Zynga and the Online Gambling Gold Rush

Zynga Inc. (NASDAQ: ZNGA) has enjoyed one hefty and substantial bounce now that online gambling is being approved and expanded in Nevada. Perhaps that should say “legal online gambling.” The question is whether Zynga will get the lion’s share of the opportunity or whether others in the mix will take the revenues.

With Nevada legalizing online gambling, other states certainly will be forced to follow suit. The Internet is not very good at keeping citizens of one state from participating in activities that are approved in other states. It is not really as if there is a money changer who has to play a role here. Then there are the billions, not millions, in revenue that can be taxed. Many states and cities do not want huge casinos being built and opened in certain areas, which is easy to see on a crime and moral level, yet hard to see from a tax revenue basis. What about allowing someone to play online poker, roulette, blackjack and other games for real money on their computer or tablet? That may get around the stigma of the full giant casino properties yet still allow for all sorts of tax.

Zynga shares are up more than 12% at $3.57 in very active trading Monday, against a prior 52-week trading range of $2.09 to $15.91. While the stock has bounced handily off of the lows it remains in the doghouse. Investors should know that Zynga’s market cap is right at $2.75 billion as of now.

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