IGT stock gets boost from Supreme Court

The common stock of International Game Technology was up sharply last week as the result of a decision the U.S.

Supreme Court didn't make.

The high court on Monday announced it wouldn't hear an appeal of a case challenging gaming devices at Indian casinos that are based on bingo games but look something like slot machines.

That, IGT officials said at the company's annual meeting, removed much of the uncertainty which has surrounded the machines which are dubbed "Class II devices." The potential benefit to Reno-based IGT? An analyst for J.P.

Morgan estimated that 100,000 of the Class II devices could be installed nationwide, although other analysts were more cautious and said the number might be in the range of 30,000 to 50,000 devices.

JP Morgan estimates that IGT might hold half the new market and generate $550 million to $730 million in additional revenue.

As a result, the brokerage firm boosted its rating of IGT's common stock to "overweight" from neutral.

Bank of America Securities, meanwhile, began coverage of the stock last week with a "buy" rating.

The stock was up more $5 a share from its levels before the Supreme Court announcement.

IGT has about 70 percent of the market for traditional slots.

It shipped about 58,000 traditional machines into the U.S.

market in its last fiscal year and projects shipments of 60,000 to 65,000 this year.

Class II devices are particularly important for Indian gaming because tribes don't need to reach a compact with state governments before they offer bingo and bingo-like games.

If a tribal casino wants to offer traditional slots, it first must reach a deal with the state a process which often is politically charged.

IGT has said it plans to make most of its game library available in the Class II format.

Its "Reel Touch" game, its first entry into the market, is planned for rollout in late September.

The technology in Class II games is sharply different from a traditional slot machine.

A traditional slot acts something like a freestanding personal computer with its own random-number generator.

A Class II machine, however, acts as a terminal connected to a central server that draws the bingo numbers.

TJ Matthews, IGT's president, told shareholders the company has made a major commitment to be the market leader in gaming systems that rely on terminals and a central server.