IGT, Scientific Games announce historic licensing agreement

September 6, 2017 12:40 AM
  • CDC Gaming Reports
September 6, 2017 12:40 AM
  • CDC Gaming Reports

Gaming equipment giants International Game Technology and Scientific Games Corporation announced an historic patent cross-licensing agreement Tuesday.

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The industry’s two largest slot machine manufacturers and gaming equipment providers said Scientific Games and IGT would now be able to offer games using patented game features from each other’s portfolios, as well as those of other members of the IGT slot game features pool.

Financial terms were not disclosed in the one paragraph joint statement.

IGT and Scientific Games have the largest patented slot game feature portfolios in North America. IGT recently signed several cross-licensing agreements with other slot machine competitors, including Konami Gaming, Aruze Gaming and Incredible Technologies.

In the early 2000s, IGT and Bally Technologies – then the gaming industry’ slot machine giants – often sued and counter-sued each other in federal court for violating various patents associated with gaming equipment.

The announcement comes a month before the giant Global Gaming Expo – the industry’s largest trade show – opens in Las Vegas. IGT and Scientific Games are expected to have a large presence inside the exhibit hall.

Prior to the deal being announced, Telsey Group gaming analyst David Katz, in a research note, said the major slot machine manufacturers each has has its own set of “specific issues” that he will focus on during G2E.

“IGT has reached an inflection point in its product offerings and has guided toward a strong conclusion to the year based on the new product it is introducing,” Katz said. “Scientific Games has generated modestly positive quarters, which have a profound impact on the equity.”

In 2015, IGT and Scientific Games were participants in multi-billion dollar mergers that consolidated a large portion of the gaming equipment sector and also brought the lottery industry and traditional slot machine games under one roof.

Italy-based GTECH Holdings acquired IGT in $6.4 billion transaction and lottery giant Scientific Games spent $5.1 billion to purchase Bally Technologies.

A year earlier, Scientific Game bought WMS Industries for $1.4 billion.

Katz told investors mergers among equipment providers could spur slot machines sales.

“The consolidation of the past several years is beginning to result in more stable diversified companies and is accelerating the convergence of lotteries, casinos, online and technology offerings,” Katz said.