Zynga Enters UK Internet Gaming Industry

This week San Francisco game developer Zynga entered the world of real money internet gaming in the UK. The company hopes to make up for losses in other areas. On Wednesday April 3rd Zynga shares climbed 14% to $3.50 at 12:38 p.m. New York time after advancing as much as 165 the biggest intraday gain since February 25th. “ZyngaPlusPoker” and “ZyngaPlusCasino” are now available to players in the United Kingdom who are over 18 years old. Zynga chose the UK for the launch because of the nation’s highly regulated and mature internet gaming market.

Zynga shares surged 30% so far this year and investors are optimistic that Zynga can use real money gaming to offset a slump on Facebook’s gaming network which accounts for most of Zynga’s revenues. Investors also hope the move will revive growth for the company. Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco said Zynga is just one of several companies taking advantage of loosening regulations for online gambling. Sebastian told interviewers “Investors are clearly very interested in real-money gaming opportunities and these headlines shine the spotlight on Zynga as one way to play that trend.”

The UK games are part of a broader plan for expansion that involves offering internet gambling in other European countries. According to Chief Revenue Officer Barry Cottle “Our long-term vision is to offer our players the next generation of real-money games on multiple platforms in regulated markets worldwide. This is just the beginning for us.”  Zynga’s games will be powered by Bwin.Party Digital Entertainment Plc based in Gibraltar. Last year Bwin formed a partnership with Zynga. Bwin will be responsible for providing the UK gaming license as well as security and fraud protection.

“ZyngaPlusPoker” players will be sent to poker rooms managed by Bwin and sometimes Zynga’s players will compete with players of games owned by Bwin. According to Manchester, U.K.-based researcher H2 Gambling Capital the US internet gambling market may be worth $7.4 billion a year by 2017. So far three states in the US have legalized internet gambling; Nevada, New Jersey and Delaware. Zynga has filed for a preliminary finding of suitability in Nevada. It may take Zynga 12 to 18 months to obtain an interactive gaming license in the state.