Nevada slot industry may benefit from Illinois court ruling

Nevada's slot machine industry could be in line for a sales jump after the Illinois Supreme Court paved a path for placement of thousands of gaming devices in bars, restaurants and truck stops.

The court on Monday upheld the state's Video Gaming Act, overturning a lower court ruling that came this year. The decision could result in 15,000 to 30,000 slot-like video lottery terminals around the state .

JP Morgan gaming analyst Joe Greff told investors the ruling was "a positive for the big three gaming equipment manufacturers (International Game Technology, Bally Technologies and WMS Industries) as it allows a new avenue of growth during a relatively stagnant U.S. gaming expansion time period."

Roth Capital Markets gaming analyst Todd Eilers said slot makers would likely start including Illinois sales when they release revenue projections as part of their quarterly earnings statements.

"Today's decision by the Illinois Supreme Court is a very positive catalyst for the gaming equipment suppliers," Eilers said. "This decision also gives us greater confidence in our fiscal year 2012 estimates for the group."

Video lottery terminals resemble traditional Las Vegas slot machines, but jackpots and awards are generated through a central server.

Adding video gaming to locations throughout Illinois was a $31 billion capital project program, which was originally passed in 2009 and backed by Gov. Pat Quinn. Taxes generated through the Video Gaming Act would help fund the program.

Janney Montgomery Scott gaming analyst Brian McGill told investors the process of placing the games in the market could be "lengthy" and is subject to delays.

Analysts said the next step is determining if Chicago will allow the machines. The city stayed on the sidelines while the court case was decided. Analysts said if Chicago joins in, it could double the number of slot machines needed.

"It is unclear whether Chicago will opt in to the games, given the new mayor and his recently announced desire for a casino in the city," McGill said.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.