Acquisitions Help Casinos Grow Inorganically



Industry consolidation

Mergers and acquisitions activity is most common when the market has bottomed out. That’s when lower stock prices become attractive to potential acquirers looking to grab more market share through consolidation.

Following its acquisition of Bally Technologies, or Bally, the Scientific Games (SGMS) portfolio of products and solutions grew to include casino management systems, table products such as automatic shufflers, proprietary table games, and electronic table systems.

The acquisition also expanded the social and real-money iGaming, as well as iLottery products and services offered by Scientific Games, or SGMS. This larger portfolio is expected to position SGMS to more efficiently use content and technology across the lottery, gaming, and interactive sectors, and to propel the company’s future growth.

In 2013, SGMS acquired WMS Industries, which was the third-largest manufacturer of slot machines. SGMS agreed to buy WMS Industries for $1.5 billion, emerging as a global supplier of lottery equipment and slot machines to casinos.

Last year in December 2014, Caesars Entertainment (CZR) acquired Caesars Acquisition Company (CACQ) to diversify its portfolio of assets and help restructure its massive $18.4 billion debt. The VanEck Vectors Gaming ETF (BJK) and the PowerShares Dynamic Leisure and Entertainment Portfolio ETF (PEJ) invest in leisure companies like Caesars.

Bally’s expansion

In 2013, Bally also acquired SHFL entertainment—previously named Shuffle Master—a manufacturer of shuffling machines, table games, slot machines, and other casino products. Bally agreed to buy SHFL entertainment for ~$1.3 billion in a deal that combined two complementary gaming-technology companies.

As a leader in products for table games such as blackjack and poker, the SHFL entertainment deal enabled Bally to provide customers with gambling devices for the entire casino floor.

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