Zynga wants to stop pretending
Industry sources have hinted at it for at least a year, but Zynga is getting serious about turning pretend poker players into real money cash-game player. As reported earlier, Zynga has an open request for tender for a real money poker product. eGR Magazine has reported bids from GTECH G2 and Playtech, and it looks like these offers won’t be the last. They’ve also been kicking the doors on poker network and bwin.party orphan Ongame.
From a supplier side, it’s a no brainer – Zynga has billions to spend after their 2011 IPO; if they’re serious about real money poker, they’ll spend to get their infrastructure in place.
The Zynga buzz in the industry is indeed palpable. Everyone has an opinion but it’s essentially split into two camps: one, Zynga will turn on the real money and their 11 million daily active users will all switch to cash game poker players overnight, turning Zynga into the greatest gambling company in the world.
Then there are the rest of us who are a little more pessimistic about Zynga’s chance to make it in a real-world gambling environment.
Zynga CEO Mark Pincus gave an interview at Fortune Brainstorm Tech a week ago where he talked about his hopes that the new model “takes a form that is more mass market than aimed at heavy-duty users.”
To be fair, Zynga has players. In fact, their 11 million daily active users have analysts drooling over the potential switch – but those are play money players. Just ask any poker room how many people have been long time players of their .NET play money site and decided to make a go of it on their real money .com site.
Also, what we know from experience, and what Zynga is about to find out, is that there is a reason a person will play poker on a free play site. These users are not gamblers and never will be gamblers. A gambler would never play poker for nothing. Without real money, it’s not the same game.
It’s hard to create a gambler out of casual players who are getting what they want without risking their hard-earned cash. To ask a player to risk their money, and let’s be honest here, is also a disclaimer that they will most likely lose their money at the table. Many a .net legend has gone down in flames after moving from the fast and loose free tables to the tighter tables occupied by real money veterans.
In the same interview with Fortune, Pincus was asked whether he regrets taking Zynga public. The company went public in December 2011 at $10 and their share price currently sits under half that at about $4.50 per.
He gave an answer that essentially said yes. He gave a spiel saying he’s always run Zynga like a public company even before his initial public offering, but that it’s that decision to go public which will likely be Zynga’s biggest hurdle as they attempt to enter the world of real money gambling.
By being a public company, especially in the US, Zynga will have extra hoops to jump through, regulations that are more cumbersome. Not only that, they are also of course limited to heavily regulated and mature gambling markets.
As the European public gambling companies will tell you, they are shut out of the US, and now, just as importantly, they are shut out of the largely unregulated markets in China and the rest of Asia as well. 3 billion people are hard to ignore.
They could be relying on federal poker regulation coming to the US, but right now, all signs are pointing to a state-by-state model of regulation that’s already begun and has been continuing in earnest.
If by chance a federal bill comes, will gamblers and poker players choose a Facebook game, will they go with a long time trusted internet brand, or will they choose an even longer trusted Las Vegas brand?
This could all be a ruse to titillate the investment bankers into driving up the company’s pathetic stock price, but I believe Zynga is genuine in their beliefs that they will be able to be a dominant player in the real money gambling world. They need to be ready for a major disappointment however if the results of their dreams become an unfavorable reality.