Zynga Rises on Real-Money Gambling in U.K.: San Francisco Mover
Zynga Inc. (ZNGA) rose the most in more than a month after unveiling two real-money games for adults in the U.K., pushing into online gambling to make up for slowing growth in other forms of social gaming on the Internet.
The shares climbed 14 percent to $3.50 at 12:38 p.m. New York time, after advancing as much as 16 percent for the biggest intraday gain since February 25.
“ZyngaPlusPoker” and “ZyngaPlusCasino” are available today to players in the U.K. who are at least 18 years old, San Francisco-based Zynga said yesterday in a statement.
The shares surged 30 percent this year through yesterday on optimism that Zynga can use online betting to revive growth amid a slump in gaming on Facebook Inc.’s (FB) network, which accounts for most of the company’s revenue. Zynga is one of several companies taking advantage of loosening regulations around online betting, said Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco.
“Investors are clearly very interested in real-money gaming opportunities and these headlines shine the spotlight on Zynga as one way to play that trend,” Sebastian, who has a neutral rating on the shares, said in an interview.
The U.K. games are a first step in a broader expansion plan that includes gambling in various countries, betting via Facebook and real-money games for mobile phones, according to Chief Revenue Officer Barry Cottle.
“Our long-term vision is to offer our players the next generation of real-money games on multiple platforms in regulated markets worldwide,” Cottle said in a blog posting yesterday. “This is just the beginning for us.”
The games will be powered by Bwin.Party Digital Entertainment Plc (BPTY), the Gibraltar-based real-money game operator that reached a partnership with Zynga last year. Bwin will provide the gaming license as well as security measures, such as fraud detection.
Players of “ZyngaPlusPoker” will be put into online poker rooms managed by Bwin, and sometimes compete against players of Bwin-owned games, Zynga said.
The U.S. market for online gambling may reach $7.4 billion a year by 2017, according to Manchester, U.K.-based researcher H2 Gambling Capital. New Jersey, Nevada and Delaware had passed laws as of early March letting residents play in their states.
Zynga took a step toward online betting in the U.S. by filing for a preliminary finding of suitability for gaming in Nevada. It could take the game maker 12 to 18 months to become eligible for real-money wagering in the state, Zynga said in December.
Zynga generates revenue currently by selling virtual goods within its games -- for example, a gun in “Mafia Wars” or a brick oven in “ChefVille.”
To contact the reporter on this story: Douglas MacMillan in San Francisco at firstname.lastname@example.org
To contact the editor responsible for this story: Tom Giles at email@example.com