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IGT Prepares to Enter U.K. Gambling Market17 November 2003
LAS VEGAS -- While some of the world's largest casino companies make headlines seeking potential sites to build gambling halls and resorts in Britain, the world's largest slot maker isn't far behind.
With the potential deregulation of gambling laws in the United Kingdom more than two years away, International Game Technology is gearing up for one of its biggest international growth opportunities in years.
"We are very well prepared for the new legislation," Robert Lamb, vice president and managing director of IGT U.K. Ltd., said during a conference call with investors and analysts Friday. "Our business strategy is in place (to be) ready for the market when it opens."
IGT created the U.K. division about a year ago to spearhead expansion plans in the region.
Under anticipated deregulation laws, Britain would be allowed to build more casinos, including suburban gambling halls, while casinos could offer Las Vegas-style slot machines with larger cash jackpots and linked progressives.
Given the most favorable estimates by analysts and other U.K. watchers, Lamb said IGT expects to begin receiving orders for Las Vegas-style slot machines in Britain by early 2006.
The company has speculated that Britain -- now offering a few hundred traditional slot machines in casinos -- could support from 40,000 to 45,000 slots.
That figure is in part based on outside experts' estimates, company executives say. IGT has declined to estimate its potential market share or sales once the liberalized rules take effect.
IGT expects some games that have been successful in the U.S. will "transfer well" to the British market, Lamb said. "The IGT game library is so enormous and diverse and has been so well received nationally," he said.
In addition, the company's October acquisition of Acres Gaming Inc. will allow it to offer software systems in the United Kingdom that work with IGT machines to track gamblers' play, he said. Acres had developed such systems for U.S. casinos.
IGT anticipates selling linked progressive slots to British casino operators that build large cash jackpots based on bets made across many machines. The offerings would be similar to IGT's U.S. products except the British government is likely to restrict progressives to a single casino. In the United States, progressive machines offer jackpots that are typically linked across an entire state.
The company encourages a controlled approach to legalizing progressive machines, Lamb said. Wide-area jackpots have tended to lag behind other developments in markets that liberalize gambling, he added.
Through its U.K.-based Barcrest Group Ltd. subsidiary, IGT already has a leading market share offering the most popular gambling machine available in Britain. Typically offered in pubs, so-called "amusement with prize" or AWP machines differ from traditional slots in that AWPs offer low-value prizes redeemed for cash.
IGT has no intention of offering another available form of gambling device, called "fixed odds betting terminals," Lamb said.
Many betting shops in Britain have the machines that allow players a chance to win a pre-determined amount based on their bet.
British gaming authorities have cracked down on such terminals because they aren't classified as gambling machines and have therefore operated with no defined limits on the value of prizes offered. Betting shops have fought back and the issue is now in court.
The British government intends to regulate the machines if it can't come to terms with the betting shops, Lamb said.
Besides the United Kingdom, IGT also is eyeing Italy and Poland as potential markets for new machines. Italy, home to an estimated 1 million-plus illegal poker machines, is close to implementing legislation that could pave the way for some 250,000 regulated gambling devices as early as next year, Lamb said.
In Poland, demand for new and upgraded machines could mean a potential market of 50,000 to 80,000 machines, he said.
Copyright © Las Vegas Sun. Inc. Republished with permission.
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