IGT remains part of Nevada after $6.4 billion merger with Italian lottery giant
Slot machine giant International Game Technology is as much a part of Nevada as the Battle Born motto, bristlecone pine trees, sagebrush and Lake Tahoe.
The folks at the former GTECH Holdings understand this.
That’s one reason why the Italian-based lottery company didn’t abandon the Silver State after spending $6.4 billion to acquire one of the casino industry’s largest gambling equipment providers. GTECH even took on the IGT name when the merger was finalized in April.
“We see Las Vegas … as one of the three pillars of the company,” said Renato Ascoli, IGT’s CEO of North America Gaming and Interactive. “This is where the market is, where our most important customers are located, and it’s why we decided to elect Las Vegas as the headquarters for gaming.”
Earlier this year, IGT said it had a deal to sell its 610,000-square-foot offices and manufacturing facilities on South Buffalo Drive, near the 215 Beltway. But the company expects to lease back some of the building for its Las Vegas offices to house sales, marketing and other corporate functions.
Meanwhile, IGT is using its 1.2 million-square-foot Reno manufacturing facility as the central hub for its slot machine business and intends to transfer the manufacturing of its North American lottery equipment to Northern Nevada by the end of the year.
Rome is still the heart of the company’s international lottery operations while Providence, R.I., houses the U.S. and North American lottery headquarters.
Ascoli, a native of Italy who spent the past few years in Boston as the general manager and president of GTECH, is also one of the newest residents of Summerlin. He moved after the merger. Also moving west was Victor Duarte, IGT’s global chief product officer for gaming. He previously held a high-level position with GTECH in Rhode Island.
Together, the executives are putting a Nevada face to the new IGT. Another tie to Nevada is the company’s chairman, Phil Satre, a Reno resident who chaired the former IGT board and spent more than 20 years as CEO and chairman of Harrah’s Entertainment.
“IGT is taking a very humble approach moving forward,” Ascoli said.
The closing of the GTECH-IGT deal ended nearly 18 months of mergers in the manufacturing sector that created two large competitors — IGT and Scientific Games Corp. The two dwarf rival equipment providers.
IGT suffered through several years of declining slot machine sales, product development missteps and lower than expected earnings. Last year, analysts said Bally Technologies — which was acquired by Scientific Games 12 months ago — surpassed IGT as the industry’s leading equipment provider.
Following eight months of combined operations, Wall Street has a better handle on the future of IGT. The focus remains on “convergence,” or transitioning game titles and products across multiple platforms — slot machines, lotteries and interactive gaming.
“We continue to believe that GTECH and IGT are better together, given the complementary nature of their product offerings and the ability to achieve both cost and revenue synergies,” Deutsche Bank gaming analyst Andrew Zarnett told investors in November after IGT reported a $7.1 million third-quarter profit.
Union Gaming Group analyst Christopher Jones said IGT’s lottery business — the company has agreements with 38 of 45 state lotteries — help reduce exposure “to the more challenged casino equipment business.”
The combined company could achieve two-thirds of an expected $230 million in annual cost savings by its first anniversary. Analysts are also hopeful the company will cut its $8.2 billion long-term debt.
IGT was founded by gaming industry icon Si Redd, who was the driving force behind development of video poker machines now common in all casinos. The Nevada-based company pioneered modern slot machine development and was a blueprint for other gaming manufacturers.
The new IGT is a combination of several businesses, including the former IGT and Lottomatica, the Italian company that acquired GTECH in 2006 for $4.65 billion. Along the way, GTECH bought Probability Plc, a mobile gaming provider, and Spielo Manufacturing, a video lottery terminal maker.
Ascoli said elements of several companies are found in IGT’s newest product, a mobile device that will allow customers of MGM Resorts International’s Strip properties to place bets using their smartphones or tablets. Casino games and slot wagering can only take place on an MGM property; sports bets can be placed anywhere in Nevada.
“We’re using all the components of the new IGT,” he said.
Wells Fargo Securities gaming analyst Cameron McKnight said IGT was “moving in the right direction” by diversifying beyond slot machines. He was also “impressed” with some IGT games seen at the recent Global Gaming Expo.
“The company’s offerings seem to be geared more toward revitalizing slot products given a range of new titles and enhancements in 3-D technology,” he said.
Howard Stutz’s Inside Gaming column appears Wednesdays and Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871.
Find on Twitter: @howardstutz