IGT revises earnings per share down to zero

Gaming equipment giant International Game Technology revised its second quarter earnings Thursday after a dispute in Alabama over the use of slot machines in conjunction with charitable bingo games had escalated.

Reno-based IGT, which told investors on April 22 it was reporting a profit of $35.9 million or 12 cents a share, now says its net income in the quarter that ended March 31 was $700,000, which translated in zero earnings per share.

In a statement, IGT said it was forced to recognize $53.1 million in impairment charges after Alabama officials halted the use of slot machines in the state. The matter forced the major slot machine manufacturers to take write-downs on their gaming equipment in Alabama.

"The legality of electronic charitable bingo in Alabama continues to be under challenge by the state's governor," IGT said in a statement, adding that since the company announced earnings, "the legal and political climate in Alabama has further deteriorated, and therefore we have determined that the recoverability of our assets in this market has been impaired."

IGT said that in addition to the impairment charges, the company's second quarter revenues were reduced by $3.3 million.

Alabama has been debating electronic bingo, which utilizes devices provided by the major slot machine makers, 2008. Republican Gov. Bob Riley went on an aggressive campaign to stop the spread of the machines, arguing that they are little more than slot machines and thus illegal under the State Constitution. He set up a task force on gambling, which raided electronic-bingo casinos and confiscated machines.

Bingo operators in Alabama have filed lawsuits that contend the legality of electronic bingo, pointing to various local statutes permitting the operation of the machines.

Court rulings on the matter, while mostly favorable to the governor's position, have not put the issue to rest, and state lawmakers jumped into the fray.

In March, the Alabama Senate approved a constitutional amendment that would authorize, tax and regulate electronic bingo. The House adjourned in April without voting on the bingo matter.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.