iGaming News all over the world 1.5.2010

01.05.2010, Bally reports third quarter results / Denmark's Online Gambling Choices to Improve / American Bankers Association Can't Stop Online Casinos / Casinos Austria selects Chartwell

Bally reports third quarter results
Bally Technologies announced diluted earnings per share of us$ 0.39 and us$ 1.50 on revenue of us$ 191 million and us$583 million for the three months and nine months ended March 31, respectively, which excludes revenues of us$10 million and us$28 million, respectively, from discontinued operations related to the Rainbow Casino.

Excluding the impairment charge related to the Alabama charitable bingo assets, diluted EPS was us$ 0.52 and us$ 1.63 for the three and nine months ended March 31, respectively Besides, Gaming equipment gross margin improved to a thrird quarter record of 51% from 45% last year.

“We are pleased with the progress of our strategic initiatives during the quarter, including international expansion, balance sheet management, systems leadership, new product initiatives, and the announced sale of Rainbow Casino, said Richard M. Haddrill, the company‘s CEO. “We believe that our recent launch of a series of premium participation games and our upcoming release of ALPHA 2 will allow us to capitalize on the spending upturn we expect to see in the coming year.”

“Our balance sheet strength continues to improve as we further reduced our debt by us$ 9 million, repurchased us$ 13 million of our common stock, and increased cash by us$ 11 million during the quarter,” added Robert C. Caller, Chief Financial Officer. “We are also pleased with our recent bank amendment, which raised us$ 75 million in incremental undrawn revolver capacity and reduced pricing on our existing term and revolver by 50 basis points. We believe this transaction was the first reduction in pricing to an existing bank facility in the U.S. gaming industry since the credit crisis began in 2008.”

The firm recently announced it had reached a definitive agreement to sell the Rainbow Casino to Isle of Capri Casinos. Results from Rainbow are included in discontinued operations for all periods presented. For the three and nine months periods ended March 31, 2010, revenues were us$ 10 million and us$ 28 million and Diluted EPS were us$ 0.03 and us$ 0.08, respectively. The company expects to close the transaction on or about June 30, 2010.

The legality of charitable bingo gaming in Alabama is under challenge by the state‘s governor. Legislation to put the legality question to a public referendum in Alabama failed to pass in the recently concluded legislative session. There are also several lawsuits pending before the state‘s Supreme Court which could negatively affect charitable gaming in Alabama. Several of the charitable bingo properties voluntarily ceased operations during the quarter pending resolution of the matter, while two others continue to operate.

As a result of these recent actions, the company concluded that it is unlikely that gaming will continue in its present form, thereby impacting the recoverability of the associated assets. As such, the firm recorded an impairment charge of us$ 11.4 million during the quarter ended March 31, 2010, which included the impairment of us$ 5.5 million in notes and accounts receivable and us$ 5.9 million in long-lived assets.

Selling, general and administrative expenses increased to 28 % of total revenues as compared with 26 % last year as a result of lower revenues. Research and development expenses increased to 11 % of total revenues as compared with 10 % last year.

Nine months ended March 31, 2010 compared with nine months ended March 31, 2009 Diluted EPS decreased to us$ 1.42 from us$ 1.54 last year. Nine months ended March 31, 2010 Diluted EPS reflects an impairment charge of us$ 0.13 per share related to Alabama. Adjusted EBITDA decreased slightly to us$ 210 million from us$ 212 million in the prior period.

Operating margin decreased to 23 % from 24 % last year. Excluding the impairment charge, operating margin increased to 25 % in the current period. Total revenues decreased to us$ 583 million as compared with us$ 648 million last year. SG&A expenses increased to 26 % of total revenues as compared with 25 % last year as a result of lower revenues. R&D expenses increased to 10 % of total revenues as compared with 9 % last year.

During the quarter, the company repurchased more than 322,000 shares of its common stock for approximately us$ 13 million. During the first nine months of fiscal 2010, the firm repurchased over 1,100,000 shares of its common stock for approximately us$ 44 million. This month, the company‘s Board of Directors also authorized a new us$ 150 million share- repurchase program.

Under the company‘s amended credit agreement effective April 9, 2010, the company has unlimited capacity to repurchase its common stock or make other restricted payments as long as its gross leverage ratio remains below 1.0. At March 31, 2010, the company‘s leverage ratio was 0.6.

“We now have orders in process for nearly 1,000 Cash Spins, which won “Best Slot Product‘ at G2E,” said Gavin Isaacs, the company‘s Chief Operating Officer. “We have begun shipping Cash Spin, and expect 500 units to be placed by June 30, 2010. Early results for Cash Spin are outstanding, and recently placed Hot Shot Progressive Cash WheelTM, Fireball and our DualVision two-player cabinet are also easily outperforming floor averages. Our pipeline for gaming operations products has never been stronger, which will help us grow our installed base of premium gaming operations machines over the next 24 months. Finally, we are very excited about the upcoming launch of our new ALPHA 2 technology this summer.”

“Our systems business continues to lead the industry through new and enhanced technology products that help our customers reduce cost, protect invested capital, and deliver more powerful player experiences,”, said Ramesh Srinivasan, the firm’s Executive Vice President – Systems. “While the extent of no-decisions and delayed decisions continue to be higher than normal, our pipeline and win/loss ratio have never been better. iVIEW DM is rapidly gaining strong interest in the industry. We expect to continue to grow our market share as evidenced by the recent Isle of Capri enterprise-wide contract announced earlier this month.”

Revenues decreased to us$ 69 million as compared with us$ 70 million last year. New gaming device sales increased to 4,571 units as compared with 4,368 units last year, driven by increased international units sold but offset by fewer new openings and expansions during the period. New unit sales to international customers were an all-time record 2,122 units, or 46 % of total new-unit shipments as compared with 1,609 units last year.

In systems, revenues declined to us$ 52 million as compared with us$ 57 million last year, primarily as a result in the reduction of the number of installations during the period which was partially offset by higher maintenance revenues. Gross margin increased to 75 % from 71 % last year, primarily as a result of the change in mix of products sold and a reduction in hardware costs. Maintenance revenues increased to a quarterly record us$ 15 million as compared with us$ 13 million last year.

Revenues decreased to us$ 210 million as compared with us$ 279 million last year. New gaming device sales decreased to 13,504 units as compared with 17,065 units last year, primarily as a result of the continued sluggish North America replacement market and fewer new openings and expansions during the period. New unit sales to international customers were 5,295 units, or 39 % of total new-unit shipments as compared with 4,218 units last year.

Yogonet.com

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Denmark's Online Gambling Choices to Improve
According to the Right2Bet organization

Danish citizens are to have greater quality and choice of gambling products after legislation presented to Parliament last week confirmed the Danish Government's desire to liberalise its gambling market, following pressure from the EU to reform its monopoly system. If passed, the new legislation could bring rapid changes as early as January 1st 2011. The June vote will hopefully be the beginning of a new era for online gamblers in Denmark. A system of rules and regulations as set out by the Danish Gambling Board will govern the operators that are to be granted licences. A fairly steep tax rate of twenty percent will apply to the gross profits of the licensed online gambling companies. The European Commission has kept up the pressure to make Denmark conform to it's standard rules regarding monopolies.

The Commission launched formal infringement proceedings against Denmark over its sports betting monopoly back in 2006. The monopoly was deemed to be in violation of an article in the E.U. laws that relates to the free movement of goods and services within the EU. Denmark's proposed amendments to it's gambling laws will see the state-owned monopoly Danske Spil, competing with a number of private-sector operators offering Danes a wider range of gambling activities. Online Poker and Casino games such as slots and roulette will be offered legally for the first time.

It has taken some time for this process to come about, H.C. Madsen, Danske Spil’s Managing Director, told Danish newspapers in November of 2009 that he welcomed the upcoming changes: “It will be nice to get some clarity on the issue after so many years of uncertainty...We’ll also be able to offer casino gambling and poker now, which we couldn’t do before.” The better tax rates for the operators will give everyone a chance to make at least a little bit of profit. The consumer is the big winner in this deal with more variety and a safe and secure place to play.

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American Bankers Association Can't Stop Online Casinos
The American Bankers Association has finally made their concerns known regarding the imposed responsibility they have to uphold the prohibition rules on online gambling in the USA. Steve Kenneally, the Vice President of the American Bankers Association, stated recently that the full implementation of the Unlawful Internet Gaming Enforcement Act would be an expensive and ineffective way for the American government to deal with online gambling. He added the Act has no real control over online gambling activity, which will result in a waste of taxpayer’s money. The banks are only able to stop transactions to online casinos if they are identified as being an online gambling operation. There are many ways an operator from an offshore location can mask or disguise their identities with the result being they will go undetected by most financial institutions, making the law preventing the transmission of funds to customers in the USA not effective.

Kenneally explained that the government has not clarified it's definition of “unlawful transaction” and “illegal gambling”, which has left officials from various banks to interpret for themselves which transactions they should block and what they will allow. There are many grey areas in those interpretations that the bankers have had trouble with before. Some online gambling activity such as lotteries and horseracing is legal in certain states in the USA. A large number of banks and credit card companies have put a stop on the wrong transactions by mistake. A few European countries consider poker and sports betting as a process that requires skill and therefore allow transactions from those online gambling activities. Again it has been difficult for the banking industry to sort out which are legal and which are not. It will cost the banks an enormous amount of money to put in place a system in America that can effectively lock the proper online gambling exchanges, costs that the general pubic will eventually be obliged to pay.

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Casinos Austria selects Chartwell
Canadian gaming software provider Chartwell Technology Incorporated has extended its client list to include one of the world’s leading online casino and gaming entertainment groups, Casinos Austria International.

Vienna-based Casinos Austria International operates Malta-licensed CAIGames.com and is set to utilise Chartwell’s Flash-based online casino platform. “Over the past 18 months, we have refocused our efforts on delivering the most exciting online casino gaming platform,” said Dave Acorn, Chief Operating Officer for Chartwell.

“Confirmation of the success of our strategy is clearly evident by the selection of our gaming platform by this preeminent casino operator. The vast structure of Casinos Austria International’s operations presented numerous technological challenges. By overcoming these obstacles we have enhanced the ability to provide our Flash-based online casino platform to geographically diverse casino operators.”

Chartwell stated that its UK-licensed gaming platform provides a full suite of ‘the most advanced Flash-based gaming content developed around an open architecture’ designed to provide the ‘efficiency and flexibility demanded by today’s leading gaming brands’.

“Tapping into the world of online gaming is an important as well as natural step for Casinos Austria International as we continue to diversify, integrating new innovative products into our portfolio”, said Paul Herzfeld, Chief Executive Officer for Casinos Austria International.

“We are delighted to have Chartwell as our trusted technology partner in this new venture and look forward to the launch of the customised casino platform as we further develop our activities as a trusted provider in regulated online gaming markets.”

Yogonet.com / iGaming Business

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