One of the companies that were thought to be a major player for the future of online gaming and poker in the United States has instead decided to pack in their efforts towards that goal. As this occurred, another organization continues to strive forward in one of the state regulated operations.
On Thursday, the social gaming giant Zynga announced their second-quarter earnings report and, while they were able to exceed the expectations that analysts on Wall Street set, still were below last year’s performance. The total revenues for the company were $231 million, a drop of 40% in comparison with the same time frame in 2012, and monthly active users also dropped to 187 million from 306 million last year. With these numbers in mind, Zynga has decided to forego entering into what will be a very competitive landscape in the U. S. online gaming and poker market.
“Zynga believes its biggest opportunity is to focus on free to play social games,” a statement from the company read following the announcement of the second quarter earnings. “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.”
Although they have had some success in the United Kingdom with real money casino gaming, there were going to be some difficulties in the United States for Zynga’s operations. The current status of regulation, with only three states (Nevada, New Jersey and Delaware) currently offering online gaming, and the hodgepodge of differing statutes required a great deal of time and financial expenditure by Zynga to be successful. Instead of jumping into the “deep water” of real money play in those states, the San Francisco-based company has decided to shore up its social gaming outlets, such as FarmVille, Words with Friends and their popular poker application.
While Zynga has seemingly departed the U. S. real money gaming market – for now – another company is charging on into the fray. International Game Technology, or IGT as it is known on the New York Stock Exchange, followed Zynga’s announcement on Thursday with its own statement on Friday that they will still pursue real money online gaming interests in the U. S.
In an interview with All Things Digital’s Eric Johnson, IGT Executive Vice President Robert Melendres commented on the divergent paths that Zynga and IGT are taking. “What Zynga’s finding out is that breaking into real-currency wagers is a difficult thing,” Melendres, who heads IGT’s interactive division, is quoted by Johnson. “They built their business as more of a causal social gaming business. We are well situated to take advantage of [real money], just as we’ve done in Europe.”
IGT also has something that Zynga didn’t: a background in live casino gaming that they could translate to the online arena. IGT, founded in 1975, manufactures about half of the slot machines in the United States, such devices as “Wheel of Fortune” and the Game King video poker system that are two of the most popular casino games around. In 2005, IGT acquired WagerWorks for online gaming and poker and, over the past two years, has also bought the Entraction Poker Network and DoubleDown Casino (the base of their social gaming efforts) that have added to their roughly $2 billion in yearly revenues.
The stock market has reacted sharply to Zynga’s decision to not enter the American market. After starting the week with their stock trading at $3.41 a share on the NASDAQ exchange under the “ZNGA” code, the stock price took a hit after their Thursday announcement and finished the week off at $3.01. For their part IGT, traded on the New York Stock Exchange under the same initials, continues to move ahead calmly, starting the week off at $18.62 per share and closing on Friday at $18.42 per share.
