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International Game Technology (IGT) has finally decided to sell off the social casino app DoubleDown five years after purchasing it.
IGT announced this week that it will sell off the fledgling platform, which they bought in early 2012 for $500 million, to South Korea’s DoubleU Games for $825 million.
The deal establishes a new multi-year strategic partnership between IGT and DoubleU Games to provide innovative player experiences in the social casino market worldwide.
“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. We will continue participating in the growth of the social casino market through our multi-year, strategic partnership with DoubleU Games,” Marco added.
“This transaction represents a unique and value-accretive partnership combining the operational excellence of DoubleU Games with IGT’s world class slot content,” said Ga-Ram Kim, CEO of DoubleU Games. “With this partnership, we are excited and confident about DoubleU Games’ future as a global leader in social casino.”
However, DoubleDown was in the red recently as GGRAsia records suggests that it has generated revenue of $280 million in 2016, down 11.7% from 2015. It also saw a 14.3% decline in average daily active users.
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.
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.