Wells Fargo Securities LLC warns that the gaming equipment industry is “under meaningful pressure.” Among the trends affecting the sector are negative alternative sales growth in the U.S., market pressures from new entrants and casino operators, the brokerage said, shifting away from participatory gaming models in which casinos and manufacturers share the revenue generated by gaming machines.
Three analysts, led by Cameron McKnight, pointed out in a 2014 Boston Games Forum handbook released on Friday that the integration of casino operators, some closures, and reduced slot tier sizes are also adding to the challenges facing game vendors. The annual conference, hosted by Wells Fargo, will be held on Dec. 4 at the Langham Hotel in Boston.
“Given these challenging operational trends, operating risks remain high for game equipment makers,” analysts said. However, they noted that “industry risks are very well recognized by investors, and the recent wave of consolidation could benefit the industry.”
Scientific Games Corp, a U.S.-based lottery equipment and management company, signed a $5.1 billion deal last week to acquire slot maker Bally Technologies Inc. The announcement was part of a slew of mergers and acquisitions deals in recent months in the casino equipment supply sector, which marks a year of major realignment and consolidation in the industry.
But this fall, many investment analysts expressed skepticism about the extent to which they were involved in some M&A deals, and the profit outlook of the consolidated company and the cost savings that could be reasonably achieved.
“With market-wide challenges at the top of mind, we found opportunities for manufacturers to not only benefit from cost savings but also generate more efficient operational/capital spending through merger consolidation cost synergies,” Wells Fargo analysts said in Friday’s announcement. 바카라사이트
“We believe this industry integration will ultimately benefit the rest of the players in the field,” they added