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IGT Focus on internet gambling is flawed

Wednesday January 30,2013 : WAR OF WORDS AT IGT HOTS UP
 
Focus on internet gambling is flawed, says challenger
 
The fight for seats on the board of online and land games and machine supplier International Game Technology became more intense Tuesday when Jason Ader, whose investment firm is leading a group seeking seats on the board against the will of the current management, criticised its recent decisions.
 
Ader told the Reuters news agency that IGT should be looking at strategic alternatives for the social gaming unit Double Down Casino it bought for $500 million a year ago and focus instead on growing Asian markets.
 
IGT bought DoubleDown, which offers free-to-play online games such as poker and blackjack, in January 2012. Shares of Las Vegas-based IGT have lost 13 percent of their value since the acquisition.
 
Opining that the company has lost focus in entering the online gambling arena, Ader, who is also a board member of the Las Vegas Sands land gambling group, said:
 
"IGT needs to get back to basics in developing games for its casino customers in the U.S. and Asia.”
 
Ader's group controls about 3 percent of IGT's stock, and seeks to nominate three directors to the company's board, including former chief executive Charles Mathewson, a move opposed by the current management.
 
The company's agm is scheduled for March 5, with CEO Patti Hart revealing late last year that the interactive operations of the company had contributed about 7 percent of overall revenue in 2012, up from 2 percent in 2011.
 
Ader claims that Asia constitutes a potential growth market for IGT, pointing to Macau, the world's largest land casino market, which generated $38 billion in annual gambling revenue in 2012, up 13.5 percent from a year earlier.
 
"There is a big opportunity to pursue growth in Macau and the Philippines in the electronic table games segment," he said.
 
Ader is concerned that the DoubleDown acquisition puts IGT in competition with some of its key physical slot machine and systems customers, such as Caesars Entertainment Corp, MGM Resorts International and Station Casinos Inc.
 
IGT comparisons of Double Down with social gaming giant Zynga were also ill-advised, Ader said, noting that Zynga's enterprise value had declined by more than 80 percent in the 12 months since IGT acquired DoubleDown.



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