In other words, we could see a board game of FarmVille, Words With Friends or CityVille in the not too distant future. In addition, we could potentially see action figures based on some of its game characters.

Merchandising around videogames is not new, and has recently spread like wildfire to mobile and social gaming with rising stars like Rovio’s Angry Birds or ZeptoLab’s Cut the Rope.

In a press release, Zynga says Hasbro has obtained the license to develop and distribute a wide range of product lines based on Zynga’s game brands, but does not get into too many details.

It also says the deal covers opportunities for co-branded merchandise featuring a combination of both Hasbro and Zynga brands, it said. Could we see a co-branded Words With Friends Scrabble game?

Hasbro already has a long-standing relationship with Electronic Arts, which publishes such titles as Scrabble and Monopoly across many platforms.

In a statement, Zynga’s CEO and founder Mark Pincus said, “This partnership is so special because it represents an exciting leap forward in enabling people to connect their virtual and real worlds. Hasbro has inspired play through their famous toys, games and action figures and we look forward to working with a company that continually creates meaningful and fun brands.”

The two companies said the first products will hit shelves in the Fall.

SchoolFeed helps users find out whatever happened to their freshman crush, of course — as well as plan reunions, scan their yearbooks and play games together. It also uses a lot of the standard viral persuasion techniques from Facebook social gaming apps, like rewarding users with virtual coins and gifts, and constantly urging them to add and share with their friends.

Instead of mining school directories, the company reverse-engineers high school class lists by getting its users to contribute their Facebook data. In my experience, the app seems to automatically include all your Facebook friends, regardless of what high school they say they went to.

Former RockYou CEO Lance Tokuda founded schoolFeed last year and is conducting a sort of RockYou class reunion of his own, having recruited former RockYou employees and RockYou investors like First Round Capital, SK Telecom and Nicolas El Baze of Partech. (Crosslink Capital and InterWest invested, as well.)

SchoolFeed really does look and feel like a cross between Classmates.com and a Zynga-style game. Tokuda pointed out that Classmates still makes significant revenue in the age of Facebook. But where Classmates charges its users, schoolFeed plans to monetize through ads and virtual goods. Its first in-app game is Bingo.

Speaking of Bingo, Tokuda told us he’s hoping to attract a relatively older audience with SchoolFeed. That’s in part because Facebook itself already serves as a sort of living yearbook for many younger people.

“We’re targeting people age 36 and older, who graduated before the Internet was born,” Tokuda said.

The game, which is a take on Scrabble, has been working its way into the cultural fabric, as Zynga is happy to remind us with a lighthearted list of milestone moments, including Alec Baldwin’s meltdown that led to getting booted off a plane (see the entire list below).

But yesterday, it became part of one of America’s biggest pastimes: Football.

If you were watching the Super Bowl, you may have briefly seen Words With Friends creators and brothers Paul and David Bettner in a cameo performance during Best Buy’s commercial. The funniest part is that they get busted for playing on a plane.

In addition to Zynga, the commercial also noted other mobile innovations, including inventors from Shazam, Square and Instagram.

Words with Friends was acquired by Zynga through the purchase of Newtoy and is actually part of an entire franchise of games that includes Chess With Friends, Hanging With Friends and the latest addition, Scramble With Friends.

In Apple’s App Store for iPhone, Words With Friends has regularly been the leading game in the word category since 2010, until Hanging With Friends became the leading game in June 2011. In August 2011, Zynga released Words With Friends on Facebook, where it has continued to be one of Zynga’s top 10 most popular titles. Currently, it ranks sixth, with Hanging With Friends now placing at 10th.

In fact, the Words With Friends franchise as a whole likely represents the company’s most played titles, even if it doesn’t monetize as well as other social game titles, like FarmVille, Poker or CityVille. A company spokesperson declined to comment.

In recognition of Words With Friends and its appearance in the commercial, here’s Zynga’s list of the game’s biggest cultural moments:

1. In the words of Jamie Lee Curtis, waiting for a word is “like a young lover waiting for words from her beau.”
2. It’s credited for being a matchmaker and a flirt because strangers can play each other and chat.
3. It helped save lives (See Gizmodo story here.)
4. Celebrity couples do it every day (Alec Baldwin is the best example.)
5. It’s the subject of ‘rapper braggadocio’ — word up, Fabolous and Big Boi.
6. John Mayer tweeted, “Words With Friends is the new Twitter.”
7. Finally, people no longer have to think you’re talking about wrestling or pandas when you type WWF.
8. The New York Giants are fans. (See the WSJ story.)
9. It became an official FAA violation when one smart celeb got kicked off a flight. (See above.)
10. And finally, the game co-starred in a Superbowl XLVI commercial.

And here, if you missed it, is the commercial:

In its roadshow presentation released online today, the Vegas-based company, which manages 42,000 hotel rooms, said one of the biggest opportunities it had going forward was on the Internet, including social games and real-money gaming.

Mitch Garber, the CEO of the company’s interactive division, said it recently launched Caesars Casino in beta on Facebook, making it the first time that a brand name was used to compete in the casino genre.

Garber believes that the game, which includes video slots, blackjack and roulette, will displace Double Down Casino as one of the category leaders. The developer of Double Down Casino, Double Down Interactive, was recently acquired by video poker giant International Game Technology for $500 million.

Garber said over the past 13 months, so much of the business has changed.

With the sale of Double Down, and the visibility into social games leader Zynga, which went public in December, and the release of more information this week by Facebook in its public filing, there are lots of verifiable signs that this is a big business.

For instance, on Wednesday, Facebook revealed that Zynga made up 12 percent of its overall revenues. Zynga’s Poker game is the leading casino-based game on Facebook, and more recently, it launched Bingo as part of a casino series.

Over the past two days, Zynga’s stock price has soared based on the Facebook news, rising 8.11 percent today alone to close at $13.39 a share.

Caesars said yesterday it was applying to be listed on the Nasdaq market under the symbol “CZR,” and that it was planning to sell 1.8 million shares between $8 and $10 apiece.

Caesars Chairman, CEO and President Gary Loveman was positive about a number of aspects of the business, as he should be in a presentation to potential investors, but one of the highlights was online gaming.

“This is a big deal for us,” he said, calling out the opportunity for gambling online, across both mobile and social networks and across multiple languages.

In addition to launching Caesars Casino on Facebook, the company has been building up its online gaming chops for some time.

Garber said this past year the company purchased Israel-based Playtika, which operates Slotomania, a very popular slots game on Facebook, iPhone and iPad. It also has two software partners that will enable it to expand into online gambling in the U.S. as soon as it becomes legal.

“We aren’t aware of any other bricks and mortar company that has the online experience that is preparing themselves as we are,” he said.

However, Zynga told All Things D it was currently seeking partnerships to pursue real-money gaming, and MGM Resorts also recently unveiled a plan to partner with online poker company Bwin.Party Digital Entertainment.

Of course, the big driver for everyone is that the laws are changing in the U.S., which makes it nearly a foregone conclusion that online gambling — at least some games — will become legal over the next year.

Late last year, the Department of Justice issued a new interpretation of the Wire Act of 1961. Under the new ruling, it interprets the act as only outlawing bets on sporting events — not all events and contests.

With that clarification in place, it will now be up to every state to pass legislation outlining operating procedures.

“We see the odds being close to 100 percent,” Garber said. “It’s just a matter of whether it will be federally regulated or state by state. The states are already doing it, but the federal government is getting their act together, too.”

Because of that, Zynga’s stock is soaring today, trading up 16.5 percent, or $1.75 a share, at $12.35, to easily beat its 52-week high of $11.50.

Up until today, Zynga’s stock had struggled to stay at its IPO price of $10 a share.

Baird Equity Research analyst Colin Sebastian tried to do some backward math based on Facebook’s disclosure yesterday that 12 percent of its revenue was coming from the social games company.

Based on that alone, we know that Zynga accounted for roughly $450 million of Facebook’s $3.7 billion revenue in 2011.

But Sebastian took it a step further and estimated that, based on Facebook’s 20 percent jump in payment revenue during the fourth quarter, Zynga’s net bookings likely totaled $315 million in Q4, versus the $300 million he was previously forecasting.

He maintained the company’s “outperform” rating on the stock, and a $12 price target.

Here’s how he did the math:

We estimate that 12% of Facebook revenues came from Zynga in Q4, which implies roughly $135 million in Zynga-related revenues. We assume 75-80% of this amount is fees related to virtual good sales, with the remainder coming from advertising. Adjusting this amount for the 30% toll, we estimate implied net bookings to Zynga of nearly $250 million from virtual good transactions on Facebook. We estimate that Zynga also generated roughly $65 million in Facebook advertising bookings and transactions on other platforms (e.g., iOs, Android), which would suggest total net bookings of $315 million vs. our estimate of $300 million. Again, this a rough estimate and a directional indicator based on Facebook filings.

Last week, I talked to Punit Soni, who runs games and mobile for Google+, to get an update on Google’s plan for social games. Since the conversation took place before Facebook’s filing, Soni has no direct responses to the numbers.

But he addresses in general how Google expects to challenge Facebook’s dominance in social gaming, and the big opportunity in front of them to do something different.

“There’s no point in being in this game if we are a ‘me-too,’” he said. “We want to be different.”

Yesterday, in Facebook’s IPO filing we learned that substantially all of the company’s payments revenue is coming from virtual goods from inside social games, and that one game publisher alone — Zynga — is contributing 12 percent of the company’s revenue, payments and advertising included.

At those rates, it’s easy to see why Google is emphasizing games and wooing developers to its platform.

It started off with a bang in August, when it launched games. In talking to reporters, Soni announced the company was sharing 95 percent of the revenue from virtual goods with developers, and was keeping only 5 percent for itself.

That was, and remains, much more generous than the 30 percent cut that Facebook takes.

Still, with only 36 games on its network, and far fewer users (however you want to calculate it), Soni was pretty honest about how far they still have to go. He was also extremely enthusiastic, and at times looked as if he wanted to leap out of his chair to get going on some of the projects Google had planned.

First, and foremost, he said they are working hard to get virality right; and second, they want to nail cross-platform, so that games worked seamlessly across the Web and mobile.

Viral channels are the most common way for people to learn about a game, and also one of the most controversial.

More than a year ago, Facebook was forced to dial back those channels, because users complained about receiving too many unwanted messages.

“We err on the side of caution,” Soni said. “We are slowly giving more options to do things.”

Soni said they also see a big opportunity to differentiate by offering a multiplatform approach, and letting developers build games that work across Google+, Google’s Chrome Web Store and mobile. Of course, it has an advantage because of the millions of Android users, whereas Facebook’s mobile efforts are still nascent.

Already, there are some examples of cross-platform play.

Today, you can play Rovio’s Angry Birds and Bubble Witch Saga across both Google+ and the Chrome App Store, and can pick up where you left off between the two.

“These are not Google+ games, but games that are on Google,” Soni stressed. “A lot more is coming on mobile.”

Google has also focused on getting a number of games as exclusives that launch a few weeks on Google+ before they show up on Facebook. To date, it has scored at least three titles — including a major title, Kabam’s Godfather — and there are more coming.

Asked why the game developers are willing to go exclusively on Google+, Soni said there’s some marketing that Google is willing to put toward it, but otherwise, “they are betting on us.”

He says it’s mostly the potential of the platform, and the fact that he’s receptive to feedback, that helps him understand exactly what developers need. Developers also acknowledge that supporting more platforms is helpful in reaching more players and diversifying their risk.

“If they say it’s because the platform is the best ever — no, it’s not true. But the plans we have and the sensitivity that we have for our users and developers, we will be very good sometime soon. … That’s why you are seeing exclusives.”

Soni wasn’t wiling to spill specific plans about what was launching next, but said a lot more is coming.

“We are a start-up platform. We are humble and know our flaws. As we grow, you’ll see new things. My work has barely started,” he said.

Facebook said today in its filing with the Securities & Exchange Commission that Zynga accounted for approximately 12 percent of the company’s revenue last year when Facebook’s revenues totaled $3.7 billion.

The revenue came from both its 30 percent payments processing fee related to the sale of virtual goods from games, such as FarmVille and Words With Friends, but also from advertising purchased by Zynga.

Additionally, Facebook said Zynga’s apps generate a large number of pages on which it displays ads from other advertisers.

The dependence on Zynga is so significant that Facebook warns that if it fails to maintain its relationship with the game maker, or if Zynga’s popularity declines, its financial results may be adversely affected.

Even more notable perhaps is that it’s not just Zynga. Facebook said social games are currently responsible for “substantially all of our revenue” when it comes from payments.

In December, Zynga went public, raising $1 billion, and is obviously one of the companies most reliant on the social network. But now with Facebook’s financials also public, we can see that the two companies are actually interdependent.

And, in fact, over the past three years, Zynga’s importance has only increased. In both 2010 and 2009, Zynga accounted for less than 10 percent of Facebook’s revenues.

The big turning point occurred in May 2010 when Zynga agreed to use Facebook Credits as its primary payment method inside games. As part of that, Facebook would collect 30 percent. That contract will expire in May 2015.

Some of the details of that contract were disclosed as part of Zynga’s public offering, but we wouldn’t be surprised if Facebook is also required to publish it at some point. In the version Zynga released, a lot of the contract was redacted.

In after-hours trading, Zynga was trading about 4 percent higher to $11.02 a share, nearing it’s all-time high of $11.50.

MORE ON THE FACEBOOK IPO:

• Facebook’s Ad Business Is a $3 Billion Mystery
• Viral Video: Farewell to the No-IPO Mark Zuckerberg
• Zuckerberg Is the Billion-Share Man: Who Owns What, Who Makes What in the Facebook IPO
• Zuckerberg Tells Investors, “We Don’t Build Services to Make Money”
• Mobile Highlighted as Key Risk Factor (and Opportunity) in Facebook Filing
• Stop All That Poking: Facebook Filing Temporarily Crashes SEC Web Site
• Zynga Accounted for 12 Percent of Facebook’s Revenue in 2011
• Facebook Has 845 Million Users
• On Its Eighth Birthday, Facebook Files to Raise $5 Billion in Massive IPO (Get Your S-1 Here!)
• Go the F**k Back to Sleep, Silicon Valley: Facebook IPO Likely to File Later Today at Earliest
• Dude, Where’s My Facebook IPO Filing? (Ashton’s on Hold!)
• The Quiet Man: Meet the Less-Known Face of the Facebook IPO, CFO David Ebersman
• Facebook Board Meeting Today for Final IPO Okays
• Facebook (Eye)PO: Tracking the Truth of the Biggest Deal of Web 2.0
• Viral Graphic: Visualizing the Facebook IPO
• Is Facebook IPO on Track for Late May?
• IPO Watch: Facebook Hiring Brunswick to Help With Comms for Expected Public Offering
• Complete Facebook coverage

The videogame company’s stock has also been hammered by recent concerns about how well its new online blockbuster title Star Wars game is selling after launching in December.

In 2011, U.S. retail sales of new physical videogame content — including portable and console hardware, games and accessories — totaled $17.02 billion, an 8 percent decline over the $18.6 billion generated the year before, according to NPD.

Additionally, multiple reports indicate that while unit sales were up year over year in December, overall revenues suffered from steep discounting. Game retailers, such as GameStop and Amazon, both reported that holiday sales fell below expectations.

Electronic Arts’ third-quarter figures will be released today after the bell.

Its stock is trading down 12 cents, or .62 percent, to $18.46 a share. That has fallen significantly from its recent high of $25.20 back in November.

Back in October, the company said it was expecting third-quarter revenues of $1 billion to $1.1 billion and a loss per share of 77 cents to 63 cents. Excluding some stock-based compensation, acquisition-related expenses and other charges, the company said it is expecting a profit of 85 cents to 95 cents a share.

Analysts are expecting revenues of $1.61 billion and earnings per share of 93 cents.

The company also faced a setback when it announced that Barry Cottle, who was in charge of the company’s digital efforts, was leaving the company. Cottle took a job with Zynga, the company’s rival when it comes to talent and publishing games on Facebook.

And, while the industry is continually contracting on the hardware and physical retail front, one area of tremendous growth is digital.

At the time of Cottle’s departure, which was the third high-profile steal Zynga made over the past year, EA confirmed the company had achieved more than $1 billion in digital revenues in 2011.

Digital revenues include everything from downloadable content on consoles to social games, like the company’s hit The Sims Social, to the new release of Star Wars: The Old Republic, which is set to challenge Activision’s World of Warcraft game.

In the second quarter, EA said digital revenues were growing 30 percent year over year, and because of that, it was able to raise its full-year guidance.

Check back here to see if the company can deliver.

Okay, okay, we get it: Morgan Stanley got the coveted left-hand lead position on Facebook’s blockbuster IPO filing. Goldman Sachs is there, too, but in the third-place, always-a-bridesmaid spo,t and is crying big salty tears about the injustice of it all.

It’s hard to feel badly for overpaid investment bankers, and focusing on them is kind of like endlessly discussing the lawyers who processed your mortgage, when the focus should be on the house you’re buying.

Does anyone except a few Richie Rich ZIP Codes in Manhattan care about this one deet of the initial public offering of the social networking giant?

Nope, but there is so little real news ahead of the IPO filing expected today that this is what we are chomping on this morning, as everyone awaits the big doc drop at the Securities and Exchange Commission.

Sources said it is likely to come this afternoon rather than this morning, though. And, perish the thought, all that dotting of I’s and crossing of T’s could delay it to tomorrow, even (unlikely, but mebbe!).

Sigh.

Tidbit: Facebook was actually founded the first Wednesday in February of 2004 in an undergraduate dorm room at Harvard University, like today but eight years later.

Thus, here’s a boring Facebook history timeline chart to look at:

Okay, that was really dull.

What up? The board met, the spinmeisters are at the ready and, most of all, Silicon Valley is stoked to make some more arrogant badillionaires.

Now, hopefully, we’ll get the real news about Facebook.

Namely, who’s getting the big dough in this much-anticipated Web 2.0 gambit? Co-founder and CEO and Hoodie Commander Mark Zuckerberg fer sure, but who else?

Plus all the juicy financials from Facebook, along with stats in usage, growth and just how much the company sticks it to its gaming serf — oops, partner — Zynga and others for the privilege of being on its all-powerful platform.

Me? I pay nada, like other Facebook users, for being able to show off pictures of my vacations and decline friendships from PR people I like, but still … well, you know.

Here is another Facebook financial chart that will not knock your socks off unless you are an accountant:

I am now so comatose waiting for the show to begin that I briefly began a liveblog of my activities this morning.

It went like this:

4:45 am PT: Done with AOL Q4 earnings, which were meh, but better meh than expected. AOL, if you recall, used to be Facebook and now is, um, not.

Note to Zuckerberg: Be nice to people on your way up, since you’ll meet them again on the way down.

4:46 am PT: I check the SEC site and get zip. Click, click, clickety-click over to find out the latest on Demi Moore and her fake-pot debacle.

Who knew there was synthetic cannabis and it is called K2 or Spice? Not me! According to Wikipedia: “It seems likely that synthetic cannabis can precipitate psychosis and in some cases it is prolonged.”

I decide to blame Ashton Kutcher and then wonder if he is an investor in Facebook via BFF-to-errant-celebrities-who-like-tech Ron Conway, also a Facebook investor.

Note to self: Call Ashton! That dude plays village idiots all the time, but I am not fooled by Mr. Pretty Face.

4:47 am PT: I consider email bombing Yahoo’s Jerry Yang, who is probably not so busy right now, and asking him what he thinks about the Demi Moore crisis and also Facebook’s IPO.

Remember when Yahoo was king of Silicon Valley and Yang posed in that purple VW on the cover of that magazine? Better still, remember when Yahoo was going to buy Facebook for just over $1 billion and then borked it?

Just sayin’, Mark — so, keep it reals!

4:48 am PT: I consider going out for doughnuts — and not because of any real weed need. I just would like me some glazed and sprinkled sugar treats right about now. Then, I could post the pictures of them on my Facebook page.

Sweet.

But you-know-who would file right when I left the house on the munchie run. Click, click, clickety-click over to the SEC site and I come up peanuts.

Time to check in on the Kardashians.

You get the idea — so, Facebook IPO, take me away!

MORE ON THE FACEBOOK IPO:

• Facebook’s Ad Business Is a $3 Billion Mystery
• Viral Video: Farewell to the No-IPO Mark Zuckerberg
• Zuckerberg Is the Billion-Share Man: Who Owns What, Who Makes What in the Facebook IPO
• Zuckerberg Tells Investors, “We Don’t Build Services to Make Money”
• Mobile Highlighted as Key Risk Factor (and Opportunity) in Facebook Filing
• Stop All That Poking: Facebook Filing Temporarily Crashes SEC Web Site
• Zynga Accounted for 12 Percent of Facebook’s Revenue in 2011
• Facebook Has 845 Million Users
• On Its Eighth Birthday, Facebook Files to Raise $5 Billion in Massive IPO (Get Your S-1 Here!)
• Go the F**k Back to Sleep, Silicon Valley: Facebook IPO Likely to File Later Today at Earliest
• Dude, Where’s My Facebook IPO Filing? (Ashton’s on Hold!)
• The Quiet Man: Meet the Less-Known Face of the Facebook IPO, CFO David Ebersman
• Facebook Board Meeting Today for Final IPO Okays
• Facebook (Eye)PO: Tracking the Truth of the Biggest Deal of Web 2.0
• Viral Graphic: Visualizing the Facebook IPO
• Is Facebook IPO on Track for Late May?
• IPO Watch: Facebook Hiring Brunswick to Help With Comms for Expected Public Offering
• Complete Facebook coverage

The Mountain View, Calif.-based company tries to boost online companies’ revenue by placing targeted promotions and offering incentives at the point of checkout.

It’s a bit similar to how grocery stores try to boost sales by strategically placing tabloid magazines, gum and candy bars at the register to spur last-minute impulse buys.

Instead, TrialPay makes last-minute offers to give people incentive to make a purchase when they are on the fence.

As an example, TrialPay’s CEO Alex Rampell said that when people visit Fandango’s site, they may get an offer for a free movie ticket if they sign up for Netflix. Or, in a Zynga game, you might be offered a virtual bouquet for free, in return for purchasing real flowers on Valentine’s Day.

Visa’s participation in the investment, which is being announced later this morning, is rare. Over the years, the payments company has made a few acquisitions, including PlaySpan, CyberSource and Fundamo, but Visa’s only investment in recent memory was in payments darling Square, which allows anyone to accept payments using a cellphone.

Rampell said that with Visa’s help, TrialPay will be able to expand to offline merchants from working exclusively with online retailers, by giving it a way to track if a person visited a store and made a purchase.

“The question is, how do we send traffic to Starbucks or McDonald’s or any other offline merchant?” Rampell said. “We already have access to people online who are buying or thinking about buying something. It would be great if we could could give you 20 virtual coins if you shopped at McDonald’s. But how do we close that redemption loop?”

Today, TrialPay, which has 130 employees, reaches more than 70 million monthly active users worldwide. In 2011, Rampell said, revenues more than doubled; he declined to offer specifics.

Rampell also declined to provide details about potential partnerships with Visa. Visa also declined to comment.

Investors in the company’s fourth round included new investors Greylock Partners, Visa Inc., T. Rowe Price, DAG Ventures, DFJ Growth and QuestMark Partners. Existing investors also participated. To date, it has raised roughly $70 million.

For more of Rampell’s opinions on how the payments space will evolve, check out his Web 2.0 speech from October:

Last week, Zynga confirmed to All Things D that it was actively investigating online gambling opportunities and is in talks with several partners.

The San Francisco social games company said Bingo is launching today in closed beta, and in the coming weeks will be available to everyone on Facebook. The game will become part of a larger franchise called Zynga Casino, which was announced in October.

Zynga’s version of the game is similar to the classic version found in bingo halls, where players watch for numbers as they pop up and mark them off on their scorecard. The first player to spell out B-I-N-G-O wins. In Zynga’s version of the game, players can compete against friends.

But for now, the closest the game gets to gambling is the casino theme.

Zynga dominates Facebook’s game chart today, but if it is able to get its toe in the door to online gambling — just as the laws change in the U.S. — it could be a big opportunity.

The casino genre has also been quietly racking up big numbers on Facebook for areas such as slots, card games and roulette. In particular, Zynga has been phenomenally successful with poker. Five years ago, it launched Texas HoldEm Poker, which continues to attract close to seven million users a day and is one of the company’s top three revenue-generating titles.

Zynga is not the only one investigating how to enter online gambling, potentially leveraging the popularity of social networks.

Video poker giant International Game Technology recently purchased Seattle-based Double Down Interactive for 500 million; Double Down develops games, including blackjack, slots, video poker and roulette. Caesars Entertainment also entered the space when it purchased Playtika, an Israeli game company known for its Facebook title, Slotomania.

Zynga’s Bingo game is not dissimilar to versions already on Facebook, such as BitRhymes’ Bingo Bash and Buffalo Studios’ Bingo Blitz.

The games themselves aren’t where the action happens; the strategy component is: When do you reach out into your social graph? When are you going to spam that list? How frequently are you gonna do that?

– Rob Tercek, moderator of a panel at Seattle’s Casual Connect conference in 2011, referring to Zynga

The company has confirmed to All Things D that it is actively investigating several opportunities, and is in talks with several partners about gambling on the Internet.

A Zynga spokesperson provided this statement to AllThingsD:

“We build games and experiences that our players want and love. Zynga Poker is the world’s largest online poker game with more than 7 million people playing every day and over 30 million each month. We know from listening to our players that there’s an interest in the real money gambling market. We’re in active conversations with potential partners to better understand and explore this new opportunity.”

As with any new entrant in the space, Zynga will have to fulfill several requirements, meaning any major rollout is still months away.

The San Francisco-based social games maker will have to wade through a maze of state, national and international regulations. It will have to secure the correct licenses, and it also needs the right technology to make betting over the Internet secure.

For either of these last two requirements, a partnership or acquisition of an online gambling organization or other technology would make the most sense, instead of starting from scratch.

However, the effort could easily pay off.

Zynga was one of the first online gaming companies on Facebook, and continues to dominate the platform today. If it is able to get its toe in the door, just as the laws change in the U.S., it could be a leader yet again.

Back in October, Zynga first started showing broad interest in the casino category.

Zynga founder and CEO Mark Pincus announced at a press event that the company was going to launch Zynga Casino, which would serve as a single destination on Facebook to build off its strong brand in poker.

Its first new game, which has not launched yet, will be bingo.

Until now, the company’s efforts have been limited to building social and mobile games that are given away for free and monetized through the sale of virtual goods.

Getting users to make bets and part with real money could prove difficult, even for a company that has so many dedicated fans.

One thing Zynga has going for it is that social games are frequently compared to gambling because of their addictive nature — both lure consumers into spending a few more dollars to continue playing.

The casino genre has also been quietly racking up big numbers on Facebook.

Besides Zynga Poker, which is the most popular poker game on Facebook, and one of the company’s longest standing titles, there are many other sleeping giants. Sean Ryan, Facebook’s director of game partnerships, has even called them “unbelievable monsters.”

Said Ryan: “It turns out that people are completely okay winning virtual currency that they can never cash out.”

If players actually have the chance to win money, who knows the size of the opportunity?

A Facebook spokesperson said the company does not necessarily see a future for gambling on the social network. “We don’t have any plans to get into real-money gambling,” she said.

It’s unclear if that eliminates others from experimenting. In the meantime, it hasn’t stopped game makers from exploring the category or the concept.

Last week, Seattle-based Double Down Interactive, which was named by Facebook as one of the most popular game makers of 2011, was acquired by video poker giant International Game Technology for $500 million. It has 4.7 million monthly active users playing a variety of games, including blackjack, slots, video poker and roulette.

The deal closely followed Caesars Entertainment’s purchase of Playtika, an Israeli game company known for its Facebook title Slotomania. Caesars bought the company in two stages, the first of which was rumored to be purchased for up to $90 million.

Caesars, which filed to go public in November, declined to comment because it is currently in its quiet period.

However, some of its plans were revealed in a document filed with the Securities & Exchange Commission. It said its Caesars and World Series of Poker brands are dedicated to online gaming, and will take advantage of real-money gaming as it becomes legalized. Right now, Caesars Entertainment offers games “for fun” in jurisdictions where online gambling is not yet legal, but has identified the legalization of online poker in the U.S. as “the largest opportunity in online gaming in the near term.”

Still, the biggest hurdle is the law.

Internationally, several countries have permitted gambling for some time, and those areas represent the most immediate opportunities.

But there are signs of the U.S. beginning to open up, too. On the day before Christmas, the Department of Justice gave the online gambling community an early present, according to a blog post written by Nelson Rose, a professor and lawyer.

“President Barack Obama’s administration has just declared, perhaps unintentionally, that almost every form of intra-state Internet gambling is legal under federal law, and so may be games played interstate and even internationally,” Rose wrote.

Essentially, what the Justice Department did was to issue a new interpretation of the Wire Act of 1961. Under the new ruling, it interprets the act as only outlawing bets on sporting events — not all events and contests, according to an article in the San Francisco Chronicle.

With that clarification in place, it will now be up to every state to pass legislation outlining operating procedures. So far, Nevada and the District of Columbia have moved quickly to enact laws. To get other state laws passed could be a lengthy process, especially during an election year.

In the meantime, launching games only in Nevada and D.C. doesn’t represent the big opportunity everyone was hoping for.

To be competitive against Caesars and IGT, Zynga may have to partner or acquire companies that already have the licenses in place or the necessary expertise.

Some of the more obvious candidates include Bwin, which operates PartyGaming.com and is traded on the London Stock Exchange; Betfair, and other operators, like Bodog, Bet365 and 888.com. Many are based in the U.K. and handle a variety of casino games and sporting contests there.

The entrance into a new market, such as gambling, would take substantial resources, and Zynga has them thanks to its public offering. In December, it raised $1 billion, making it the largest Internet IPO since Google.

So, will Zynga be the next “unbelievable monster?” Clearly, it is willing to try.

Specifically, the billboard is on 101 southbound in South San Francisco, just north of SFO. It heralds, “Bits: Everything you need to know on the business of technology.”

A spokeswoman for the Times said she didn’t know when the billboard went up, but said it was part of a broader promotion effort after the relaunch of Bits late last year.

Other Web companies who’ve recently bought billboards on Highway 101 in the San Francisco Bay Area include Zynga, Groupon, Box.net and even the young travel search site Hipmunk.

Campaigns on 101 (warning: Locals frown at people who call it “the 101”!) cost an average of $10,000 to $20,000 per month, with some prominent spots costing more than $30,000 per month, said John Laramie, CEO of ADstruc, a DSP for outdoor advertising.

It should be noted that AllThingsD competes with Bits, obvi.

Also, please excuse the cellphone photo through my dirty windshield; I drove to L.A. this weekend and should really take the car in for a wash.

Early last year, his San Francisco company, which makes social games such as “FarmVille” that are played on Facebook, was on track for one of the hottest initial public offerings of 2011. But when Zynga finally went public last month, its stock price dropped 5% on the first day of trading and has since consistently traded below its $10 offering price.

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Zynga was up 42 cents, or almost 5 percent today, to close at $8.87 a share.

That’s a huge reversal from earlier this week when the stock nosedived to an all-time low. Meanwhile, none of the traditional game makers were having such a good day.

Electronic Arts closed down $1.47, or 7.5 percent, to $18.04 a share; THQ fell 7 percent to 66 cents a share; Take-Two Interactive fell .5 percent to $14.50 a share; and industry-leading Activision Blizzard slipped 2.5 percent $12.24 a share. GameStop also traded lower, finishing off the day down 2.8 percent to $23.51 a share.

The game makers were universally feeling the impact of an NPD Group report that revealed yesterday that videogame software sales fell 8 percent in December compared to the same month in 2010. When including hardware and accessories, like game cards, the entire industry contracted by 21 percent year over year.

Potentially, investors were betting that if the traditional game-makers weren’t fairing well, then Zynga was a good bet. The leading Facebook game-maker operates purely online and on mobile, so it potentially would be more isolated from the retail and packaged goods sectors.

The old guard vs. new guard battle also played out on the front lines yesterday.

EA was dealt an additional blow when Zynga announced it had hired away Barry Cottle, head of Electronic Arts’ Interactive division. Cottle, who was in charge of the company’s digital strategy, including social and mobile games, was EA’s biggest weapon in fighting Zynga’s dominance on Facebook and had led EA’s rise on mobile.

But EA’s loss was Zynga’s gain.

The social games leader appointed Cottle to the position of EVP of business and corporate development in charge of new global partnerships, acquisitions and other development roles.

Last year, Zynga hired Electronic Arts’ COO John Schappert, who now holds the same title at the social games company. It also picked up EA Play’s EVP Jeff Karp, who is now Chief Marketing and Revenue Officer.

Most recently, Cottle was overseeing EA Mobile, Playfish, Pogo, Hasbro and PopCap, and had been one of the key driving forces behind transforming the company from primarily a packaged goods company to a digital company.

At Zynga, Cottle will serve as EVP of business and corporate development in charge of new global partnerships, acquisitions and other development roles.

In a letter sent to employees today, Electronic Arts CEO John Riccitiello downplayed the departure of Cottle, and said it was going to fold EA Interactive into the entire organization now that “everyone and everything is digital.”

Four years ago, when it originally set up EA Interactive, it was to oversee mobile, social and Pogo, he explained. But today, those initiatives are part of every group within the company.

“It’s abundantly clear that the digital transformation is not confined to one group,” he wrote. “Therefore, we have decided to begin 2012 by folding EAi into the organizations noted below. This reflects our new reality: everyone and everything is digital.”

Executives now leading the charge include EA Labels President Frank Gibeau, COO Peter Moore, CTO Rajat Taneja and EVP of digital Kristian Segerstrale.

Riccitiello provided further evidence of EA’s digital transformation by announcing that the company had achieved more than $1 billion in digital revenues in 2011.

The loss of another high-profile executive to Zynga represents a signficant blow to the company, which has been clear about its attempt to challenge Zynga’s dominance in social gaming. Last year, it paid $750 million to acquire PopCap to become the second-largest social game maker on Facebook.

Cottle, who was at EA for the past five years, previously worked at Palm, where he held the position of COO, and at the Walt Disney Company, where he was he was an SVP and chief marketing officer.

“It’s rare that you find someone who possesses a deep operational background and also has the vision to see where your business and your industry are headed,” said Zynga’s CEO Mark Pincus in a release. “His skill set, combined with his deep understanding of the games, technology and entertainment spaces will help us accelerate our mission of connecting the world through games.”

The e-commerce giant (a term typically reserved for Amazon in these woods) is one of the larger examples companies from the Bay Area that are setting up shop here and looking to soak up some of the Northwest’s rich engineering talent.

Other companies with satellite offices in the Seattle area include Google, Facebook, Zynga and Salesforce.

“I’m surprised I ended up at eBay, but the story is compelling,” said Ken Moss, who was hired in November to be eBay’s VP of managed marketplaces technology; Moss is GM of the Redmond office.

A long-time Microsoft employee whose claim to fame includes inventing the Pivot table in Excel, Moss more recently co-founded CrowdEye, a start-up focused on search technology and later on stock market prediction.

He said eBay’s dedication to the region is one of the biggest selling points for recruitment.

Most of the 75 employees that currently work there were hired over the past few months, and a small team has been here for seven years. Among the newbies I met were a number of Microsoft veterans who had been there for 12 to 15 years.

Moss says he will report directly to eBay’s CTO Mark Carges, which is “a signal to the whole company that diversified development is for real.”

“We are first-class citizens,” Moss said, referring to sometimes strained relationship between remote workers and a company’s headquarters.

Eric Brill, VP of eBay’s research labs, is also based in the Redmond office, and has been working part-time there since joining the company in 2009.

Moss said eBay will be looking to hire a range of technologists, from college graduates to senior leaders, including developers, testers, researchers, data miners and other positions.

While I was at the office on Tuesday, the mountains were peeking out from the clouds and were easy to spot from the floor-to-ceiling windows on the fourth floor. It was easy enough for everyone to have a window seat in the open-floor plan.

Although the employees just moved in on Monday, a sign outside the building already announced eBay’s presence. Inside, workers were busy putting the final touches on the space to make it feel like eBay. Primary colors of red, blue, yellow and green highlighted the office walls; with a bit of Seattle flair, conference rooms were named after Northwest tribes such as Puyallup and Quinault (and other names that might be difficult for San Jose-based employees to pronounce).

But missing were some of the perks that some recruits expect these day — no shuttles to and from work or fancy cafeterias, for instance. 

In fact, eBay has a long way to go to compare with what Google has done here. Since entering the market seven years ago, Google has hired more than 900 employees, spread across two locations, a spokesperson confirmed.

One office is in Seattle’s Fremont neighborhood; the other is on the Eastside.

The two offices are geographically divided by Lake Washington, which can be crossed by one of two floating bridges — or by boat, if you are crafty enough. The traffic bottlenecks make for a horrendously notorious commute, so having two locations that straddle both sides is a huge perk — like having offices in both San Francisco and San Jose.

Because of Google’s size here, many of its perks are similar to its Mountain View headquarters, including free meals prepared by chefs, frozen-yogurt bars and other, mostly food-based, luxuries.

In eBay’s case, the new digs are located deep on the Eastside, a couple of miles past Microsoft in Redmond, and roughly 15 miles from Jeff Bezos’s empire in downtown Seattle. Recently, Amazon relocated its headquarters to a brand-new campus in South Lake Union, a neighborhood being revitalized by former Microsoft executive Paul Allen.

Other outside companies that have also established sizable tech centers here include Facebook and Zynga. A couple others have gained offices through acquisitions. Electronic Arts, for instance, now has a large office here, after acquiring PopCap; EMC now has big expansion plans here, after purchasing Isilon.

And Geekwire, a Seattle-based technology blog, is good at keeping an ongoing tally, including recent moves into the area by Jawbone and SweetLabs, a San Diego-based start-up, based by Intel Capital and Google Ventures.

Two years ago, Facebook opened an office in the heart of downtown Seattle. It plans to move soon to a 27,000-square-foot space that will have room for about 135 employees. The 70 or so engineers in the office today have worked on projects such as video calling, the Facebook iPad app and other big issues, such as security.

Last April, social game maker Zynga opened an office in Seattle’s historic Pioneer Square neighborhood, hoping to absorb some of the game talent here, spawned from Xbox and Nintendo, and cloud-computing knowledge from Amazon. It has 50 employees today, but declined to say how many it planned to hire in the near future.

As with most of these companies, eBay believes it can find a diversity of talent here that can’t always be easy to hire in the Bay Area.

As a Seattle native, and having covered tech here for the past 12 years, including an eight-year stint at the Seattle Times, I might not be the most unbiased on the subject. But I’ve seen first-hand the breadth of talent here, from Microsoft, Amazon, Expedia, T-Mobile and many others, including a strong start-up pool.

Despite that, the local tech community often suffers from an inferiority complex when it compares itself with the Bay Area, which is much larger. Still, it seems that Silicon Valley companies are finding a number of excuses to travel north to drink from the area’s plentiful tech waters.

The two independent moves illustrate how quickly the social games industry evolves.

Rather than tell the stories separately, here’s an overall look at how Google plans to chip away at Facebook’s dominance as a platform, and how EA is challenging Zynga as the top social game maker.

Google said this morning that its third exclusive game has launched on Google+, meaning that it will have the game before any other social network for the next 30 days. The other two were Rovio’s Angry Birds and Kabam’s The Godfather.

The new game, Pirates: Tides of Fortune, was created by Israeli developer Plarium.

The game has a city-building theme, where you must build rum distilleries, lumber yards and gold mines so you can build ships and defend yourself. A fun twist is that the game can be set to speak to you in Pirate or English, French, German, Spanish or Russian.

Meanwhile, Electronic Arts, the second-largest social game maker on Facebook behind Zynga, is following up the successful launch of The Sims Social with a Hasbro game title, Risk: Factions.

Instead of replicating the board game or console version of the game, EA says it has added a plot. Players must pick a faction, either the Humans, led by General William P. McGutterpants; an army of fearless Cats led by the honorable Generalissimo Meow; or a militia of brain-starved Zombies led by the cadaverous Colonel Stiffenberg.

Each develops special weapons, which give each faction a different strategy, and then players get to attack one another by rolling the dice. Players can also develop their military base to build up their troops and construct factories to produce weapons.

Some social games companies are opting to offer Google an exclusive because the search company says it will help promote the game. Also, although Google+ has a smaller network of users, it takes a smaller cut of the revenues — 5 percent compared to Facebook’s 30 percent — so it’s possible any revenue difference can equal out.

Still, Facebook has the larger gaming presence, totaling around 200 million users worldwide. At this point, it isn’t worth mentioning that it has gained a new exclusive, either.

Zynga easily tops the social games charts, but Electronic Arts is slowly creeping up through a combination of acquisitions and games based on well-known brands.

At one time, The Sims Social was close to toppling Zynga’s CityVille game as the largest game on Facebook, but it has since slipped in the rankings, trailing behind several other Zynga titles, according to AppData.

EA has launched other Hasbro titles on Facebook, including Scrabble and Monopoly Millionaires, but neither became an overnight hit. Its second-most popular game is Bejeweled, which it gained through its acquisition of PopCap in July.

At one point today, the stock dipped as low as $7.97 a share before closing at $8 even.

At that price, it is $2 below it’s initial stock price of $10, and has lost at least 20 percent of its market value in less than a month.

But why?

The San Francisco social games company has launched at least two new games since going public, and over the past few days, no harsh analyst report has come out with a negative rating.

It appears the once high-flying Silicon Valley company — known for addictive games on Facebook like FarmVille and CityVille, and mobile games like Words With Friends — is having a hard time gaining the market’s confidence.

To be sure, there’s no clear answer for the price drop; and other tech companies that recently went public, such as Groupon or LinkedIn, have experienced their own fluctuations. But there is one theory making the rounds.

Analysts and other sources suspect Zynga’s stock has been propped up over the past month by the underwriters, who agreed to buy shares if the stock started to perform poorly. The stock purchases would have created steady demand for the stock and kept the price relatively stable.

Furthermore, the theory goes, the underwriters have since met their obligations for buying the stock, and therefore are are no longer buying as many shares.

Incidentally, on Friday, Morgan Stanley — one of Zynga’s underwriters — disclosed that it had purchased nearly 16 million shares in December.

But while the disclosure, filed with the with the Securities & Exchange Commission, adds fuel to the theory, it is unclear if those shares were purchased as part of the IPO, or if they were spread out throughout the month.

Zynga declined to comment, citing its quiet period.

Still, whatever the reason for the drop, Zynga’s shares are seeing less demand.

As recently as last week, the stock was trading at $9.45 a share, but since then, it has struggled to stay above $9. On Friday, it lost 12 cents; today, it lost 81 cents, or 9 percent.

But even if the underwriting theory is on the mark, it doesn’t explain the broader question of why Zynga’s stock price is falling. Shouldn’t there be other investors who are willing to buy up a piece of Zynga?

Unfortunately, it seems the market isn’t sure what to do with the stock, or how to value it.

A social games company fits somewhere between traditional game makers, like Electronic Arts and Activision; and an Internet stock, like Google or LinkedIn.

Zynga gives away its games for free, but still manages to be profitable from selling virtual goods, such as a tractor or more power-ups, that a small number of players elect to purchase inside the games.

It’s also heavily reliant upon Facebook, which could be another problem. Facebook, too, operates privately, and reveals only as much information about its business as it has to — at least until it files to go public, which could be later this year.

In all likelihood, many of these investor fears could be settled when Zynga reports its first period as a public company. No word on when that will be yet, but the fourth-quarter report should come as soon as this month, and no later than February.

Here’s the first — Marvel: Avengers Alliance.

The combat role-playing game on Facebook leverages some of the biggest names in superheroes, including Spider-Man, Iron Man, Thor, Captain America, Wolverine and many more. It will go live by the end of March.

In the game, players must add heroes to the Avengers team and then train them to unlock specific abilities and attacks. Players will also be challenged to face off against other friends who are playing the game.

But as with other social games, the battles are asynchronous, meaning that they do not occur at the same time, but rather occur on a turn-by-turn basis.

The game takes place in a “galaxy-wide disaster, known as the Pulse,” which makes Manhattan vulnerable to an attack. The players are agents on a peace-keeping mission to keep New York safe from the villains.

The game, built by Playdom, is the first to incorporate a Disney brand since the company was acquired for $563.2 million, plus a $200 million earn-out, more than a year ago.

The brand will conceivably help to lift Playdom’s position on Facebook, but also may indicate that the kinks are starting to be worked out, post-merger, between Playdom, which is based in Palo Alto, and its parent company 350 miles away.

Currently, Playdom ranks as the 15th-largest app developer on Facebook, with 15.3 million monthly active users. Zynga and Electronic Arts are at the top of the list, with 221 million and 50.8 million users, respectively.

The company’s stock dipped below $9 a share, and by midday, shares had fallen 29 cents to $8.90, nearing its all-time low of $8.75 a share.

Just last month, the largest social games company successfully sold 100 million shares at $10 apiece to raise $1 billion. On its second day of trading, the company’s stock  sank to what for now is its low before settling at $9.02 a share.

Since then, it has been trading fairly consistently, and there was no obvious explanation for today’s sell-off.

If anything the stock should be pushing higher on the release of its latest games. Typically, more games translates to more revenue for the company, which is focused on selling virtual goods in the free-to-play model.

This morning, Zynga announced its newest mobile game, a spinoff from its ultra-popular Words With Friends franchise. The game, called Scramble With Friends, challenges players to connect letters to spell as many words as possible before the clock runs out.

The game closely follows yesterday’s launch of Hidden Chronicles, which is the company’s first Facebook game in the popular “hidden objects” category, where players are challenged to find a number of items within a scattered and cluttered scene.

Still, Wall Street apparently isn’t impressed.

Based on intraday trading, the company’s market valuation dropped to $6.2 billion, about two-thirds of its IPO valuation of $10 billion.

Zynga isn’t the only stock market newbie trading lower today.

Groupon, the other hot Internet IPO of 2011, also sank. The company’s shares were down 90 cents, or almost 5 percent, to trade at $17.89.

Confidence in the stock was still reeling from two reports released this week. One surveyed merchants to find out how satisfied they were after running a deal. The other reported that revenues in November were weaker than expected across the entire daily deals industry.