Zynga acquires design studio founded by slot industry veteran

A design studio founded by a longtime slot machine industry veteran has been acquired by social gaming giant Zynga Inc., which is seeking an avenue into Nevada’s gaming market.

San Francisco-based Zynga, developer of “Farmville,” “Words With Friends” and other freeplay social games, did not disclose a purchase price for Spooky Cool Labs.

The 40-person game studio, which is based in Chicago, focuses on developing social casino games.

Spooky Cool Labs was founded by veteran slot machine designer Joe Kaminkow, who spent more than a two decades with International Game Technology, developing some of the casino industry’s best performing slot machine titles. Many of the games were based on pop culture television shows and movies, such as “Wheel of Fortune,” “Sex and the City” and “Ghostbusters.”

In February, Kaminkow joined Aristocrat Leisure Ltd. as the Australian slot machine maker’s senior vice president of game development in the U.S. He will continue in that role going forward.

Zynga did not release a statement on the deal, but in a blog post to company employees, Chief Revenue Officer Barry Cottle said the acquisition was “an exciting step” in widening the company’s social casino offerings

“We’ve been taking a hard look at expanding into new game categories that strike a chord with our players,” Cottle said. “Our goal is to continue to provide our players free social games with the most engaging social experience and the highest quality content.”

According to gaming analyst Todd Eilers of Eilers Research, Aristocrat’s contract with Kaminkow gives the slot maker exclusive access to any land-based game content and/or patents invented by the designer.

Zynga will have exclusive access to any social gaming content and patents through Spooky Cool Labs.

“Zynga is getting some impressive talent with the acquisition of Spooky Cool Labs that should help improve its social casino game portfolio going forward,” Eilers said. “We believe both Zynga and Aristocrat will have access to any real money gaming content created by Kaminkow.”

Zynga is seeking to convert its social gaming platform into real money pay-to-play online gambling in Nevada. In December, the company filed an application with state gaming regulators for a finding of suitability, an initial step in the licensing process.

Eilers said Zynga’s purchase of Spooky Cool Games would have little near-term financial impact on the company, which slashed 18 percent of its work force in a cost-cutting effort earlier this month.

The content from Spooky Cool Games could help Zynga compete in the freeplay social casino sector with traditional land-based companies, including Playtika, which is owned by Caesars Interactive Entertainment, IGT’s DoubleDown Casino, and Jackpotparty, which is owned by WMS Industries.

“Many companies are having success by converting proven land-based slot content into social content,” Eilers said. “It makes sense that Zynga add some game development talent with traditional land-based gaming experience.”

Shares of Zynga, traded on the Nasdaq Global Select, closed at $2.86, down 4 cents or 1.21 percent.