Zynga Stock Crashes After News Of No Real-Money Betting In US

Published on July 26, 2013 by Terry Goodwin

Investors in Zynga stock apparently were betting heavily on the company's move into real-money gambling in the US. After the company announced that would not happen, the stock price for the company crashed on Thursday.

At the close of the day, Zynga stock was down 15%, to just over $3 a share.

Since Zynga announced earlier this year that they were going to enter the world of real-money gambling on their social network gaming platform, investors have been eager to jump on board. That made Thursday's announcement by Zynga COO David Ko disappointing to many of those investors.

"The decision really centered around focus," said Zynga COO David Ko."

That focus will shift from the US to the UK, where Zynga is pursuing gaming licenses. Gamblers in the US thought that Zynga was their ticket to real-money casino gambling, but that will not be the case.

"It's a space that will likely become crowded, expensive, and with big incumbent players from Las Vegas getting involved soon," said Digital World Research Analyst P.J. McNealy, when speaking about the future US online gambling market.

Several states have passed online gaming regulations, including Nevada and New Jersey. With the regulations in place, both states have started the licensing process for online casinos, with existing land-based casino owners getting the first crack at the new licenses.

Zynga, which created many of the top games on the Facebook social networking site, was looking to parlay the success from Facebook into real-money bets. The company will focus on the UK, and at a later time may re-think their decision to enter the US market.