Courtesy of Benzinga.
Zynga (NASDAQ: ZNGA) has added a former online gambling exec to its team in an effort to advance its own real money gaming initiative.
According to AllThingsD, Maytal Ginzburg was most recently the senior VP of regulated markets at 888 Holdings, a company that describes itself as “one of the world’s most popular online gaming entertainment and solutions providers.” Her appointment comes at a time when multiple executives are leaving the firm, including two vice presidents.
Their departures are nothing compared to what a gambling expert could bring to the table. In its current form, Zynga is a struggling mess. The company continually tops the charts of AppData.com but can barely maintain a consistent stock price. On August 2, Zynga shares hit an all-time low of $2.70. Four weeks have passed since then but the stock has yet to recover.
The company has attempted to offset its losses (and quell investor worries) with a venture into mobile game publishing. Zynga has not been successful, but the company hopes that a deal with Nokia (NYSE: NOK) will help turn the tide.
That, however, is unlikely to happen unless Nokia can turn its own company around. Thus, Zynga’s biggest chance of success is the legalization of online gambling in all 50 of the United States. The company could feasibly enter markets where online gambling is already legal and regulated. But in doing so, Zynga would face competition from a host of companies that have been in the business for several years. Those companies will surely do everything in their power to defend their turf.
Zynga stands to benefit the most from domestic gambling because it is has yet to receive widespread acceptance and legalization in the United States. By building a series of games to take advantage of gambling if and when it becomes legal, Zynga could beat its competitors to the market. At the very least, Zynga would have the luxury of competing on a level playing field.
For Zynga, this all sounds like great news. Some investors may also be pleased, as the company’s stock is likely to rise on any successful gambling initiative.
Investors need to be weary, however. Zynga is not an everyday game developer with a turnaround plan. Many believe that, from day one, the company has thrived by exploiting the work of other, more talented and more creative corporations. This strategy allowed Zynga to soar to the top of Facebook (NASDAQ: FB) gaming.
Critics of Zynga might be inclined to believe that the company will use the same exploitation and copycat tactics to bolster its online gambling business. But in this case, Zynga may not just be exploiting the work of other developers — it might also exploit consumers.
Facebook seems to be ill suited for real money gambling. People carelessly jump in and out of social media games without giving them a second thought. By taking advantage of this, Zynga will inevitably publish and promote games that people spend more money on than they had intended.
This will occur even if the company has no intention of exploiting consumers. Zynga may only wish to exploit its fellow game developers. If consumers buy into this exploitation, however, and come to Facebook with bulging eyes at the prospect of winning real money, no one wins. In this scenario, everyone loses.
There will no doubt be a few talented poker players who will win big, giving hope to the rest of the world. These men and women are likely to appreciate Zynga’s effort even if they don’t support the company’s corporate policies. That is understandable. But it does not mean that consumers, investors, or anyone else should sit back and let Zynga take advantage of another market.
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