Last week, it was reported that International Game Technology (IGT) plans to shut down its electronic tables game (ETG) division by 2027, as part of a strategy to concentrate on its key business priorities and long-term growth objectives.
This decision underscores a broader trend among major players in the gaming industry to scale back after years of expansion, suggesting a potential shift toward consolidation and a renewed focus on core operations.
IGT, which was acquired in a $6.3 billion deal last year that merged it with Everi Holdings and took the company private under Apollo Global Management, has already undergone significant changes. One major move was the spinoff of its former lottery division into a separate entity called Brightstar Lottery. With the upcoming closure of the ETG division, IGT's scope appears to be narrowing rather than expanding.
This transformation mirrors developments at IGT’s competitor, Light & Wonder. Previously known as Scientific Games, Light & Wonder sold off its lottery and sports betting segments in 2021. Since that time, the company has refocused primarily on games and systems, and its stock has risen by 30% over the last five years.
In a post-divestiture statement in 2022, CEO Matt Wilson praised the company's streamlined structure, emphasizing a commitment to "building great games fully cross-platform."
The trend toward consolidation is evident among casino operators, especially regarding their digital strategies. In the wake of the 2018 PASPA decision, many rushed to adopt an omnichannel approach. However, some prominent operators have now stepped back from these efforts.
For instance, Wynn Resorts announced the closure of its WynnBet online brand in 2023. Rather than investing further in digital platforms, Wynn has shifted its focus towards developing its resort in the UAE and pursuing new land-based opportunities. CFO Julie Cameron-Doe expressed dissatisfaction with the “outsized marketing spend” required for online user acquisition, opting instead for “higher and better uses of capital deployment.”
Las Vegas Sands has also retreated from digital pursuits. Although the company explored opportunities through its Sands Digital Services division after founding CEO Sheldon Adelson's passing, it ultimately halted those efforts last October. In a communication to staff referenced by the Las Vegas Review-Journal, CEO Patrick Dumont indicated that this digital direction was inconsistent with the company’s core long-term objectives.
Penn Entertainment has recalibrated its digital focus as well. Having spent $2.5 billion on online sports betting deals with ESPN and Barstool Sports—neither of which proved successful—the company now concentrates solely on its theScore brand, achieving a more than 40% rise in stock this year.
Meanwhile, two major casino operators, MGM and Caesars, are both facing potential changes in ownership by the end of this year. This summer, Caesars was taken private by billionaire Tilman Fertitta in a $17.6 billion deal. The MGM board is currently evaluating an $18 billion takeover proposal from Barry Diller, its largest shareholder.
Concerns have surrounded the digital side of Caesars’ business even before the acquisition, especially as its growth consistently outpaced traditional segments. Though both Caesars and Fertitta have refrained from commenting on the deal specifics, uncertainty remains regarding the future of the digital operation within the context of Fertitta’s existing Golden Nugget holdings.
MGM has made significant investments in its digital initiatives, including its BetMGM joint venture with Entain. However, Diller’s interest seems to lie primarily in MGM’s physical assets. He stated, "We began investing in MGM nearly six years ago because we believed it represented a rare kind of business: one with real world assets that AI cannot easily replicate or disintermediate and exceptional digital growth opportunities."
In contrast to consolidation trends among suppliers and casino operators, many online sports betting companies are pushing for growth in the prediction markets sector. This expansion comes with its own challenges due to differing regulatory and operational demands. While sports betting has been classified as gambling, predictions are treated more like financial products, introducing additional complexities.
Major online sports betting firms, including DraftKings and FanDuel, have actively pursued ventures into predictions. DraftKings acquired the Railbird exchange and launched DKeX, while FanDuel struck a deal with CME Group to provide FanDuel Predicts. Other notable players in the predictions space include Fanatics, Underdog, and PrizePicks.
However, this diversification carries risks. Some operators are navigating both state-regulated sports betting and federally licensed predictions, which may not be sustainable in future years. Ongoing lawsuits from major online gambling states regarding prediction operators could complicate their operations, potentially escalating to the Supreme Court.
DraftKings anticipates prediction-related expenditures may reach $300 million this year, with FanDuel facing similar projections. Considering the current decline of shares for both companies—down 51% for FanDuel (Flutter) and 31% for DraftKings—this represents a risky financial commitment.
