G2E Panel Highlights Growth in Gaming M&A and Investment

By Todd Winkler,
Editor at online-gambling.com

Todd Winkler Editor at online-gambling.com

Todd Winkler is another one of our highly professional editors at online-gambling.com. The expert has been part of our team for 6 years, during which time he contributed articles regarding poker, blackjack, and DFS. Winkler is also knowledgeable about New Zealand's legal gambling market.

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Last updated: October 17, 2024

Industry experts at the Global Gaming Expo (G2E) 2024 say the gaming sector is in a strong position for mergers, acquisitions (M&A), and investment opportunities. During a panel on October 7 in Las Vegas, speakers discussed the industry’s financial rebound and the growing potential for private equity deals.

The panel, moderated by Edward King, co-chief investment officer at Acies Investments and a former Morgan Stanley executive, included insights from Andrew Zarnett of Jefferies, Shannon Demus of Light & Wonder (L&W), and Matt Davey of Tekkorp Capital.

M&A and Investment Trends Highlighted

The discussion opened with Edward King, highlighting the growing interest in private equity within the gaming sector. He called gaming “one of the most active areas” for deals, referencing major acquisitions like Brightstar Capital’s $1.1bn purchase of AGS in May and Apollo’s $6.3bn takeover of IGT and Everi in July.

Andrew Zarnett pointed to the post-Covid revenue boom as a key factor driving this renewed investment. He explained that profits are now mostly coming from high-value players. Matt Davey agreed, adding that the strength of the American consumer has helped fuel the industry’s rebound. However, he mentioned that smaller, asset-light companies still struggle with funding, though recent interest rate cuts by the Federal Reserve could improve their access to capital.

King also emphasized the need for long-term debt, especially given the legislative risks still facing the gaming industry. Even though the market is thriving, no US state has expanded gaming laws in 2024.

Light & Wonder’s Financial Recovery

Shannon Demus shared details on Light & Wonder’s financial turnaround and how it’s positioned the company for future growth. When she joined in 2021, the company’s balance sheet was struggling with economic issues. However, the 2022 sale of its lottery and sports betting divisions helped refocus the business. Demus said these moves have turned L&W into “a darling of the industry.”

With its finances now in order, L&W is carefully looking at new M&A opportunities. Demus pointed to the October 2023 acquisition of social gaming company SciPlay as a big win. This deal has helped broaden L&W’s portfolio and strengthen the business. She also expressed surprise that rival Aristocrat is considering selling Big Fish Games, given how valuable social gaming has been for L&W.

Looking Ahead: Industry Predictions and New Markets

Matt Davey compared the current investment climate to the late 2010s, a time of high investor confidence after the repeal of the Professional and Amateur Sports Protection Act. While today’s market is different, Davey predicted that the gaming industry could see a similar wave of investment in the next few years, possibly within three to five years, depending on market trends.

When discussing emerging sectors, Davey emphasized the critical role of timing. While entering unregulated or developing markets early can offer lower costs, it also brings greater risks due to uncertain regulations. He added that public companies tend to draw more investor interest as they are held to stricter standards of certainty by shareholders.