The president and CEO of Light & Wonder said the prospects for expansion of igaming in the U.S. have improved, while urging the industry to take a strong stance against betting prediction markets that threaten that stalled gaming segment.
Matt Wilson spoke on opening day Tuesday at the 47th annual Gaming Conference hosted at Circa Las Vegas by the Nevada Society of Certified Public Accountants. The conference runs through Wednesday.
Rick Arpin, a managing partner and gaming leader with KPMC, hosted the discussion with Wilson, who cited gross gaming revenue as the lifeblood of the industry. Wilson tells people all the time not to listen to everything on the news, other than what’s happening with GGR, to have the correct barometer.
“The U.S. consumer has weathered the storm a lot,” Wilson said. “Inflation, rising gas prices, and rising home prices — costs have gone up, but players are still playing. The K-shaped economy is very real in gaming. The middle to upper classes are getting richer and the lower classes are feeling pressure. You see that in Vegas. You see Wynn Resorts, Aria, and Bellagio (doing) fantastic numbers with record profits, while the lower end of the Strip is struggling. That’s the K-shaped economy coming to life in the gaming space.”
Wilson said Light & Wonder did a long-term plan in 2022 about expansion in the industry that would take it from $900 million in EBITDA to $1.4 billion. One of the big assumptions was that three major igaming states would come online between 2022 and 2025.
“We were 100% wrong on that,” Wilson said. “We haven’t had a single incremental state. We thought igaming was about to go into this massive way of expansion, but today seven states have igaming.”
Politicians are slow to approve the expansion of gaming unless they’re under financial duress, which is starting to happen, Wilson noted.
“You’re starting to see a big uptick in the idea of further expansion, whether it’s igaming or historical horse racing or land-based games. We’ve heard about the skill-based market in Pennsylvania and Virginia getting regulated. There’s a lot of activity happening on all fronts.”
Wilson said while Light & Wonder is agnostic in the approach gaming should take, the company wants growth that is great for the industry overall. Of course, he added, there will be winners and losers in that construct.
In response to a question from Arpin, Wilson tackled the issue of prediction markets.
“This came out of nowhere and was the talk of G2E,” Wilson said. “It has gone parabolic over the last six months. Kalshi and Polymarket have double the market value of DraftKings and FanDuel. That’s amazing and brutal. People are playing prediction markets and that’s coming from somewhere. It’s not like there’s an infinite discretionary dollar for the casino. We don’t have a dog in the fight, but we play in the igaming space and there’s a threat it will get there one day. We know people are working on five-reel slot machines derived off complex contracts. If it’s a no for (Nevada gaming regulators), then it’s a no for us. The industry needs to get together and work collectively to figure out how to slow this juggernaut down. It’s very hard to argue it’s not illegal gaming.”
Wilson also talked about the state of the industry and the consolidation that’s happened starting with Scientific Games, which later became Light & Wonder. Other operators have gone through consolidation as well, but that’s changing.
“We’ve seen in the last five years a massive unwinding of that consolidation,” Wilson said. “I’m a big believer that companies that do one thing very well can be successful. These conglomerates tried to be everything. We figured out lottery companies and gaming companies don’t belong together. There’s no synergy there.”
“We uncoupled that and sold our platform business. The industry has (refocused itself) to pure play and one or two things and do it well. I’m a big baseball fan, and there aren’t a lot of Shohei Ohtanis out there —both a great hitter and a great pitcher. It’s hard to be great at lotteries and make the world’s greatest content.”
An audience member asked what competitor’s slot machine he wished he had. Wilson answered Aristocrat’s Dragon Link. He said it came from nowhere to be a monster hit.
Aristocrat and Light & Wonder are always going head-to-head. so there’s naturally a competitive tension, Wilson said.
“We make over 150 batches of games a year, so we want our next batch of games to be the next big breakthrough,” Wilson said. “That’s the beauty of these things. You never know, especially when they’re in incubation. If anyone in the industry says they know a game will be a hit, they’re lying to you. There’s safety in numbers. That’s why you put out 150 games.”
