International Game Technology has seen growth in social gaming since acquiring DoubleDown earlier this year, but is not overly optimistic about federal online poker legislation in the coming year.
“We don’t expect legislation in the U.S. to move significantly in the next 12 months,” IGT CEO Patti Hart told Reuters.
IGT purchased DoubleDown in January for what could eventually turn out to be a total price of $500 million. An initial payment of $250 million is due to be followed by $85 million in retention payments and possibly $165 million more if certain revenue goals are reached in three years.
DoubleDown has several million social gamers on Facebook who purchase virtual chips while playing slots, blackjack and poker. IGT’s intent on purchasing the company was to transition from free-play to real-money play in due course. While things are moving slowly in that regard, DoubleDown reported revenue of $35.8 million for its fourth quarter that ended Sept. 30. That was an increase of 20% from third quarter totals.
“(DoubleDown is) way ahead of plan, meaningfully contributing to revenue, EBITDA (earnings before interest, tax, depreciation and amortization), and cash flow in the company,” Hart said.
IGT was one of the first companies to secure an interactive gaming license in Nevada. While the company is excited to be part of history, the revenue from an intrastate poker format is not expected to be large.
“(IGT’s gaming license is) for people who reside in Nevada, so the pool of potential players is not significant enough,” Hart said. “The online gaming environment looks social for an extended period of time in the United States.”