IGT a sleeping giant in ‘Net gaming

Friday, May 9, 2003 | 11:13 a.m.

Even before major casino companies announced plans to operate Internet gambling sites abroad, the industry's largest supplier, International Game Technology, had exited the business by pulling its stake in a Sydney-based content provider to Web casinos.

IGT divested of Access Systems after just a few months over concerns that a website run by an Access client was accepting bets from clients outside Australia, one of few jurisdictions that had legalized online betting. Nevada gaming regulators also aired their concerns about the investment -- namely, that Nevada license holders were entering uncharted waters and putting their valuable state gaming licenses at risk.

Still, the Reno-based company -- the world's largest slot maker -- is considered a sleeping giant in the emerging Internet gambling business.

"With their technology, their systems and their content, IGT could be a pretty powerful provider of online services" for Web casinos, said Marc Falcone, a gaming industry analyst with Deutsche Bank Securities.

IGT Chief Executive Tom Baker says the company is waiting for the right time and place to jump back into the market.

"We took a look at it then and thought it was a good idea," Baker said in an interview published today in In Business Las Vegas, a sister publication of the Las Vegas Sun. "We changed our mind because the regulatory environment in the U.S. is still uncertain and the politicians and regulators still have not come to a consensus and a clear set of rules for how things are going to work."

Internet gambling must be legalized in this country before the industry can gain enough credibility to move forward, Baker said.

"I personally feel that although we've seen some success in some parts of the world, Internet gaming is not going to work well until the U.S. is part of the market," he said. "We'll continue to stay abreast of what's going on ... I think (legalization is) going to take a while. How long? I don't know, but a while."

IGT would more likely offer content for online casinos rather than operate one, which could compete with the company's land-based casino customers, Vice President of Marketing Ed Rogich said.

The company has been approached by major gaming companies to provide content for websites that now operate in areas that have expressly legalized Internet gambling.

But it has steered clear of such deals because of the cloudy legal environment in the United States, Rogich said.

"When the light started shining more and more on Internet gambling, the one thing we saw that held true through it all was that the potential impact on our business wasn't worth the price of being involved with it at all," Rogich said.

Regulator attitudes towards Internet gambling may change over time, Baker said.

"Some of these businesses that regulators don't like at all, as time goes on and as those businesses change and the people doing them change or the technology becomes more secure, the regulators become more comfortable with it."

In the meantime, IGT is exploring other technologies.

The Nevada Gaming Control Board recently adopted regulations that govern the use of "cashless" slots and other software allowing for gambling via electronic transfers rather than cash.

As soon as this year, Baker said, the company may begin testing technology that could allow customers to transfer cash from their bank accounts to slot machines.

"We are comfortable that the technology is there to make that work. What we're not sure of is how it will work in the marketplace ... If it is accepted and the laws allow it, we would expect to provide that technology."

IGT isn't promoting the use of credit cards in slot machines, instead siding with regulators who have prohibited the practice.

"We have no interest in trying to change that or pursue any kind of credit card gaming machine activity," Baker said.