Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

Businessweek Archives

Is This A Winning Number?

Inside Wall Street


Some attractive market bets often look like pure gambling--especially the companies that are in the gambling business. Take GTECH. As a designer, manufacturer, and operator of lottery systems, including video lotteries, the company might seem to be a very risky proposition. Yet GTECH so far has produced nothing but handsome gains for investors who bought in uhen the company went public in July at 17 a share. Some savvy pros think the stock, already at 27 1/2, will hit 40 within a year.

What's going on? State governments are increasingly turning to lotteries to raise revenues. GTECH, based in West Greenwich, R. I., supplies and operates lottery systems in 20 states and 7 countries, which gives it 68% of the U.S. market and 75% of the global market.

GTECH is also well-positioned to score in video-game lotteries--the fastest-growing segment of the business. Its major rival in video lottery terminals, Video Lottery Technologies, was recently removed by the Australian government from its supplier list. GTECH, a current supplier to Australia, will almost certainly benefit from Video Lottery's woes.

Analyst Kurt Feuerman of Morgan Stanley thinks that his 1993 earnings estimate of $1 a share vs. 1992's estimate of 64 may prove low, in part because of the added business that could come from Australia. In addition, he thinks that GTECH's new game, Keno Club, will be a hit. GTECH markets the game in South Australia, Kansas, Oregon, and Rhode Island. Keno Club will be a gold mine for GTECH as more states sign up for it.

One big investor is betting on GTECH because he thinks California will sign on for Keno Club. Feuerman agrees: If GTECH gets a 5% share of the Keno game in California, it would add annual revenues of at least $25 million and incremental earnings of at least 10 cents a share, figures Feuerman.GENE G. MARCIAL

blog comments powered by Disqus