Apr 26, 2016 Newsdesk Latest News, Macau, Top of the deck, World
Hong Kong-listed Paradise Entertainment Ltd has agreed to transfer all of its electronic table game (ETG) technology, patents and other intellectual property to global gaming supplier International Game Technology Plc (IGT), with the exception of table game intellectual property used exclusively in Macau.
The patent and technology agreement was announced on Monday. IGT will pay Paradise Entertainment an up front fee of US$12.95 million, Paradise Entertainment said in a filing to the Hong Kong Stock Exchange on Tuesday.
IGT will also make earn-out payments – on a quarterly basis over a 15-year term – based on placement in casinos of products utilising Paradise Entertainment’s table game intellectual property, according to Tuesday’s statement. Earn-outs are typically additional payments made to the owner of a business entity after it is sold to other parties. Paradise Entertainment said it estimates such payments will range from 3 percent to 12 percent of IGT’s sales revenue for the licensed products during the 15-year term.
Paradise Entertainment develops, supplies and sells electronic gaming systems in Macau and internationally under the LT Game brand.
The agreement provides IGT with exclusive rights to Paradise Entertainment’s table game intellectual property “for the development, manufacturing, and distribution of live [dealer] and random number generator electronic table games worldwide”. In Macau, LT Game Ltd will remain the exclusive provider of such ETG products.
Paradise Entertainment said the deal is the best path to create value for the company and its shareholders in markets outside Macau. “The transactions will facilitate the expansion and operations of electronic gaming business and increase the revenue base of the group,” said the firm.
Closing of the agreement is subject to Paradise Entertainment obtaining the requisite shareholder consents and approvals, according to Monday’s statement.
“This intellectual property assignment agreement is a natural and important step in Paradise’s productive relationship with IGT,” said Jay Chun, chairman and managing director of Paradise Entertainment.
“IGT’s global reach and strong relationships with operators around the world make IGT the ideal company to maximise the business potential of Paradise’s live [dealer games] and random number generator patents and technology in the international market,” he added.
In August 2014, LT Game Ltd announced a three-year distribution deal with the pre-merger entity International Game Technology, a Nevada-based supplier of slot machines.
Under the terms of the agreement IGT had agreed to distribute LT Game’s live and electronic table game systems in the U.S. and Canada. LT Game in turn had agreed to serve as distributor for IGT’s slot machines in the Macau market. IGT in April 2015 completed a US$6.4-billion merger with Italy-based lottery equipment specialist GTech SpA, creating a new entity called IGT Plc.
The 2014 deal between IGT and LT Game shall be terminated upon signing of the latest agreement, Paradise Entertainment said in Tuesday’s filing.
Commenting on the latest deal, IGT’s global chief product officer for gaming, Victor Duarte, said: “Through our agreement with Paradise, IGT is now uniquely positioned to capitalise on live [dealer] and fully electronic table game opportunities in gaming jurisdictions around the world”.
“This pivotal expansion of our product portfolio empowers IGT to innovate in a new and growing segment while offering our customers an even broader range of best-in-class gaming solutions,” added Mr Duarte.
In the Macau market, LT Game has an ongoing patent litigation with SHFL Entertainment (Asia) Ltd, now a unit of U.S.-based Scientific Games Corp.
Under the litigation, LT Game opposes SHFL’s right to sell in the Macau market multi-game electronic table games with a live dealer and involving baccarat. SHFL has strongly defended what it says are its legitimate commercial rights in the Macau market.
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