Canadian lotteries infuse Nevada’s slot industry with sales opportunities

Canadian lotteries are providing Nevada's slot machine industry with some much-needed sales opportunities.

International Game Technology signed a deal recently with Loto-Québec to supply its online gaming site, Espace Jeux, with interactive versions of the slot machine maker's top-performing games.

Meanwhile, the Atlantic Lottery Corp. - which is the gaming operator for New Brunswick, Newfoundland, Nova Scotia, and Prince Edward Island - announced it was awarding its contract for new video lottery terminals to four companies, including IGT and Bally Technologies.

During the first phase of its deal with Loto-Quebec, IGT will provide access to its Cleopatra, Wheel of Fortune - Hollywood Edition, Monopoly with Pass Go Bonus and Clue slot machine content. The games will be hosted on the Loto-Quebec servers in Montreal.

"Convergence is crucial to the future of North American casino gaming," IGT executive vice president of emerging businesses Robert Melendres said. "The addition of Loto-Quebec as an interactive business-to-business partner is further proof of our commitment to the North American online and mobile market."

A second phase will integrate the IGT Casino remote game server, which will allow 16 more of the online games that will be developed in Canadian French to be available on the Espace Jeux site.

In the agreement with Atlantic Lottery, Roth Capital Partners gaming analyst Todd Eilers told investors, IGT was expected to receive 28 percent of the contract while Bally would supply 28 percent of the games.

"We look for Canadian VLT shipments to help boost the North American replacement cycle in calendar year 2012 and 2013," Eilers said.

In addition to the Atlantic Lottery and Loto Quebec, government lotteries in Alberta, Saskatchewan and Manitoba are replacing older machines.

IGT and rival slot machine maker Spielo have each won pieces of previously announced Canadian lottery contracts.

The Atlantic Lottery contract was the first replacement deal won by Bally. In a statement, Bally said the deal calls for almost 1,600 slot machinelike VLTs.

"We are extremely honored to be selected as a key supplier of VLTs in Atlantic Lottery's effort to replace its aging fleet," said Robert Parente, Bally's vice president and managing director of Canada. "This agreement affirms Bally's commitment and focus to provide innovative technology for the Canadian gaming market."

JP Morgan gaming analyst Joe Greff said the agreement with Atlantic Lottery could add between 10 cents and 20 cents to the company's annual earning per share over the next few years.

"We view the announcement as a distinct positive as it is the first win for Bally in the Canadian VLT market, which has historically been dominated by IGT and Spielo," Greff said.

Notable suppliers not selected for the Atlantic Lottery replacement order include WMS Industries and Aristocrat Technologies, both of which won a portion of the Alberta replacement contract.

"We continue to highlight IGT as the biggest beneficiary of Canadian VLT replacement contracts," Eilers said.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.