Until recently, most companies represented in the US gambling market were public. Shares of casino operators, bookmakers, and software providers were listed on stock exchanges and available for free sale.
The situation changed in 2024. In H1 alone, 3 high-profile deals were made involving independent investment companies.
The Casino Market team introduces the current trading situation and considers the nearest prospects of the American gaming industry. Learn more about the essential niche trends and order the development of a turnkey gambling business from our managers.
IGT and Everi Holdings Merger
On July 26, Apollo Global Management announced the acquisition of IGT (International Game Technology) and Everi Holdings for $6.3 billion.
The deal involves merging IGT’s gaming and digital divisions with Everi’s fintech services. The new private organisation, created based on the capacities of the 2 providers, will come under Apollo’s complete control. IGT’s lottery department will be relisted as a separate public company.
The deal was announced in February 2024, but a private investment company later joined the agreement, taking on full financial support responsibilities.
Both studios dominate almost all US gaming markets. IGT’s quarterly net revenue over the past 3 months exceeded $1 billion, while Everi’s income hit $191 million.
Bally’s Business Path Under Private Equity
A day before the Apollo deal, the Standard General hedge fund announced the completion of its mission to buy the Bally’s Corporation. The buyer offered the company $18.25 per share.
The studio previously had a more favourable price proposal ($38) but rejected the request. Since then, the brand’s assets have fallen significantly, so the provider agreed to Standard General’s contract terms. The deal is expected to be fully repaid in H1 2025.
As part of the agreement, Queen Casino & Entertainment, a regional operator also owned by the hedge fund, will control Bally’s capacities. The total coverage of Standard General’s gambling enterprises after the Bally’s deal includes 19 entertainment facilities in 11 states. At the same time, the studio will remain a public organisation and become the only major US gaming supplier owned by private equity.
Other niche companies are still trading on the stock exchanges. Among them:
- Boyd Gaming;
- MGM Resorts;
- Wynn Resorts;
- Red Rock Resorts;
- Penn Entertainment;
- Caesars Entertainment.
Acquisition of the AGS Brand
The most significant occasion of May 2024 for the American gaming market was Brightstar Capital Partners’ acquisition of the AGS provider. The buyer offered the studio $12.50 per share, 40% more than its value recorded on May 8, the day before information about the deal was exposed.
The developer has been public since January 2018. Previously, it belonged to the Apollo brand. In recent years, AGS has grown significantly in terms of producing table and interactive entertainment.
Among the studio’s achievements:
- Gaining the title Best Table Game Product for Bonus Spin Xtreme at the Gaming & Technology Awards in 2021.
- Winning 2nd place in the Best Slot Product category with Triple Coin Treasures on the Spectra UR43 machine in 2023.
Reasons for Private Investment in Gambling
According to the AGEM’s statistics, the stock index of the gaming hardware sector in July 2024 increased by 7% compared to the data for the previous year. Some industry analysts believe that the trend reflects not so much the growth of the gambling market but the low valuation of industry companies’ assets.
Most public offerings are now quite far from their historical maximums, which increases the attractiveness of niche securities for individuals.
Fantini Research’s founder mentioned the old pattern independent investment groups operate according to. They continue to buy cheap assets to sell them at a higher price, according to Frank Fantini. For instance, Apollo does not aim to become the largest casino operator in the US. It looks more like extracting maximum benefit from the undervalued enterprise.
The expert believes the recent wave of deals is the final chapter in the financial history of the entire industry.
Mr Fantini also analyses the current situation by considering historical events:
- Until the 1980s, the gaming business was almost entirely in private hands.
- Only in 1978 did operators find a way to list their assets on stock exchanges. The industry then experienced several decades of rapid growth.
- Now that the US gambling vertical has matured, the 3rd wave of sector transformation is beginning.
Private capital has a significant advantage over public companies: the freedom to move assets.
KPMG’s Las Vegas Managing Partner is sure gaming market representatives have severe issues with positioning. In Rick Arpin’s opinion, the main problem is that public brands cannot take advantage of the low cost of their shares as private investors do. They have to take out loans and then repay these obligations for years. This time is the best for independent entrepreneurs to make profitable purchases.
Gambling is a unique market with a relatively high barrier to entry due to serious legislative restrictions and high requirements for licensing industry products and services. Nevertheless, if an investor acquires an asset of an existing enterprise, further purchases become easier. This alternative way to debut in the niche has proven effective through the Apollo example.
Situation in the Betting Segment
With the growing popularity of casino deals, the question naturally arises: is it possible to make a major bookmaker private? Currently, most US betting platforms are public or associated with such companies.
The list of industry leaders includes:
- DraftKings;
- FanDuel (Flutter);
- Caesars Sportsbook;
- BetMGM (MGM-Entain);
- ESPN Bet (Penn-Disney).
So far, the only exception in the American wagering sector is the Fanatics Sportsbook platform, in which Michael Rubin, Fanatics’ CEO, owns a controlling stake.
Chris Grove, Eilers & Krejcik’s partner, believes the situation will remain unchanged and private deals are not expected in the near future. He doubts that at least one of the top 5 US operators will change their status and become commercially owned. This scheme has too many complexities, and its implementation costs are not worth the result.
In the investor’s opinion, betting is not a business segment where any operator with its platform is guaranteed to succeed. The market is quite efficient in its current structure and continues to generate billions of dollars in revenue annually.
The Main Things About Private Investment in Gambling
The American market is demonstrating a bright and exciting trend: the transition of public gaming companies to private ownership. This tendency has yet to gain mass popularity but already shows promising prospects.
Let us summarise the article’s fundamental notions:
- Private investment is a profitable and convenient alternative to an independent project launch. The entry threshold into the gaming industry is quite high, so purchasing existing enterprises is becoming an attractive solution.
- The acquisition of public companies is relevant only for the casino niche. This approach is not practised in the betting segment due to excessive costs, fiercer competition, and the segment’s sustainability in its current format.
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