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Best of Howard Stutz

Gaming Guru

Howard Stutz

IGT adding to slot games

24 October 2006

RENO, Nevada -- Slot machine giant International Game Technology took the initial steps Monday to enter the electronic table game business with plans to develop blackjack and roulette tables that don't require the presence of a dealer.

Reno-based IGT, the gaming industry's largest slot maker, said it was acquiring the technology for those products from Novomatic AG, an Austrian-based gaming company. No purchase price was announced.

In a separate deal, Novomatic will supply IGT with equipment parts for the electronic roulette game.

Electronic table games allow multiple gamblers to play traditional games but in a dealerless format similar to a slot machine.

Gaming analysts said the announcement gives IGT an additional product to increase overall sales and a way to bring table games into gambling jurisdictions that only allow slot machines, such as Delaware and Pennsylvania.

American Indian casinos, as well as gambling halls in Europe and Macau, China, have also been viewed as locations for electronic table games.

"We believe that IGT will likely gain some share of the (electronic table) market, while we think the worldwide opportunity remains quite compelling for all players," Deutsche Bank gaming analyst Bill Lerner said in a note to investors.

In a statement, IGT Labs Senior Vice President Randy Hedrick said the company had explored technology for electronic table games developed by different companies before settling on Novomatic.

A spokesman for the Austrian company said it unveiled its electronic roulette game in 1997.

Lerner said the competition for electronic table games is growing. IGT will compete with products produced by Shuffle Master, Aristocrat and Aruze for space on the gaming floor.

Shuffle Master has been the casino equipment provider with the largest reach in the electronic table game market. The Las Vegas-based company operates Table Master, an electronic table game system that uses the company's own line of table game titles, such as Three Card Poker and Let It Ride.

Shuffle Master has been placing Table Master games over the past year, especially into California tribal casinos. As of July 31, the company had 139 of the five-seat gaming terminals operating in various gaming markets.

In October, Shuffle Master signed an agreement with the Delaware State Lottery System to place 54 Table Master terminals in the state's three lottery venues. The installations are expected to be completed by the end of November.

Shuffle Master has an additional electronic table game product, acquired in the purchase of Australian slot machine maker Stargames, that is used in international markets.

Lerner said Shuffle Master has a big jump on the competition. The Delaware deal gave the company 100 percent of that market and it won the contract by beating out IGT.

"Shuffle Master's electronic table product remains relatively more compelling given Shuffle Master's deep content of patent-protected proprietary games," Lerner said.

Shares of IGT traded up 31 cents, or 0.74 percent, on the New York Stock Exchange Monday, closing at $42. Shares of Shuffle Master closed at $30.06 on the Nasdaq National Market, up 36 cents, or 1.21 percent.