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Mark Pincus, the chief executive of Zynga, said in a conference call with analysts today that the company will launch its first real-money online gambling poker game in the first half of 2013. The game will likely be launched outside the U.S., since real-money online gambling is still illegal in the vast majority of states.
There are regulatory roadblocks in many countries, but Europe is rather open. Pincus said the launch will be subject to online gambling regulatory reviews. Zynga’s non-real-money poker game, Zynga Poker, accounted for 18 percent of revenue. In that game, users purchase poker chips with real money, but they cannot cash out any winnings.
The announcement on the earnings conference call with analysts confirms speculation that Zynga has big plans to cash in on the lucrative real-money online gambling market. While 2 or 3 percent of Zynga’s users spend money ($2 or $3 per user per month) in social casino games, online gambling is much more lucrative. Online gambling revenues often reach $300 per paying user per month.
In the U.S., new hope arose for real-money online gambling in December, when the Justice Department ruled that online poker and other skill-based games were not considered illegal as long as they were specifically legalized state by state. Nevada has legalized online real-money gambling, and other states are moving to do the same. Meanwhile, Zynga can likely operate real-money online gambling in other territories where it is legal, and then wait for legalization in the U.S.
Zynga’s stock price rose past $15 a share based on the rumors around real-money online gambling. But today, since Zynga missed its earnings target, investors don’t seem to care. The stock is down more than 36 percent in after-hours trading.
When asked about the real-money gambling opportunity and other avenues for growth, Pincus said that mobile games are a big opportunity. He said the first real-money gambling products are ready and will be released in markets where it is legal, subject to getting licensing. The company does not currently have plans for that in the U.S. because it is not legal.
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