Inside Asian Gaming

48 INSIDE ASIAN GAMING | August 2013 INTERNATIONAL BRIEFS Bally To Acquire SHFL Bally Technologies has entered into a definitive agreement to acquire SHFL Entertainment for US$1.3 billion. In a deal Bally CEO Ramesh Srinivasan called “transformational,” the Las Vegas-based slot giant (NYSE: BYI) is paying $23.25 a share for SHFL’s Nasdaq-listed common stock, a 24% premium to the 15th July closing price. Bally described the purchase, which both boards unanimously approved, as a combination of “two best-in-class, highly complementary and customer-centric technology companies with a shared commitment to innovation.” Mr Srinivasan said, “SHFL’s intellectual property, renowned brands and industry-leading suite of diverse, high-performance products will enable us to … provide the most comprehensive product portfolio offered around the world.” SHFL CEO Gavin Isaacs said it is “the right time to join forces”. He called it “a unique opportunity to combine each other’s many strengths, particularly our talented teams who have been the key drivers of success for each organization. … We share a common vision to build the industry’s leading supplier based on delivering superior products, solutions and services to customers around the world.” The acquisition significantly broadens Bally’s reach into growth markets outside the US, particularly in the land-based and online table games and e-tables sectors of Asia and Australia. At the same time, it eliminates an increasingly competitive rival for its share of the domestic slot machine market. The company said it has “committed financing” to complete the acquisition, whose enterprise value includes $8 million of SHFL debt and cash reserves of $41 million. Bally estimates trailing 12-month EBITDA of $415 million from their combined operations, based on about $1.3 billion in total revenues, of which $644 million is recurring. Bally said it also expects to achieve synergies of at least $30 million. SHFL said it expects closing will occur no later than June 2014, pending approval by the company’s shareholders and regulatory approvals. US Court Rejects Tax on Foreign Gamblers Foreign gamblers cannot be taxed on every winning bet they make in US casinos when they end up losing money overall, a new court ruling says. Rejecting current Internal Revenue Service policy, the US Court of Appeals for the District of Columbia ruled that the agency must treat foreign gamblers the same way it taxes American bettors, who are assessed only on the profit they make after a gambling session. If they lose they owe nothing. The different policies were based on the fact that foreigners cannot deduct gambling losses from their income, as US residents can, and thus should not be allowed to do so during individual gambling sessions. However, Judge Brett Kavanaugh, writing for a unanimous three- judge panel, called that a “non sequitur.” “After a night of gambling, it’s no fun to walk out of the casino a loser,” he said. “But it’s even worse when the IRS, on your way out, tries to tax you on each individual bet that you happened to win over the course of your losing night.” The case was brought by a South Korean businessman who over the course of two years won more than $500,000 playing slot machines at a tribal casino in California, but lost even more, ending up $50,000 in the red, according to court documents. The IRS claimed he owedmore than $150,000. He sued, but a federal Tax Court upheld the IRS policy. Another Megaresort for Spain? Sheldon Adelson has yet to start building in Madrid and already a potential rival has sprung up in Barcelona, the city he turned down for EuroVegas. It will be on an equally grand scale. And one of his Macau competitors, Melco Crown Entertainment, is negotiating to manage the gaming side. BCNWorld plans to break ground this year on a US$6 billion, six- casino resort complex outside Barcelona with 18,000 hotel rooms envisioned at full build-out and an array of leisure attractions spread across 1,500 acres. The first phase of Barcelona World, as it’s called, will feature 1,100 hotel rooms operated by Meliá and is slated to open in 2016. Barcelona is the city Las Vegas Sands rejected in favor of Madrid for its equally grandiose EuroVegas, a $30billion complex of 12 resort hotels with six casinos, convention facilities, golf courses, shopping malls and other attractions scheduled to open in phases beginning in 2017. Bally CEO Ramesh Srinivasan