IGT BAGS THE ELEPHANT?

Well not quite an elephant but Cosmopolitan may be IGT’s 2nd SBG property.

Finally, a positive catalyst emerges for IGT.  We think IGT may have landed a contract with Cosmopolitan to provide Server Based Gaming (SBG) across the property.  While probably not material in terms of financial contribution and it won’t hit until IGT’s FY2011, this should be considered a positive from a sentiment perspective.

IGT’s first SBG property, MGM’s Aria, opened in December.  IGT received a one-time payment of roughly $6 million for the system hardware and is essentially providing a free two year trial of its SB software.  Not bad from MGM’s perspective.  We believe the Cosmopolitan deal could be similar.  IGT should also procure a 50-55% market share at Cosmopolitan, similar to that at Aria and above its recent 35% ship share.  This is also good news for IGT.

A few other slot supplier tidbits:

  • IGT has a promising new application for SB called Random Riches whereby if a player bets X ($$'s/lines/etc) they know they will get Y (ie bonus rounds/ spins/ etc) thereby extending the time on device
  • SB Window for legacy games was a defense move against iVIEW DM (Pechanga for example)
  • WMS has submitted their operating system that would allow them to go SB at Aria.  Issue is that their games aren’t performing very well now because they have a limited library that has been approved….. since they built SB into all the games – it’s a slow process for them
  • BYI still has 5 outstanding issues to get compliant with SB but should get there by year end - moving but moving slowly.  Their games are performing well at Aria