By Jerry Whittaker
What is this? Big in the online casinos games news last week we find Zynga going public with the intention to offer gambling online in the USA. This obviously depends on whether or not Internet gambling ever becomes legal in this country. When Zynga went public with the hard-assed statement that they – would NOT, nor ever would – offer pay for play gambling games online, were they being short-sighted? We certainly think so.
While Zynga was adamant about becoming the #1 online gaming business in the world; announced they had found their niche and would not change, their share price was also suffering. It becomes evident that the online casino games marketplace was much too tempting to resist. As a result of the announcement, a share price that was struggling much below $9 has actually increased, and although still under $9, the improvement has been noticed.
Rumour has it that this look-see into the online gambling industry could make the company a good deal more money than the present micro-transactional model; although, this model has made them hundreds of millions of dollars in the past. Certainly enough to make a recent application for a $1 billion IPO!
Although Zynga Poker is the biggest online poker network in the world they offer no real prize money in online poker games. Players purchase chips priced at a fraction of the dollar value, then win the same; this is how Zynga earns millions in revenue. A release of earnings from the fourth quarter should see good numbers; however, these might not be as good as was expected. The fourth Q is good as a rule, and with a whole new release of games, Zynga should have been onto a good wicket, but have been experiencing periods of no growth. We also have to remember that released earnings are tied to the stock price.
The potential for earnings in Internet gambling is huge. In the USA optimists are anticipating a multi-billion dollar industry, and this is so lucrative that can any business afford to ignore it. Or is it the fact that the current Zynga business model is not performing as it has been. Certainly once their latest results have been released, the real truth will be made known.
What really seems to be happening here; is that the company is admitting they are seeking to enter the online casinos games biz, so, speculation is rife. They must be seeing it as a way to make money into the future, when we bear in mind that gambling online in the USA is still very much a black market business! Currently 30 million players a month apparently play Zynga poker, has the business bottomed out or reached critical mass, regardless of the fact that they ‘build games that their players love?’