International Game Technology (NYSE: IGT) makes slot machines and other electronic casino games. IGT sells the majority of its products directly to casinos and produces nearly 70% of slot machines in North America. The company also develops and sells casino network systems, including Central Determination System (CDS) machines that connect casino games to a central server that determines the outcome of a specific game and the IGT Advantage Casino System that integrates operations such as machine accounting and table game automation.
Shaky consumer confidence has sent the Applied Analysis Gaming Index, which includes casino operators and gaming machine manufacturers, down by 15.7 percent in January 2008, and IGT's stock dropped 6.78% during this time.
The number of casino games sold by IGT dropped 2005-2007, and most revenue growth came from the company's casino network systems and other technology that helps casinos manages games and tables rom a central location. Although IGT has offices internationally - including the fast-growing gambling spot in Macau, the vast majority of sales come from North America.
IGT competes with Aristocrat Leisure (ASX:ALL), WMS Industries (WMS) and Shuffle Master (SHFL) in the casino gaming industry. IGT acquired Digideal Corporation in June 2007 (for $31.2 million), WagerWorks in August 2005 (for $89.1 million), and Anchor Gaming in December 2001 (for $1,323.9 million).
|Years ending September 30||2007||2006||2005|
|Revenues ($ in millions)|
International Game Technology's 8% increase on gaming operations from 2006 to 2007 reflects its growing emphasis on the more technological aspects of the casino gaming industry. Although its sales of electronic gaming machines remained the same, fiscal 2007 saw an increase in research and development, along with a growing emphasis on network systems. International Game Technology's investment in R&D increased to $202.2 million in fiscal 2007, from $188.5 million in 2006 and $138.4 million in 2005.
People tend to go to casinos only when they feel they have enough disposable income. Shaky consumer confidence has sent the Applied Analysis Gaming Index, which includes casino operators and gaming machine manufacturers, down by 15.7 percent in January 2008. IGT's stock dropped 6.78% from December 2007 to January 2008.
There is also evidence to the contrary. Gambling has been considered rescession-proof for many decades. It seems when a person is down on his luck, he is much more willing to gamble. In 'tourist' casinos like Las Vegas, one can expect a drop in attadance. This is due to the fact that people have to fly there. It is more of a vacation so people tend to vacation less when money is tight. In 'local' casinos, there has been almost no notice in attendance drop. Many casinos, espcially in Florida, have seen increases. This is due to the fact that players are from the area and gamble on a regular basis. For example, the revenue for poker and lotteries is at a all time high and still increasing.
Since IGT deals with casino-related electronic gaming products, it can only operate in regions that have legalized gaming. Jurisdictions in Florida, Pennsylvania, Kansas, Indiana, Washington and California have legalized gambling and more governments abroad are following the trend as well. IGT expects growth in its business in markets in Latin America, Europe, Asia, and Australia in fiscal 2008. 
The gaming industry is adopting newer centrally managed systems, such as IGT's Wide Area Progressive (WAP) network systems that link machines across several casinos in a given region, greatly simplifying casino operation. International Game Technology's investment in R&D increased to $202.2 million in fiscal 2007, up from $188.5 million in 2006 and $138.4 million in 2005.
Similarly to technological advancement, customers' constantly changing tastes can render certain gaming products obsolete. Many hardcore gamers prefer table games like blackack. The average table games player brings $400 to a casino to gamble, while the average slot machines player brings $40. The table games players are more educated than the average slots players which is indicated by the higher income level. Slot machines continue to grow in popularity and thus have begun to require more and more floorspace in casinos worldwide, which helps the business of IGT, the world's leader in slot machine manufacturing.
($ in millions)
|Company||2007 Revenue (Total)||2007 Revenue (Electronic Gaming Machines)||2007 Revenue (Gaming Operations)||Market Cap|
|International Game Technology (IGT)||2,621||492||1,235||14,353|
|WMS Industries (WMS)||540||317||174||1,712|
|Shuffle Master (SHFL)||179||39||27||569|
|GTech Holdings (private)||1,294||N/A||N/A||4,446|