IL VLT UPDATE

Takeaway: IL soon to be a big market for IGT

IL ESTABLISHMENT LICENSING PROGRESSING IN-LINE WITH OUR RECENTLY RAISED EXPECTATIONS

Yesterday, the Illinois Gaming Board released a list of all licensees as of August 16th.  The list included 180 licensed establishments, implying approval of an incremental 92 establishments in August.  This implies an acceleration over the 70 licenses granted in July.  To date there have been no established licenses revoked and only 8 establishment have been denied licenses. Currently there are 1,770 pending establishment approvals. 

Starting in September, the authorities will actively pursue enforcement against locations operating “grey” machines with locations found in violation of the law charged with Felony action.  Therefore, the increased number of locations licensed in August was in line with our expectation of an acceleration of approvals for legal machines. 
 

Each location can have a maximum of 5 machines so 180 approved locations implies a current maximum market size of 900. We expect that about 1,000 VLT's will get shipped to IL in the September quarter with IGT shipping the majority of those machines. Our best guess is that 3,000 VLTs will be shipped to IL in 2H2012, and by the end of 2013, the market should comprise of about 10,000 units.  Given that we are just in the 3rd month of establishments approvals, its too early to say whether these estimates will come to fruition. We expect that the majority of VLTs will be for sale, with manufacturers providing financing to the route operators.  We are hearing that ASP's should be in the mid to high $12k range. 

DETAILS ON PENDING APPLICATIONS: 

  • Distributor: 4 (Cadillac Jack IL, Gametech International, Golden Route, PDS Gaming-IL)
  • Manufacturer: 3 (Cadillac Jack, Gametech, Golden Route)
  • Supplier: 7 
  • Technicians: 35 
  • Terminal handlers: 159 
  • Terminal operators: 17
  • Establishments: 1,770 pending