Glu Mobile Shares Jump on Real Money Gambling Game

Andrew Klips  |

Shares of Glu Mobile (GLUU) have leapt ahead by 20 percent in early Tuesday trading to hit their highest level since November 1 on news of the “freemium” game maker entering into the real-cash gambling realm. The San Francisco-based company said this morning that it has made available its first real-money mobile gambling game through a partnership with Probability plc.

Glu and Probability entered into a strategic relationship last year with initiatives centered on the real-money gambling sector. Probability’s client list includes some of the majors in the online gaming industry, including Paddy Power and William Hill.

The new mobile slot game is available in the United Kingdom via Probability’s distribution channels. The game employs intellectual property from Glu Mobile’s popular “Samurai vs. Zombies Defense” game, according to a corporate statement by Glu on Tuesday morning.

“We anticipate that real-money gambling will continue to gain momentum globally and believe that with this offering, Glu is well positioned to capitalize to the extent that additional markets adjust regulations," said Niccolo de Masi, chief executive at Glu Mobile.

de Masi’s sentiment echoes that of others in the gaming industry that have been helping lift the value of shares of Zynga, Inc. (ZNGA) as the social game maker is making its own bid to generate revenue through legalized gambling. Zynga signed a partnership agreement in 2012 with Bwin.Party Digital Entertainment to try and penetrate the UK markets. Apparently, news of competition is not wearing well on Zynga with shares down by 2.5 percent in Tuesday trading after hitting its highest level since July 25 on Monday.

News in recent months of Nevada, Delaware and New Jersey all passing legislation to permit online gambling has created a buzz as investors speculate about the initiatives and companies that could potentially capitalize on the newfound revenue streams. Not only have social plays like Zynga been on the rise, but casino operators, such as Caesars Entertainment (CZR), who owns the famous World Series of Poker, have been boosted as they are expected to emerge quickly with a presence in the online gambling arena.

Down the road, Augmented Reality may play a substantial role in online and mobile gambling, allowing players to immerse themselves into a virtual casino from the comfort of their own couch. The shift towards AR could utilize technologies such as those being developed by Google, Inc. (GOOG) with its Google Glass project, Microsoft Corp. (MSFT) with patents it obtained in 2011 or upstarts like Infinity Augmented Reality Inc. (ALSO).

Research firm Juniper Research estimates that the online gambling market will reach $45 billion by 2017 and that the total amount of wagers placed from mobile devices alone will reach $100 billion in the same timeframe. Right now most companies are looking overseas, but as the number of states increases that legalize gambling domestically, technology and casino companies were surely be allocating more resources to try and assert a dominant position.

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