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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

IGT cuts ties with Digideal

7 May 2010

RENO, Nevada -- International Game Technology is ending its relationship with electronic table game provider DigiDeal, allowing the smaller company to branch out on its own.

The announcement Wednesday unwinds a 2007 transaction that established IGT as majority owner of DigiDeal and gave IGT exclusive rights to manufacture and distribute DigiDeal table games globally.

Under the new manufacturing and distribution agreement, DigiDeal, which is based in Spokane, Wash., will now sell its products direct to customers.

Within the next few months, the manufacturing and distribution agreement between the companies will be terminated and IGT will no longer hold an equity interest in DigiDeal.

"We've had the benefit of working closely with IGT over the last three years, which has allowed us to mature as game designers and developers," DigiDeal Chief Executive Officer Michael Kuhn said in a statement. "Considering many markets only allow or are transitioning to electronic multiplayer tables, I am excited about DigiDeal's future."

Craig Billings, IGT's head of corporate development, said the transaction allows the slot machine maker to concentrate on core products.

Macquarie Securities gaming analyst Joel Simkins said the announcement is consistent with IGT's focus in the past year to remove itself from low-return-on-investment businesses, where the company has not gained a solid foothold.

"The discontinuation of this partnership shows where the company's focus lies going forward," Simkins told investors. "Decisions such as this prove that management hopes to exit noncore businesses and refocus on the higher-value opportunities."

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said table game maker Shuffle Master should see an immediate boost by the news because IGT is exiting the electronic table game market.

However, he cautioned the market might be shrinking because several states have legalized live table games. Wieczynski said the product might lessen in importance to Shuffle Master, which may be a reason IGT decided to cut ties with DigiDeal.