Double Down Interactive, a subsidiary of
International Game Technology (
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
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. (
Electronic Arts Inc. (
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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