WMS shareholders approve SciGames takeover

Posted on May 13, 2013 by r.weston

Shareholders to receive US$26 a share with acquisition to be completed by end of 2013

WMS shareholders have voted in favour of the merger agreement which will see SciGames acquire the business by the end of 2013.

Of the votes cast at Friday’s meeting, more than 99% of those present voted in favour of adopting the merger agreement which will see shareholders receive US$26 a share.

In addition, more than 85% of voters were in favour of the non-binding advisory proposal for compensation related to the acquisition. All voting represented approximately 75% of WMS shareholders eligible to do so.

WMS chairman and CEO Brian Gamache described the meeting as “an important milestone” towards the eventual acquisition. “In the meantime, we remain focused on commercialising new innovative game content and products for our casino operator customers,” he said.

The US$1.5bn takeover was announced in January, with SciGames CEO Lorne Weil calling the acquisition the “opportunity of a lifetime”. However in its recent first quarter results, the games, technology and service provider revealed it has already paid $4m in fees and expenses related to the acquisition, contributing to a $11.6m year-on-year decrease in total revenues.

Earlier this month, the Delaware Lottery selected a joint bid by SciGames, 888 and Williams Interactive to provide it with online gambling services.

WMS acquisition costs sees SciGames revenues decline

Posted on May 8, 2013 by r.weston

Scientific Games’ total Q1 revenues fall $11.6m year-on-year, with gaming revenues decreasing 14.85%

Scientific Games’ revenues for the first quarter of 2013 dropped 5% year-on-year with the company’s CFO Jeffrey Lipkin citing costs associated with the forthcoming WMS acquisition as a key factor.

In an analyst call discussing the results, Lipkin revealed the games, technology and service provider had to pay approximately US$4m in fees and expenses related to the WMS acquisition, with the $1.5bn deal announced in January.

SciGames’ total revenue fell to $219.6m for the three months ended 31 March, down from $231.2m for the same period in 2012. Gaming revenue also decreased 14.85% year-on-year from US$41.23m in the corresponding period last year to $35.11m, with the company attributing this decrease to difficult economic conditions harming player activity.

Attributable EBITDA was down 9.23% compared to Q1 2013, decreasing from $86.7m to $78.7m and SciGames also posted a $13.2m net loss in the quarter, compared to a $1.8m profit in Q1 last year.

Revenue from lottery sales decreased $3.3m year-on-year too following lower sales to SciGames’ international customers.

Scientific Games CEO Lorne Weil said in the analyst call the WMS acquisition will be “far and away the most transformative development in our history” and he defended the disappointing first quarter results.

“Our Q1 results were in line with our budget,” he said. “The first quarter has historically been a seasonally lower quarter. Our Q1 results last year had an anomaly and reflected some unusual items that benefited the quarter.

“I am very happy with the direction in which the company is heading. We are highly focused on executing on the number of significant business initiatives and we anticipate momentum will accelerate as the year progresses. Looking ahead we continue to lay the ground work for opportunities in 2013 and beyond including joining forces with WMS,” he added.

SciGames also announced a meeting has been scheduled with WMS stockholders for 10 May to discuss the pending acquisitions, while applications have been filed in each of the 50 jurisdictions required to close the deal.

Since the first quarter, SciGames has won two new contracts. Last week the Delaware Lottery selected a joint bid by Scientific Games, 888 and Williams Interactive to provide it with online gambling services, with the online gaming site set to go live by the end of the year. Last month Northstar Lottery Group, a coalition of Scientific Games and GTECH, was the winning bidder for the New Jersey state lottery contract.

Williams Interactive boosts WMS Q3 revenues

Posted on May 7, 2013 by r.weston

Online division brings in US$17m to drive 21.9% year-on-year gaming revenue growth

WMS Industries’ growing egaming division helped the company record a 21.9% year-on-year increase in gaming operations revenue for the quarter ended 31 March 2013.

Gaming revenues for WMS, acquired by Scientific Games in January, increased from US$65.4m in Q3 last year to $79.7m in this year’s third quarter. The online division Williams Interactive, launched in July last year, contributed $17.1m.

WMS’ saw overall revenues grow 1.1% to $177.9m in the period, a rise from $176m in the corresponding quarter last year. However, adjusted EBITDA for the third quarter decreased 25% year-on-year, dropping to $49.3m from $65.3m in Q3 last year, while net income was also down 64% from $22.1m in the same period in 2012 to $7.5m. Both declines were blamed on to “incremental costs related to the pending acquisition” by SciGames.

WMS chief executive Brian Gamache said he was encouraged by the “continued strong revenue growth for our interactive products and services”. “Strong player and customer interest in recently launched gaming machines and the growing availability and rising popularity of our interactive products and services are establishing a platform for long-term success,” he said.

Gamache added that WMS would look to increase investment in new product development and marketing efforts aimed at “expanding the distribution and availability of [its] interactive products, services and game content”.

Last week the Delaware Lottery selected a joint bid by Scientific Games, 888 and Williams Interactive to provide it with online gambling services, with an online gaming site in the state set to go live by the end of the year. The third quarter also saw Williams Interactive strike content distribution deals with SkyBet’s Sky Vegas casino brand and the Rank Group, as well as Scandinavian-facing operator Bonnier Gaming.

WMS Gaming appoints new CTO

Posted on April 11, 2013 by r.weston

Tony Belkin takes charge of gaming supplier’s hardware and software development

WMS Gaming has named Tony Belkin as its new chief technology officer and vice president of engineering.

Belkin has taken on a role previously occupied by Laurie Lasseter, who will continue to work at WMS Gaming as executive technology advisor.

Belkin will report to Fred Gabbard, senior vice president of product development operations, and oversee the engineering and development of the gaming supplier’s hardware, software and gaming systems. He has more than 30 years’ experience in technology and product development with a range of companies including Motorola.

“Tony has the knowledge, leadership skills and passion required to speed our development of new technology platforms to exceed the expectations of our casino customers and the player community,” WMS Gaming president Ken Lochiatto said.

WMS Gaming is a subsidiary of WMS Industries, which is set to be acquired by Scientific Games, after a US$1.5bn acquisition deal was agreed in January, with SciGames CEO Lorne Weil describing the purchase as the “opportunity of a lifetime” for both companies.

Last month WMS Industries’ egaming subsidiary Williams Interactive announced a deal to supply Sky Vegas with online slot content.

SciGames posts 7% revenue growth in 2012

Posted on March 12, 2013 by r.weston

Lottery supplier sees net loss in Q4 widen as $1.4bn WMS acquisition completion draws closer

Scientific Games recorded a 7% increase in revenues last year and is edging closer to completing its proposed acquisition of gaming supplier WMS Industries, the company has announced in its results for the year ended 31 December 2012.

Due to US lottery retail sales increasing 5%, Scientific Games achieved a 4.3% rise in revenue in the fourth quarter ended 31 December 2012 compared to Q4 2011, with attributable EBITDA increasing 13% from $80.3m to $90.6m year-on-year.

The lottery specialist’s net loss in Q4 increased however from $8.5m in the same 2011 period to $24.7m, attributable to increased depreciation and amortization expenses. Revenue from gaming, meanwhile, decreased after losing a William Hill contract and closing its Austrian over-the-counter business in 2011.

The Federal Trade Commission has granted SciGames and WMS early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, a pre-requisite for the US$26 a share acquisition announced in January. At the time Scientific Games said the $1.5bn acquisition should officially close by the end of this year and highlighted the significant boost he anticipated to the company’s earnings per share by creating a company “with the ability to offer an extensive range of products and services to public and private sector lottery and gaming customers around the world”.

In an analyst call discussing the results, CEO Lorne Weil said the acquisition of WMS would be “special” for SciGames once completed. “We believe it leverages the strategic dimensions about the broad scale and scope – scale through the integration of functional resources like engineering, manufacturing and content development, and scope through the application of the core competencies of each partner to generate new revenue streams in the markets of the other,” he said.

The company was part of the consortium led by OPAP awarded the contract to manage the Greek lottery in December for 12 years, with SciGames set to be the exclusive instant ticket supplier.

SciGames has also agreed a deal to supply the Maryland Lottery with its Properties Plus loyalty rewards programme, bringing the total to eight, which the supplier stating in its results that this programme “will help lead the way for states to begin providing internet-based offerings”.

WMS acquisition “opportunity of a lifetime”, says SciGames CEO

Posted on January 31, 2013 by r.weston

Lorne Weil predicts rapid boost to Scientific Games’ earnings per share and never-seen-before games

Scientific Games CEO and chairman Lorne Weil has described the agreement to acquire WMS as “the opportunity of a lifetime” for both companies to boost financial performance and product offerings.

Discussing the US$1.5bn, $26 a share agreed acquisition of the slot game manufacturer in a conference call just half an hour after the announcement, Weil highlighted the significant boost he anticipated to Scientific Games’ earnings per share (EPS), as well as the chance to combine creative expertise to create new, unique games. Scientific Games anticipates the acquisition will officially close by the end of this year.

On the financial benefits of the acquisition, Weil said: “A very, very different financial profile emerges almost immediately because for the merged company, what in our case has been relatively modest EPS, certainly in relation to what our EBITDA has been, almost immediately certainly within a year or two, we would anticipate very very significant reported EPS.”

The lottery and gaming software provider anticipates to generate $110m in anticipated cash flow savings on an annual run-rate basis. Combined, the two companies recorded US$1.623bn in the 12 months up to 30 September 2012, as well as a combined attributable EBITDA of $669m including anticipated synergies.

Weil added that the second main benefit of the acquisition was the potential for the two companies to work together to develop new games as an “even more compelling” advantage than the financial one: “Here we have a case where the complementarities [sic] first and foremost has huge opportunities for revenue synergy… to market and sell each other’s products and systems and services through the other’s channels of distribution, and also to create new products and systems and services that neither of us is offering to the market at this present time.

“But as a result of the complementarity [sic] of our capabilities, [we] will create products not only that neither WMS nor Scientific Games have ever seen, but indeed I think that neither the gaming market nor the lottery market has ever seen, and I’m very very excited about that,” he continued.

Weil said there was “no competitive overlap between Scientific Games and WMS” in terms of their business strategies and as a combined company, Scientific Games and WMS can offer a more complete product offering – while both currently offer slots, the former also has sports lottery products, draw games and electronic instant tickets, while the latter provides video poker, casino games and multi-player games as well as social games.

When questioned by analysts Weil argued that the two businesses were a good match because while Scientific Games’ income is increasingly being generated from international markets. “WMS is almost the mirror image of that, with about 75% of the business being in the United States.”

Referring to Scientific Games’ market penetration in China, the rest of Asia, Europe and Latin America, Weil said he was “confident our footprint can be helpful for expanding WMS’ business in these territories”.

Weil also predicted that an increasing number of state-owned and private lotteries are looking to offer gaming products of which WMS would now be able to profit from, citing in particular the Greek lottery’s privatisation, with an offer accepted from an OPAP-led consortium including Scientific Gamesaccepted in December last year.

When asked during the call about Scientific Games’ approach to the US market, currently regulating on a state-by-state basis, Weil said: “That would seem to very, very strongly favour the approach that we’ve been orientating ourselves around, which is built around the relationships that we have in every one of these states and integrating into that all the things that WMS has been doing.

“Certainly if the situation stays fundamentally the way it is now, then I think the combination of the Scientific Games and WMS online strategy and activities would be operating in an obviously very favourable environment,” he added.

Shares in WMS closed last night at $16.37 a share, while news of the deal sent WMS’s share price up 56% in pre-market trades to $25.60 a share.

Online activity sees WMS revenues soar

Posted on November 2, 2012 by t.washington

Chairman and CEO Brian Gamache predicts annual revenue from interactive to reach at least $35m in fiscal 2013

A US$9m year-on-year growth in revenue from interactive products and services has seen WMS Industries record first quarter turnover of US$159.1m.

In its first set of results since making two online acquisitions earlier this year, WMS Brian Gamache chairman and CEO said the company was generating “very exciting” growth from interactive products.

Its online products and services revenue, that now sits within a separate division entitled William Interactive, increased to $9.5m for its fiscal first quarter of 2013 from $0.7m in the same period in 2012, primarily reflecting the launch of Jackpot Party social casino on Facebook in July this year.

Organic growth in WMS’s UK-based B2C online website and the addition of the newly-acquired Phantom EFX and Jadestone businesses were also cited as major contributors to the boost in revenues.

“We are extremely pleased by the initial success we are achieving in leveraging the value of our library of proven gaming content into the interactive markets, including social, casual and mobile entertainment,” said Gamache. “This success is reflected in the $9m year-over-year growth in revenue from interactive products and services, and we anticipate a range of $35-to-$40m in annual revenue for fiscal 2013 from these revenue streams.

“While the costs needed to build a sustainable foundation for interactive products and services impact near-term operating profitability, we believe this investment favorably positions WMS to participate in the attractive, high-margin growth potential of these opportunities that can lead to the creation of new value for our shareholders.”

Williams Interactive CEO and president, Orrin J. Edidin (pictured), said in yesterday’s Q1 earnings analyst call: “If you consider the approximate $34m all-in cost to acquire Jadestone and Phantom, add in the $18m of costs to originally license the IP and create a technology foundation for our jackpotparty.com online platform several years ago, and then add in the expense we incurred over the past two years and the expected $30m to $35m in incremental expense that Scott mentioned for fiscal ’13, you’d see that the total investment for WMS to enter these three new revenue streams was much less than $100m spread over multiple years.

“…we believe the foundation we’re building today in interactive products and services will be an important contributor to the WMS revenue stream and profitability story over the next several years.”

Overall the company, that specialises in the manufacture of lottery terminal and slot machines, saw revenue from gaming operations grows 4% to $71m compared to the same period last year, while gross profit increased by $4.1m.

The past 12 months have seen WMS establish a varied online business, launching a separate division entitled Williams Interactive to manage the offering in July this year.

Later that month, the Jackpot Party-branded social casino on Facebook was launched, followed by the Nevada licenced WMS signing a strategic alliance with Dragonfish, the B2B arm of 888 Holdings, aimed at allowing it to offer 888’s online poker product to US casinos.

In April it announced that Jackpot Party would host Groupe Partouche’s Belgian-facing casino offering, where the operator is one of just four to hold a top-level ‘A+’ licence.

In September WMS launched its freeplay casino product Play4Fun Network with its first client, a tribal casino in Iowa, enabling the casino’s players to access multiple play-for-fun slot and casual games online, all under the casino’s own brand.

Meanwhile October saw the company sign multi-year licensing agreements with Swedish operators Betsson and Unibet Group. The deal allows Betsson and Unibet access to WMS’ games offered by Jadestone, following May’s acquisition of the Swedish games developer. The portfolio also includes games offered by WMS’ UK-facing site Jackpot Party which went live last year.

WMS and Stratosphere expected to receive Nevada licences today

Posted on September 20, 2012 by r.weston

Service provider and operator go before NGC after being among last to receive recommendation from outgoing Gaming Control Board chairman Mark Lipparelli

The owner of Las Vegas’ Stratosphere Casino is expected to become the third licensed online poker operator in the US later today, while WMS Gaming is set to become the fifth licensed service provider.

Online poker marketing affiliate PokerTrip Enterprises is also set to become the first licensed affiliate in the Silver State at the Nevada Gaming Commission (NGC) hearing, having become the last companies to receive recommendations from Nevada Gaming Control Board chairman Mark Lipparelli, whose impending departure was exclusively revealed by eGR North America on Tuesday.

American Casino & Entertainment Properties (ACEP), the holding company for the Stratosphere, Vegas-based PokerTrip Enterprises and Illinois-based WMS Gaming all received approval from Nevada’s Gaming Control Board earlier this month and are expected to meet little opposition from the NGC.

ACEP had originally applied for both operator and service provider licences in February, but has since requested to withdraw its service provider application. The Stratosphere owner would be the third licensed online poker operator following the licenses awarded to South Point Poker and Monarch last month.

WMS Gaming would become the fifth licensed service provider after Bally Technologies, IGT, Shuffle Master and payment processor Global Cash Access. WMS has provided slot machines, video terminals and game software for land-based and online casino operators since 1999.

Earlier this year it announced a strategic alliance with Dragonfish, the B2B arm of 888 Holdings, and acquired online gaming content developer Jadestone Group, as well as social and mobile game developer Phantom EFX.

WMS’ egaming division Williams Interactive, launched in July, launched two social casino games on Facebook and its UK-facing brand Jackpot Party has released several online slots this year.

Lipparelli, who spoke at eGR NA’s Power Summit in Laguna Beach last wekek, has overseen the awarding of all the online poker licenses so far. In a statement, Nevada Governor Brian Sandoval said: “Mark has dedicated himself every day for four years to working to maintain Nevada’s leadership in the gaming industry and I thank him for his loyal service to the state.”

Earlier this week, Vintage Vegas Gaming, the company that owns former World Series of Poker host Binion’s Gambling Hall & Hotel in Las Vegas, became the latest operator to file an application for licensure.

WMS and Stratosphere set for Nevada licence hearing

Posted on August 31, 2012 by r.weston

Licence applications on Gaming Control Board agenda for 6 September

WMS Gaming and the owner of Las Vegas’ Stratosphere Casino will have their applications for online poker licences in Nevada considered by the Gaming Control Board (GCB) on Thursday.

If recommended by the GCB, the Nevada Gaming Commission will decide whether to award the licences at its next meeting on 20 September.

Illinois-based WMS has applied for manufacturer and service provider licences, while American Casino & Entertainment Properties (ACEP), the holding company for Stratosphere, had applied for operator and service provider licences in February but has since requested to withdraw its service provider application.

If successful, ACEP will become the third operator in the Silver State allowed to offer online poker, following the licences awarded to South Point Poker and Monarch last month.

WMS Gaming has been providing slot machines, video terminals and game software for casino operators – both land-based and online – since 1999. This year it announced a strategic alliance with Dragonfish, the B2B arm of 888 Holdings, and acquired online gaming content developer Jadestone Group as well as social and mobile game developer Phantom EFX.

WMS’ egaming division Williams Interactive, launched in July, has released two social casino games on Facebook and its UK-facing brand Jackpot Party has launched several online slots this year.

More than 30 companies have applied for Nevada licences, including twelve operators, with Golden Gaming becoming the latest to submit an application last week.

NRT Technology and Sartini Synergy Online are the most recent applicants, with both companies applying for service provider licences.

888 to be “one of the largest” US operators

Posted on August 29, 2012 by r.weston

Partnerships with Caesars Interactive Entertainment and WMS, as well as a future B2C deal, to spearhead the operator’s US entry

888 chief executive Brian Mattingley (pictured) has claimed the operator will be “one of the largest, if not the largest, operators in the US” as the company awaits its Nevada licence hearing.

Speaking after 888’s impressive H1 report was released this morning, Mattingley confirmed that the operator is currently undergoing the routine investigation by the Nevada Gaming Commission as part of its online poker licence application.

Last month, the operator signed a partnership with WMS, in addition to its existing B2B agreement with Caesars Interactive Entertainment, and both will complement a B2C offering with an as of yet unconfirmed partner once 888 enters the US market.

“We have made sure that all three of our partners know exactly what is going on with each other,” Mattingley said. “We have been very open and honest about what our raison d’être is with the US territory and would not have signed deals if there was going to be conflict.

“The only thing I will say is it takes years of experience to open an online business. 888 is not just about writing the software, it’s a complete company, and if other people feel they can do that good luck to them but we think it will be a long time in the making. The amount of effort that we are putting in and that Caesars Interactive are putting in is immense, and I don’t think they’d be doing that if in six months’ time they were going to walk away,” he added.

After an overall revenue rise of 21% for H1 2012 compared to the same period last year, 888 has approved the issue of a US¢2.5 dividend. Since the launch of its Poker 6 platform in regulated markets last year, poker has performed well, and for the six months ended 30 June, saw a 72% revenue rise to $41.2m.

“The second half of the year will see increased investment in Spain, where we will attempt to build on our impressive market share, and also in the United States, where we are preparing for regulatory changes,” said Mattingley, for whom this was the first half-year report since his permanent appointment as CEO in March.

Meanwhile 888poker has launched a new TV commercial featuring Canadian mixed martial arts (MMA) champion Georges St-Pierre.

The online poker operator is offering players the chance to play St-Pierre via webcam and enter a one-off tournament celebrating the advert’s release.

Players can win a seat in the $10,000 tournament in a number of ways including via $3,000 freeroll, $1,000 knock-out and $1,000 team tournaments.

A brand ambassador for 888.com, St-Pierre holds the record for the all-time most consecutive welterweight title defenses and two MMA World Champion titles.