78°F
weather icon Mostly Cloudy

Gaming industry giant takes ‘natural step’ forward

Scientific Games Corp. is Nevada’s new International Game Technology — without the baggage.

Over the past 18 months, the lottery provider spent $7.6 billion to acquire the gaming industry’s No. 2 and No. 3 slot machine manufacturers.

Last month, Scientific Games said it will move its corporate headquarters from New York City to offices off the 215 Beltway. The company will consolidate its substantial U.S. manufacturing operations in Las Vegas by the end of this summer.

More than 1,500 employees of the company’s 8,500-person workforce will be located in Las Vegas. Scientific Games expects to add another 200 Las Vegas manufacturing positions over time.

The Las Vegas Global Economic Alliance — the private-public partnership tasked with expanding the Southern Nevada economy — touted Scientific Games’ move West as another step in creating a regional global business destination.

Scientific Games CEO Gavin Isaacs said Las Vegas represents “a natural step” in the company’s evolution.

The corporate move was also the gaming industry’s worst-kept secret. The deal was sealed when the governor’s economic development operation offered the company $2.5 million in incentives to build a 40,000-square-foot building in Las Vegas, sweetening the pot a week ahead of the announcement.

After buying WMS Industries for $1.5 billion and Bally Technologies for $5.1 billion (a year earlier, Bally acquired SHFL entertainment for $1.3 billion) Scientific Games became the industry’s most diversified global business.

The company has 10 divisions that touch all aspects of legalized gambling — lotteries, slot machines, table games, sports wagering, management systems and interactive gaming. All but two of the divisions will be based in Las Vegas. The lottery headquarters will remain in Georgia, and the interactive group will be based in Chicago.

While Scientific Games is growing, IGT is shrinking in Nevada.

The slot machine giant is in the process of being sold for $6.4 billion to Italy-based lottery conglomerate GTECH Holdings. The new, yet-to-be-named company will be headquartered in the United Kingdom but will be listed on the New York Stock Exchange.

The name IGT is not expected to disappear, and the company plans to keep its manufacturing facilities in Las Vegas and Reno. But IGT’s Nevada corporate presence will be greatly reduced.

The GTECH-IGT deal is still awaiting shareholder and regulatory approval and is expected to be completed by April.

Meanwhile, analysts are focused on Scientific Games. In January, IGT said its first-quarter earnings saw double-digit declines in net income, earnings per share and revenue.

Macquarie Securities gaming analyst Chad Beynon said IGT underperformed investor expectations.

“The results clearly highlight that this was a difficult product sales quarter. We expect Scientific Games to gain market share, particularly in the international markets, where IGT continues to suffer,” Beynon said.

Janney Capital Markets gaming analyst Brian McGill said Scientific Games can take advantage of its Bally products.

“Scientific Games should benefit from the ongoing disaster at IGT and take market share over the next few quarters,” McGill told investors. “IGT was once the market leader, but management mishaps and lacking content have left it in a vulnerable position from a competitive standpoint.”

With the WMS purchase, Scientific Games acquired the company’s offices and production facility in the McCarran Center south of Sunset Road. WMS’ primary slot machine manufacturing plant in Waukegan, Ill., a one-hour drive north of Chicago, will be closed with the jobs transferred to Las Vegas.

The Bally transaction gave Scientific Games the company’s large manufacturing and production facilities near McCarran International Airport. The former SHFL headquarters and manufacturing plant is the lottery company’s new corporate offices.

Scientific Games said that the Bally acquisition was expected to result in $235 million in corporate cost savings by the end of 2016. That includes a 21 percent cut in non-manufacturing positions the company spelled out in a Securities and Exchange Commission filing last September.

Scientific Games also brings to Nevada its largest shareholder, colorful billionaire investor Ronald Perelman, 72, who is also the company chairman. Perelman, a New York-based financier who owns more than 30 percent of Scientific Games, has long been interested in the gaming industry.

Outside of gaming, Perelman’s investment fund owns a large stake in cosmetics giant Revlon. Currently ranked 32nd on the Forbes 400, Perelman made light of his made-for-tabloid personal life when he was licensed by Nevada gaming regulators in 2013.

He’s been married five times.

“I expected you to ask me about my divorces. I’m glad you didn’t,” Perelman told the Gaming Control Board. “I’m a specialist (on prenuptial agreements).”

Scientific Games provides products to 39 of the 44 U.S. state-run lotteries and to 50 lottery countries.

The company’s presence in Nevada, along with GTECH’s purchase of IGT, means lottery companies control Nevada’s slot machine industry. And the Silver State doesn’t even have a state lottery.

But for those hoping Nevada will add a lottery, don’t hold your breath.

The casino industry here is still king.

Howard Stutz’s Inside Gaming column appears Wednesdays and Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. Find him on Twitter: @howardstutz.

Don't miss the big stories. Like us on Facebook.
Business Videos
How much do Las Vegas casino CEOs make?
Las Vegas gaming CEOs made anywhere between $1 million and $24 million last year, according to company filings with the U.S. Securities and Exchange Commission. ((Las Vegas Review-Journal)
30-year-old Rio needs a little TLC
Nearly 30 years after the Rio opened, the red and blue jewel that helped catapult Las Vegas to a new level with its buffet and nightclub has lost its status along with its shine.
The latest on the Drew Las Vegas - VIDEO
Eli Segall recounts his tour of the Drew Las Vegas, formerly the Fontainebleau, on the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
Pinball Hall of Fame to move near south Strip
Operators of the Pinball Hall of Fame have been approved to build a new, larger arcade near the south edge of the Strip on Las Vegas Boulevard near Russel Road. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
National Hardware Show underway Las Vegas
The National Hardware Show kicked off Tuesday at the Las Vegas Convention Center (Mat Luschek / Review-Journal)
Caesars for sale?
Caesars Entertainment Corp. has been swept up in takeover speculation since the company’s share price tumbled last year amid disappointing earnings and concerns over a recession. Amid the decline, hedge funds scooped up shares. Billionaire activist investor Carl Icahn began buying shares of Caesars as early as January. Icahn acquired nearly 18 percent by mid-March. In February Icahn called on the Caesars board to study a sale as a way to boost shareholder value.
Las Vegas home prices
Las Vegas home prices grew fastest among major markets in February for the ninth straight month. But amid affordability concerns, the growth rate has slowed down. Southern Nevada prices in February were up 9.7% from a year earlier, according to the latest S&P CoreLogic Case-Shiller index. The last time Las Vegas' price growth fell below 10% was in September 2017, S&P Dow Jones Indices reported.
Free Parking Coming To Wynn
Free parking will come to the Wynn and Encore resorts on May 1, 2019. (Mat Luschek / Review-Journal)
Founding Venetian employees talk about 20 years at the Strip resort
The Venetian, which opened May 3, 1999, is celebrating 20 years on the Las Vegas Strip. Seven original employees talk about opening the luxury resort and working there for two decades. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Circa aiming for December 2020 opening
The 1.25-million-square-foot property will have 44-stories and 777-rooms. It will also have a separate nine-story, 1,201-space parking garage.
Boxabl official explains the building concept
Boxabl business development manager Galiano Tiramani shows off a room built by his company. (Blake Apgar/Las Vegas Review-Journal)
TI/Mirage Tram reopens
The tram that shuttles guests between TI and Mirage reopened this week after being closed for much of 2018.
Las Vegas Convention Center expansion taking shape
Renderings and actual footage show how the Las Vegas Convention Center is evolving.
Former Starbucks CEO Howard Schultz at Las Vegas convention
Former Starbucks CEO and potential presidential candidate Howard Schultz spoke at the Epicor Insights user conference at Mandalay Bay Convention Center Wednesday, April 17, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Drew Las Vegas to open in the second quarter of 2022
The 67-story Drew Las Vegas is slated to open in the second quarter of 2022 at the north end of the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
NAB Day 1 (Time Lapse)
NAB kicked off at the Las Vegas Convention Center on Monday, April 8, 2019. (Mat Luschek / Review-Journal)
National Association of Broadcasters Show shows 1mm thick 8K TV with 22.2 channel digital sound
Japan’s NHK Science & Technology Research Laboratories booth featured a 1mm thick 8K TV system used in conjunction with a 22.2 channel digital sound system at the National Association of Broadcasters Show at the Las Vegas Convention Center. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Nevada shoppers react to Smith’s no longer accepting Visa credit cards
On March 1, Smith’s announced that it would no longer be accepting Visa credit cards at any of its 142 supermarkets, including the 45 in Nevada.
Massachusetts Gaming Commission asks how long Wynn executives knew about misconduct
Business reporter Rick Velotta gives an update on the adjudicatory hearing on the suitability of Wynn Resorts to retain its gaming license in Massachusetts.
Henderson app developer part of Startup in Residence
Henderson based developers of the app On Point Barricade are taking part in Startup in Residence, a North America program dedicated to pairing tech companies with governments. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Sam's Town employees and customers talk of their love for the iconic casino
Longtime Sam's Town employees and customers love each other and love their casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Las Vegas apartments rents
Las Vegas’ apartment market has accelerated in recent years. Developers are packing the suburbs with projects, landlords are on a buying spree, and tenants have filled buildings.
William Boyd talks about the birth of Sam's Town
On the eve of the 40th anniversary of Sam's Town, William Boyd, executive chairman of Boyd Gaming and son of hotel namesake Sam Boyd, talks about how the casino became one of the first local properties in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
High Roller observation wheel turns five
The world’s tallest observation wheel celebrates it’s fifth year on Sunday, March 31, 2019. (Michael Quine/Las Vegas Review-Journal) @Vegas88s
Escape Room Industry Growing In Las Vegas
Escapology employees discuss the growing escape room industry in the U.S. and Las Vegas. (Bailey Schulz/Las Vegas Review-Journal)
Impact of parking fees on visiting the Las Vegas Strip
There are no data showing a relationship between Strip resort and parking fees and the number of out-of-state visitors to Las Vegas. But there are data showing a relationship between Strip parking fees and the number of local visitors to the the Strip. ‘’As a local, I find myself picking hotels I visit for dinner or entertainment, based on whether they charge for parking or not,”’ said David Perisset, the owner of Exotics Racing. ‘’It is not a matter of money, more of principle.’’ A 2018 survey by the Las Vegas Global Economic Alliance found 36.9 percent of Clark County residents reported avoiding parking at Strip casinos that charge for parking. 29.1 percent reported avoiding using any services from a Strip casino that charges for parking.
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Faraday puts Las Vegas land on the market
Nearly two years after Faraday Future bailed on its North Las Vegas auto factory, the company has put its land up for sale. (Michael Quine/Las Vegas Review-Journal)
El Cortez owner Kenny Epstein on running the iconic property
Kenny Epstein, owner of the El Cortez Hotel in downtown Las Vegas, talks about Jackie Gaughan mentorship and answers rumors about bodies in the basement at the mob-era casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
LVCVA recommends construction of underground people mover
The Las Vegas Convention and Visitors Authority announced the recommendation for an underground people mover for the convention center. The system would have the potential to expand and connect Downtown and the resort corridor all the way to McCarran. (Michael Quine/ Las Vegas Review-Journal)
THE LATEST
Caesars new CEO appears to be in for the long term

Based on the terms of Tony Rodio’s employment agreement disclosed in a Securities and Exchange Commission filing, he appears to be in for the long term with a $1.5 million annual salary, prospective bonus payments of $3 million, as well as a $3 million buyout clause. This doesn’t look like the pathway to a quickee company sale.