Zynga Shares Fall on News It Is Ending Plan for Gambling

“Zynga is making the focused choice not to pursue a license for real money gaming in the United States,” the company said in a statement. “Zynga will continue to evaluate all of its priorities against the growing market opportunity in free, social gaming, including social casino offerings.”

The announcement, which came on a day when Zynga reported quarterly results mostly in line with investor expectations, sent its shares down 13 percent, to $3.06 in after-hours trading.

Over the last year, Zynga’s business model has rapidly crumbled while it continued to lose online gamers to rivals. Executives have pleaded for time to turn around the company, arguing to investors that greater fiscal discipline and execution would stabilize Zynga’s position, while its foray into casino-style gambling could pay off handsomely in the long run.

That thinking has changed in recent months within the company’s upper echelons, with Mark Pincus, a founder, and his replacement as chief executive, Don Mattrick, returning to Zynga’s roots with free social games like FarmVille, which catapulted the company to stardom in 2009.

“We need to get back to basics and take a longer-term view on our products and business, develop more efficient processes and tighten up execution all across the company,” Mr. Mattrick said in a statement.

Zynga reported $231 million in quarterly revenue on Thursday, a 31 percent drop from a year ago, as the struggling publisher continued to lose players.

Zynga said the number of active monthly players dropped to 187 million this quarter from 306 million a year ago, its lowest since mid-2010. The company, which has acknowledged fundamental problems with its business model, went public in December 2011 at $10 a share.

Excluding certain items, Zynga posted a loss of a penny a share, compared with a penny-a-share profit a year ago.

Zynga reported $188 million in bookings, which is a measure of the value of virtual goods bought by players during the three-month period that ended June 30. That is a 38 percent drop from $302 million a year earlier.

Poker Web Site Advances Online Gambling

LAS VEGAS — As the nation’s first legal, pay-to-play poker Web site embarks on a 30-day trial period, players from every state and Europe are logging on, even as casino companies, tech developers, regulators and lawmakers alike examine the technology for strengths and flaws.

Station Casinos, a local company with 16 properties in the Las Vegas Valley, took ultimatepoker.com online on Tuesday. The company hopes to bring some clarity to the debate among gambling officials and lawmakers about online gambling.

At issue is whether the company can verify that the site’s users are over 21 and in Nevada, using identification and geolocation software, among other tools. Visitors to Nevada can register to play before arriving in the state.

Opponents have expressed concern about minors using the site.

The site’s activation accelerated a race that started this year when Nevada passed a law that legalized online gambling, beating New Jersey by a matter of weeks.

Bo Bernhard, executive director of the International Gaming Institute at the University of Nevada, Las Vegas, called the site a milestone.

“It’s the first online casino — in the state that developed the modern casino resort,” Mr. Bernhard said.

About 30 hours after the site opened, Tom Breitling, the Ultimate Poker chairman, crowed about being “first out of the gate” and said he was surprised to see “pent-up demand” as poker players expressed interest in the site.

Mr. Breitling also pointed to the “huge responsibility” that came with being first, as dozens of companies hope to open similar Web sites in Nevada and other states.

Keith S. Whyte, executive director of the National Council on Problem Gambling, said “the Internet poses risks for problem gambling,” and pointed to data from Europe that suggests that frequent gambling on the Internet is associated with problem gambling, or addictive behavior.

Mr. Whyte said he wants to see online gambling in the United States unfold with controls like those in Europe, including software that tracks gambling behavior online and displays for user information like account balances and time spent playing. He said that Nevada’s legislation did not have such requirements.

“Nevada is in some ways playing with fire,” he said.

A. G. Burnett, chairman of Nevada’s Gaming Control Board, said that comments and observations would be gathered from users and Ultimate Poker during the 30-day trial. The board will decide whether the site should be allowed to continue operating and, two weeks after that, the Nevada Gaming Commission will make the final decision.

The same procedure is followed for every new game introduced in Nevada casinos, Mr. Burnett said. Approving a form of gambling that takes place over the Internet, instead of in a bricks-and-mortar casino, means “we’re entering into a different world.”

“Everybody’s going to be trying to test it, hack it, get into it,” he said.

Nearly two dozen companies have obtained licenses to participate in some aspect of online gambling, including MGM Resorts International, Bally and Caesars, often through subsidiaries or in partnership with other companies.

Bits: Online Gambling Heats Up

The two big casino states, Nevada and New Jersey, are racing into online gambling as a way of protecting their turf. They will in essence become laboratories for what is and is not feasible in Internet wagering.

Shannon Litz/Nevada Appeal, via Associated Press Gov. Brian Sandoval of Nevada signed an online gaming bill Thursday.

Nevada legislators, who previously authorized online poker, hurriedly passed a new bill this week that allows the state to enter into deals with other states to essentially pool their gambling populations. “This is the day we usher Nevada into the next frontier of gaming,” Brian Sandoval, Nevada’s governor, said on Thursday as he signed the bill.

In the year since online poker became a theoretical possibility in Nevada, no company has yet offered it. One problem: It’s too small a market, especially in a state where it is not exactly hard to gamble the old-fashioned way — by plunking your body down in a casino or, for that matter, just about anywhere else.

“We don’t have a universe of players,” Pete Ernaut, a Nevada political consultant, told The Las Vegas Review-Journal. “So for us, what we get to offer to a state like California or Texas is that we have the most mature regulatory infrastructure. We have the most mature financial, auditing and collection capabilities, much greater than some of those states, and they have the players.”

Wayne Parry/Associated Press Gamblers staying at the Borgata casino in Atlantic City can now place their bets from their rooms.

Meanwhile, New Jersey is also barreling ahead. Chris Christie, the governor, is likely to sign a revised bill permitting a variety of online gambling as soon as next week. All online ventures will be under the tight control of the Atlantic City casinos. Delaware, the smallest of the three states that are moving ahead with online gambling, also has ambitious plans.

In a harbinger of the new age, gamblers at the Borgata casino in Atlantic City will, as USA Today put it, “be able to lose their shirts without wearing one.” Gamblers staying in one of the casino’s 2,000 rooms can now place their bets right there without venturing onto the casino floor. From there it is only a small step to just staying home and gambling from the hammock.

Internet companies that make online games are watching all this with considerable interest. “Is 2013 going to be a game-changer?” asked Paul Thelen of Big Fish Studios, which began offering a gambling app in Britain last fall. “No. But in 2014, it starts getting interesting.”

Full Tilt Poker Chief Surrenders to U.S. on Gambling Fraud

Raymond Bitar,40, had been working at Full Tilt's Dublin, Ireland, headquarters, and until Monday had not returned to the United States since charges against him were first announced in April 2011.

Federal prosecutors in Manhattan have charged 11 people at the three biggest online poker companies: Absolute Poker, Full Tilt Poker and PokerStars. The U.S. government also seized their Internet domain names.

At a hearing late on Monday in Manhattan federal court, Bitar pleaded not guilty to nine criminal counts, including illegal gambling, money laundering and wire fraud charges.

Online gambling has been illegal in the United States since 2006, the year Bitar moved Full Tilt's operations to Ireland. Some U.S. lawmakers have talked recently about legalizing Internet gambling and regulating it.

Since unveiling the case, prosecutors have expanded both their civil and criminal charges against Full Tilt. They say it operates as a Ponzi scheme and paid its directors more than $440 million while defrauding players, even after the charges were filed.

Prosecutors say Full Tilt, founded in 2004, has taken in about $1 billion from players in the United States. They estimate that Full Tilt still owes $350 million to customers in the United States.

Full Tilt and Bitar have denied the Ponzi scheme accusations.

U.S. Magistrate Judge Debra Freeman at Monday's court hearing denied a prosecutor's request to refuse bail for Bitar, and set his release on a $2.5 million bond. He will, however, remain jailed until all the bail conditions are met.

Prosecutor Arlo Devlin-Brown said Bitar's decision to stay in Ireland rather than face U.S. charges showed he was at risk of flight. Devlin-Brown said that Bitar had remained in Ireland to operate Full Tilt's fraud against its players.

"He was running it, I submit, because the company was at this point little more than a Ponzi scheme and he had to be there to prevent it from unraveling," said prosecutor Arlo Devlin-Brown.

Bitar, a U.S. citizen from near Los Angeles, California, said in a statement that he had stayed in Ireland to work on "possible solutions to get the players repaid."

Tiltware, a California-based company, owns all the Full Tilt Poker entities.

Absolute Poker co-owner Brent Beckley pleaded guilty in December to conspiring to break U.S. laws against gambling on the Internet. He also pleaded guilty to a charge of conspiracy to commit bank fraud and wire fraud. His sentencing is scheduled for July 23.

The case is USA v. Tzvetkoff et al, U.S. District Court for the Southern District of New York No. 10-cr-00336

(Reporting By Basil Katz; Editing by Eric Walsh)