Recent reports indicate that International Game Technology (IGT) is set to close its electronic table games division by 2027 as part of a strategic shift toward core business priorities and growth objectives. This decision exemplifies a trend among major industry players scaling back on diversification in favor of a more consolidated approach focused on their primary operations.
IGT, which was acquired in a $6.3 billion deal last year that merged it with Everi Holdings and brought it under Apollo Global Management, previously spun off its lottery division into a separate entity, Brightstar Lottery. The impending shutdown of the ETG division marks another move in IGT's strategy to streamline its business rather than expand its reach.
Similarly, Light & Wonder, IGT's rival formerly known as Scientific Games, has followed a parallel path. In 2021, it divested its lottery and sports betting divisions, refocusing primarily on games and systems, resulting in a 30% increase in its shares over the last five years. CEO Matt Wilson commented after the company’s sports betting divestiture in 2022 that the streamlined organization allows for a dedicated focus on developing versatile games.
This consolidation trend is not limited to gaming manufacturers; casino operators have also stepped back from their online ventures. Wynn Resorts, for example, recently decided to shut down its WynnBet online sportsbook in 2023. CFO Julie Cameron-Doe stated the company found the online user acquisition costs too burdensome, opting instead to invest in their UAE resort and explore land-based opportunities.
Las Vegas Sands is another operator that has pivoted away from digital. After exploring potential avenues for online gambling through its Sands Digital Services division following founder Sheldon Adelson’s death, the company ceased those efforts last October. In a memo to employees, Sands CEO Patrick Dumont indicated that continuing to pursue these digital opportunities did not align with the company’s core objectives.
Penn Entertainment has faced its own challenges amid its digital ventures. With an initial investment of $2.5 billion into its online sports betting initiatives, including partnerships with ESPN and Barstool Sports, the company has shifted its focus to its theScore brand, resulting in a 40% rise in its shares this year.
Meanwhile, major players like MGM and Caesars may also undergo significant changes. Caesars was taken private this summer in a $17.6 billion deal by Tilman Fertitta, and speculation about a potential spin-off of its digital business has circulated. Recently, Fertitta executives provided no clarity on the future of the digital segment amid the buying process.
MGM, which has invested heavily in its digital endeavors through its BetMGM joint venture with Entain, is currently evaluating a non-binding $18 billion offer from Barry Diller, an entertainment giant who has expressed interest mainly in MGM’s physical assets rather than its digital properties.
As supplier and casino consolidation continues, online sports betting companies are pursuing growth in prediction markets, a shift that involves significant risk. Many operators, including DraftKings and FanDuel, are venturing into predictions, though the distinction between gambling and financial products presents operational challenges.
Investments in this expansion are substantial, with DraftKings projecting prediction-related costs could reach $300 million this year. Both DraftKings and FanDuel, however, have seen their stock values decline significantly this year, by 51% and 31% respectively, indicating potential volatility in their strategies.
