Gaming Industry Heavyweights Discuss the Future of Post-Recession Gambling

April 19, 2010

NEW YORK, April 19/The Wall Street Transcript/ — In exclusive Q&A interviews with The Wall Street Transcript, Robert Caller, CFO, executive vice president and corporate treasurer of Bally Technologies, and William E. Mudd, CFO and executive vice president of Churchill Downs, weigh the future of the gaming industry and upcoming growth opportunities in this environment of economic recovery.

Mr. Caller outlines Bally’s corporate strategy of focusing on the manufacture and sale of gaming devices, and on the operation of the company’s own gaming device assets, explaining the motives behind Bally’s recent sale of the Rainbow Casino to Isle of Capri. The CFO also discusses Bally’s April 5 announcement to lower its guidance for fiscal year 2011, highlighting the reasons for that decision.

In his exclusive interview with TWST, Mr. Mudd offers in-depth details on Churchill Downs’ acquisition of Youbet.com and explains how this transaction fits into the company’s corporate strategy of diversification away from solely pari-mutuel wagering on horse racing. He also offers a summary of the company’s financials and corporate goals for 2011.

Highlights of both interviews include:

Mr. Caller’s in-depth outline of Bally’s slot data system products, including the new gaming ALPHA 2 platform to be released summer 2010.
Market opportunities in states with new gaming legislation as well as in Italy, Macau, Singapore and Australia.
Mr. Caller’s detailed breakdown of Churchill Downs’ diversification efforts and resulting increased net revenues in 2009.
Mr. Caller’s analysis of the future of the company’s horse racing operations.

Some key quotes are:

“The gaming industry in North America is pretty much a closed society due to the regulatory environment. We have 280 gaming licenses around the world, as do all of our competitors, so you don’t just get into this business by accident. We do look at larger acquisitions and mergers from time to time, but more recently we’ve been focused on technology tuck-in acquisitions.” — Robert Caller, Bally Technologies
“What we found on the racing side of the business is it’s becoming increasingly difficult to continue to operate racetracks without supplementing with other sources of revenue…Gaming, by and large, is what most racetracks have been able to acquire as another form of revenue, and it also helps in the way of purses.” — William E. Mudd, Churchill Downs

Bally Technologies, Inc., is an international gaming company that designs, manufactures, distributes and operates gaming devices and computerized monitoring, accounting and player-tracking systems for those devices. Bally’s slot data system (SDS) products are used in more than two-thirds of the world’s casinos, in over 3,000 slots.

Churchill Downs, Inc., is a multi-jurisdictional owner and operator of pari-mutuel wagering properties and businesses; it also offers gaming products through its slot and video poker operations in Louisiana and Florida. Aside from the company’s racing operations, which include the Churchill Downs Racetrack, where the Kentucky Derby is hosted annually, Churchill Downs also has an online business, advance-deposit wagering business and gaming business, among other holdings.

The Wall Street Transcript features in-depth Q&A interviews with equity analysts, money managers and public company CEOs. For more than 40 years, TWST has provided primary-source information on public companies to financial professionals, management consultants and senior corporate executives.

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