Zynga has relinquished plans to pursue online gambling in the U.S. despite widespread expectations from Wall Street that this market will present vast potential in the coming years.
This is a complete change of heart for Zynga, which has applied for numerous licenses in the U.S. We’re told, however, that the decision to back out of online gambling was not solely CEO Don Mattrick’s call.
Along with Mark Pincus, Zynga’s chairman, this fateful decision was reportedly reached by the board and the entire executive team.
Not surprisingly, the news had an immediate impact on Zynga’s shares as they plummeted more than 17 percent early this morning.
Pincus and Chief Operating Officer, David Ko, have addressed real-money gambling questions, reiterating the company needs to regain its focus on free-to-play social games and its core demographic.
Rather than creating social games for the desktop, Zynga aims to put mobile first. Mobile has accounted for 27 percent of of Zynga’s bookings in the second quarter. Compared to a year ago, Zynga’s monthly user base has fallen to 187 million, down 39 percent.