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Wall Street bullish on slots machines

26 August 2009

LAS VEGAS, Nevada –- Two gaming analysts have given slot machine makers a reason to smile. Both told investors that prospects for equipment manufacturers are high going into the next few years.

Potentially, 70,000 new slot machines could find their way into Ohio, Illinois, Kansas, Maryland, and Pennsylvania. In addition, California and New York are taking steps to add games while Massachusetts and Kentucky may consider gaming legislation.

"The upcoming fall season brings a number of important catalysts for the equipment companies," wrote Janney Montgomery Scott gaming analyst Brian McGill. "It will give insight into the magnitude of the new slot supply coming online."

Said Goldman Sachs gaming analyst Steven Kent, "When we upgraded the gaming equipment sector to Attractive at the end of 2008, our primary reason was our belief that states would look to expand gambling to raise revenues to plug tax shortfalls."

Kent said even more expansion opportunities now exist.

The analysts said International Game Technology, WMS Industries and Bally Technologies should all benefit.

Kent said the opening of Aria at CityCenter in December would help server-based gaming. He also expects November's Global Gaming Expo in Las Vegas should be a positive vehicle for the equipment makers.

"As we enter 2010 many of the casino operators should loosen their purse strings, which could jump-start a new replacement cycle," Kent said.