Editorial: Proposed merger deserves close look

Wednesday, July 11, 2001 | 9:24 a.m.

Reno-based International Game Technology's pending acquisition of Las Vegas-based Anchor Gaming poses some thorny antitrust issues for state and federal regulators as they assess the impact of a merger between the slot machine makers. In the past few years there have been a spate of acquisitions among hotel-casino corporations, and recently state gaming regulators have acknowledged that antitrust concerns will play a larger role in their review of mergers.

The proposed acquisition isn't a sweeping change in market share. IGT, which already has joint ventures with Anchor, now has 70 percent of the North American slot machine market. Anchor has about one-half of 1 percent of the same market -- if joint ventures aren't tallied. But Anchor's share of the market isn't why IGT is willing to pay $1.3 billion to swallow the company. As the Sun's David Strow reported, Anchor produces $200 million a year in annual cash flow -- about half of what IGT reports. So acquiring Anchor Gaming will make IGT considerably more powerful, something that could help them cement their dominance. Still, a slot maker's hegemony can slip away: Just 15 years ago Bally had more than 90 percent of the market before IGT took away the crown.

For Nevada's tourist-based economy, it is essential to have healthy competition in our gaming industry, a competition that has produced innovation and played a large role in the thriving economy we've experienced. State gaming regulators and federal regulators should carefully consider the proposed acquisition to ensure that it couldn't lead to a single slot-machine maker crushing any competition.