IGT Exploring Potential Sale Amid US Gambling Expansion

Acquisitions, legal expansion, mergers, technological developments. Those words could apply to many industries in the United States in 2023. The online gambling industry is no exception. Amid early maturation of that industry in the US, there are opportunities to craft the future.

International Game Technology (IGT) has shared with the public that it has retained firms to perform a strategic review of its operations. There are many possible outcomes for IGT. Failing to explore all options right now could be missing out an opportunity.

A Thursday news release from IGT explains that the company is kicking the tires on a number of potential options for how to proceed with its gambling operations.

Toward that end, "IGT has retained Deutsche Bank, Macquarie Capital and Mediobanca as financial advisors and Sidley Austin and White & Case are serving as legal counsel." At this point, all options are on the table. Those range from staying on the present course with further investment all the way to a complete sale.

As far as the motivation for the review, IGT Executive Chair Marco Sala provides an explanation.

"Over the last three years, IGT has sharpened its strategic focus by reorganizing around core product verticals, monetizing non-core assets, reducing structural costs and significantly improving its credit profile," Sala stated. "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."

In plainer language, IGT's board of directors believes the stock price is too low and the iron could be hot for a major move. They might be onto something, too.

If nothing else, Thursday's announcement produced a short-term boost for IGT shareholders. In early trading, IGT's stock was up more than 13% on Thursday. There are other reasons for investors to kick the tires on IGT, though.

In the first quarter of this year, IGT reported adjusted EBITDA (Earnings Before Interests, Taxes, Depreciation, and Amortization) of $449 million. Additionally, IGT said it hit its goal for its operating income margin at 24.1%.

Regardless of such performance, its earnings per share fell 72% compared to the first quarter of 2022. That's part of the timeliness of the review, though. Amid that stock performance, IGT has been busy. The company partnered with BetMGM to launch a Wheel of Fortune-branded online casino app in New Jersey.

Earlier this week, IGT closed on a deal to lock up the exclusive gaming rights for Wheel of Fortune for another decade. IGT has also agreed to help the Connecticut Lottery take its business online recently. Yaamava’ Casino also debuted IGT's X Poker. That's all just since June began a week ago.

The timeliness of this review isn't solely about what IGT is doing, though. When it comes to potential acquisitions or mergers, it takes two to tango.

As more US jurisdictions legalize more forms of online gambling, gaining a significant market share is going to favor large operators. Holding onto those shares of the market is going to require those operators to get larger, too.

In that interest, the acquisition and merger dominoes have already started to fall. Fanatics Betting & Gaming purchased PointsBet's US operations. Kindred is also conducting a strategic review toward a potential sale. Rush Street Interactive has streamlined its operations as it remains a hotly rumored acquisition target.

Thus, IGT putting its hat in the ring before the companies looking to do the acquiring spend all their cash on other opportunities is pivotal. That is, of course, if that is the direction IGT ends up going. Announcing this review makes it clear that IGT is ready to listen to offers.

IGT is putting all of its tires on the lot. Come and kick away.