International Game Technology (IGT) announced the decision to discontinue its electronic table games (ETG) division by 2027, a strategic move aimed at concentrating efforts on core business areas and long-term objectives. This decision, disclosed last week, underscores a growing trend of consolidation within the gambling sector and reflects IGT’s strategy following its acquisition by Apollo Global Management, which combined IGT with Everi Holdings in a $6.3 billion deal last year. The divestiture of its ETG division follows the earlier separation of IGT’s lottery business into a standalone entity, Brightstar Lottery.
IGT’s recent actions mirror similar strategic shifts by its competitor, Light & Wonder (formerly Scientific Games), which divested its lottery and sports betting segments to sharpen its focus on gaming products and systems. Light & Wonder’s stock performance, having increased by 30% over five years, suggests that such streamlining efforts may positively impact market valuation. According to CEO Matt Wilson, this realignment aims to enhance cross-platform game development.
The iGaming industry has witnessed a significant retreat from digital ventures among several operators. The drive for omnichannel expansion post-PASPA in 2018 saw rapid growth, yet many operators have since scaled back their online pursuits. Wynn Resorts, for example, ceased operations of its WynnBet online brand in 2023. The company cited the high costs of online customer acquisition as a deterrent, choosing instead to focus on physical developments, like its resort project in the UAE, as stated by CFO Julie Cameron-Doe.
Las Vegas Sands represents another prominent case of digital withdrawal. Following the death of its founder Sheldon Adelson, a vocal opponent of digital gaming, the company briefly explored digital opportunities before abandoning these efforts last year. CEO Patrick Dumont noted in a staff letter that continuing digital pursuits no longer aligned with the company’s strategic goals.
Penn Entertainment serves as an example of a shift in strategy following unsuccessful digital ventures, having invested $2.5 billion in partnerships with ESPN and Barstool Sports. Today, the company focuses primarily on its theScore brand, a move that has seen its stock rise by over 40% this year.
In the broader context of consolidation, major operators like MGM Resorts and Caesars Entertainment are also experiencing significant changes. Caesars was recently privatized in a $17.6 billion acquisition by Tilman Fertitta. Speculation surrounds potential changes in Caesars’ digital operations, though neither the company nor Fertitta has provided clarification. The integration of Caesars’ digital operations with Fertitta’s existing Golden Nugget assets remains uncertain.
MGM Resorts is currently considering an $18 billion acquisition proposal from Barry Diller, MGM’s largest shareholder. While MGM has invested significantly in digital through its partnership with Entain for BetMGM, Diller has expressed particular interest in MGM’s physical assets. He has emphasized the value he sees in MGM’s unique and tangible assets amid growing digital interests.
Conversely, in contrast to the consolidation trend among traditional casino operators, online sports betting companies are branching into prediction markets. This expansion raises regulatory and operational challenges, as these markets require different resources than traditional gambling products. Notable players like DraftKings and FanDuel have ventured into these markets, with DraftKings launching the DKeX exchange and FanDuel collaborating with CME Group.
However, the expansion into prediction markets involves significant risks and costs. Several states are legally challenging prediction operators, an issue that may escalate to the Supreme Court. These legal battles could heavily influence the feasibility and future viability of operating both sports betting and prediction markets simultaneously.
DraftKings has projected prediction-related expenses could reach $300 million this year, a substantial risk given the current market conditions. Both DraftKings and FanDuel have seen significant declines in their share prices, down 31% and 51%, respectively, this year.
The iGaming sector is undergoing significant transitions as companies reassess their strategic priorities, often opting for consolidation and streamlining in pursuit of stability and core growth. As the landscape evolves, operators will need to navigate complex regulatory environments and market pressures to capitalize on their strategic repositioning.
Looking forward, industry stakeholders await further developments as companies implement these strategic shifts. The outcomes of ongoing regulatory challenges, particularly in the prediction market, will play a critical role in shaping the industry’s direction. Meanwhile, responses from markets and investors will provide crucial insights into the effectiveness of these consolidation strategies.
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