Shuffle Master (NASDAQ:SHFL) announced yesterday that it would sell certain assets of its unheralded slot unit to high tech slot king IGT (NYSE:IGT) for an undisclosed amount.

The deal includes Shuffle Master's share of its alliance slot operations, related inventory, and certain intellectual property. According to CEO Mark Yoseloff, the company still plans to sell all of its slot assets at a profit over the next several months.

For reference's sake, Shuffle Master's slot unit delivered a mere $10 million in revenues in 2003 - about 14% of its total revenues. That said, this is clearly bigger news for Shuffle Master than for IGT, and just the first step of a larger refocus.

Last month, Shuffle Master announced that it would divest itself of its non-core slot machine business in order to focus on its core table games products and table games businesses, two areas in which the company has successfully dominated. Since then, its shares have climbed more than 25%, where it has just bounced off its all-time high near $39.

If you're a regular casino patron - whether it be at an MGM Mirage (NYSE:MGG), a Caesars Entertainment (NYSE:CZR) (formerly Park Place Entertainment), or a Mandalay Resort Group (NYSE:MBG) casino on the Las Vegas Strip, or your local riverboat in middle America - you are no doubt familiar with Shuffle Master's products. Its automatic card shufflers are a ubiquitous presence at the card tables, and its Three Card Poker and Let It Ride are staple table games.

As I pointed out last month, the table games licensing model in particular has helped drive impressive margins -- namely the 77% gross margins and 25% net margins. Margin improvements will only continue with the sale of the lower margin slot business, and as the company gains better market penetration with new table games. To this end, Shuffle Master also recently introduced Four Card Poker and Dragon Bonus, both of which I caught my first glimpse of at Boyd Gaming's (NYSE:BYD) Sam's Town in Tunica, Miss., a few weeks ago.

This first slot asset sale is positive news for Shuffle Master - the Rule Maker in its niche -- as it allows the company to focus on its competitive advantages. However, the benefits of this sale - and future sales as well -- are most likely already factored into its share price, which maintains a reasonable premium at about 30 times this year's earnings.

Discuss Shuffle Master's future on the Shuffle Master discussion board. Only at Jeff Hwang can be reached at