Traveling to London for the ICE trade exhibition, Jefferies Equity Research analysts pronounced themselves pleased by developments in digital gaming. These included a rise in proposition betting, advances in technology, and better igaming content.
“In short, we note considerable progress in product investment to compete in online sports betting and igaming offerings, with the improving market opportunities in the U.S. and globally, which drives our bullish stance,” wrote the Jefferies team.
Prop bets were identified as the leading area of growth, albeit on a much more gradual basis in the United States. By contrast, they comprise 70 to 80 percent of online sports wagering in Europe and the United Kingdom. However, based on growth in U.S. states where prop betting is legal, the analysts predicted a total addressable market of $37.5 billion by 2030.
Another major growth sector is live-dealer play in igaming, particularly in the Americas. Despite a limited number of operators, pricing was described as “rational, as suppliers remain ever focused on product quality, with live game shows, Hollywood partnerships, and game localization key areas of differentiation.”
In Brazil, igaming and online sports wagering are not only now legal, but the first group of licenses is expected to be announced soon. The projected size of the Brazilian market is $3 billion a year, equivalent to New Jersey, Jefferies predicted.
The analysts’ leading choices in the online sector included FanDuel parent Flutter, seeing U.S. profitability and shielded from macroeconomic headwinds by its growth in both channels and penetration. Others lauded were DraftKings (“for continued product and [gross gaming revenue] momentum”) and Light & Wonder (“accelerating digital gaming revenues, in addition to its land-based gaming momentum”).
Meetings with individual companies broke down as follows.
Bally’s Corp.: “Having stripped considerable cost from the business,” Bally’s continues to refocus on sports betting as a “funnel” (as CEO Robeson Reaves has called it) to igaming. Five hundred game developers have been let go, but the Gamesys purchase was said to have onboarded both marketing and game-analytical expertise. Digital operations are expected to post a $30 million loss this year, then break even in 2025.
Reaves and fellow executives revised their new-resort plans for the Tropicana Las Vegas site, telling Jefferies analysts that “alternative redevelopment plans are being considered in view of the current balance-sheet constraints.” As for the recently redesigned Bally’s Chicago, the company said it was “exploring a wide range of financing avenues.”
Light & Wonder: “Encouraging” were the early results from live-dealer games in Michigan, where LNW games are being fielded by BetRivers and Golden Nugget Online alike. Despite some U.S. controversy in the field of social gaming, LNW said it was continuing to view it as a major growth sphere. Executives looked forward to launching the Dragon Train game in the U.S., piggybacking on its successful performance in Australia.
Sportradar Group: This company was described as reorganizing its management structure to eliminate silos and create efficiency. One growth area is virtual sports, where NBA statistics are providing the basis for play. Management indicated some shyness with regard to live-dealer gaming, saying, “It requires the right experience,” despite a demand for it with younger customers.
Playtech: Live-dealer games are now being streamed from studios in New Jersey, Pennsylvania, and Michigan, with two European feeds planned for this year. Although Latin America in general and Brazil in particular were deemed “exciting,” the U.S. was described as “challenging.” The latter was blamed on “exclusivity agreements, though Playtech’s existing relationships with major operators across other jurisdictions and products should help it win contracts as existing agreements roll-off and operators look to diversify supply.”
Kambi: Alliances with both a daily-fantasy provider and a leading sports-media broadcaster give it first-mover advantages in Brazil and exposure to more than 15 million potential users. In other global action, Kambi’s Tzeract division had handled over 300,000 bets, including three-quarters of pre-match wagers since the World Cup in 2022.
Evolution: “Lackluster” results from this company’s four random-number-generator acquisitions didn’t mar the outlook as far as analysts were concerned. Evolution plans to launch more than 120 games this year, including Lightning Storm, which set a new record for number of bonus rounds (five). Live-dealer game Crazy Time #1 had just been approved in New Jersey and additional debuts were anticipated.
Gambling.com: Unlike many first movers in the igaming space, this company said it is doing better as the U.S. market matures, “rather than the intuitive inverse dynamic.” Media partnerships were cutting into profit margins, analysts reported, despite revenue growth. Talk of acquisitions that would require greater equity led the Jefferies team to infer “very low profitability.”
