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Indy Gaming: IGT could sell its slot machine division as a ‘strategic alternative’

Howard Stutz
Howard Stutz
Global Gaming Expo attendees discuss a Wheel of Fortune slot machine at the IGT booth during the tradeshow on Oct. 11, 2022. (Jeff Scheid/The Nevada Independent).

Good morning, and welcome to the Indy Gaming newsletter, a weekly look at gaming matters nationally and internationally and how the events tie back to Nevada.

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Gaming equipment giant International Game Technology may be taking a page out of the playbook of rival Light & Wonder.

The Italy-based company, which maintains a small corporate office presence in Las Vegas and a manufacturing facility in Reno, said last week it was “evaluating strategic alternatives” for its global gaming and digital operations business segments.

In a statement, company executives said the range of options included a sale, merger or spinoff of the divisions, as well as further investment.

The announcement came three days after IGT said it reached a new 10-year licensing agreement with Sony Pictures Television for the exclusive rights to use the Wheel of Fortune brand across the company’s casino, lottery and social gaming products through the end of 2034.

The launch of the Wheel of Fortune slot machine changed the trajectory of then-Nevada-centric IGT when the company launched the game — just as casino legalization began rolling across the U.S. in the 1990s. IGT created some 300 versions of the game, which has paid out more than $3.5 billion in jackpots since 1996, according to a company statement.

So why would IGT be considering a possible sale of the divisions?

The investment community speculated that last year’s corporate moves by Las Vegas-based Light & Wonder — selling its lottery division for $6 billion and its sports betting business for $800 million — may have triggered IGT’s board into action.

IGT generates more than 64 percent of its revenue from its worldwide lottery business, which makes sense given that in 2015, lottery giant GTECH acquired casino-centric IGT in a $6.4 billion buyout with the combined company taking on the IGT name. With the 2018 expansion of legal sports betting in the U.S., IGT created a digital gaming division to capitalize on the business opportunity.

The lottery business, however, is what drives the company.

Truist Securities gaming analyst Barry Jonas wrote in a research note last week that IGT previously said it was exploring a spinoff of its digital division but might have seen the potential value of including the gaming division after Light & Wonder, formerly known as Scientific Games, completed its deals.

“The company has always extolled the synergies of its three segments, though this is something Light & Wonder got over to extract value,” Jonas wrote.

Even though sales prices may have declined since last year’s deal, Jonas wrote there is “a wide range of scenarios here with a sizable potential for value creation.”

Analysts said one of the reasons IGT may be looking at some type of corporate restructuring is its stock price. The company’s shares were trading at $27 at the time of the announcement and jumped up to $30 by the end of the week amid speculation about pending deals.

“We have argued that an ‘unpacked’ IGT should be worth considerably more than where it trades,” B Riley Securities gaming analyst David Bain wrote in a research note. He suggested IGT’s “iconic” gaming business “offers a unique opportunity within the global gaming industry.”

However, Bain said there is a “relatively limited field of potential buyers.”

Attendees watch a demonstration of a gaming machine at the IGT booth during G2E on Tuesday, Oct. 11, 2022. (Jeff Scheid/The Nevada Independent)
Attendees watch a demonstration of a gaming machine at the IGT booth during G2E on Tuesday, Oct. 11, 2022. (Jeff Scheid/The Nevada Independent)

IGT Chairman Marco Sala, who was the CEO of GTECH at the time of the IGT purchase in 2015 and became CEO of the newly combined company, cited the company’s stock price in the statement announcing the plans.

"We believe the intrinsic value of IGT's market-leading businesses and diversified cash flow profile is not currently reflected in our stock price and the timing is right to assess opportunities that may enhance value for IGT's shareholders," Sala said.

Jefferies gaming analyst David Katz told investors the initial idea going back to the 2015 merger between GTECH and IGT was of the cross-value potential between the lottery business and casino gaming. But it never materialized, and now IGT now believes the value is operating businesses separately.

“The larger questions are who would be interested and what they might pay,” Katz wrote in a research note.

He said the broader global gaming market could have international players seeking a U.S. presence in slot machines while the digital gaming division would more likely draw an American-based company.

An American Airlines flight, framed by the $2.2 billion Sphere in Las Vegas, prepares to land at Harry Reid International Airport on Wednesday, May 24, 2023. (Jeff Scheid/The Nevada Independent).
An American Airlines flight, framed by the $2.2 billion Sphere in Las Vegas, prepares to land at Harry Reid International Airport on Wednesday, May 24, 2023. (Jeff Scheid/The Nevada Independent)

Sphere adds a studio to produce ‘immersive content’ for the Las Vegas venue

As the $2.2 billion Sphere in Las Vegas moves toward its opening in late September with a performance by legendary rock band U2, the company behind the Strip’s most expensive entertainment attraction has created a division to boost its future entertainment offerings.

New York-based Sphere Entertainment, which was spun off from MSG Entertainment in May leading to the dropping of MSG from the Las Vegas venue’s name, announced the launch of Sphere Studios, which will develop “original immersive entertainment” exclusively for the 17,500-seat entertainment venue behind the Venetian Hotel and Casino off Koval Lane.

One of the innovations the company announced was “Big Sky,” an ultrahigh resolution and immersive camera system.

Sphere Studios will be located in Burbank, California, and includes “Big Dome,” a 28,000-square-foot, 100-foot-high specialty-built geodesic dome with a quarter-sized version of the screen at Sphere in Las Vegas. The facility serves as a specialized screening, production facility and lab for content at Sphere.

The Sphere includes a 580,000-square-foot exosphere with an outdoor programmable LED screen. Inside the venue, a 160,000-square-foot interior LED display will wrap around the audience. The project has been under construction for five years and has seen numerous cost increases.

Prior to the Sphere, the 65,000-seat Allegiant Stadium was Las Vegas’ most expensive entertainment venue with a cost of $1.9 billion.

In a research note earlier this month, Macquarie Securities analyst Paul Golding, who follows the entertainment industry, said Sphere Entertainment, “continues to be a bit of an unknown value driver given its novel format and cost to build and operate.” 

MSG Ventures CEO David Dibble said in a statement that “Sphere Studios is not only creating content but also technology that is truly transformative.”

MSG Ventures is a division of Sphere Entertainment and is focused on the development of advanced technologies for live entertainment.

“We created Big Sky, the most advanced camera system in the world, not only because we could, but out of innovative necessity,” Dibble said. “This was the only way we could bring to life the vision of our filmmakers, artists and collaborators for Sphere.”

The initial show will launch in October with “Postcard from Earth,” a one-hour production that will be shown multiple times per day. In a statement, the company said the show will be the first to utilize Sphere’s technological capabilities.

Film crews from Sphere Studios have traveled the world to film scenes for “Postcard from Earth” with Big Sky camera systems. 

Wynn Resorts CEO Craig Billings makes a point during an interview at Wynn Las Vegas on June 28, 2022. (Joey Lovato/The Nevada Independent).
Wynn Resorts CEO Craig Billings makes a point during an interview at Wynn Las Vegas on June 28, 2022. (Joey Lovato/The Nevada Independent)

Wynn Resorts extends contract of CEO Billings

Wynn Resorts extended its contract with CEO Craig Billings through June 2027, increasing both his annual base salary and bonus targets over the next four years.

Billings, just the third CEO in the company’s history, is directing the development of a $3.9 billion integrated resort in the United Arab Emirates on the man-made Al Marjan Island in Ras Al Khaimah. 

The company is also seeking one of three casino licenses in New York City through a partnership with the Related Companies on an integrated resort near the Western Yards at Hudson Yards, next to the Javits Center.

Billings, who took over as CEO in January 2022 following the retirement of Matt Maddox, was promoted as Wynn’s CFO in 2017 after years with gaming equipment manufacturers and technology providers.

In a filing with the Securities and Exchange Commission on June 2, the company said Billings' employment agreement increases his annual base salary from $1.8 million to $2 million and increases the annual target value of his restricted stock from 375 percent of his base salary to 410 percent.

The company also extended the employment agreement of CFO Julie Cameron-Doe by three years to June 2026, increasing her annual base salary from $900,000 to $950,000, as well as increasing restricted stock target values and other bonus incentives.

Wynn has two casinos in Las Vegas, Encore Boston Harbor in Massachusetts and two properties in Macau.In an interview last year with The Nevada Independent, Billings said his role at Wynn Resorts was “continuing to make sure that we are the standard-bearer for the casino industry.”

The Plaza Hotel and Casino in downtown hotel-casino display its Main Street façade and porte-cochère and four new venues. (Courtesy photo).
The Plaza Hotel and Casino in downtown hotel-casino display its Main Street façade and porte-cochère and four new venues. (Courtesy photo)


Via press release from Plaza Hotel & Casino

The downtown hotel-casino celebrated what it termed its “reimagination” of its Main Street façade and porte cochère with four new venues: Carousel Bar, Pinkbox Doughnuts, the rooftop patio at Oscar’s Steakhouse and Brian Christopher Slots at Plaza. The project began last year.

“For more than 50 years, the Plaza has called 1 Main Street home. Main Street is where Las Vegas got its start, and the Plaza continues to enhance this historic and exciting thoroughfare. Last year, we opened the legendary live music venue Sand Dollar Downtown. Today, we further establish Main Street as a premier downtown destination.”

  • Jonathan Jossel, CEO, Plaza Hotel & Casino 

Via press release from Jacobs Entertainment

The former Sands Regency officially became J Resort with a ribbon cutting that revealed two new restaurants, expanded gaming space and a renovation of 500 hotel rooms. The renaming and renovation is the first phase of a redevelopment of the property that will include new entertainment venues, unique artwork and a hotel expansion.

“J Resort will be the place to be for an unforgettable experience. J Resort is set to become the premier gaming destination in Northern Nevada, offering an unbeatable selection of restaurants, accommodations, art displays, and entertainment options.”

  • Jeff Jacobs, CEO, Jacobs Entertainment

Via press release from Fontainebleau Las Vegas

The Strip resort, which is expected to open in December, named gaming industry veteran Mark Tricano as president. He most recently worked in Macau with Galaxy Entertainment Group. He also worked with Caesars Entertainment and Station Casinos (now Red Rock Resorts) in Las Vegas, including as general manager of Red Rock Resort. Fontainebleau also named Michelle Reda to oversee marketing and Kimberly Virtuoso as the head of human resources.

“Our executives have all proven to be extraordinary leaders throughout their careers. Their passion, appreciation for excellence, and entrepreneurial spirit make each one of them a natural fit to complement the leadership team we have built to date.”

  • Brett Mufson, president, Fontainebleau Development

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