The spin-off of IGT’s lottery business and the merger of its games business with Everi looks like a winner, in part because it undoes some of a previously heralded merger.
When then Milan-listed lottery giant Lottomatica acquired IGT the idea was that combining lottery and slots would create a one-stop shop, using lottery revenues to add heft and predictability to the more mercurial gaming business.
It didn’t turn out that way, not for IGT-Lottomatica nor for Bally’s and Scientific Games, which did their own similar merger.
Bally’s-Sci Games, now named Light & Wonder, came to that realization earlier and sold off the lottery business.
Light & Wonder’s return to gaming only is working grandly as its stock hits all-time highs. I suspect IGT will also benefit by being able to focus on gaming. That should especially be true as IGT stock sells for an unrealistically low valuation that now should be corrected.
In addition to Everi’s vibrant games business, IGT is getting a kicker—Everi’s fintech business. Everi has worked hard to grow beyond the commodity-like business of casino cash access offering a variety of services including cashless software. Fintech should fit neatly into IGT’s systems business and, indeed, might give it an advantage over Light & Wonder’s robust systems product line.
IGT is getting something else that might not work its way into many analyst research notes and may be a hidden gem—Everi board chairman Mike Rumbolz will also chair the enlarged IGT.
Again using Light & Wonder as the example, LNW’s Jamie Odell has shown how valuable a board chairman can be.
IGT’s chairman has been Marco Sala, who dates from its Lottomatica days and is based in Europe. In Rumbolz, the new Las Vegas-based IGT will have a home-grown chairman and one with a superb strategic mind.
OOHS, AAHS AND OTHER SYLLABLES
With quarterly earnings season now past, here are some quick impressions:
- Oohs. Churchill Downs and Red Rock Resorts continue to be strong performers with clear—dare we say compelling?—growth stories. Interestingly, neither fits the glamorous profile of a Las Vegas Strip casino operator or omnipresent sports betting operator.
- Aahs. For refreshment, nothing beats companies that perform predictably, thus kudos to Boyd Gaming, Monarch Casino, Gaming & Leisure Properties and VICI Properties. The best news is that, being predictable, there’s more to come.
- Oohs is Light & Wonder hitting its stride under CEO Matt Wilson or what? After what seemed to be a lifetime of digesting acquisitions, running up debt and being run by non-gaming executives who clearly did not see gambling as the future, Light & Wonder is hitting its stride as a multi-channel gaming technology company being run by a gaming guy.
- Ooh, I see. Similarly, MGM Resorts and Wynn Resorts have navigated years of transitional leadership and now find themselves as high quality casino operators positioned for near and far future growth.
- Show Me. Caesars, Penn Entertainment, Golden Entertainment and Full House Resorts appear strategically well positioned. Now it’s time to show they can grow profitability.
Caesars has to show its various expansion investments will now pay off. Penn Entertainment has to show ESPN Bet is a good bet. Full House Resorts has to convert its two new can’t-miss properties into extra-base hits if not home runs. Golden has to show it can grow now that it has shown it can sell assets.
- Uh-oh. Century Casino and Catena Media stumbled. For Century, it may be a matter of patiently waiting for expansion projects to come online, though the company has never fulfilled its promise. For affiliate Catena, it may turn itself around or shop itself around.
- Whew! After months in the dark, Inspired Entertainment revealed that its accounting issues were negligible. Unfortunately, a soft third quarter undercut what could have been a relief rally. The dominant player in virtual sports and growing iGaming provider now has to capitalize on its wealth of potential.
- Who dat? Better Collective might be the affiliate that few American investors know, but the Danish company has a proven track record, is run by founders with a vision and has raised a war chest to finance acquisitions.
