IGT to supply terminals for Quebec Lottery

LAS VEGAS, Nevada -- Slot machine giant International Game Technology said Friday the company was awarded 56.7 percent of the replacement market for the Quebec Lottery.

The agreement means Nevada-based IGT will provide 7,200 new video lottery terminals to be used by Loto-Quebec at its locations throughout the Canadian province.

Loto-Quebec received government approval in 2009 to proceed with replacing its slot machinelike video lottery terminals in order to update an estimated 12,000 outdated gambling devices.

IGT Chief Operating Officer Eric Tom called the Loto-Quebec contract a "valuable business."

Janney Montgomery Scott gaming analyst Brian McGill told investors the IGT deal was for more games than he expected. It's still unclear, however, the dollar value of the contract.

"We have always heard that the games in Canada would come at a slightly lower price than for casino games in North America," McGill said. "This was by far the biggest contract for the Canadian VLT replacement cycle."

Union Gaming Group principal Bill Lerner told investors the deal could be worth up to 2 cents per share on IGT's annual income statement.

McGill said the province of Alberta is expected to award a VLT replacement for 5,000 games at some point this year and IGT should gain a large portion of that contract. Other Canadian provinces are planning to replace machines used in their lottery systems, but not to the extent of Quebec or Alberta.

Slot machine sales have gone stagnant in the United States over the past few years as gaming expansion has slowed and casinos have avoided replacing older slot machines with new games since the economy softened.

McGill said the best prospects for slot machine makers currently include the potential for gaming expansion in Illinois and a move by Ohio to add video lottery gaming to the state's racetracks.

"Other than that, there is nothing imminent for new markets that are not included in current estimates," McGill said.

IGT said the Quebec replacement process was expected to begin next year. Video lottery terminals are similar to traditional Las Vegas-style slot machines, but the games are connected to a central server that determines awards and jackpots.

IGT also announced Friday that it has met all of the conditions to close on the company's acquisition of Entraction, a Swedish online gaming company.

Last month, the company announced it would spend $115 million to acquire the company, which is to be the 12th largest Internet poker network in the world and the third-largest independent network, according to PokerScout.com.

Entraction's legal online gaming business in Europe has more than 4 million registered gamblers in partnership with more than 60 operators.

Entraction provides Internet gaming site technology for online poker, casino, bingo and sports betting. In 2010, Entraction generated about $56 million in revenue.