Zynga rallies after announcing launch of gambling games


Zynga (ZNGA) is jumping after the company announced last night that it would allow U.K. users to gamble real money on its games. WHAT'S NEW: Slated to launch today, the games are called ZyngaPlusPoker and ZyngaPlusCasino, the company said. Players ages 18 and over will be able to gamble on the games in the U.K., Zynga stated. Zynga added that it would launch social versions of real money gambling games on Facebook (FB) and mobile platforms in Britain throughout 2013. ANALYST REACTION: In a note to investors earlier today, Needham analyst Sean McGowan wrote that he was encouraged by Zynga's launch of "real money games." ZyngaPlusPoker and ZyngaPlusCasino could boost Zynga's second quarter results, added the analyst. Furthermore, while the company's first quarter results are likely to be weak, the success of Zynga's new mobile game, "What's the Phrase" on Facebook and mobile platforms may be a bright spot for the company, added the analyst. He maintained a $4 price target and Buy rating on the shares. TODAY'S PRICE ACTION: In early trading, Zynga jumped 31c, or 10%, to $3.38. OTHERS TO WATCH: Facebook could be boosted if Zynga's real money gambling games are highly successful. Meanwhile, casino operators such as Wynn Resorts (WYNN), MGM (MGM) and Las Vegas Sands (LVS), which are both trading significantly lower today, could take a hit if Zynga offers such games in the U.S.

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