Las Vegas Sun

December 3, 2021

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Shuffle Master continues to grow

Two acquisitions by Shuffle Master Inc. -- one that closed Tuesday and another expected to be completed within three months -- will expand the Las Vegas company both geographically and in product line.

The company, which is announcing its first-quarter earnings today, said Wednesday that it had signed a letter of intent to acquire Casinos Austria Research and Development (CARD), a division of Casinos Austria of Vienna.

CARD manufactures and distributes card shufflers and casino chip-sorting machines, primarily in Europe. The parent company is a major casino operator in Europe.

Shuffle Master also announced that it has completed the purchase of most of the assets of BET Technology Inc., Carson City, a privately held corporation that has developed the Fortune Pai Gow, Royal Match 21 blackjack side bet and Casino War table games.

Terms of the BET Technology deal were not disclosed. Shuffle Master is in financial negotiations on the CARD transaction.

The two deals are the most recent examples of Shuffle Master returning its focus to its core product of shuffling machines and developing table games that use those shufflers. The company announced in December that it is shedding its slot machine business to return to the products that the company entered the market with just over a decade ago.

"The announcements of the past 36 hours are indicative of where the company is headed strategically and indicative of what we feel will be more announcements like them in the future," said Daniel Davila, a gaming analyst with Sterne, Agee & Leach Inc., Birmingham, Ala. "Their capital won't be tied up in the slot business any more."

Paul Meyer, president and chief operating officer of Shuffle Master, said that the acquisition of CARD would bring three immediate benefits to the company.

"The CARD subsidiary has sales people on the ground in Europe and in an office in Brisbane, Australia," Meyer said. "When we close the deal, it makes us an international company overnight."

Added Davila, "Prior to the CARD letter of intent, the company had some international presence, but this expands their footprint significantly."

Perhaps more importantly to Shuffle Master is that the acquisition of CARD could save the company millions of dollars in litigation costs. A U.S. District Court judge in Reno in December issued an injunction against CARD preventing the company from selling, leasing, importing or otherwise using its One2Six card shuffling machine, which Shuffle Master contended in September infringed on its patents.

"It's hard to quantify how much removing the litigation will save," Davila said, "but it's probably a half-million bucks a quarter."

Meyer said Shuffle Master has been planning similar litigation in Great Britain and Australia over the same issue.

"We had several discussions with them (CARD), including talks on an acquisition," Meyer said.

The third benefit of the acquisition, he said, is the immediate broadening of the company's product line. The Easy Chipper, for example, is a portable poker chip sorting machine that would compete on the market with the TCS Chipper Champ Plus machine developed in Australia.

The acquisition of CARD would add between 20 and 25 overseas employees. Shuffle Master presently has about 250 employees in the United States.

The BET Technology deal, Meyer said, involves no personnel or buildings, but will expand the company's market share of table games.

By adding 1,100 Fortune Pai Gow, Royal Match 21 and Casino War games, Shuffle Master would operate more than 2,900 of the 4,300 branded table games in the world market. In addition to acquiring BET Technology's games, Shuffle Master -- which already owns the rights to Let It Ride, Three Card Poker, Four Card Poker and other games -- has acquired the patents for other projects in the BET Technology development pipeline.

In addition to announcing the two deals, Shuffle Master also said this week that the company's board of directors has extended chief executive Mark Yoseloff's executive contract through 2007. Yoseloff, a former mathematics and computer science professor at Princeton and Arizona State universities, joined the company in June 1997.

"They're in an enviable market position in their particular niches," Davila said of Shuffle Master. "They have significant management capability now in addition to having significant leadership in their product niches and we don't see that changing."

The company's news has been met warmly on Wall Street.

After rising 7 percent to close at $36.85 on Wednesday, Shuffle Master stock traded this morning at $39.50, up another 7.2 percent.