Last week, iGB reported that International Game Technology (IGT) plans to phase out its electronic table games (ETG) division by 2027. This decision reflects the company’s intention to concentrate on its core business and long-term growth objectives.
This move marks another instance of a significant player in the gaming industry reducing its scope after years of expansion, suggesting a shift toward consolidation and a renewed focus on core operations. IGT was acquired last year in a $6.3 billion merger with Everi Holdings, facilitated by Apollo Global Management. Following this acquisition, IGT spun off its lottery division into a separate entity, Brightstar Lottery, indicating a sharp pivot away from diversified interests.
A similar trend can be seen with Light & Wonder (L&W), the former Scientific Games. In 2021, L&W sold off its lottery and sports betting divisions to refocus primarily on games and systems. Since making this shift, the company’s stock has risen by 30% over the past five years. Matt Wilson, the CEO of L&W, expressed satisfaction with the streamlined organization and emphasized a concentrated effort on developing high-quality games across all platforms.
Consolidation is also evident among casino operators, especially regarding their online services. The rush toward an "omnichannel" approach intensified following the 2018 PASPA decision, but several key players now appear to be scaling back these efforts. Wynn Resorts, for instance, ceased operations of its WynnBet online platform in 2023, redirecting its focus toward developing its UAE resort and pursuing new land-based ventures. CFO Julie Cameron-Doe cited dissatisfaction with the high marketing expenses associated with online user acquisition as a driving factor behind this decision.
Las Vegas Sands, notable for its previous engagements with digital gambling, ended its exploration of online opportunities last October. In a letter to employees, CEO Patrick Dumont stated that pursuing this avenue no longer aligned with the company’s core long-term goals. This decision is in keeping with the company's historical resistance to digital gaming under its late founder, Sheldon Adelson.
Penn Entertainment is another example of a company that has recalibrated its digital strategy. After investing $2.5 billion in its online sports betting agreements with ESPN and Barstool Sports, neither of which yielded positive outcomes, Penn has narrowed its focus to its theScore brand, resulting in a stock increase of over 40% this year.
Looking forward, both MGM and Caesars, two casino operators with broad offerings, may undergo ownership changes by the end of the year. Caesars was recently acquired by billionaire Tilman Fertitta in a $17.6 billion deal, while MGM’s board is considering an $18 billion takeover proposal from its largest shareholder, Barry Diller. In Caesars' case, speculation about spinning off its digital ventures has circulated even before the acquisition, as its growth has frequently outpaced traditional Las Vegas and regional operations. Details from Fertitta's management team on their plans for the digital segments remain sparse.
MGM, which has heavily invested in both internal digital ventures and the BetMGM joint venture with Entain, faces uncertainty. Diller has emphasized his interest in MGM’s physical assets rather than its digital operations, stating, "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."
On the other hand, while suppliers and casino operators are leaning toward consolidation, many online sports betting companies are expanding into prediction markets. This trend has been notably led by DraftKings and FanDuel; the former acquired Railbird exchange and launched its own, DKeX, while the latter has partnered with CME Group to run FanDuel Predicts. Other players like Fanatics, Underdog, and PrizePicks are also entering this arena.
This expansion into prediction markets is accompanied by significant risks and costs. Several online sports betting operators operate both state-licensed sports betting and prediction products under federal regulations, a situation that may become untenable as numerous leading gambling states are litigating against prediction companies for offering improper sports contracts. This matter is expected to escalate to the Supreme Court soon.
Investment costs in predictions are climbing, with DraftKings forecasting $300 million for this year related to prediction operations, while FanDuel has provided similar estimates. Such heavy financial commitments are daunting, particularly given that shares of both companies have seen declines of 51% and 31% this year, respectively.
