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The big initials at Zynga these days are RMG. That stands for real-money online gambling, and the company just filed for the right to publish such games in the state of Nevada.
Formally, the company filed its “application for a preliminary finding of suitability” with the Nevada Gaming Control Board. The move positions Zynga to offer real-money online games (and, quite possibly, real-money gambling) in the state of Nevada, where it is already legal to play such online games as long as players are inside the state. The prospect of real-money gambling is the only piece of news that lifts Zynga’s stock price these days (up 0.43 percent in after-hours trading), and social casino games have been hot all year.
That’s because Zynga makes the world’s most popular social casino game: Zynga Poker. It makes perhaps a couple of bucks a month per paying user, and a small percentage of players pay money. But with real-money gambling, the stakes are bigger. Players who pay real money to gamble online will spend several hundred dollars a month, according to market surveys. If Zynga can use its poker brand power to tap into the real-money gambling market, it will have a chance to disrupt the online gaming market and lift its sagging profits.
“This filing continues our strategic effort to enter regulated RMG markets in a prudent way,” said Barry Cottle, the chief revenue officer at Zynga, in a statement. “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 U.K. players in the first half of 2013.”
Zynga has cut a deal to publish real-money casino games in the United Kingdom in a partnership with real-money online gambling firm bwin.party. In the U.S., online gambling is still illegal in most states, but the federal government is stepping back from enforcing a ban since the Justice Department reevaluated its stance on the matter in Dec. 2011. In the wake of that ruling, Delaware and Nevada approved online gambling laws in their states.
If all states approve online gambling, Zynga could have a bigger market. But the chances of that happening quickly are low. And in Nevada, the Gaming Control Board has a lot of power. It can decide whether or not to grant a gambling license to companies requesting permission. And for years, it has developed the know-how to determine whether companies applying for such permissions are shady or not. If Nevada grants a company a license, it is likely that other states could do so as well. Or so the theory goes.
Approval in Nevada takes an estimated 12 to 18 months.