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ENTRACTION SOLD TO IGT

Date June 2011
Price $115,000,0001
Asset Entraction
Buyer
Status Business as usual
Software Yes
Success

Entraction Holding AB was in June 2011 sold for $115 million to the Nevada-based slot machine giant International Game Technology (IGT)

Entraction was a Swedish gaming company traded on the Swedish stock exchange. At the time of the purchase Entraction was the 12th largest poker network in the world according to Pokerscout.com.

It was only 3 months after IGT had acquired the network that it excluded a list of nations which no longer were welcome: Canada, Israel, Russia, Norway and Turkey. They later excluded Spain, Australia, Cyprus and Belgium in July 2012.

The reason for the purchase was to be ready  to enter the US market. IGT had considered whether to build a software from scratch or purchase an existing poker network.

Wall Street was quick to praise the acquisition, saying IGT was moving ahead of other slot machine makers in a potentially massive market. Analysts considered Internet poker alone to be a $6 billion-a-year business.

Roth Capital Partners gaming analyst Todd Eilers said all domestic equipment suppliers should be preparing for the eventual legalization and regulation of online gaming in the United States.

The IGT deal was quite expensive, but Eilers stated it was a strategic move that would have minimal impact on the company's near-term earnings.

"This deal is essentially a bet on the U.S. market opening up," Eilers said. "If it does, this will likely turn out to be a very good deal. We believe it's only a matter of time before the U.S. market opens up with a push at both the federal and state levels."1

Whether to determine if the purchase was a success is yet to be known. In the summer of 2012 it was still not possible to operate a poker network in USA. Several states were in the process of opening up but nothing final had happened yet. When and if the market opens the acquisition will be considered a smart move. If not - it was a calculated risk and can never be considered disastrous for the slot the machine giant IGT.


1. CasinoCityTimes.com