IGT joins emerging Internet gaming industry

International Game Technology of Reno is joining two other big Nevada companies dabbling in the booming Internet and online gambling industry.

The company said Wednesday it formed an alliance with Access Systems Pty. Ltd., a Sydney, Australia, maker of Internet gambling systems. IGT will own a minority stake in Access, and will market Access' ACES Internet gaming system to major gaming operators worldwide. Terms of the deal were not disclosed.

IGT said it will limit its efforts to jurisdictions where Internet gambling is legal and regulated. Most officials consider Internet gambling to be illegal in the Unites States under decades-old laws. Legislation formally outlawing the practice in the United States has yet to pass Congress.

The ACES system is a secure, scaleable high-volume transaction system designed to support a wide variety of games including lotteries, bingo, keno, slots, blackjack and roulette. Another Access product, Games Development Kit, allows customers to develop new games for the ACES system.

The biggest Access customer to date is the Austrian Lottery, which has used the system since December.

Paul Patrick, a gaming analyst at Prudential Securities, said IGT is the biggest and most established American company to enter the Internet gaming market to date.

"I think this is an important development," said Patrick. "You probably will see other companies follow their lead."

IGT, primarily a gaming machine maker, controls about 70 percent of that market, said Patrick.

It's difficult to predict whether all other gaming machine manufacturers will feel compelled to jump onto the Internet, Patrick said.

"It's just an emerging industry," he said. "It's hard to predict what these players are going to do."

Australia is the biggest country to legalize Internet gambling, said Patrick. The allure of operating in a jurisdiction that is perceived to be more legitimate than, say, the many Caribbean islands that have legalized Internet gambling, is a factor likely to attract more established companies, he said.

"I think Australia, because they're regulated, a lot of the bigger companies are going in there now," said Patrick.

To date, no established casino operators have made the jump to the Internet, said Patrick.

IGT said it chose the ACES system as the highest quality and most secure online gaming system after an industry-wide review.

"Equally important to IGT is Access' policy of licensing its ACES technology only to major gaming operators in regulated jurisdictions," said Tom Baker, president and chief operating officer of IGT.

IGT's foray into Internet gambling puts it in company with American Wagering Inc. and Bally Gaming, both of Las Vegas. American Wagering has an Australian Internet gambling license and has started accepting sports bets over the Internet in Australia. American Wagering operates Leroy's race and sports books in casinos throughout Nevada.

And Bally Gaming has developed a computer networking system that will allow Nevadans access to state sports books via their personal computers. The system, called the Remote Access Verification Environment, or RAVE, is a proprietary intranet that allows access only to dial-up subscribers.

RAVE cannot be accessed via the Internet, and uses a sophisticated call tracing system to verify its users are not calling from outside Nevada, where sports betting is illegal.

Nevada gaming regulators have traditionally frowned on Internet gambling. But Nevada Gaming Control Board Chairman Steve DuCharme has said that as long as Nevada companies limit their Internet gambling activity to jurisdictions where the practice is legal, they would not run afoul of the Board.

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