IGT Launches New Poker Game - Analyst Blog


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Double Down Interactive, a subsidiary of International Game Technology ( IGT ) recently launched a new poker game on Facebook. The new game known as Texas Hold'em Poker is a free-to-play game and is the second poker title to join the Double Down Casino after Omaha poker.

IGT acquired Double Down Interactive in January this year. Double Down Casino is one of the most popular social games on Facebook with more than 4.7 million monthly active users, according to AppData. There are currently 20 games that players can enjoy at the Double Down Interactive online casino on Facebook.

Players are awarded with free chips every day in order to play the free-to-play games. Players can pay to play a wide range of poker games, slots, roulette tables and video poker games. We believe that the new poker game will further boost Double Down Casino's user base going forward.

According to market research firm eMarketer, the U.S. social gaming market is expected to be worth $2.18 billion in 2012, doubling by 2014. Generally, most of the social games are free to play and generate revenue primarily through the in-game sale of virtual goods in exchange for virtual currency, which is known as micro-transactions.

In case of Facebook, which is currently the world's largest social network with more than 800 million global users, players use their Facebook credits to buy virtual goods. Facebook keeps a certain percentage of revenue and delivers the remaining to the game developer. Advertising is also an important source of revenue for social game developers as well as Facebook.

This is also true in case of casino style games, where gamers play for virtual currency or Facebook Credits, which they can never be cashed in as per the prohibitions under the U.S. gambling laws. Despite this disadvantage, casino style gaming is considered the fastest growing segment of the social gaming market given the addictive nature of the games.

Although Double Down is a lesser-known company compared to some other big names in the sector, the company has achieved success in building a strong customer base within a very short span of time. This has primarily been driven by Double Down's broad and expanding portfolio, which includes blackjack games, slots, slot tournaments, video poker and roulette.

IGT is a comparatively new entrant in the social gaming market. We believe that Double Down's strong product portfolio and customer base will provide it a competitive edge over the other established players such as Zynga Inc. ( ZNGA ) and Electronic Arts Inc. ( EA ) going forward.

We believe that IGT is successfully penetrating the online and social casino gaming market through the acquisitions of Double Down and Entraction Holding AB. We believe that the addition of poker, bingo, casino and sports betting will boost IGT's interactive gaming portfolio going forward.

The company has also ventured into the cloud computing arena through its IGT Cloud. With the IGT Cloud services, we expect IGT to gain traction in the casino gaming industry, as it would likely be well accepted by new casino properties, thereby improving the company's top line going forward.

We have a Neutral recommendation on the stock over the long term (6-12 months). Currently, IGT has a Zacks #3 Rank, which implies a Hold rating on a short-term basis.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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