International Game Technology Forming Dedicated iGaming, Sports Betting Unit
Posted on: September 9, 2021, 09:00h.
Last updated on: September 9, 2021, 02:56h.
International Game Technology (NYSE:IGT) is tapping into the booming internet casinos and sports wagering industries, announcing the creation of a dedicated digital and betting unit.
The London-based company’s iGaming and sports wagering enterprises were previously part of its global gaming segment. Enrico Drago, who previously oversaw IGT’s internet casino, iLottery, and sports wagering businesses, will be the chief executive officer of the new digital and betting outfit. Drago will report directly to IGT CEO Marco Sala.
As a result, beginning with the third quarter of fiscal year 2021, IGT will report results under three business segments: Global Lottery, Global Gaming, and Digital & Betting,” said the company in a statement.
IGT’s iLottery business, which has impressive growth potential in its own right, remains part of the company’s broader global lottery unit.
Financial Impact of IGT Business Rejig
Gaming supplier IGT said that in advance of its third-quarter earnings report, it “expects to provide a recast of its historical financials to reflect the new segment disclosure.”
Last month, the maker of the famous Wheel of Fortune slot machines provided bullish financial guidance, forecasting revenue for the second half of 2021 of $2 billion on operating income from continuing operations of $300 million. The company generated $500 million in cash flow from continuing operations and a record $380 million in free cash flow in the first half of 2021.
Investors like the news of IGT forming a dedicated iGaming and sports wagering unit, as the shares are higher by 3.3 percent in midday trading. The stock is up 26.33 percent year-to-date.
“These businesses have become strategically important to IGT as they afford us the opportunity to leverage the global reach and strong customer relationships of our Global Gaming segment,” said CEO Sala in the statement. “The new structure gives us more flexibility in our product and solutions portfolio and enables better appreciation of the intrinsic value of these activities.”
Reasons to Like IGT Stock
The UK-based gaming technology company provides back-end services and solutions for lotteries and sportsbooks around the world, and also manufacturers slot machines.
The company is also actively working to reduce its debt burden and bolster cash flow, efforts that could be enhanced by the streamlining of its iGaming and sports betting businesses. Additionally, forming a dedicated outfit for those units could be well-timed, because the move is occurring at a moment of exponential growth in those industries.
Some analysts estimate the iGaming industry ascending to $23 billion in 2030, 70 percent of which will be derived from slots. That could be a boon for IGT and rival Scientific Games because as the research firm notes, those companies each control about 20 percent of the online slots market.
The consensus price target on IGT stock is $29.31, or more than 33 percent above where the shares reside at this writing.
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