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Soclal gaming giant no longer courting bwin.party for the Ongame purchase, despite asserting real-money gaming interest.

Zynga can be scratched off the list of possible candidates to purchase the Ongame Network. Pokerfuse has learned from a source close to the situation that negotiations for the purchase of the second largest online poker network are progressing, but those talks do not include Zynga.

Reports began to surface in late June that Zynga was interested in Ongame immediately following the news that Shuffle Master pulled out of its agreement to purchase the online poker network. According to a statement by bwin.party both companies “mutually agreed not to proceed with the proposed transaction” and the company was “re-engaging with other third parties that have expressed an interest in acquiring Ongame.”

Those rumors began to heat up last month when Zynga founder and CEO Mark Pincus reasserted the company’s interest in real money gambling, stating that it was “actively exploring” the market, both in the US and beyond.

With the first regulated online poker market in the US gearing up for launch later this year, Nevada looked like the perfect place for bwin.party to shop its surplus asset.

However, the market for online poker software took an interesting turn just two weeks ago when PokerStars entered into an agreement with the US Department of Justice. Neither PokerStars nor Full Tilt admitted to any wrong-doing in operating in the United States market prior to Black Friday, and both are eligible to apply for a license in the US to offer real-money poker when states or the federal government offer such an opportunity.

Ongame, which consists of approximately thirty skins, has been on the market since March 2011 when bwin and Party Gaming merged to form bwin.party Digital Entertainment Plc. It is the fifth largest poker network internationally, although bwin players—thought to make up a large part of the player pool—will be transitioned to the PartyPoker platform prior to sale.

The network has seen its cash game traffic decline more than 20% in the last year, inline with a shrinking global online poker network. Competing networks like iPoker, PartyPoker, PokerStars and Microgaming have seen similar or worse reductions.