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Bally Purchase of SHFL Latest Industry Merger
Bally Purchase of SHFL Latest Industry Merger

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AIR DATE: July 19, 2013

GUEST

Howard Stutz, gaming reporter, Las Vegas Review-Journal

BY IAN MYLCHREEST -- Bally Technologies has announced a $1.3 billion buyout of SHFL Entertainment. It’s the latest in a series of industry mergers that have come along in the wake of casino mergers, Las Vegas Review-Journal Gaming Reporter Howard Stutz says.

The “mergermania” began when MGM Mirage bought out Mandalay Bay and consolidated its hold on the south end of the Strip. Talk then moved to equipment makers, and with much of the Strip’s business under just four companies, it only made sense that slot-machine makers and table equipment manufacturers would also consolidate their operations.

In January, Scientific Games spent $1.5 billion to buy WMS gaming. That merger married a lottery company with the third largest slot-machine maker. And the SHFL deal also brings together two complementary companies – a major slot-machine maker and a manufacturer of tables, card equipment and electronic table games, Stutz says.

The other factor is the new emphasis on interactive technology in gaming and now casinos can go to just a handful of companies to equip their operations. The two companies are complementary, so Stutz is not expecting many lay-offs outside of top management.

Talk is, said Stutz, that there may be more mergers coming soon. Growth is crucial and the quickest way to grow is to buy a competitor rather than try to build that from scratch. That is certainly what drove Pinnacle Entertainment’s decision to buy Ameristar Casinos. That also means that development will be incremental in the casino industry.

MGM International also won approval from Springfield to be one of three proposed casinos in Western Massachusetts. Wynn is vying for the license in Boston and a third project is slated for the southeast past of the Bay State.

The casinos in these other jurisdictions do not operate as they do on the Strip. The taxes are higher and the casinos are much smaller but in the designated region, MGM or Wynn would be king. MGM’s, for example, will be the only casino in Western Massachusetts. “They basically have a monopoly on gaming in Western Massachusetts,” he says.

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