IGT announces its plans
International Game Technology (IGT) will spin off its Digital & Betting arm over the coming 12 months. During a virtual investor day on Tuesday, the global gaming technology provider outlined its plans to maximize the value of the business segment. The division will become its own separate entity over the next year.
IGT will hold onto a majority stake in the business
IGT will then decide whether to take the new entity public or not. No matter what happens, IGT will hold onto a majority stake in the business. The supplier believes that this new type of structure for its Digital & Betting division will help position it to gain market share in the “high growth” online gambling sector.
A dedicated management team will take charge of the spun-off business. IGT has recently hired previous Bet365 executive Gil Rotem as iGaming president and former William Hill US CEO Joe Asher as Sports Betting president. Management will receive an appropriate incentive plan, with the new entity having access to more cash and the option to look at potential mergers and acquisitions.
A fast-growing segment
While a lot of casino game players and sports bettors might not recognize the IGT brand directly, its products are everywhere. The company’s PlaySports technology powers approximately 50 US-based sportsbooks. This covers both online and retail operations, with FanDuel representing one of its most important partners. IGT also offers online casino content.
For the third quarter of this year, the Digital & Betting segment at IGT experienced 37% growth year-on-year, reaching revenue of $43m. It is on course to reach revenue of $160m for 2021 as a whole. IGT only created this unit in September as it was previously a part of the global gaming segment.
The company is also planning to make about $2.8bn in capital expenditures and R&D over the next five years. This investment will support the firm’s existing portfolio, as well as focus on its “fast-growing iLottery and Digital & Betting activities.” Future expectations for IGT
The Digital & Betting division at IGT represents only a portion of its overall business. For the entire company, IGT has forecasted total 2022 revenue of $4.3bn. Mainly, the supplier is focused on manufacturing land-based gaming machines, in addition to providing back-end services to sportsbooks and lotteries all across the globe.
cash resulting from operations to reach $850m and $1bn
IGT has taken steps to improve its cash holdings and profit margins while cutting the amount of leverage it uses. For 2022, the firm expects cash resulting from operations to reach $850m and $1bn, with net leverage to drop to between 3.5x and 4x and operating margins between 20% and 22%.
By 2025, IGT hopes to have a free cash flow of about $2.5bn, as well as operating margins of between 26% and 28%.
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