By the end of next month International Game Technology (IGT) expects to have completed, subject to closing conditions and regulatory approvals, a transaction to acquire WagerWorks, Inc in an all cash merger. The total consideration paid will be in the region of $90 million and IGT anticipates that as a result the fiscal years 2005 and 2006 will see additional earnings of 2 cents per share.

WagerWorks, a private company that provides internet gaming technology and services, comes with a strong content portfolio and strict compliance policies that ensure end users offer the company’s products in a responsible manner. Those products include the popular games Wheel of Fortune and The Price is Right, and its customers include Virgin, PaddyPower, World Poker Tour, Rank, BskyB and Blue Square. The acquisition will give IGT a foothold in the expanding Internet gaming, mobile and interactive television business. TJ Matthews, CEO of IGT, said that acquiring WagerWorks would assist the distribution of IGT game content across the new channels and mediums. He added, “We are very excited to work with their customer base, content providers and management team to accelerate and enhance WagerWorks' growth prospects."

The feeling was echoed by the CEO of WagerWorks, Paul Miltenberger who stated, “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."

The fact that WagerWorks has worked with a policy of rejecting any companies that offer online gaming to player in the United States should ensure that IGT avoids any regulatory problems with its gaming licences. The deal is seen as being a strategic move by IGT to keep abreast of the fast growing online market rather than competing with its traditional land-based clients. However, the high reputation of IGT in the gaming industry and its position as the global leader in slot machine manufacture is another indication that Internet gaming is becoming respectable, whatever the US administration insists.
(E-07.28.05)

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