Shares of social media outcasts Zynga (ZNGA) are moving higher after the company opened the virtual doors on two UK-based gambling websites. The move gives Zynga a potential revenue source to replace its collapsing Farmville gaming business and lost revenues from Facebook (FB).
Zynga's new sites are among about 10 million places to gamble, grouses Breakout co-host Matt Nesto. "It's not like this is something that's new to Brits, but it is new to Zynga."
CEO Mark Pincus has long maintained that online gambling is a massive opportunity for the company. It better be because Zynga has seen a talent exodus at an executive level that's left Pincus all but alone in the executive suite. The latest exit was Dan Porter, the former CEO of OMGPOP, who left yesterday barely a year after Zynga purchased the makers of Draw Something for a reported $200 million.
Almost half of Zynga's roughly $2.6 billion market cap consists of $1.28 billion in cash, suggesting investors aren't placing a ton of faith in their casino initiative or much of anything else the company has been doing.
Last February, New Jersey Governor Chris Christie singed into law a bill legalizing interstate gambling in his state. Zynga sees little benefit from the bill but is theoretically well-positioned in the event of an expansion of the law.
Shares of Zynga have lost more than 70% in the last 12-months on dwindling income. It would seem Zynga's UK offering is the ante in the company's last hand at the table as a public company. UK punters better step up or Zynga is going to go bust sooner rather than later.