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.