International Game Technology (IGT) has announced plans to discontinue its electronic table games division by 2027, focusing instead on its core business areas and long-term growth targets. This decision reflects a broader trend in the gaming industry, where major companies are scaling back operations after years of expansion and diversification, signaling a shift towards consolidation and a strong focus on primary business objectives.
IGT, which was acquired by Apollo Global Management in a $6.3 billion deal last year, previously merged with Everi Holdings, leading to significant restructuring. A notable result of this acquisition was the spin-off of IGT's lottery division into a separate entity, Brightstar Lottery. The upcoming closure of the electronic table games division further narrows IGT's operational focus.
This trend mirrors that of IGT's competitor Light & Wonder, which rebranded from Scientific Games. In 2021, Light & Wonder divested its lottery and sports betting divisions, subsequently centering its efforts on gaming and systems, leading to a 30% increase in its stock over the past five years. CEO Matt Wilson emphasized the benefits of this streamlined structure, stating that the organization now has a “singular focus on building great games across platforms.”
Consolidation is also prevalent among casino operators, particularly regarding their online platforms. The anticipation for an “omnichannel” strategy surged post-PASPA legalization in 2018. However, some major operators have recently curtailed or exited their online initiatives. Wynn Resorts, for instance, closed its WynnBet online brand in 2023, shifting its focus back to the development of physical properties in the UAE. CFO Julie Cameron-Doe cited dissatisfaction with the high marketing expenditures associated with online customer acquisition as a main reason for this pivot, indicating a preference for other investment opportunities.
Las Vegas Sands also retraced its steps in the digital realm, terminating its internal exploration of online gambling opportunities last October. In a message to employees, CEO Patrick Dumont noted that pursuing this avenue was misaligned with the company’s core long-term goals, which aligns with the late founder Sheldon Adelson’s aversion to digital gambling.
On the other hand, Penn Entertainment, which made significant investments of $2.5 billion in online sports betting partnerships with ESPN and Barstool Sports that did not yield the expected results, has shifted its focus solely onto its theScore brand. This reduction in scale has resulted in a notable 40% increase in the company’s stock this year.
As for two of the largest casino operators, MGM Resorts and Caesars Entertainment might also see changes in ownership before the year ends. Caesars was acquired by billionaire Tilman Fertitta this summer for $17.6 billion. The future of Caesars' digital content remains unclear, with speculation about potential spin-offs or integration with Fertitta's Golden Nugget operations. Neither Caesars nor Fertitta has provided substantial details beyond confirming the deal during recent regulatory discussions.
MGM, which has invested significantly in its digital ventures and holds a collaborative stake in BetMGM with Entain, is weighing a takeover bid of $18 billion from Barry Diller, its largest shareholder. Diller has expressed a keen interest in MGM’s physical assets over its digital holdings, reinforcing a market perception that the company’s true value lies in its real-world properties rather than its online operations.
While suppliers and casino businesses lean towards consolidation, several online sports betting firms are embracing expansion, particularly into prediction markets. Although the two sectors cater to similar customers, their operational frameworks differ significantly. Sports betting is categorized as a gambling product, whereas prediction products are treated as financial instruments with distinct obligations and operational costs.
Prominent online sports betting companies, including DraftKings and FanDuel, have moved into the predictions sector. DraftKings acquired Railbird exchange and created its own exchange, DKeX, while FanDuel has partnered with CME Group to offer FanDuel Predicts. This diversification strategy does come with risks, as ongoing legal disputes could restrict the operations of prediction markets, potentially culminating in Supreme Court proceedings in the near future.
Investment-wise, DraftKings anticipates prediction-related costs might soar to $300 million this year, a significant financial commitment. FanDuel has made similar forecasts, raising concerns as both companies currently face downturns in their stock values, with shares falling 51% and 31% respectively this year.
