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Best of Howard Stutz

Gaming Guru

Howard Stutz

Isaacs goes from unemployed to CEO of four companies

6 August 2014

LAS VEGAS -- Less than 10 months ago, Gavin Isaacs was jobless.

By early next year, Isaacs expects to be CEO of a company that controls two of the world’s top three slot machine manufacturers, the casino industry’s largest supplier of table games and casino management products, and the biggest U.S.-based provider of lottery systems.

Last week’s surprising announcement that lottery giant Scientific Games Corporation, was buying slot machine giant Bally Technologies, Inc. in a $5.1 billion transaction brought most of Isaacs’ past and present together.

Isaacs, 49, became CEO of Scientific Games in June. He spent the previous few months working as a consultant to billionaire financier Ronald Perelman, who is the chairman of Scientific Games and the company’s largest shareholder.

Before Isaacs arrived, Scientific Games bought slot machine builder WMS Industries Incorporated for $1.5 billion, closing the transaction last October. A month later, Isaacs, CEO of SHFL entertainment, closed the company’s sale to Bally for $1.3 billion.

No one would blame Isaacs if he spent 2014 lounging on a Hawaiian beach or deep-sea fishing off his native Australia, while contemplating his next move after 15 years in executive-level positions with three gaming companies.

The vacation lasted just a few months.

All four businesses are coming together under one umbrella. The regulatory approval process for the Bally’s transaction could take a year.

Isaacs’ presence at the deal’s forefront is soothing to the investment community. He spent five years as Bally’s chief operating officer, two years as SHFL Entertainment’s CEO, and the last two months as Scientific Games' CEO. Previously, Isaacs held executive positions with Australia’s Aristocrat Technologies, including president of its Las Vegas-based American operations.

“Gavin Isaacs’ familiarity with the various platforms involved should enhance integration efforts, as he has a strong understanding of the product lines and a good rapport with the professionals involved,” said Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski.

Once completed, New York-based Scientific Games will be a company that services all channels of the worldwide gaming industry, including slot machines, table games, lottery products, interactive gaming and management systems for both casinos and lotteries.

“This is a very transformative bet on the future of the supplier business in our view, particularly as it now combines four companies that used to be separate not too long ago,” Credit Suisse gaming analyst Joel Simkins said.

Isaacs aspired to be CEO of Bally. He left for SHFL in 2011 and a year later, his counterpart in the company, Ramesh Srinivasan, who oversaw development of the systems products, was named CEO.

In April, Srinivasan was replaced by the person he replaced, Richard Haddrill.

Three months later, Isaacs and Haddrill reached agreement on the sale. Haddrill is expected to become vice chairman of Scientific Games once the sale is finalized.

Simkins said the “irony of this deal” is Isaacs “finally gets the role he wanted.” The issue is “how he ultimately integrates such a massive platform and the myriad cultures” of the four companies.

“(It) will not be an easy task,” Simkins said.

After departing SHFL following the sale, Isaacs had a yearlong noncompete clause in his separation agreement.

He quickly became the gaming industry’s top management commodity on the open market.

There was rampant speculation that he would join International Game Technology as CEO, replacing Patti Hart, once his noncompete expired. (The sale of IGT to Italian lottery giant GTECH for $6.4 billion was announced July 16).

In April, however, Isaacs surfaced as Perelman’s consultant.

Last November, Scientific Games board member and Perelman confidant Dennis Kennedy moved into the company’s CEO position. It was clear he was keeping the seat warm for Isaacs.

Scientific Games struck a deal with Bally to end the noncompete clause.

According to a company filing with the Securities and Exchange Commission, Isaacs is well-compensated. He was given a three year-contract worth $1.5 million in base salary, annual bonus incentives of up to 100 percent and 200 percent of his salary, and stock options.

Isaacs has his work cut out for him.

The gaming equipment sector has been under pressure. The replacement market for new games remains soft. Smaller manufacturers have cut into the larger companies’ market share. Slot floors are shrinking and casinos have shifted away from higher-priced slot machines where they share gaming revenue with the manufacturers.

“Given these soft trends, operational risk remains elevated,” Wells Fargo Securities gaming analyst Cameron McKnight told investors. “Gavin Isaacs has faced these headwinds for many years and is well-equipped for the challenge.”
Isaacs goes from unemployed to CEO of four companies is republished from