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Social gaming company has filed preliminary paperwork in Nevada for a gambling license
Gambling is integral to the future of Zynga. That has been well known for a while now, but it is especially true now that its relationship with Facebook has come to an end. Zynga needs to find news ways to bring in revenue if it wants to survive, and that makes the potential money it can make from gambling even more important.
The social gaming company filed paperwork with the state of Nevada that is the first step toward getting a gaming license in the state, the Wall Street Journal reported Wednesday.
By submitting an Application for a Preliminary Finding of Suitability from the Nevada Gaming Control Board, a piece of preliminary paperwork the company needs before officially filing for a gaming license, Zynga has gotten the ball rolling toward being able to legally offer real money gambling games in the United States. It may not happen for a while, though, since the process might take a year to a year and a half to complete.
“Zynga has filed its Application for a Preliminary Finding of Suitability from the Nevada Gaming Control Board. This filing continues our strategic effort to enter regulated RMG markets in a prudent way. We anticipate that the process will take approximately 12 to 18 months to complete. As we’ve said previously, the broader U.S. market is an opportunity that’s further out on the horizon based on legislative developments, but we are preparing for a regulated market. We’ve also recently partnered with bwin.party to bring the highest quality real money gaming experiences to our UK players in the first half of 2013,” Chief Revenue officer Barry Cottle said in a statement to various media outlets.
Now that Zynga and Facebook have essentially broken up, the gaming company is being forced to find new ways to making up for lost revenue. To that end, it has signed a deal with cloud-based television company Synacor to bring its games to Synacor’s 45 cable, satellite and telecom companies, starting in 2013. And bringing gambling to the United States is the second part of the process.
Gambling was always a part of Zynga’s strategy; Poker was the company’s very first game, launched in July 2007, and has remained extremely popular, even as Zynga’s Ville games have lost some of their edge.
But, as its once mighty relationship with Facebook began to erode, gambling was becoming increasingly important to Zynga. The company’s casual games thrived on Facebook, until the social network began emphasizing new games in its news feed and notifications so that people have a greater level of discovery. Zynga CEO Mark Pincus even blamed Zynga’s disappointing second quarter numbers on the changes made by Facebook.
To balance the loses it was seeing, it was reported in July that Zynga would begin to allow real-money gambling in markets outside the United States by the beginning of 2013.
“What we’ve said, and what we have to announce today, is that we have our first products in development and that we intend to release them in markets that are regulated and open, subject to our getting licensing,” Pincus said on an analyst conference call discussing Zynga’s second quarter earnings.
“The US is obviously an attractive market, but it’s not an open, regulated environment today.”
In October, right before the release of its earnings reports, Zynga announced that it was partnering with bwin.party to offer real money online Poker and Casino games in the UK market. Zynga's UK-based RMG service and bwin.party will launch RMG products including Poker and a full suite of 180 Casino games in the first half of 2013, which include table games such as slots, roulette and blackjack.
Zynga Poker is such an important piece of the company's future that, after Zynga was forced to announce that it was lowering its outlook for the remainder of 2012, due in part to the weakness of its Web games, Pincus sent to a note to employees in which he specifically cited Zynga Poker as one area where the company would be investing heavily.
"The challenges we faced in our Web business in Q2 continued in Q3 and while many of our games achieved plan, we still experienced overall weakness in the invest and express category. To address this we’re further investing in other genres like casino where we already lead with Zynga Poker and blue PVP, a category we pioneered with Mafia Wars, and now have the opportunity to reinvent with the industry’s best talent here at Zynga," Pincus wrote.
Zynga stock was up 3.07% Wednesday, trading at $2.32 a share.
Zynga could not be reached for comment.
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Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users. Zynga’s games are available on Facebook, MySpace, Bebo, Hi5, Friendster, Yahoo! and the iPhone, and include Texas Hold’Em Poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist. The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group, Reid Hoffman and Peter Thiel. Zynga is headquartered at the Chip Factory in San Francisco. For more information, please visit www.zynga.com.