Zynga Making “Focused Choice” to Not Pursue Real Money Gambling License in U.S.

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Zynga released details of their Q2 2013 performance today.

Buried a bit down in the press release are two notes that will be of definite interest to those watching the regulated market for real-money online gambling in the United States.

Zynga suspending U.S. real-money gambling efforts

The first note offers a clarification of Zynga’s long-murky plans with regard to real-money online gambling in the United States (emphasis mine):

Zynga believes its biggest opportunity is to focus on free to play social games. While the Company continues to evaluate its real money gaming products in the United Kingdom test, Zynga is making the focused choice not to pursue a license for real money gaming in the United States. Zynga will continue to evaluate all of its priorities against the growing market opportunity in free, social gaming, including social casino offerings.

Sources confirm that the company intends to withdraw their active application in Nevada.

Some had speculated that the entrance of new CEO Don Mattrick would complicate – or at least delay – that application process.

The second note is more subtle, but echoes the first. In their “highlights” for Q2, Zynga mentions the “acquisition of Spooky Cool Labs LLC, a provider of social casino games.”

The emphasis is again mine, and it’s there because the consensus reporting on Spooky at the time of acquisition focused primarily on the company’s real-money pedigree.

Leaves UK effort with bwin.party in question

The release says that Zynga “continues to evaluate” its UK-facing RMG efforts in partnership with bwin.party.

I’d say that stops short of a ringing endorsement. The fact that Zynga refers to it as a “test” also suggests there’s a definite shelf life for the effort.

Neither Party or Zynga has been forthcoming with numbers, but the between-the-lines assessment of observers has generally been that Zynga is steering very little traffic on the poker side.

The lack of any positive chatter the last few quarters from Zynga or bwin.party regarding the relationship also suggests that time might be drawing down on Zynga’s sole foray into real-money online gambling.

Notes from earnings call

  • “Not happy” with Zynga Poker, competitors are “closing the gap.” Zynga deploying “top talent” to fix the issue.
  • Fraud is still a massive issue for Zynga Poker. Poker also losing ground to slots and simpler games.
  • Zynga now calls bwin.party partnership a “test” and focuses exclusively on social aspect of Spooky acquisition.
  • When asked why the company was abandoning RMG instead of just back-burnering it, Zynga’s David Ko replied that the “decision we made around RMG really centered around focus.” That was basically the only mention of the decision during the call.
  • Is Zynga Poker hitting a bottom? Ko says “We love the category, we see that the market is growing over all, we are taking steps to rectify” Zynga Poker’s performance.

- Chris is the publisher of OnlinePokerReport.com. Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.
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