The year of 2021 saw a number of mergers and acquisitions in the gaming industry, and it is expected to continue with iGaming likely to be an epicenter of consolidation. Over the past few years, sports betting grabbed plenty of attention, and this segment of the gaming attracted a lot of takeover activity.
However, a number of analysts are of the view that iGaming will grow at a faster rate in the coming years, simply because it offers more attractive margins and it is legal in fewer states than is sports wagering.
According to Goldman Sachs’ estimates, iGaming revenue could grow from $1.5 billion today to $14 billion in 2033, promising a 27% CAGR (compound annual growth rate) for more than a decade.
The estimated growth of the iGaming has prompted many analysts to predict that the digital gaming landscape will subject to more consolidations. Jefferies analyst David Katz recently predicted that iGaming companies of all sizes will participate in consolidation in the coming years.
Speaking on the topic, Katz said, “We expect companies both large and small to remain active on both sides of digital mergers and acquisitions (M&A), as suppliers and operators focus on building competitive positioning and broader capabilities.”
Gaming industry experts are realizing that online or internet-based casinos will emerge as drivers of growth in the future. Thus, binging technology in-house will be an easy way to boost efficiencies as well as profitability. It is for this very reason that conventional casino operators will try to grab iGaming companies.
Bill Hornbuckle, chief executive of MGM Resorts, said earlier this year, that online casinos would be the secret to any gaming business’ success. It is also possible that suitors will place more emphasis on a target’s assets and technology capabilities than valuations.
According to Katz and some other analysts, suppliers in the gaming sector are trying to leverage content from conventional slot machines and table games for consumption in the iGaming and online social casino spaces. That could prompt consolidation.
Katz has “buy” ratings on NYSE-listed gaming giant International Game Technology (IGT) and NASDAQ-listed Scientific Games. Just a few weeks back, IGT said that it would form a dedicated digital and betting unit. Scientific Games, on the other hand, confirmed that it trying to acquire an additional 19% stake in social casino games developer SciPlay Corporation that it doesn’t own currently.