International Game Technology Plans New Units
Because online gaming and sports betting is growing in the US, International Gaming Technology has decided to create a dedicated unit for both sectors.
Over the past few years, we have seen the online gambling industry flourish in the United States. From sports betting and poker to casino games and the lottery, most states in the country offer some form of gaming online. For software developers, the time to become involved is now. Many companies are opening up their service options to cater to these sectors or focus on broadening their focus to include iGaming. For International Gaming Technology (IGT), the company has decided to create two dedicated sectors involving sports betting and iGaming to further direct its focus.
In the past, IGT had its sports betting and iGaming operations in its global gaming unit. Now, the two will have their own dedicated spaces to focus separately on these gaming options. With the breakdown of services, IGT will now report via Global Gaming, Global Lottery, and Digital & Betting. The iLottery segment of the company has seen significant growth too but remains part of the global lottery unit of the company.
Before its third quarter report is made public, IGT says that it expects the historical financials to be reevaluated to reflect the segment changes. In August, the company reported the forecasted revenues for 2021’s second half at $2 billion on operating income from operations of $300 million.
During the first half of the year, the company generated $500 million in cash from continued operations. The free cash flow grew to a record setting $380 million for the same time frame. Investors of the company are happy with the split in sectors and feel that it will be a major benefit to the company. With the announcement, shares grew by over 3% during midday trading.
CEO Marco Sala said that the businesses have become strategically important to the company as they provide the opportunity to leverage its global reach and build strong customer relationships within its Global Gaming segment.
IGT is a gaming technology company based in the United Kingdom that continually offers premium services to the gaming industry in a variety of sectors. Lotteries and sportsbooks around the globe benefit from the companies service as well as casinos that use the venues land-based machines.
Currently, the company is working to boost cash flow and reduce its debt so that they can push the company further into the gambling world. IGT feels that changing up its operations and focusing on sports betting and online gaming in separate sections will help to enhance the streamlining of funds.
The change also takes place as both industries are seeing massive growth, especially in the United States. IGT will be able to take advantage of this growth with specific individuals working towards pushing the sectors to the next level.
Analysts expect that the online gambling industry will reach over $20 billion by 2030. The majority of that number is estimated to come from slot games. If this occurs, it would create huge business for IGT as well as rival companies.
It has been noted that IGT and Scientific Games hold the market share when it comes to online slot gaming at 20%. This puts both companies in a prime position as the years go by to see a return on their investment as the market grows.
As the news gets out about the sector changes, it is expected that IGT shares will continue to increase. Consensus price targeting is over $29 and this is much higher than previous price points this week.