Casino technology giant International Game Technology PLC posted a wider first-quarter loss than a year ago, weighed down by $97 million of net foreign exchange loss. But IGT’s revenue rose and company officials reported strong growth across its business segments.
Also, the company positioned itself to profit from the U.S. Supreme Court’s lifting of the ban on sports betting beyond Nevada. In a call with analysts and investors Tuesday morning, IGT CEO Marco Sala said the company is already offering “a regulator-certified sports betting solution that is up and running at MGM’s casinos in Nevada.”
Sala said IGT has also deployed its sports wagering system in Italy that can support a “full-scale operation” or a kiosk-type retail format.
“Ultimately, the opportunity will depend on how many states choose to allow it, how quickly they do so, and how the regulations will shape the offer,” Sala said. “Having said that, we have a longstanding deep relationship with the U.S. casino operators and state lotteries.”
On Monday, it was revealed that IGT was the sole bidder to run Rhode Island’s potential sports betting operation.
Deutsche Bank gaming analyst Carlo Santarelli said after the conference call that IGT’s experience in Italy and with MGM might give the company a leg up as sports betting evolves in the U.S.
“While IGT has been less vocal, relative to peers, as it pertains to the sports betting opportunity, we believe the customer relationships and broad offering suite position IGT well for incremental gains from the evolving sports betting environment,” Santarelli told investors.
In the first quarter that ended March 31, London-based IGT, said its net loss was $103 million, or 51 cents per share, compared with a net loss of $54.8 million, or 27 cents per diluted share, a year earlier.
Adjusted net income, which excludes the foreign-service debt and other one-time items, was $31 million, or 15 cents per share. The number missed the 27-cents-per-share forecast of analysts polled by Zacks Investment Research.
Adjusted earnings before income, taxes, depreciation and amortization, a measure of cash flow, was $436 million, up 17.5 percent from $371 million a year earlier.
Revenue rose 5.2 percent to $1.21 billion from $1.15 billion. The latest result topped the $1.16 billion revenue estimate of Zacks-polled analysts.
On the conference call, Sala said global lottery growth was significant in the quarter; sales grew 24 percent in North America. Also, he said, jackpot games rose over 50 percent, helped by both Powerball and Mega Million.
“As I’ve said before, innovation remains one of the most important drivers of lottery expansion and we demonstrated that,” Sala said. “Jackpots were an important element of the performance in North America and International segments, but the underlying contribution of instants and draw-based games was also very good around the world.”
Sala added that gaming product sales (up 29 percent in the quarter buoyed by strong systems sales worldwide), replacement unit shipments and IGT’s installed game base in North America all increased in the quarter. Sala noted that its Advantage casino management system had gone into the Resorts World Catskills in Monticello, New York, and at MGM Cotai in Asia.
After the court lifted the sports betting ban, in place since 1992, on May 14, analysts speculated that IGT and its rival Scientific Games stood to prosper particularly, through sales of equipment and other technology.
“Coming off strong earnings beats in the previous two quarters, IGT had already seen several upward revisions lately,” Zacks, which rates IGT “strong buy” wrote in a note to investors, “and (May 14th’s) ruling ought to improve their results even more.”
Post-ruling, Bank of America raised its IGT price target to $36 from $34 and reiterated its “buy” rating on the stock.
Beyond the frenzied sports betting speculation, IGT will partner with HTC will deploy Virtual Zone, a virtual reality system that will let players compete for prizes at The Orleans in Las Vegas.
The first games will be group ($30) and single-player archery ($10) games, costing $30 and $10, respectively, The Motley Fool reported, and hitting the high score in the six-hour window the game is open can win a player up to $150.
Virtual reality could let IGT bring a casino-style experience to places with legalized web gambling.
“If the experience of going to a casino is to have an escape from the world for a short amount of time, it makes sense that VR would be an attractive alternative to the same users,” The Motley Fool’s Travis Holum wrote. “Tournaments are an interesting starting point, but I think we’ll see VR betting before long as companies like IGT push the industry to develop more content.”
CDC Executive Editor Howard Stutz contributed to this story.
