Zynga Inc (ZNGA) Turnaround Depends On Online Gambling

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Zynga Inc (NASDAQ:ZNGA) sales have been faltering since other social gamers began flocking towards Facebook Inc. Last week, the company reported an 18 percent decline in revenues and 13 percent slide in monthly active users from the same period in 2012. But the Mark Pincus-led company might find a savior in online gambling. The Las Vegas-based casino operator Ultimate Gaming is planning to launch the first fully legal poker website in the United States. It could generate billions of dollars for Zynga Inc (NASDAQ:ZNGA) as well as payment processors like PayPal Inc.

Zynga Inc (ZNGA) Turnaround Depends On Online Gambling

Yesterday, UltimatePoker.com offered real-money Internet gambling in Nevada. If the game is legalized, it could become a $400 billion business. Zynga Inc (NASDAQ:ZNGA)’s popular online poker game Texas HoldEm Poker has over 30 million monthly active users. On mobile platforms, its casino type games like slot games and card games were among the top three genres for Google Play as well as Apple’s iOS last year, according to USAToday.

Zynga Applies For License In Nevada

Last year, Zynga Inc (NASDAQ:ZNGA) applied for a license from with Nevada Gaming Control Board (NGCB). It may consume about 18 months before the license is issued. The trouble with online gambling is that there aren’t any rules at the federal level since Justice Department restrained Internet poker in 2011.

The rules now depend on individual states. Given the strong potential for tax revenues, state governments are unlikely to suppress it longer. Many states including Nevada, Delaware and New Jersey have legalized online gambling. H2 Gambling Capital, an analyst firm, said that the US real-money Internet gambling market could rise to $7.4 billion by 2017 as several states are passing legislation to support online gambling. Mobile gambling alone could rise to $4.4 billion. Currently, global real-money Internet gambling business generates $34 billion in revenues, and is growing at 8 percent per year.

Along with Zynga Inc (NASDAQ:ZNGA), it will also bring vast opportunities for PayPal Inc. It already processes gambling payments in countries where online gambling is legal, including in the UK.  PayPal doesn’t offer this service in the United States because there isn’t a uniform federal law.

Zynga Inc (NASDAQ:ZNGA) shares were down 0.31 percent to $3.18 at 1:03 PM EDT.

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