Zynga (NASDAQ:ZNGA) filed a preliminary application yesterday to operate a real-money gambling business in Nevada, and investors seem to like the news, as they’re trumping ZNGA shares up by about 7% early Thursday.
Zynga has suffered a deterioration of its business on Facebook (NASDAQ:FB), so a move into the gambling market does look attractive. Plus, it’s not an unnatural fit, as the company does have some popular titles in the casino gaming field, such as Zynga Poker.
The approval process for getting a Nevada license isn’t easy, and could take Zynga anywhere from 12 to 18 months. In the meantime, major casinos — including MGM Resorts International (NYSE:MGM) and Caesars Entertainment (NASDAQ:CZR) — are exploring online gambling efforts of their own.
Zynga also has been aggressive in overseas markets, recently striking a partnership with U.K. gambling company bwin.party that should provide a nice stream of revenues — though it probably won’t be a game-changer considering Europe’s already competitive market.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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