Zynga to launch real-money gambling online games in 2013

Mark Pincus, the chief executive of Zynga, said in a conference call with analysts today that the company will launch its first real-money online gambling poker game in the first half of 2013. The game will likely be launched outside the U.S., since real-money online gambling is still illegal in the vast majority of states.

There are regulatory roadblocks in many countries, but Europe is rather open. Pincus said the launch will be subject to online gambling regulatory reviews. Zynga’s non-real-money poker game, Zynga Poker, accounted for 18 percent of revenue. In that game, users purchase poker chips with real money, but they cannot cash out any winnings.

The announcement on the earnings conference call with analysts confirms speculation that Zynga has big plans to cash in on the lucrative real-money online gambling market. While 2 or 3 percent of Zynga’s users spend money ($2 or $3 per user per month) in social casino games, online gambling is much more lucrative. Online gambling revenues often reach $300 per paying user per month.

In the U.S., new hope arose for real-money online gambling in December, when the Justice Department ruled that online poker and other skill-based games were not considered illegal as long as they were specifically legalized state by state. Nevada has legalized online real-money gambling, and other states are moving to do the same. Meanwhile, Zynga can likely operate real-money online gambling in other territories where it is legal, and then wait for legalization in the U.S.

Zynga’s stock price rose past $15 a share based on the rumors around real-money online gambling. But today, since Zynga missed its earnings target, investors don’t seem to care. The stock is down more than 36 percent in after-hours trading.

When asked about the real-money gambling opportunity and other avenues for growth, Pincus said that mobile games are a big opportunity. He said the first real-money gambling products are ready and will be released in markets where it is legal, subject to getting licensing. The company does not currently have plans for that in the U.S. because it is not legal.

Worries about future pummel Zynga shares

Zynga investors are not playing games.

After Zynga’s dismal second-quarter earnings report and still dimmer outlook, shares plummeted 40 percent. At least seven analysts downgraded the online games maker and several raised questions about its long-term relevance.

Zynga Inc. cut its full-year guidance sharply Wednesday after reporting a loss and revenue below Wall Street’s expectations. Though both user numbers and revenue increased, analysts were expecting much more.

In turn, Goldman Sachs and others downgraded the stock and lowered their target prices.

Problems are myriad for the maker of “FarmVille” and other Facebook games. The company’s bleak outlook was due to the sharp drop-off of users of Zynga’s most profitable games, delays in developing new games, the growing pull of Facebook’s mobile app and because Facebook has changed the way it promotes games, said Goldman’s Heath Terry. He cut Zynga to “Neutral” from “Buy.”

Zynga’s mobile games, such as “Words With Friends,” are popular but don’t make as much money as the Facebook versions. And Facebook makes up nearly all of Zynga’s revenue.

Facebook Inc. recently changed the way it recommends applications to users in a way that favors newer games rather than older ones such as Zynga’s “FarmVille.” But Cowen analyst Doug Creutz thinks the weak report isn’t just about Facebook’s changes.

“We are skeptical that Zynga’s (paying) player bases on titles like `FarmVille’ and `CityVille,’ which have been around for years, simply forgot to play without proper prompting via their news feed,” he wrote in a note to investors. Rather, he said, he thinks users are shifting from PC-based social games to mobile gaming.

“We think this shift is likely permanent and ongoing, threatening Zynga’s largest business segment,” he said, keeping his “Neutral” rating.

A few analysts remained positive. Baird analyst Colin Sebastian called the quarter a “big reset of expectations” for investors, and the stock will suffer. But he still believes that over the long term, Zynga will benefit from the growing market for social and mobile games. He kept an “Outperform” rating on Zynga’s stock but lowered his target price to $6 from $13.

Zynga’s stock is down $1.99 at $3.09 in afternoon trading. That’s its lowest level since Zynga went public in December and nearly 70 percent off its IPO price of $10.

Zynga’s bad news dragged Facebook’s stock lower too. Shares of the online social networking company dropped $2, or 8.8 percent, to $27.34 a few hours before Facebook was scheduled to report its second-quarter earnings, its first as a public company. In 2011, 11 percent of Facebook’s revenue came from Zynga.

Olympics: Cardiff kicks off the 2012 Games in style

Wales kicked-off the Olympics in style today as fans from across the globe hailed the Games’ first event as a “perfect” curtain-raiser.

London 2012’s opening salvo saw Great Britain’s women’s football team edge out New Zealand in the blazing sunshine of the Millennium Stadium with a spectacular free-kick before Cameroon took on Brazil in the day’s later game.

A league of nations could be seen and heard on the streets of Cardiff, which was awash with colour, as thousands of fans soaked up the sun and the opening moments of an event that the country has waited for since 2005.


London 2012 chairman Sebastien Coe arrived in Welsh capital by helicopter ahead of the fixture and said Cardiff had transformed itself into a “truly Olympic city” to give the Games the best possible start ahead of Friday’s opening ceremony in Stratford.

He said: “This is a city I know well; I come to Cardiff regularly, but it had an Olympic feel to it today and that’s fantastic.

“It seems barely credible that it was seven years ago where we snuck across the line in Singapore and started off this extraordinary journey.

“And it’s great that [the] start is in Cardiff too because one of the commitments we made form the start – and I have strong feelings on this as someone who was not brought up in London – is it had to be about the UK.

“Although the Games are in London, it is not uniquely a London story.

“The football tournament is a big tournament, a long tournament, and we didn’t want to base it solely in London when you have stadiums like the Millennium – these are world renowned theatres of football.”

Lord Coe’s enthusiasm for the opening event was shared by more than 40,000 partisan fans who attended the match.

Although seats behind each goal in the stadium lay empty, numbers were swelled by healthy numbers at ticket cabins on the day.

And there were long queues heading into the stadium amid a strict security operation meaning all bags and rucksacks bigger than A4-size were searched. and fans were frisked.

Supporters were encouraged to get there two hours before kick-off to avoid a backlog while other staff handed out airport-style plastic bags as fans were herded through gates.

Once inside, they could embrace Olympic fever again with highlight reels of games gone-by played on the big screens to get fans in the mood for the next fortnight.

Meanwhile a sea of Union flags greeted both sets of players as they walked out onto the pitch in the blazing sunshine.

Eager supporters enjoyed pre-match “shout-offs” before competing chants of “Kiwi” versus “GB” punctuated the 90 minutes.

And TV crews beamed images around the world with a convoy of broadcasting trucks lining the Taff embankment in the shadow of the Millennium Stadium.

Next page: Culture Secretary Jeremy Hunt on Olympic security


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Start-up brings real bets to online games

ONLINE social games could get a shot of real money with a new platform launched by an international start-up.

The new platform to allow real-money bets on almost any online game is coming from Betable, a London-headquartered company with a British gambling license, and working in California with US game developers.

“This is the first and only platform to allow any game developer to allow real-money gambling,” said Christopher Griffin, chief executive of Betable.

Mr Griffin said the new system will allow players outside the United States and other jurisdictions where online gambling is legal to place real-money wagers.

He said this combines the experience of social games with the thrills of real betting. It can be offered on computers and a variety of mobile devices.

“Social game developers have all the ingredients that the gambling guys are missing,” Mr Griffin said.

“They have good user experiences. They have a huge install base of a billion players, but they don’t have access to monetisation.”

Betable has not announced any specific contracts, but said the platform could be used by the popular Facebook or social games like Zynga’s Farmville.

“We can turn the harvesting of crops into a slot machine,” said Mr Griffin.

“You could add a slot machine, you could buy the corn with real money. The cool thing is you can build traditional casino games or invent totally new mechanics.”

Mr Griffin said the problem with social games is that despite their popularity, developers have few opportunities to make money. Only a small number of players pay for “premium” games, and advertising revenues are limited.

Betable has a British gaming license which allows bets to be placed from any jurisdiction in the world where online gambling is legal. This means US players are excluded because of a ban on internet gambling in the United States.

“At Betable, we’re unlocking real-money gaming for developers who can innovate in what up until now has been a massively impenetrable space,” said Mr Griffin.

“Our partners and investors believe that Betable represents the largest opportunity for innovation and monetization for game developers in years.”

The company has not released details of its funding, but said it has “more than 25 investors” and “one of 2012′s largest seed rounds of funding”.

Those investing include venture capital groups Greylock Discovery Fund and FF Angel LLC, True Ventures, along with Facebook launch team member Dave Morin and Russian billionaire Yuri Milner, an early Facebook investor.

“We believe real-money gaming will make the social games industry more successful and has the potential to catapult games that offer it to the top of every app store on the planet,” said Tony Conrad, partner at True Ventures.

“While awaiting the US legalisation of online gambling which could take years, the overseas markets represent billions of dollars in opportunity for developers located anywhere in the world.”

Games open with football and Bolt warning

CARDIFF/LONDON – The British women’s soccer team kicked off the Olympics on Wednesday with victory for the home team over New Zealand, and Jamaican sprinter Usain Bolt, hero of the 2008 Games and the fastest man on earth, vowed to win again, declaring: “This is my time”.
The whiff of scandal hung over London’s Olympic Park, where thousands of journalists and athletes were limbering up for the July 27-August 12 showcase, after Greek triple jumper Paraskevi Papachristou was withdrawn from the Games for a racist tweet. Her subsequent apology fell on deaf ears, with the head of the Greek Olympic mission, Isidoros Kouvelos, saying: “She made a mistake and in life we pay for our mistakes.”
Britain won the first competitive contest of the London Olympics when a free kick from Stephanie Houghton gave them a 1-0 victory over New Zealand in the opening match of the women’s soccer tournament at the Millennium Stadium. Not only was the match the first event of the Games, it was also the first competitive match the British team had ever played and Houghton earned her place in women’s soccer folklore with her 64th minute shot.
Britain has not competed in Olympic soccer since the men’s team failed to qualify for the 1972 Munich Games because Wales, Northern Ireland and Scotland fear for their independent status within world governing body FIFA if they allow their players to compete for a united British side. As a consequence Britain did not enter the Olympics from 1976, but as hosts, they were obliged to enter a team for these Games ensuring this match a certain historic significance.
Much of the action on the pitch will not live long in the memory. New Zealand were the first to settle in the hot conditions, but Britain, with Jill Scott and Anita Asante combining well, took a grip on the game and they went close to scoring after 21 minutes.
Kiwi keeper Jenny Bindon, at 39 the oldest player in the competition, did well to punch clear from a corner, then made an excellent reflex save to deny Eniola Aluko what looked to be a certain opening goal. Britain went close again 15 minutes later when Aluko crossed for Anita Asante but she hit the post with Bindon beaten.
New Zealand made little impression on the British defense and Alex Scott and Casey Stoney nullified what little threat there was from Sarah Gregorius and Hannah Wilkinson. Even when Gregorius got a lucky break after a mix-up between Scott and Stoney 18 minutes from time, she failed to finish with a weak shot straight at goalkeeper Karen Bardsley. Amber Hearn did force Bardsley to tip over the bar in the closing minutes, but Britain comfortably played out time for a well-deserved victory in the first of the days six women’s games. Brazil and Cameroon, the other two teams in the group were playing in Cardiff later
With doping concerns at centre stage, nine track and field athletes have been banned for violations in a crackdown on the use of prohibited substances at the London Olympics. The athletes, including leading Moroccan marathon runner Abderrahim Goumri, were all caught with the aid of the Athlete Biological Passport program, which will be used at an Olympics for the first time in London.
Separately, fellow Moroccan 1,500 meters runner Mariem Alaoui Selsouli, a silver medallist at the world indoor championships this year, tested positive for a banned diuretic and will also miss the London Games. The soccer match in the Welsh capital, which Britain won 1-0, came two days before Friday’s opening ceremony at the main London stadium, the culmination of seven years of preparations for an event that draws billions of viewers around the world.
In host city London, basking in sunshine after a rainy summer, authorities went ahead with unpopular lane closures to keep the roads, and hundreds of thousands of extra visitors, moving, and security has been beefed up to protect the Games. Counter-terrorism chiefs have played down the possibility of a major attack, although in a possible sign of pre-Games jitters, a Typhoon fighter jet was scrambled to intercept an aircraft that had flown into restricted air space. Communications with the plane were restored, however, and the fighter told to stand down, the defense ministry said.
More than 16,000 athletes are warming up for their big day at venues across Britain, and 11 million visitors will follow every twist and turn of intense battles for the ultimate prize – Olympic gold. Bolt, Jamaican winner of the 100 meters and 200m Olympic titles in Beijing in 2008, fired the opening salvo in what promises to be an explosive 100m sprint final on August 5, arguably the blue riband event of the Games.
“This is my time,” said the 6ft-5in (1.95m) athlete, as attention turns from a security scandal and transport chaos in the run-in to the Olympics to what really counts – sport. “This will be the moment, and this will be the year, when I set myself apart from other athletes in the world,” 25-year-old Bolt told the Guardian newspaper.
Bolt, who holds the world record for the 100m race, is aiming to achieve what no other man has ever done before – successfully defend the 100m and 200m finals. While the British government and Olympic officials will be delighted that sport is now in focus, the threat of transport disruption and security worries lingered with just two days to go before the eagerly-awaited opening ceremony.
One target of anger among notoriously grumpy taxi drivers and many ordinary Londoners are the so-called “Games lanes” which came into operation on Wednesday. Scathingly dubbed “Zil” lanes after Soviet roads reserved for black limousines carrying senior Communist party members, the roads are reserved exclusively for Olympic officials, the media, athletes and sponsors.
Anyone caught straying into the lanes without permission faces an automatic 130-pound fine, and there has been confusion and heavy traffic in several parts of the capital as a direct result of the system. “They’ve closed off the Games lane, but nobody (from the Olympic community) was using it,” said Ross Keeling, a call-out engineer, speaking after he travelled from east London to the city centre.
“My journey usually takes me 40 minutes, but it took two hours with the change. It was a pain the neck. We just have to sit and watch the empty lane.” The threat of delays at Heathrow and other airports was avoided, however, when border guards called off a strike planned for Thursday.
Culture and Sport Secretary Jeremy Hunt announced this week that 1,200 extra soldiers had been deployed to protect Olympic venues at the last minute to cover for a shortfall in private security guards in a major embarrassment for Prime Minister David Cameron’s administration. The presence of courteous, smiling troops at the Olympic Park has in fact proved highly popular among athletes, reporters and officials.
“Security to me hasn’t been an issue,” said U.S. beach volleyball player Misty May-Treanor, one of dozens of athletes talking to the media before the training begins in earnest. “I just look at all those young faces, all the soldiers, and I’m like, you guys are so young. It kind of puts everything into perspective,” added the 34-year-old. Also attracting the cameras were Syria’s athletes, who put aside the increasingly violent civil conflict engulfing their country on Wednesday to sign a “truce wall” at the Olympic Park and raise their flag.

Games chief weighs into comment over Jones conditioning

CALLING criticism of Leisel Jones’s conditioning ”disgraceful”, the Olympic team’s chef de mission, Nick Green, mounted an impassioned defence of the eight-time Games medallist whom he said has been unfairly targeted on the eve of her record-breaking fourth Olympics.

Opening his daily media conference in London yesterday morning with the most impassioned statement of his tenure, Green said Jones had the full support of the team.

”She’s a triple Olympic gold medallist and a winner of eight Olympic medals for this country. I think she deserves a lot more respect than she was given.

”I’m pleased that there’s been unanimous support for Leisel Jones by her fellow competitors, by other athletes. I’ve seen comments from Cathy Freeman, Giaan Rooney, Libby Trickett,” Green said.

”It’s just unfair that she has been targeted this way on the eve of what, for her, is an historic competition. It’s her fourth Olympic Games. She is the only female ever in swimming to go to four Olympic Games.”

In an episode that could influence Green’s task of selecting a flag bearer for the opening ceremony tomorrow night – he has consistently raised Jones among the candidates – the team boss said the 26-year-old swimmer was a model Olympian who deserved the utmost respect.

Asked if there were ever reasonable grounds to criticise the physique of top athletes, Green responded: ”I think you’ve got to respect that athletes prepare for four years for this occasion. And athletes come in different shapes and sizes.

”It’s your performance … which is absolutely paramount.

”Athletes don’t come to an Olympic Games on a holiday. They just don’t. And Leisel is a superb athlete; a triple Olympic gold medallist and she’s won eight medals for this country over four Olympic Games. She knows what she is doing, and she is preparing in the right way. Everyone in the team supports her 100 per cent.”

Green even implored the Australian media contingent to get behind the national team.

”The athletes, to be at this level of competition, need to eliminate any distractions from their daily preparation … So allow the athletes to get on and do what they need to do.”

Two-time Olympic gold medallist Kieren Perkins staunchly defended Jones’s appearance. ”We spend far too much time worrying about the aesthetics of bodies without appreciating the unique physical traits that allow someone to do the extraordinary things that they do,” he said.

Social games lose favour, pushing Zynga to Q2 loss, shares in freefall

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