Zynga May have Just Lost Out on a Billion Dollar Opportunity

230 million members that may want to gamble = big bucks

It looks like the mac daddy of slot machine companies may be stealing one from Zynga. That’s right gang, International Game Technology (NYSE ticker symbol: IGT) is buying Double Down Interactive, a Facebook app developer that makes a virtual casino game. It’s a $500 million dollar deal structured based on Double Down meeting certain financial criteria.

According to IGT, the deal includes $250 million in cash plus 85 million in retention payments over the next two years and up to $165 million in cash payable over the next three years subject to Double Down meeting certain financial performance targets. The DoubleDown Casino game has seen explosive growth since October, 2011. Monthly active users have increased from 3.3 million to 4.7 million. I still believe that’s a crazy amount to pay for a company sporting less than 5 million active monthly users.

Zynga, on the other hand, with almost 230 million users has a huge reason and the potential to enter online gaming. Recent changes in the online gaming laws have lessened the barriers to entry. Considering their presence on Facebook, this could easily represent a billion dollar opportunity for Zynga.

Assuming that gambling companies are beginning to acquire Facebook app companies, the clock is ticking for Zynga. The company already dominates as an app developer on Facebook. At some point Zynga may decide that CasinoVille would bring home some big bank for the company and its investors.

 About Zynga:

Zynga Inc. (NASDAQ: ZNGA) is the world’s largest social game developer with more than 227 million monthly active users playing their games which include CityVille, FarmVille, CastleVille, Indiana Jones Adventure World, FrontierVille, Words With Friends, Mafia Wars, Mafia Wars 2, Empires & Allies, Zynga Poker, Pioneer Trail, Cafe World, and Treasure Isle. Zynga Inc. games are available on a number of global platforms including Facebook, Google+, MySpace, Yahoo, Tencent, the iPad, the iPhone and Android devices. Through Zynga.org, Zynga players have raised more than $10 million for world social causes. Zynga Inc. is headquartered in San Francisco. For more information, visit www.zynga.com or www.zynga.org.

Source: Business Journal