International Game Technology (IGT) recently entered into a partnership with Atlantic Lottery, a corporation owned by the governments of Nova Scotia, Prince Edward Island, New Brunswick and Newfoundland and Labrador.
Under the terms of the agreement, IGT will provide 1,612 video lottery terminals (VLTs) to Atlantic Lottery. IGT will provide GL20 Lottery terminals, which complies with the industry standard specifications of Gaming Association and G2S protocols. The partnership is expected to expand IGT’s presence in Canada.
This is IGT’s second international partnership to supply VLT machines. In March this year, IGT announced a strategic partnership with Italy-based lottery operator Lottomatica Group, under which the company will install approximately 9,000 video lottery terminals (VLT’s) all over Italy. IGT also teamed up with Lottomatica to integrate its VLTs into its Spielo VLT network system, which has been widely adopted by Italian concessionaires including Lottomatica.
Meanwhile, IGT also announced that it will supply interactive online casino games to EspaceJeux.com, Loto-Quebec's Online Gaming Site for players in Quebec, Canada. IGT will supply four of its top playing games Cleopatra, Wheel of Fortune – Hollywood Edition, MONOPOLY with Pass Go Bonus and CLUE in the first phase.
During the second phase, IGT will license another 16 online games to be available on EspaceJeux.com through its Casino remote game server. For this purpose IGT will host the games in a new datacenter in Kamloops, British Columbia. By the end of 2012, IGT expects to license more than 30 casino-style games including several IGT Video Poker titles.
As IGT is bearing the brunt of a sluggish domestic market due to lower play levels, a higher unemployment rate and weak replacement sales, the company is seeking expansion opportunities in international territories to boost profitability. We believe that IGT will continue to focus on expanding its presence in international markets and will further sign licensing agreements with leading local providers over the long term.
We believe that IGT is successfully penetrating the online and social casino gaming market through the acquisitions of Double Down and Entraction Holding AB. The acquisitions have significantly boosted its interactive gaming portfolio. Moreover, with IGT Cloud services, we expect the company to gain traction in the casino gaming industry, as it would likely be well accepted by new casino properties, thereby improving the company’s top line going forward.
We have a Neutral recommendation on the stock over the long term (6-12 months). Currently, IGT has a Zacks #3 Rank, which implies a Hold rating on a short-term basis.
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