The great investment thesis behind Zynga (NASDAQ:ZNGA) was that it would eventually turn its play-money Zynga Poker game into a wildly lucrative online poker business, rivaling even the most established players in gaming. There was a time when an idea like that wasn't too far-fetched. Zynga Poker has around 36 million users every month on Facebook with around 6 million of those on the site every day. The problem is that online poker isn't legal here in the U.S., so this huge user base hasn't translated to a significant profit.

First-quarter revenue dropped 18% and the fickle nature of online-game players has begun to hurt Zynga. Without the legalization of online poker in the U.S., it's hard to see how the company can develop a sustainable business or become a market darling again.

Online gaming isn't here

Zynga has begun offering real-money online poker in the U.K., but it's under a partnership with bwin.party. The problem is that it isn't really a differentiated product ,and online poker is already a well-established business in the U.K.

In the U.S. there's a world of opportunity in online poker but little political will to make it happen. States like Nevada, Delaware, and New Jersey have legalized or outlined their plans for online poker, but a federal bill is likely years away. In the meantime, Zynga hasn't announced plans to compete in the jurisdictions making online poker available.

Even if a federal bill does pass, there's no guarantee Zynga would win. Online poker is all about gaining a critical mass of users, and it's a uphill battle. MGM Resorts (NYSE:MGM) and Boyd Gaming (NYSE:BYD) have already partnered with bwin.party for a U.S. online gaming venture. Bwin.party is one of the largest real-money online poker companies in the world, and with PokerStars likely shut out of the U.S. in the near future, this would be a formidable opponent. Caesars Entertainment (NASDAQ:CZR) has also had its eyes on online poker for some time, and with the World Series of Poker brand, it has a big draw for players. Caesars thinks so much of online poker that it's spinning off its "growth" assets, and online games are a key part of the new company.

Even in a best-case scenario, can Zynga be taken seriously against those opponents? Would real, big-money players even entertain the idea of playing on Zynga?

Zynga is in trouble

Without online poker, Zynga is in trouble. Management expects revenue to fall from $264 million in the first quarter to between $225 million and $235 million, another bad sign for Zynga stock. The only value the company has is $1.3 billion in cash and marketable securities. But with 18% of the company's workforce being cut and losses expected to return in the second quarter, I don't see a lot of upside for investors.

Even if online poker were a reality, it would be an uphill climb for Zynga -- but without it, the company is sunk.