Online gambling is getting more and more legalized in the world and specifically in the United States though it’s still mostly banned. Howver, investors get the sense that this should change in the near future and shares of online gambling players have reacted positively. This US opportunity could become a game changer for these companies. With 35 million users, Zynga shares are up 59% YTD and this might be just the beginning. When they will give the opportunity to players to play real money, their revenue per user will improve dramatically. The online gaming industry has been lobbying quite aggressively to get their voice heard but this process takes time. But, in this challenging economic environment, politicians realize that they need to find creative ways to increase taxes. For all these reasons, Nevada, New Jersey and Delaware have all decided to legalize online gambling.
Consequences are still unknown but it’s clear that this will make a huge difference for online gambling companies. Sell side analysts say that this will be a 2014 event as it will take time to find the right pricing and an efficient marketing strategy to drive users to spend money on their desktop or their mobile device.
A few months ago, there were not that many investors that believed in online gambling companies and Zynga was trading close to net cash. Now that Zynga has struck its first deal with European gaming operator bwin.party, things might be really different. We hope that people will keep on spending wisely their hard earned money on online games.