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By William Spain, MarketWatch
Last Update: 4:52 PM ET July 27, 2005
E-mail it | Print | Alert | Reprint |CHICAGO (MarketWatch) — International Game Technology made a move into the tricky world of online gambling Wednesday as the slot machine giant cut a deal to buy WagerWorks for $90 million in cash.
IGT (IGT: news, chart, profile) said it’s buying the privately-held provider of a gambling software to boost distribution of its games “across new channels and mediums including the Internet, mobile devices, and interactive television.”
Many online gambling companies, operating in an area where U.S. law is widely considered to be murky, have drawn fire from law enforcement authorities, politicians and activists. Most of the operators that take bets from people in the United States are located offshore.
In the announcement, IGT Chief Executive T.J. Matthews said WagerWorks is known for “adherence to a strict compliance policy ensures that operators offer the company’s products and services to end users in a responsible manner.”
IGT did not return calls seeking further comment.
In a note to investors, analyst Marc Falcone at Deutsche Bank wrote that “WagerWorks has a long-established track record of only doing business with companies where online and interactive gaming is regulated and legal.”
The acquisition “places IGT in a strong competitive position relative to other equipment manufacturers should restrictions on online gaming in the U.S. be relaxed,” he added.
On Wall Street, shares of IGT closed up 2.5% to $27.98
Other industry heavyweights have dipped their toes in the sector, most notably MGM Mirage (MGM: news, chart, profile) , which owns about 10% of WagerWorks and ran a now-shuttered online gambling operation in the U.K.’s Isle of Man.
That company continues to believe that “online gaming ought to be legalized, regulated and taxed,” said spokesman Alan Feldman, but MGM Mirage has no immediate plans to try again.
“The challenge,” Feldman added, “is that U.S. law isn’t going to change anytime soon and without talking bets from the U.S., there is no business model that works.”
William Spain is a reporter for MarketWatch in Chicago.
