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Is Zynga Inc (ZNGA)’s Bet on Mass Market Gambling a Game Changer?

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Zynga Inc (NASDAQ:ZNGA) reiterated its intention to focus on mass market gambling, prompting a series of questions on the company’s future with regard to hardcore gambling. Zynga Inc (NASDAQ:ZNGA) CEO Mark Pincus quashed allegations, which had suggested that the company could be trying to cash in on the existing hardcore gambling market following its foray into online gambling in the UK. Zynga seeks to focus on its strength, that is, making gambling social. Zynga Inc (NASDAQ:ZNGA) has experience in social gaming, an attribute that if married to gambling, could trigger a massive upside in online engagement for the company.

Zynga Inc (NASDAQ:ZNGA)Doors opening for monetization of online gambling

The long-term obstacle to online gambling has been turning electronic money into real cash. Companies are only allowed to account for money received from gambling electronically in the US, but this standard seems to be changing. The state of Nevada hurriedly signed into law a bill allowing for the monetization of online gambling, beating New Jersey to become the first state to allow the practice.

According to recent reports, mobile games maker Glu Mobile Inc. (NASDAQ:GLUU) became one of the earliest beneficiaries of the new rule. Glu Mobile designs, markets, and sells mobile games worldwide. It develops original games based on its intellectual property comprising Big Time Gangsta, Blood & Glory, and Bug Village, among others.

Zynga Inc (NASDAQ:ZNGA) has already taken a huge step towards this course after David Ko, COO, announced during the conference call that the company expects to report its first real-money gaming products by end of the first half of 2013. He also revealed that the company had already filed for a license to offer gambling services in Nevada, back in December 2012. This could be a crucial turning point for a stock that has been under pressure for the greater part of the last thirteen months.

Zynga’s shares fell nearly 80 percent in 2012, but were up 15 percent on Monday, following the announcement. Glu Mobile shares also shot up 6.4 percent to follow up on the rise on Friday, February 22, of 6.3 percent.

Zynga Inc (NASDAQ:ZNGA) is the master of social gaming and looks to capitalize on its experience in order to trigger a paradigm shift in the way online gambling is done. Pincus said, during a Morgan Stanley conference in San Francisco on February 25, “It makes it more exciting than when you are by yourself in an anonymous poker room. We’re not the company to win the hardcore real-money gamers, but we think we are for the mass market audience.” Zynga started making inroads to the real-money gambling arena last year when it announced a deal with the UK-based poker company Bwin.

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