Recently, International Game Technology (IGT) announced plans to terminate its electronic table games (ETG) division by 2027 to concentrate on its primary business priorities and long-term growth objectives. This reflects a broader trend among major industry players who are retreating from diversified ventures to focus on core operations.
IGT, which was acquired and subsequently merged with Everi Holdings, was taken private by Apollo Global Management in a $6.3 billion deal finalized last year. A significant outcome of this acquisition was the spinoff of IGT’s former lottery division into a stand-alone entity, Brightstar Lottery. Now, the planned closure of the ETG division marks another step in IGT's strategy to narrow its focus.
This shift mirrors changes at IGT's competitor, Light & Wonder (formerly Scientific Games). In 2021, Light & Wonder divested its lottery and sports betting divisions, redirecting its efforts primarily toward games and systems. This strategy appears to have been fruitful, with the company's shares rising 30% over the past five years. Following Light & Wonder's sports betting divestiture in 2022, CEO Matt Wilson expressed satisfaction with the streamlined organization, emphasizing their focus on developing high-quality, cross-platform games.
The consolidation is also evident among casino operators, particularly regarding their online offerings. In the aftermath of the 2018 PASPA ruling, many rushed to adopt omnichannel strategies. However, several prominent names have retracted their digital commitments. For instance, Wynn Resorts closed its WynnBet online brand in 2023, redirecting its focus towards developing its UAE resort. CFO Julie Cameron-Doe criticized the excessive marketing costs linked to online user acquisition, stating that there were better uses for capital deployment.
Las Vegas Sands, founded by the late Sheldon Adelson, also withdrew from digital expansion. After exploring opportunities in digital gambling through its Sands Digital Services division, the company decided last October to abandon these efforts. CEO Patrick Dumont informed employees that continuing on this path no longer aligned with the company's long-term goals.
Penn Entertainment, after investing $2.5 billion into online sports betting partnerships with ESPN and Barstool Sports, refocused solely on its theScore brand. As a result, the company’s shares have surged more than 40% this year.
Notably, two prominent casino operators, MGM Resorts and Caesars Entertainment, may face shifts in ownership by the end of this year. Caesars was taken private in a $17.6 billion deal by billionaire Tilman Fertitta. Persistent rumors about spinning off Caesars' digital business predate the acquisition; growth in this sector has consistently outpaced the company’s traditional Las Vegas operations. However, neither Caesars nor Fertitta has disclosed future plans regarding the digital division, and recent regulatory appearances by Fertitta executives yielded no insights on whether the digital segment would remain or be consolidated.
MGM, which has heavily invested in its digital operations, including through its BetMGM venture with Entain, is now assessing an $18 billion takeover offer from its largest shareholder, Barry Diller. At 84, Diller has indicated that his interest lies in MGM's physical assets rather than its digital infrastructure, reinforcing a trend where companies appear to favor established, tangible assets over digital ventures.
While consolidation seems to be the order of the day for suppliers and casino operators, many online sports betting companies are currently expanding their reach into prediction markets. Even though these sectors cater to similar audiences, they operate under distinct processes and obligations.
Major players like DraftKings and FanDuel have been particularly active in this area. DraftKings acquired Railbird and introduced its own exchange, DKeX, while FanDuel partnered with CME Group to operate FanDuel Predicts. Other sports betting operators are also exploring prediction services, which come with their own financial risks and operational costs.
However, the expansion into predictions is fraught with challenges as several leading gambling jurisdictions are suing prediction companies for offering sports contracts, a dispute that could escalate to the Supreme Court. The outcomes of these legal battles could hinder online sports betting companies' ventures into prediction markets.
Investments in this sector are also significant, with DraftKings estimating its prediction-related costs could reach $300 million this year, while FanDuel has made similar projections. Given that shares of FanDuel's parent company Flutter and DraftKings have declined by 51% and 31%, respectively, this financial bet carries considerable risk.
