IGT bails on European online poker operations
International Game Technology has quietly pulled the plug on its online poker operations in Europe, saying the business model had suffered due to regulatory changes.
The slot machine manufacturing giant spent $115 million last year to acquire Entraction, a Swedish-based online poker operator with more than 4 million players.
In June, IGT was licensed by Nevada gaming regulators to provide interactive gaming systems under the state newly created online gaming regulations. IGT officials said they planned to use the Entraction technology platform with its Nevada online poker systems.
A gaming source said the European shutdown would not affect IGT’s ability to offer its online poker systems to Nevada casinos.
In a recent interview with Bloomberg News, IGT Chief Executive Officer Patti Hart said several European countries changed regulations and prohibited residents from gambling with players in other nations.
“There is less profitability and the product becomes less interesting,” Hart said.
IGT will continue to offer other forms of online gaming in Europe, including bingo, slot machines and sports wagering.
The company did not formally put out a press release announcing the shutdown, news of which first surfaced on several Internet poker networks last week.
Wall Street analysts, who have been critical of some of IGT’s recent moves, such as the company’s $500 million acquisition this year of social gaming company DoubleDown Casino, had also not commented on the European shutdown.
In a statement, IGT said the poker shutdown was “purely focused on our European dotcom business and does not impact future decisions regarding entry into new markets.”
The company said other aspects of its online gaming business were growing.
“Change and uncertainty in European market conditions have diminished the expected returns in certain real money wagering products,” according to the company statement. “As a result, we are consolidating our product development.”
In June, IGT told Nevada gaming regulators the company shut down Entraction’s websites in Turkey, Israel, Russia, Norway and other jurisdictions the company said had “gray areas” concerning Internet wagering laws.
In addition, IGT said it learned Entraction had accepted wagers from American gamblers before the enactment of the Unlawful Internet Gambling Enforcement Act of 2006, which made it illegal for banks and financial institutions to conduct financial transactions for online wagering.
The company entered preliminary talks with the U.S. Department of Justice concerning those wagers.
IGT initially entered Internet gaming in legal European markets early last decade, when it acquired British-based WagerWorks in two deals. IGT officials told Nevada gaming regulators the company is licensed in more than 360 gaming jurisdictions, including 10 licenses covering interactive gaming.
Shares of IGT closed at $12.86 Tuesday on the New York Stock Exchange, down 16 cents, or 1.23 percent.
Bloomberg News cited a study by researcher H2 Gambling Capital that showed online gaming generating $32.1 billion in revenue worldwide last year, with Japan, the United Kingdom and Germany as the largest contributors.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.
