WMS AND INTERNET GAMING

This morning Fantini’s Gaming Report wrote about WMS’s foray into online gaming.  For those of you that missed it here’s what was written:

“WMS has set up shop in the United Kingdom to launch Internet gaming late next fiscal year, eGamingReview reported.  The company is hiring 25 employees in London in preparation for the launch of a UK-facing site, then will follow with sites aimed at France, Italy and Spain as those countries open their markets to competition beyond their state-granted monopolies. WMS will be the first major US slot machine company to go beyond licensing games to online operators. It also would give WMS experience to offer its games directly to Americans already familiar with them in slot machine form if I-gaming is legalized in the US. As such, it could start a trend of suppliers to brick-and-mortar casinos competing against them on the Internet, and opening whole new revenue streams.”

We spoke to the company and got some clarification on what’s really going on.  The online gaming effort in the UK is has been an ongoing part of WMS’s R&D efforts and is already reflected in the R&D budget – so the employees are not new hires.  The online strategy in the UK is an extension of what WMS showed in it vault at G2E this year, namely increasing customer loyalty to the casinos and WMS games by allowing them to continue their experience online on operator’s websites.  In the UK, regulation allows WMS to have a more direct strategy. The launch of their online gaming efforts in the UK will be a FY2011 event, and should not have any material impact on R&D or SG&A in the interim.  As far as the US is concerned, online gaming is not likely to get legalized in the foreseeable future, at least not until the federal government can figure out a way to tax online gaming.