Consolidation Era in the Gaming Industry: Major Deal Trends

Last week, it was reported that International Game Technology will close its electronic table division in 2027 to focus on "core business priorities and long-term growth goals." This decision illustrates the trend toward consolidation and a return to core areas and may reflect a broader industry strategy.

Last year, IGT was acquired and merged with Everi Holdings by Apollo Global Management in a deal worth $6.3 billion. The first major change following the transaction was the spin-off of IGT's lottery division into a new company called Brightstar Lottery. The closure of the ETG division is yet another step towards narrowing IGT's focus rather than expanding it.

Consolidation through IGT and Light & Wonder

IGT's transformation resembles the strategy of its main competitor, Light & Wonder. Previously known as Scientific Games, the company sold its lottery and sports divisions in 2021. As a result, L&W's shares have risen 30% over the past five years. After completing the sale of its sports segment, CEO Matt Wilson noted that the team is now focused on creating "amazing games for all platforms."

Casino Operators Leaving Digital Markets

The trend of consolidation has also affected casino operators, particularly in terms of online services. Wynn Resorts, for example, closed its WynnBet brand in 2023, deciding to focus on developing its resort in the UAE. CFO Julia Cameron-Dow highlighted "excessive marketing spend" on online users and pointed to better capital utilization.

Similarly, Las Vegas Sands ceased its digital project initiatives, especially after the death of founder Sheldon Adelson. CEO Patrick Dumont stated that "further development in this area is not aligned with the company’s long-term goals."

Potential Changes for MGM and Caesars

Casino operators MGM and Caesars may change owners by the end of the year. Caesars was acquired by billionaire Tilman Fertitta for $17.6 billion. MGM received a buyout offer from investor Barry Diller for $18 billion. Diller emphasized that he is specifically interested in MGM's physical assets, not its digital ones.

Risks in Expanding Bookmakers

Conversely, while the industry consolidation remains a trend, many online sports betting companies are attempting to expand into predictive markets. DraftKings and FanDuel are actively pursuing opportunities in this space, but such attempts come with significant risks. Projected costs could reach $300 million.

Bookmakers face challenges as many states are suing prediction operators for providing sports contracts. This issue is expected to be addressed by the Supreme Court in the coming years.