International Game Technology, the world's leading slot machine maker, hit the jackpot with one of the largest single orders in its 23-year history.
Harrah's Entertainment Inc. has agreed to buy 11,000 new coinless slots from Reno-based IGT, company officials announced Monday. Contract terms were not disclosed, but the officials said slots cost about $10,000 each.
"This deal is one of the largest orders, if not the largest single order, IGT has ever received, and is of historical significance for both companies," IGT Chief Executive G. Thomas Baker said in a statement.
Gambling analyst David Anders of Merrill Lynch said the deal would help IGT continue its dominance of the slot industry. IGT controls about 70 percent of the U.S. market.
"We had been concerned that we would see a leveling off of (slot) replacement demand in 2004, which we thought would become a concern of investors," he wrote in a report.
"However, with today's announcement the company easily has another four quarters of growth in replacement demand, which will likely sustain if not permit further valuation expansion," Anders added.
In July, IGT reported a 14th straight quarter of earnings that topped the previous year. Its earnings report for the fiscal year ending Sept. 30 is set for release in early November.
IGT stock closed Monday at $31.16, up $3.07, or 10.9 percent, per share.
Ed Rogich, IGT vice president of marketing, said the Harrah's deal is comparable to his company's 2001 sale of 15,000 coinless slots to Park Place Entertainment.
Cashless machines issue bar-coded tickets for payoffs that can either be redeemed for money or played in another machine.
The latest deal represents about 75 percent of Harrah's expected slot purchases over the next year, Baker said.
"With this order, we are on track to achieve a new target of 60,000 to 65,000 domestic replacement machine sales for fiscal year 2004," he said.
Through the first three quarters of the past fiscal year, domestic replacement shipments totaled 42,500 machines, up 44 percent over the previous year. Replacement machines accounted for about two-thirds of total domestic sales for the year through then.
"(Cashless slots) are stimulating the replacement market," Rogich said. "This technology has spurred a replacement cycle that's faster than usual."
IGT recently added a new production line and will not need any new employees to handle the order, Rogich added.
Harrah's will use the new slots for its Fast Cash ticket system across the country, including its resorts in Reno, Lake Tahoe and Las Vegas.
"By eliminating wait times for change and hopper fills, coinless gaming will offer our customers unprecedented convenience," said John Boushy, Harrah's senior vice president.