Scientific Games Shakes Up Gambling Industry

In a move that will surely have rippling effects across the gambling industry, it was announced Wednesday that Scientific Games will acquire slot machine manufacturing company WMS. Scientific Games, a manufacturer of software and lottery tickets, will purchase Illinois-based WMS, formerly known as Williams, in exchange for $1.42 billion in cash and debt.

The deal may prove to be a slam dunk for Scientific Games, as WMS was one of the first companies to be licensed by the state of Nevada as an online poker operator. Nevada passed a law last year that will allow Silver State residents to access online poker websites as long as they are physically present in the state when they log on, and it is anticipated that the games will go live sometime later on this year. So far over a dozen companies have been granted operating licenses by the Nevada Gaming Control Board.

While several other states, including Pennsylvania and California, are looking into the possibility of following Nevada’s lead and passing online poker regulation laws, thus far the only other state to enact such legislation is Delaware.

A similar bill in New Jersey that would also legalize online poker yet is broader in scope to include other forms of Internet wagering, remains on Governor Chris Christie’s desk awaiting signature. It is expected that Christie will allow the law to take effect automatically rather than signing it. Christie vetoed a comparable bill back in 2011.

Nevada lawmakers are now pressing for legislation that would also allow the state’s governor to negotiate interstate online poker deals with other states that have legalized the game, as it would seem that online poker regulation at the federal level is stalled after it failed to gain traction in the Senate at the end of the last Congressional session.

The acquisition of WMS by Scientific Games continues a gambling industry trend of consolidation – back in December it was announced that Ameristar Casinos would be bought out by Pinnacle Entertainment, a rival casino operating firm. On news of the WMS/Scientific Games deal, WMS stock rose 54 percent.

WMS has not always been a maker of popular, super-modern slot machines like Wizard of Oz and Reel ‘Em In. In fact, WMS got its start manufacturing good old-fashioned pinball machines and other types of non-gambling related video games. The company, which has its headquarters on the northwest side of Chicago in the Avondale neighborhood, added a 120,000 square foot building to its campus there last August.

The new building, an attractive glass structure, houses 250 WMS employees. It remains unclear whether WMS will continue to be headquartered in Illinois after the completion of the deal with Scientific Games. At its Chicago campus, the company employees roughly 600 workers.

Not only will the deal allow Scientific Games to get an early foot in the door of Nevada online poker, it will also establish the company’s most profitable arm.

Scientific Games CEO Lorne Weil said of the deal, “The acquisition is transformational for Scientific Games, enabling us to offer a complete portfolio of lottery and gaming products and services to both new and existing customers around the world.”