IGT purchasing Wagerworks

eek

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Feb 10, 2003
Seems a strange thing to do considering the legal situation in the USA.

playMGMmirage.com didn't last long...

...and didn't the Meister move because of potential problems too?
 

Casinomeister

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eek said:
...and didn't the Meister move because of potential problems too?
Eh? I moved here because I married a German and the Bier is kick-ass. I also moved here in '99 before all of the bullshit US laws.

And here I stay :D
 

GrandMaster

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I don't think anybody is trying to claim that it is illegal for an American company to produce online gambling software. For example, RTG is based in Georgia, a state which does not allow casinos or sports betting. Wagerworks casinos do not allow US residents to gamble, whereas RTG casinos do and RTG does not seem have any problems because of this. Playmgmmirage's problems may have had to do with bad marketing, with their failure to realize the differences between online and land-based casinos, or with the fact the casino offered the worst blackjack known to man.
 

dalzilla

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More from the press release

More from release...
Note the comments related to "operators who knowingly process gambling transactions from the US: and "....think this transaction validates WagerWorks' regulatory strategy and reinforces our belief that remote gaming will continue to evolve and mature in a regulated manner, led by credible established gaming companies, like IGT."

I tend to interpret this as a current outlook versus the future of regulated online gaming. I own IGT stock and will be curious to see the short and long term effect on it.

dal


"International Game Technology Announces Definitive Agreement To Acquire WagerWorks, Inc.

RENO, Nev., July 27 /PRNewswire-FirstCall/ -- International Game Technology (NYSE: IGT) announced today that it has entered into a definitive agreement with WagerWorks, Inc. ("WagerWorks") pursuant to which WagerWorks would be acquired by IGT in an all cash merger. The consummation of the merger is subject to customary closing conditions and regulatory approvals. IGT expects the transaction to be completed in August 2005.

WagerWorks, a privately owned company, is a provider of internet gaming technology, content and services. WagerWorks has distinguished itself with its content portfolio and strict operation policy of not conducting business with operators who knowingly process gambling transactions from the United States. WagerWorks' customers include BSkyB, Rank, Blue Square, Paddy Power, Virgin and World Poker Tour(R). They also have important premium content relationships with Sony (including online internet rights to Wheel of Fortune), Hasbro and FremantleMedia.

TJ Matthews, IGT's Chief Executive Officer said, "The acquisition of WagerWorks will help the distribution of IGT game content across new channels and mediums including the internet, mobile devices, and interactive television. WagerWorks' adherence to a strict compliance policy ensures that operators offer the company's products and services to end users in a responsible manner. We are very excited to work with their customer base, content providers and management team to accelerate and enhance WagerWorks' growth prospects."

Paul Miltenberger, Chief Executive Officer for WagerWorks said, "We think this transaction validates WagerWorks' regulatory strategy and reinforces our belief that remote gaming will continue to evolve and mature in a regulated manner, led by credible established gaming companies, like IGT. We've had a longstanding relationship with IGT and our approach to the industry, particularly as it relates to content, is complementary. We're thrilled about the opportunity to utilize IGT's content and intellectual property portfolio to further enhance our product offerings and deliver the most compelling gaming experience to the players."

Under the terms of the proposed transaction, the total consideration paid by IGT would be approximately $90 million, subject to a working capital adjustment. Pending final purchase accounting adjustments including amortization of lifed intangibles and in-process research and development, IGT estimates the transaction to be up to $0.02 dilutive to earnings in both fiscal 2005 and 2006".....
 

jetset

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Grandmaster has zero'd in on a key advantage of the WagerWorks operational style, and the release makes at least two references to it:

"WagerWorks has distinguished itself with its content portfolio and strict operation policy of not conducting business with operators who knowingly process gambling transactions from the United States."

and

"WagerWorks' adherence to a strict compliance policy ensures that operators offer the company's products and services to end users in a responsible manner."
 

jetset

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The analysts think so, too:

Analysts said WagerWorks' policy of working exclusively in jurisdictions that permit Internet gambling and avoiding companies that offer play in the United States should enable IGT to dodge any regulatory problems.

"This acquisition gives IGT a foothold in Internet gaming without worry about jeopardizing its gaming licenses, since WagerWorks does work for only licensed and regulated sites," said Eric Hausler, a gaming analyst for Susquehanna Financial Group, in a note to investors.

"Internet gambling continues to explode in popularity driven by the proliferation of poker," Hausler said. "We see it more as a vertical play with longer-term accretive implications, although we see IGT more as a back-end supplier and content provider than interested in going into competition against brick-and-mortar customers. We see the acquisition as strategic, not transformational, given a myriad of regulatory issues surrounding mobile or Internet gaming, which may or may not get solved over time."
 

eek

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GrandMaster said:
or with the fact the casino offered the worst blackjack known to man.
??
The single deck game was 99.96% with 1% comps at playMGMmirage.com grandmaster...

(Although I found the variance had a bit of a habit of being negative...)
 

GrandMaster

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eek said:
??
The single deck game was 99.96% with 1% comps at playMGMmirage.com grandmaster...

(Although I found the variance had a bit of a habit of being negative...)
Maybe later, but in the first version there was only Top Hat BJ with 97.9% theoretical return.
 

why0why

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With the way the US is, I think it is too dicey to make gaming software here. I have considered making software, but if they decided to prosecute, I think they could and they would win.
 

mary

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IGT a few years ago had an online software company that they'd acquired (I'll have to look it up); they were forced to sell by the Nevada Gaming Commission.

Since then, Virtgame convinced the Gaming Commission that internet gaming could be made secure with respect to geolocation and there have been other events that have made the Commission more receptive to Internet gaming. MGM Mirage had no legal troubles.

IGT has undoubtedly been monitoring Wagerworks since its inception as a spinoff from Silicon Gaming when that was acquired by IGT. Wagerwork's founder Andrew Pascal is Steve Wynn's nephew. This isn't a sudden change of heart due to the Party Poker IPO; this has been in the making a long time.
 

eek

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Geolocation is easy to circumvent if you use a server in another jurisdiction to reroute your internet requests Mary.

Its called tunneling software and took me 15 seconds to find.
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There will also be offshore services that do this for a monthly fee.
 

mary

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eek honey, you know that and I know that...now don't go blowing Virtgame's groove. (They got patents on their geolocation method.)

CAFTA passed today by a *two vote* margin. It may lead to Costa Rica forcing the US to accept online gambling under free trade agreements; unlike the WTO agreements it has no "morals exception".
 

mary

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Poor Access Gaming! they did the software for Lasseters. Lasseter's takes wagers from the US, so they won't be courted by any US companies in the future.
.................................................................................
Access Systems Forms Partnership With Reno Based Leader IGT

January 27, 1999 - International Game Technology of Reno Nevada ("IGT") and Access Systems Pty. Ltd. of Sydney, Australia ("Access") recently signed an agreement to develop a global Internet gaming software alliance. Under the terms of the agreement, IGT will own a minority interest in Access and will assist in the marketing of the Company's ACES Internet gaming system to major gaming operators in regulated and legalized Internet gaming markets.

Access' leading edge ACES software technology provides gaming operators with a secure, scaleable and robust high volume transaction-processing platform. The ACES system supports a very broad range of games including, lotto, bingo, keno, slots, blackjack and roulette. Access' Games Development Kit ("GDK") allows its customers or other game developers to develop new games for the ACES system independent of Access. The Austrian Lotteries is a current customer of Access and is the first major lottery to offer interactive games over the Internet. The Austrian Lotteries began live operations in December 1998 using the ACES system.

"IGT has continually evaluated the developments and opportunities in the Internet gaming arena and the ACES system is the highest quality and most secure product in the marketplace." commented Tom Baker, President and Chief Operating Officer of IGT. "Equally important to IGT, is Access' policy of licensing its ACES technology only to major gaming operators in regulated jurisdictions."

Stephen Mulcahy, Managing Director of Access, said, "IGT is the ideal strategic partner for Access. The agreement with IGT enables us to expand our business by increasing market accessibility via IGT's worldwide distribution network. It also allows us to add considerable gaming content for our ACES system."

IGT is a world leader in the design, development and manufacture of microprocessor-based gaming products and software systems in all jurisdictions where gaming is legal.

Access is the world leader in the supply of Internet gaming systems to major gaming operators in regulated jurisdictions with customers in Australia and Europe. Access licenses its ACES technology in regulated jurisdictions to licensed gaming operators - casinos, lotteries and lawful wagering operations.

For further information contact:

International Game Technology
Reno Nevada U.S.A.
Maureen Imus
Phone: (775) 448-0127
Access Systems Pty. Ltd
Europe
Stephen Mulcahy
Phone: (353) 86 8144713
Access Systems Pty. Ltd
Australia
Tim Todhunter
(61) 0412 390966


SOURCE: Access Systems and IGT
 

eek

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Feb 10, 2003
(just thinking aloud)
IGT isn't like RTG, IGT is very dependent on local regulators and needs to keep them happy.
So if the IP system isnt good enuf there's a high probability IGT will be forced to use the heavy documentation system for player ID that the Isle of Man implemented...and which was a failure...

I'm not sure if there any I.O.M. casinos left, many moved to the Channel Islands.
I was going to sign up at Atlantis but they wanted heavy documentation like birth certificate/SS number info.

I really get the impression that we've all been here before...

...time will tell.
 

mary

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Microgaming sites ask for SSN as does Neteller. I don't see that as insuparable.

birth certificate, on the other hand...wow.

I didn't know that the reason Atlantis (Kerzner) and others left Isle of Man was the id requirements, I thought it was the combination of no-US players and taxes.

As far as US regulators go, there are two jurisidictions that set the requirements for the rest of the country: Nevada and New Jersey. If something is ok with Nevada, it will be ok elsewhere. The gating factor will not be IGT's (and some other companies, all the lottery companies leap to mind) ability to convince regulators that their security is good-- the gating factor will be whether or not the Feds back down on the Wire Act applying to online casinos and poker rooms.

Some states have already authorized Internet wagering should the Feds explicity not prohibit it. Nevada is one of them. IGT is Nevada's hometown team. IGT could offer the many casino customers it currently has a full web online casino presence package that hooks seamlessly into the existing slot club program. MGM Mirage and Harrah's have already had a go at live wagering without US customers and couldn't make it; if the US becomes legal I don't see Nevada stopping them. The political will is not there.

In the meantime, IGT via Wagerworks can continue to enroll UK land operators. I see them going head-to-head with Cryptologic on this.

I have owned IGT stock for several years now (since before they acquired Anchor and Acres) and currently hold it. That means a.) I follow them closely and b.) I'm totally biased.
 
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eek

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The heavy documentation requirements were there to ensure the law wasn't broken, under 18, US resident etc etc etc
These onshore based operations with US aspirations had to show beyond any reasonable doubt that they were not breaching US regulations.

On the flip side for the casino, credit card deposits were legally enforceable debt.

No US players was another reason they left, but that hasn't changed
They also had to deposit a bond(~$2M ?) with the IOM gaming commission.
Taxes I'm not so sure about, I though both places were 10%...
 

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