IGT To Sell Online Casino Unit DoubleDown To South Korean Firm For $825 Million
Deal Comes As Social Casino Platform Sees Revenue Decline
Five years after purchasing the fledgling social casino app DoubleDown, International Game Technology (IGT) has reached an agreement to sell it.
IGT announced this week that it will sell the platform to South Korea’s DoubleU Games for $825 million. IGT bought DoubleDown in early 2012 for $500 million.
According to a report from GGRAsia, DoubleDown generated revenue of $280 million in 2016, down 11.7 percent from 2015. It also saw a 14.3 percent decline in average daily active users.
DoubleDown was the firm’s venture into the online gaming space, as IGT was licensed by Nevada for real-money online poker. However, it never launched that platform due to a lack of liquidity in an intra-state market with less than three million people.
IGT also decided to close its European online poker network in late 2012 due to a lack of liquidity.
So far, real-money online casino gaming is only legal in two additional states—New Jersey and Delaware. While regulated real-money internet gambling is only about a $200 million market in the U.S., the social casino games market is valued at about $4.5 billion.
The $825 million is 10.5 times DoubleDown’s full-year 2016 adjusted EBITDA, according to IGT. “Proceeds from the transaction will be used for general corporate purposes, including debt reduction,” the Nevada-based slot machine giant said.
SeekingAlpha reported that IGT has about $8 billion in debt.
“Since acquiring DoubleDown in 2012, IGT has grown it into one of the largest and most successful brands in the North American social casino market,” said Marco Sala, CEO of IGT. “After several years of strong, organic growth and increasingly attractive valuation levels, the time is right for us to maximize the value of this asset for our shareholders.”
IGT added that it will pursue a “multi-year, strategic partnership” with DoubleU Games. The companies are planning a game development, distribution and services agreement that will allow DoubleU Games to offer IGT’s library on DoubleU Games’ combined social casino platforms, in exchange for ongoing royalties to IGT.
In 2015, IGT and Italy-based lottery firm GTECH merged in a $6.4 billion deal.
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