Light & Wonder has accessed new capital markets and is thriving on social, online and in person channels. Matt Wilson, the CEO of Light & Wonder is now looking for opportunities to grow in Asia and via US igaming.
Light & Wonder’s quarter-end results continue to validate the company’s decision to sell its lottery and sports betting arms.
The revenue for the third-quarter of 2023 grew by 12.8%, to $731m. This was aided in part by the record profits from social casino and igaming games. This is the fifth quarter in a row that the supplier has seen double-digit year-on-year growth.
Matt Wilson, chief executive of the company says that companies are only able to be top-notch at certain things. We said that we couldn’t be the world’s best company for sports, social casinos and lottery. We decided to remain a content-based company while keeping the three complementary businesses.
The First of Many?
Wilson continues, “It is very competitive and the conglomerates of old-fashioned ’80s style where many different companies doing different jobs are rolled together in one portfolio only work because they all belong to the same person.” This model does not work.
Light & Wonder looks like a trend-setter on this front. IGT has begun a divestment process of its Global Gaming, PlayDigital and Lottery divisions to concentrate on their lottery business. Playtech is reportedly considering focusing on B2C, after its failed bid to acquire 888 earlier this year.
Others are catching on to the fact that Light & Wonder gained a competitive edge by removing its clothing.
Wilson, in the case of IGT sees many similarities. He fully endorses an streamlined strategy. He says, “We unlocked an enormous amount of value.” If competitors closely monitor Light & Wonder, they might also follow other strategic decisions.
Down Under
The supplier then secured a secondary listing at the Australian Stock Exchange which opened up new capital. The ASX has now listed 15% of Light & Wonder’s market capital, which is well above management’s expectations.
Wilson explains, “we thought that there would be some interest in the Light & Wonder tale down there, but once we listed we attracted a large number of investors.”
In this respect, he has experience in the field. He went through it during his time at Aristocrat. He is well-known in Australia’s investment community because it’s his home territory. However, he says that the public gaming market there remains largely untapped.
There’s an Australian superannuation program where employers are required to invest money in the market for their workers. That’s millions of dollars every quarter looking for a place to live. The ASX list is dominated by mining and financial companies. Light & Wonder offers a technology with a worldwide market.
He adds, “I believe we were pressing against an opened door.”
Can another company adopt this strategy? Wilson thinks Light & Wonder has an advantage in that it is a business with Australian managers, a presence in Australia, and a proven track record. He adds, “But I can see that other gaming companies are looking at the market as an investment opportunity.” I wouldn’t surprise if others adopted the same approach.
Light & Wonder: Opportunities in the Far East
ASX’s secondary listing gives Asia a stronger foothold. Macau is still the biggest market, but there are also opportunities in Japan, Thailand, and Vietnam. With Philippines igaming flourishing, the Asian markets have a lot of potential.
Wilson has a special place in his heart for Macau, having lived there from 2007 to 2012. Wilson recently returned to Macau for the first decade, and he was impressed by its can-do spirit. It is comparable with Las Vegas. When I lived there, they promised to build a new bridge between Hong Kong and Macau, which is 30 miles, an hour ferry ride away. They built a bridge.
You underestimate China on your own peril. They do so many things for such big sales that I believe Macau is getting its footing back.
He believes that the Philippines is Asia’s biggest story. The chairman of Pagcor is looking to double the gross gaming revenue in a very short period of time. It’s a big goal. You have to think differently in order to achieve it.
This is a result of the increased number of integrated resorts. They’re buying a lot for their sites. “He’s said he will buy 3,000 gaming devices starting January 2024.”
Wilson says he did not understand how big the Philippines market was before his visit. Now? Now?
Building a solid base in Asia
Wilson claims that Light & Wonder controls around half of the Asian market for machines. The company has a second ace in its pocket for the Asian market. Wilson attributes its dominance to Qin You, the developer of 88 Fortunes. She “really masters the art of creating games for Asian populations.” Wilson says, “We love her.”
Wilson affirms that you understand what appeals to Chinese audiences, and as a native speaker, create authentic titles to position your supplier to benefit from the opportunities available in the area.
Light & Wonder has a thriving social and online arm. Is there any hope of a significant online push, given that Pagcor will soon launch its online casino?
Light & Wonder is very serious about compliance, and takes its regulatory conditions seriously. We would only launch this market if we were confident that the rules and regulations are clear.
Light & Wonder faces rivals who do not have the same obligations to comply with regulations. Igaming providers can and do take a relaxed approach to grey and black markets without the burdens and revenues of land-based operators.
The white, gray and black dilemma of suppliers
Can they compete with rivals who can grow wherever they want and how they like?
Wilson is blunt: “I believe we’re disadvantaged.
He explains, “We compete with other companies that are betting on black markets. They don’t pay taxes and the margins they get from these bets is better. This allows them to have more capital for investments.” Regulators must take an in-depth look at who is operating within their ecosystem, and decide if they’re comfortable.
A common response by regulators is to say that they only have jurisdiction over a limited area. Light & Wonder is trying to make that change. Wilson thinks that the company’s position is having an effect. I think there’s some progress with the new legislation in states that say you cannot be involved in the black market to work here – regulators must not be seen as supporting this activity.
Will the US gaming industry break through in 2024?
Matt Wilson’s success in guiding Light & Wonder to its new simplified era as well as opening up new capital, and potentially new markets is still a work-in-progress.
He explains that mature markets in Europe, and now the UK are digital first territories. This means players get their first experience with gambling through computers or smartphones. The players are able to reach the market via online.
The US players are led to online gambling by the casino. Since the casino has been the main attraction in the town for 40 years, the players have “already become accustomed to certain games”. Wilson says Light & Wonder specializes in titles and franchises like these, but he is confident that digital-first games will win over the long run.
He says that there is still plenty of room for different games. However, the tentpole franchises which players have played for years will win. Blazing Sevens, a popular brand within our portfolio is Blazing Sevens. The brand has been in existence for over 40 years. “We are moving that business from land-based to our digital ecosystem.
Integrating players with the Omnichannel Ecosystem
The US casino player is not only interested in the traditional gaming floor, but also other options. Light & Wonder research indicates that land-based casino players are more likely to try social gaming or igaming when permitted.
You can almost see the demand in their eyes. Otherwise, you will miss the chance.
It doesn’t matter if the game hasn’t been released yet. Wilson acknowledges that it is “not progressing at the rate we would like. But you must believe, in five to ten years time, the gaming market will be digitalised in all parts of the world.
It’s happening already. We should regulate this, and encourage responsible gaming around it.
You can protect yourself and do it safely. As governments get more comfortable, I believe you will see even more regulation.
It’s difficult to deny that Wilson, who has brought back the shine to the company, is responsible for the success of Light & Wonder across the three business verticals.
