Leading gaming supplier Light & Wonder is getting out of the live dealer games business.
Executives said on Tuesday that it will halt its work in that vertical and divest that side of its business after a strategic review determined that resources were better used elsewhere.
Light & Wonder started offering live dealer products in 2023.
“While we’re still in the relatively early days of investing in the business, we strive to stay nimble as an organization and are thus focusing on the risk-reward profile of our other businesses, which have better visibility to superior returns relative to live casino,” said CEO Matt Wilson on an earnings call.
“After a thorough strategic review, we identified that there have been some changes to the operator and supplier dynamics in that category, which has resulted in some degradation in pricing. So we made the decision to divest that set of assets and refocus the business to higher ROI investments.
“I think it’s an example that these strategies aren’t set-and-forget, we review them periodically and make sure they’re working for us. We made the decision to divest and focus on areas where we can see clear line of sight to better returns.”
Live dealer market smaller than L&W expected
The decision will remove a major live dealer player from the U.S. market. Light & Wonder has been competing with the likes of Evolution and Playtech in that vertical.
Wilson noted that exiting live dealer “obviously, shuts down a portion of the addressable market for iGaming.” However, he stressed that live deaelr has proved to be a smaller percentage of the market than originally anticipated, and that pricing dynamics in that category have declined since the company invested in it.
Wilson and Chief Financial Officer Oliver Chow both said they anticipate a modest uplift in adjusted EBITDA by discontinuing live dealer games.
Light & Wonder will pour more resources into its other online gaming offerings under new iGaming CEO Simon Johnson and will look to focus the business more on first-person-perspective content, aggregation and monetization.
“Our wheelhouse and our core competencies are where we’re focusing the iGaming business going forward,” added Wilson.
Light & Wonder won’t offer sweeps without regulatory clarity
As well as supplying land-based gaming services and a range of online casino products, Light & Wonder also has a robust social gaming presence through its SciPlay branch.
In the Q&A section of the call, Wilson was asked about online sweepstakes, and whether the company would consider stepping into that vertical. He stressed that Light & Wonder are pro-regulated and pro-taxable gaming “in all its formats.”
“We see sweeps at the moment as being unregulated and so against our vision and strategy,” he added. “If they were to regulate at some point down the path and tax in the same accordance as our other markets, we’d be willing to explore that.
“But we don’t see a pathway to that happening anytime soon. In fact, we see regulation actually going the other way and many AGs in different states are putting cease-and-desists out against sweepstake operators. So at the moment, we’re watching it closely. Obviously, it’s a fast-growing category, but doesn’t face the same regulations and taxes that our operator partners do across the U.S. market.”
