• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

IGT's declining slot ship share has been a major topic of discussion for some time. Less talked about is participation revenue share, and how much more room there is for IGT to fall.

A frequently asked question in this space is whether IGT can maintain its severely depleted ship share, now hovering around 35%.  A more important question may be how IGT is going to maintain its participation revenue share of 65% among the Big Three (it's probably around 60% in total)?  The answer is probably the same as it was for ship share 6 years ago when it was 60%:  it won’t.  What is amazing is that it was actually 90% six years ago.  Certainly, IGT's new participation games seem to be getting warm reception.  However, holding participation share significantly above its ship share may be difficult to maintain over the long-term.  See the chart below and note IGT’s steady decline that doesn’t look like it will abate. 

PARTICIPATION SHARE UP FOR GRABS? - Participation Games  revenue 6

Due to its superior content, WMS is the most likely thief of IGT's participation share.  Moreover, up until now, WMS hasn't participated in the Class II market which will boost their market share going forward.  BYI could also be in a solid position since IGT is overly reliant on the Wheel games (See our 11/27/09 post, HOW LONG WILL THE WHEEL KEEP TURNING?) and BYI has developed a whole new wheel product line since the IGT's wheel patent was ruled invalid.  However, our long-term bet would remain with WMS.