IGT's sbX Hits Pennsylvania Casinos

International Game Technology (IGT - Analyst Report) recently announced that the Pennsylvania Gaming Control Board has agreed to allow casino operators in the state to install sbX casino management system on their floors.

sbX is the first server-based gaming solution approved by the Gaming Standards Association (GSA) that allows its operators to run games of their own choice at any time, facilitating better casino floor management at lower operational costs. sbX also provides complete freedom to the players in terms of selecting games of their own choice instantly and experiencing a more real-life feel of casino management.

sbX features multiple tools, which spice up the entire gaming experience. sbX Floor Manager also allows access to the IGT game library, thus enabling operators to efficiently manage their casino floor with the mere touch of a button. sbX Media Manager helps operators to target the right players at the right time by quickly refreshing media displays with customizable marketing messages.

sbX also features a unique Service Window option, which enhances player interaction experience at the slot machine. The window provides options regarding information and services that the players and operators can optimize.

sbX provides significant competitive edge to casino operators because of its flexibility and diversified management functionality. IGT plans to expand sbX domestically as well as internationally, thereby driving growth.

Recently, IGT installed the sbX system at Panama-based Fantastic Casino Albrook. The company also informed the installation of sbX at Gala Leo's Casino, owned and operated by Gala Casinos, in Liverpool, the United Kingdom. More than 50 casinos in 11 countries have already partnered with IGT for this server-based technology.

IGT ended fiscal 2011 on a high note with revenue increasing 2.1% year over year to $1.96 billion. This was primarily driven by strong product sales (up 5.0% year over year), which fully offset a slight year-over-year decline in gaming operations. We anticipate that customer base expansion will further boost IGT’s top-line growth over the long term.

The casino sector continues to face macroeconomic concerns given the high unemployment levels. This has led many casino operators to cut costs in an attempt to preserve their liquidity, which has slowed down the machine replacement cycle. This trend appears to be hurting IGT’s growth outlook.

Moreover, sluggish macroeconomic conditions, fewer new openings and increasing competition from Bally Technologies Inc. (BYI - Snapshot Report) and WMS Industries Inc. (WMS - Snapshot Report) will keep the stock range bound in the near term.

We have a Neutral recommendation on the stock over the long term (6-12 months). Currently, IGT has a Zacks #3 Rank, which implies a Hold rating on a short-term basis.

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