Who’s next, or perhaps better, what’s next in the world of gaming technology companies?
A decade ago, the news was consolidation, as mergers created conglomerates led by IGT and Scientific Games. Part of the investment rationale was that the lottery divisions of IGT and Sci Games gave financial stability and resources to the riskier games business.
Today, acquisitions and spin-offs are about strategic focus and streamlining, including the U-turn decoupling by IGT and Sci Games (the latter now named Light & Wonder) from their lottery businesses.
Such moves make more sense as companies position themselves to win in emerging technologies. Some acquirers are also willing to pay the price, as indicated by Aristocrat’s pending purchase of iLottery provider NeoGames.
The number of potential acquisitions and spin-offs are numerous. Here are a few, for pure speculative entertainment, that could make sense:
- Affiliates have proliferated along with the rest of the online sports betting and iGaming industry in the U.S. Consolidation among them might make sense as it has for operators. Public affiliates likely to be acquirers, or merger candidates themselves: Better Collective, Gambling.com and Catena.
- Bragg Gaming. Consolidation also makes sense for the many platform companies that provide games to online operators. At $70 million in market capitalization and trading at around three times EBITDA, fast-growing Bragg Gaming could be attractive to a company that wants to buy a leadership position in the space.
- Everi. Almost from the moment that Global Cash Access acquired slot machine company Multimedia Games and became Everi, observers thought a split made more business sense.
However, such talk ended as both businesses grew and the stock price rose.
Now, with a lower stock price, it would not be surprising to see that talk revive. The games business could fetch a nice price given its strong product line and provide funds to invest in the fast-developing world of payments where Everi could be the unassailable powerhouse with some strategic acquisitions.
- GAN and Rush Street Interactive. It is increasingly clear that online operators benefit by owning their own technology. GAN and Rush Street, meanwhile, have struggled to profit as stand-alone technology providers and given their inexpensive prices, could be targets for ambitious operators.
GAN founder Dermot Smurfit might want to hold on to his ownership but an acquirer can always devise an irresistible deal. Chief Rush Street shareholder Neil Bluhm is a real estate developer whose brick-and-mortar Rush Street Gaming is a success; there isn’t a special reason for him to hold on to an online company.
- GeoComply is the leader in geo-location, an essential service in a rapidly growing and evolving digital world. The small private company could be attractive to a larger company that wants to dominate with a full menu of digital technology.
- Incredible Technologies. The developer of clever non-gaming coin-ops and Class III gambling games could prove attractive to a buyer that can further invest in its growth, and its owners might decide at some point to cash out after enjoying very successful careers.
- Inspired Entertainment basically owns the virtual sports betting space, an area of vast potential that could prove very attractive to a larger company. Executive Chairman Lorne Weil is enjoying the ride, but he proved once before in selling Scientific Games that he can sell when the price is right.Inspired also has an iLottery platform for those who see great potential in that industry segment.
- Interblock also leads a growing space with vast potential – electronic table games. Once owned by a European entrepreneur, Interblock now belongs to private equity firm Oaktree Capital. Private equity buys in order to sell. It would be no surprise if Oaktree were to sell Interblock or take it public.