Zynga Announces Online Gambling Contraction Instead Of Expansion Plans

Zynga revealed its second quarter earnings this week as well as making third quarter projections that fell short of investor expectations.  But the earnings report became secondary after the company announced its decision not to enter the expanding US online gambling market – a decision that sent Zynga’s share price tumbling.

Zynga became well-established in social gaming with its popular ‘Farmville’ game, available on Facebook.  The two companies reached an agreement to offer a real-money gambling version of Farmville that was put to test in the UK, where online and mobile gambling are widely accepted.

Zynga’s plan was to develop mobile gambling apps of Farmville and other games in the UK, expand across Europe, and eventually reach North America.  However, newly installed Zynga CEO Don Mattrick, a Vancouver born gaming developer who founded what became Electronic Arts Canada, insisted the company must “focus” on fixing weaknesses before following through on expansion.

We are missing out on the platform growth that Apple, Google and Facebook are seeing.  We have the ability to break some bad habits and get back to some good fundamentals.”

The US is cited by most gambling experts as the largest untapped online and mobile casino market in the world.  While internet betting remains illegal federally, many states are authorizing the practice within their own jurisdictions, which gambling pundits believe could lead to a federally regulated market.

Mattrick insists Zynga will put plans to enter the US aside for the time being, and focus on business in the UK.  The company made no mention as to whether they will withdraw from the Canadian market, though given Mattrick’s heritage Zynga is expected to remain committed to Canada.

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