Zynga Makes First Move Towards Gambling In Nevada, Says Process Will Take More Than A Year

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Zynga has applied for a “preliminary finding of suitability” from the Nevada Gaming Control Board, which is the first step towards offering real-money gambling games in that state.

The news broke in the Wall Street Journal, and Zynga has confirmed it, though it notes that the process will take 12 to 18 months, and says that it sees gambling in the “broader U.S. market” as “further out on the horizon based on legislative developments.” The company also repeated that it plans to launch its first effort in real-money gambling (a partnership in the United Kingdom with bwin.party) during the first half of 2013.

Here’s the full statement from Chief Revenue Officer Barry Cottle:

Zynga has filed its Application for a Preliminary Finding of Suitability from the Nevada Gaming Control Board. This filing continues our strategic effort to enter regulated RMG markets in a prudent way. We anticipate that the process will take approximately 12 to 18 months to complete.  As we’ve said previously, the broader U.S. market is an opportunity that’s further out on the horizon based on legislative developments, but we are preparing for a regulated market. We’ve also recently partnered with bwin.party to bring the highest quality real money gaming experiences to our UK players in the first half of 2013.

Over the past few months, as Zynga finances have disappointed, CEO Mark Pincus has been pointing to real-money gambling as one of the main opportunities for Zynga’s future growth.

Update: I just got off the phone with gaming attorney and former regulator Mark Clayton, who gave me more of the legal context. He said that historically, in Nevada, “if you wanted to get licensed for a gaming project, you had to have a deal in hand” — such as the rights to purchase a casino.

On the other hand, securing a deal can be challenging when you’re facing “regulatory uncertainty.” So Nevada introduced this concept of a preliminary finding of suitability, which allows a company to clear some of the regulatory hurdles before they make an actual deal. Basically, it’s an acknowledgment from the gaming board that it’s okay with that company doing business in Nevada.

In other words, this is indeed the first step for Zynga to apply for a gambling license, and eventually to offer real-money gaming in Nevada. Clayton also noted that in order to offer online poker, you have to either be a resort casino, or be an Internet gaming company that partners with a casino. He didn’t talk about Zynga specifically, but it sounds like a casino partnership is a likely course of action.