Zynga Inc (ZNGA) Fortunes May Improve With Legalized Online Gambling

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Zynga Inc (NASDAQ:ZNGA) has been considered a low performing stock by analysts over the past few months, but this may be a case where analysts are wrong in their assumption, says a report from Seeking Alpha by Intelligent Speculator. LinkedIn Corp (NYSE:LNKD) has performed well, but Facebook Inc (NASDAQ:FB), on which many analysts were positive, is trading low this year.

Zynga Inc (ZNGA) Fortunes May Improve With Legalized Online Gambling

What Can Turn Fortunes Around for Zynga?

Legalization of online gambling in various states of the U.S. may positively impact Zynga Inc (NASDAQ:ZNGA) shares. Online gambling can bring in millions of users and generate huge revenues for the company.

It is anticipated that the revenue collected by online gambling will be much more than what is being spent by U.S. based gamers. According to Wikipedia in 2007,  gambling revenues reached $100 billion. These revenues will become even higher once online gambling legalized.

The advent of online gambling will not have any adverse affect on traditional casinos. However, it would be a good idea to secure money by easier and more fitting online gambling.

Fight Continues to Legalize Online Gambling

However, there is still a lot of work to be done to legalize online gambling. There are many companies which are trying to give legal status to online gambling by considering various legal options, as well as lobbying.

The major question which arises is, what would be the profit of Zynga Inc (NASDAQ:ZNGA). The online game maker will face stiff competition in the industry, and there could be billions of dollars that would be kept at risk

Zynga Inc (NASDAQ:ZNGA) will mainly face competition from two sides, which would be other players in the online gambling industry and offline traditional casinos and gambling institutions.

Advantages to Zynga

There are various big corporations like PokerStars and BetFair that are ready to come in the field. However, many of these big companies have in the past violated some U.S. rules. These companies had to pay heavy charges in order to settle the cases and also some of the owners, founders or senior executives of these companies cannot set their business in the United States.

The other benefit which Zynga may draw from legalizing online gambling is that it has the advantage of being a U.S. company, compared to other companies and websites which will be based outside United States, primarily those that are based in tax havens.

Zynga Inc (NASDAQ:ZNGA) will be a good buy if online gambling gets legalized but as of now just buying on the speculations that something of this sort will happen may be a risky decision.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

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