Reaction to a report in London’s Guardian newspaper that speculated that Italy could raise gaming taxes on International Game Technology, Plc. caused IGT’s stock price to fall 6.72 percent. A prominent Wall Street gaming analyst now says the investor fears are overblown.
IGT still has a large corporate presence in Italy, which was the base of GTECH, which bought IGT in 2015 for $6.4 billion. IGT operates an Italian VGT concession.
Last week, SunTrust Bank gaming analyst Barry Jonas issued a research note saying investors overreacted to the Guardian piece. “IGT’s stock has a very high correlation to the Italian stock indexes,” Jonas wrote. (The reaction was) “overblown, as Italy risks are nothing new to IGT…
“The Italian machine concessions are due for renewal in 2022, and we think increasing taxes yet again could backfire and limit interest in the rebid process.”
He added that the supplier gets 65 percent of its quarterly cash flow in Italy from two lottery contracts, which are not up for renewal until 2025 and 2028, respectively.
“(Both) have contractually set economics that cannot by changed,” Jonas said.
