Zynga Inc. (ZNGA) has experienced a precipitous drop in stock price the last two years as its CEO left the company and it ceded large chunks of its share of the online gaming market to competitors. A glimmer of hope to rehabilitate the company as an online gaming force ended on Sept 26, when the Zynga officially withdrew their bid to become a sanctioned online casino.
The request to withdraw has reportedly been granted, ensuring Zynga will not go forward with a planned transition to real-money gaming. That transition had been bitterly opposed by the entrenched gaming establishment in Las Vegas.
While influential Las Vegas Sands (LVS) CEO Sheldon Adelson had voiced doubts about the viability of online gaming , his competitors have already entrenched themselves in internet gambling, with Caesars Entertainment Corp (CZR) and MGM Resorts International (MGM) already making significant headway in the burgeoning industry. Zynga lacked the clout to go head-to-head with MGM and Caesars in obtaining a license, and as a partnership with either of the companies never materialized, they were forced to eventually withdraw their application.
The company had previously announced that it would not pursue a gaming license in July. Though Zynga still maintains a presence in real-money online gambling in the UK, the US withdrawal makes official what they had already assured, essentially killing any hope they had of becoming a major American gambling house.
Zynga plummeted on the news, as they struggle to identify a clear strategy for turning things around, with shares dropping 6.36 percent to hit $3.54.
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