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Glu Mobile (NASDAQ:GLUU) is a game developer that makes mobile games and sells them through the various app stores. Mobile gambling that uses using real money and not virtual currency is the direction GLUU is headed next with game development. Currently games can only gamble using virtual currency and none of that can be exchanged for real money in the United States. Some states in the U.S. are pushing forward legislation that will help to bring in tax revenue. So far Delaware and Nevada have passed mobile gambling legislation and New Jersey is right on their tails. At the present time, mobile gambling is popular using only virtual currency. The profit that a gaming company makes on virtual currency is very little compared to what they can make using real currency.

Glu Mobile released earnings at the beginning of February and the earnings call had a couple of intriguing points at the end. When issuing guidance the company said that, "the 2013 guidance does not assume any multi-month top 75 grossing titles on the iOS and the Android App stores." This basically means that Glu is not accounting for any hit games. The second statement, "Secondly, we have not included any revenue from Glu Publishing nor our Probability Gaming real money gambling titles in this guidance" makes me even more excited for this upcoming year at Glu Mobile.

A game staying in the top grossing titles for a long time means the game is consistently bringing in money for the developer. With Glu Mobile venturing into the real money mobile gambling, top grossing titles are almost inevitable. A look at the most recent top grossing list from appshopper.com will show how popular casino and gambling games are. In the top 10 grossing games for iPad there are four casino/poker games and in the top 25 there are eight casino/poker games. On iPhone there are seven casino/poker games in the top 75 grossing games.

This means that there is a lot of potential for Glu Mobile and there is also a lot of competition. In areas with a lot of competition, companies look for acquisitions that will give them a lead. With GLUU announcing the launch of Glu Publishing, the company can help smaller developers market its products for a fee or potentially a revenue sharing plan. Instead of having to make acquisitions to bring in hit games, Glu Mobile can work with small developers and emerging market developers to bring in money. Glu Publishing's goal is to bring emerging market games to the rest of the world and help the developers to launch the games across all platforms. This effort could take a game popular only in a country like Thailand and work to launch it to the rest of the world. This way, Glu Mobile does not have to rely on acquisitions like the poor acquisition of OMGPOP by Zynga (NASDAQ:ZNGA). We will see where that acquisition leads for Zynga but it bought the company that developed Draw Something at the peak of its popularity.

Gambling on mobile devices is not that new of a trend with three of the four top grossing casino games on iPad having been in the top 200 for almost a full year and the 4th top grossing has been there for about 7 months. Glu Mobile is set to launch its first real money mobile gambling game in the first quarter through its partnership with Probability PLC, a company that specializes in mobile gambling in the U.K. Probability PLC announced last month a round of funding to help with investing in additional marketing exposure. So, Glu Mobile is partnering to launch a slot style game in the first quarter with Probability PLC and have not included any of the revenue generated from this partnership in its 2013 guidance. Also of great importance, on the most recent conference call Glu Mobile also said that it is confident it will not need to raise capital for the rest of 2013.

It was a full year ago but slot-maker International Game Technology purchased Double Down from Facebook (NASDAQ:FB) for $500 million. With the new legislation in Nevada and pending legislation in New Jersey, the game manufacturers and casinos are learning how much it will cost for them to take gambling mobile. GLUU looks attractive with its relatively low market cap of $155 million compared to Zynga's market cap of $2.5 billion. With Juniper Research estimating that mobile betting will be a $100 billion industry by 2017 and Big Fish Studios in a New York Times piece claiming "Average revenue per player is exceeding $20 a day, whereas in virtual currency it was 30 or 40 cents," what is not to like? It only seems like a matter of time before the U.S. casinos decide to go mobile. The casinos have only one choice, go mobile or be left in the dust.

With all of the chips lining up for Glu Mobile, it is time to place a bet. GLUU is trading at $2.26 at the time of writing this article and the 52-week range is $1.99-$5.90. Glu Mobile has pushed back titles from the end of 2012 to the first half of 2013 to attempt to further monetize these games. They are expecting to launch 15 titles in 2013 and most coming in the first half of the year. If any of the titles are successful they could send this stock soaring considering the beat down it has received over the past year. I would be a buyer of anything below $2.20 at this point and waiting for the legislation to pass in New Jersey. States want to bring money to their casinos, so we should see New Jersey act very soon.

Disclosure: I am long GLUU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: 2 Words Will Turn Glu Mobile Around: Mobile Casino