Discussion at our site: Gaming Industry Challenges in 2025, encompassing mergers, competitions, and other significant matters
Rewritten Article:
- Gaming Industry in the US: Mergers, Acquisitions, and Sweepstakes in 2025
As we step into 2025, the gaming industry presents a buoyant landscape. The American Gaming Association reported an astounding revenue of $71.92 billion in 2024, surpassing the previous high of $66.5 billion by 7.5 percent, marking the fourth consecutive year of growth.
However, a year of prosperity might not be in the cards for everyone in the industry.
"I believe we'll continue to witness consolidation, not only in suppliers but also among B-to-C operators worldwide," said Davis Catlin, Managing Partner and Co-Founder of Discerning Capital, during our roundtable discussion. "The market might transform into an oligopoly, and the U.S. is heading in that direction naturally."
Catlin also anticipates a flurry of transactions among affiliates in 2025. According to Jonathan Michaels, founder and principal of Michaels Strategies, a senior executive recently suggested that the definition of gambling is "prize, chance, and consideration," which does not seem to fit today's industry.
"Things tend to overlap significantly," Michaels said. "A lot of the discussion will revolve around competitive threats. You can see this with iGaming now, where it's growing rapidly but there's fierce competition."
Sports betting operators, in particular, are predicted to consolidate their position within the industry. As sports betting operators are typically oligopolistic, Catlin expects consolidation to occur in Australia, while the number of scaled operators in Europe continues to shrink.
"The question with the U.S.," Catlin said, "is what will happen to the long tail of subscale operators here. They need to find a way to scale, and the most feasible approach would be to get acquired."
Catlin argues that industries often experience a "hype cycle" where interest outpaces the potential for profit within the next five years.
"In a year from today, we'll probably be talking about FanDuel, DraftKings, BetMGM, and Caesars in the U.S. being profitable," he added. "There may be more information about Prize Picks, Underdog, and other similar companies."
Catlin refrained from mentioning Penn Entertainment and its partnership with ESPN as potentially becoming profitable.
"Penn's ability to destroy value over the last five years has been impressive," he stated. "I used to work at a big public market fund, and when your share price increases because you can cancel a multi-billion dollar bet you made, then something has gone terribly wrong with your management."
Another segment of the industry generating extensive coverage lately is sweepstakes and questions about their legality. Michaels predicts that we'll achieve clarity regarding the sweepstakes casino market in the coming year, spurred by the industry's growth.
"Interest in this area has been growing because some of the players are shedding light on it," Michaels said. "They're doing it to safeguard their social casino business. Ultimately, I believe a number of states will take significant action to restrict or outright ban the sweepstakes casino model."
Michaels mentioned that Connecticut recently challenged the legality of High 5 Games in the state.
"High 5 Games has a commercial gaming license," Michaels said, "and if they can't get their KYC and compliance in order, I suspect that there are many others who aren't even close to that level. Regulators and attorneys general are starting to scrutinize that niche closely."
One of the big questions the gaming industry will grapple with is the future of legal gambling in California, Florida, and Texas, considered lucrative jurisdictions.
Catlin has conversed with some groups in Texas who have suggested that Oklahoma tribes, through sponsorships and arenas, are positioning themselves for legalization.
"However, I also think that might take a decade," Catlin said. "Tribes and many of these operators think in five- and ten-year horizons, but I haven't heard of any immediate plans."
Michaels thinks Florida might legalize via compact, but it could take much longer in California and Texas.
"I don't see a 2026 referendum related to sports betting coming to California," Michaels said. "And in Texas, Jackpocket was practically targeted by the lieutenant governor, Dan Patrick. Within a week, they were out of business. I don't see any legalization momentum resulting from the way that played out."
Key Developments:
- BetMGM's Strategic Momentum: The MGM-Entain joint venture reported a 34% YoY revenue growth in Q1 2025, primarily driven by iGaming (+27%) and online sports betting (+68%). They are staying focused on refining player management and product enhancements rather than external acquisitions in their revised strategic plan.
- Market Growth Trends: The online gambling market is projected to reach $169.22 billion by 2030 (10.44% CAGR from 2025), with operators focusing on technology (VR, blockchain) and geographic expansion. While recent activity reveals an emphasis on organic scaling, operator consolidation remains a possibility.
- Reduced Investment in Star Entertainment: Bally’s reduced its investment in Australia's Star Entertainment Group from $180M to $120M, while a major shareholder increased its stake via convertible bonds. This could be a reflection of broader industry liquidity pressures and selective capital deployment tactics that might be mirrored by U.S. operators.
- In 2025, Davis Catlin anticipates an increase in transactions among affiliates and consolidation among B-to-C operators globally, potentially leading to an oligopoly in the gaming industry, as he believes the US is heading in that direction.
- Jonathan Michaels has suggested that the definition of gambling, which is traditionally seen as "prize, chance, and consideration," does not seem to fit today's industry, indicating a significant overlap in discussions about competitive threats.
- catlin predicts that sports betting operators will consolidate their positions within the industry, with sports betting operators in Europe and Australia being prime targets for consolidation, while the number of scaled operators in Europe continues to shrink.
