Slot machine maker IGT purchases online gaming company

Nevada-based slot machine maker International Game Technology has reached an agreement to purchase Double Down Interactive, gaining the infrastructure to potentially offer online wagering for money.

The deal, valued at as much as $500 million, comes less than a month after Nevada gaming regulators approved regulations that could make Nevada the first state in the nation to offer legal Internet wagering within its borders. Several Canadian provincial governments began offering online lottery betting a year ago for residents living within those provinces.

“The addition of Double Down launches IGT into a leadership position in social gaming, extends our global reach through new mediums and leverages our unmatched expertise in game development,” IGT Chief Executive Officer Patti Hart said in a joint statement released by the companies. “We intend to drive meaningful value from this rapidly growing distribution platform that reaches a new but complementary demographic of gamers."

A day after the recent move by Nevada gaming regulators, the U.S. Justice Department issued an opinion stating that a 50-year-old federal law that had been interpreted to ban online wagering only applies to sports betting, apparently excluding other forms of betting, including poker and casino-style games. The Nevada Attorney General’s office is analyzing the opinion. Meanwhile, several companies have submitted applications to the gaming control board as they seek to offer online betting within the state.

"Double Down and IGT share complementary cultures focused on innovation and creativity. Both companies are committed to providing unrivaled quality, service and entertainment to millions of players," Double Down Chief Executive Officer Greg Enell said in the joint statement. "Leveraging IGT's research and development, global reach, and best-in-class content will provide our loyal player base with an even more robust experience and is expected to augment Double Down's growth trajectory."

Players on the site do not currently wager money but instead garner points as they play against each other, which is billed as “online social gaming,” or against an automated opponent. The site claims to have 1 million players daily, with new games “added all the time.”

The $500 million deal — $250 million in cash, $85 million in retention payments and an additional payout of $165 million over three years based on Double Down hitting unstated financial targets — is expected to be funded by cash on hand, according to the joint news release.

In early 2010 the casino industry’s Capitol Hill lobbying arm, the American Gaming Association, issued a statement suggesting that online wagering could be properly regulated, with many gambling experts believing that Internet poker would be the most likely form of online wagering because it is seen as the least serious threat to brick-and-mortar casinos, reported The New York Times.

But online betting has drawn opposition from sources within the gaming industry, including Las Vegas Sands Chairman Sheldon Adelson. Adelson, one of the largest individual donors to the U.S. Republican Party, recently shared his concerns with Sen. Jon Kyl of Arizona, the No. 2-ranking Republican within the Senate.

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  1. Whenever I hear people start talking in meaningless marketing jargon, it worries me.

    "...drive meaningful value..."
    Duh! It's assumed that this deal was made in order to make money and that profit wasn't an afterthought. Then again what exactly does IGT consider "meaningful value"? That doesn't specify actual monetary gains and could mean anything.

    "...expected to augment Double Down's growth trajectory."
    I love this quote because it simply lists growth as the goal and not actual profits for stakeholders. Growth itself should not be a goal. Borders Books, Circuit City, and many other companies had unbelievable growth, and look where they wound up. Instead of growth, how about profit trajectories?

    "...our loyal player base..."
    Don't make me laugh. No one has ever refused to play "Gold Fish" because IGT didn't make it. Truly that goes for any slot machine.

    And what's with this "Social Gaming" label? Don't try and lump gambling in with Facebook games, and MMORPGs as a way to disguise it. In the same vein as trying to relabel High Fructose Corn Syrup into "Corn Sugar", all that does is scare off people by making them leery that you're trying to hide something because you're hiding behind a name. Unless you're physically at a table with your friends playing cards or dice, or in a Bingo hall, Gambling is NOT a social event. Watch any drone at a slot machine, or solitary player (which most are) and you'll quickly realize this. Sitting behind a computer monitor just reinforces this, if not make it worse.

    Just be honest and cut out the useless jargon and tell the truth that you've got a new marketing strategy. There's a reason we tell kids to set goals in life and not "trajectories". Besides that, investors want to put money into companies that make money in return, not ones that float around keywords to try and show how well their employees paid attention in marketing classes.

  2. This is a move to eliminate the Middle Man, The Casino. Just sell Direct to the Consumer, like everyone else via the Internet, Pay few Taxes and make all the profit. You know these Center will be in locations that will Tax them the least or not at all - just for creating a few low wage Jobs.