IGT announces plans to spin off sports betting business

The London-based technology provider International Game Technology (IGT) has announced plans to spin off its online gambling business.

The announcement was revealed during the firm’s investor day on Tuesday and is intended to maximize value from its Digital & Betting operation.

What is IGT’s plan?

As outlined on the investor day, IGT plans to establish its Digital & Betting business unit as a separate legal and operating entity over the next 12 months. Once this is complete, the firm will decide if it will pursue a listing for the online operation.

According to IGT, the new structure will help the firm to attack the “high growth” online gambling industry.

The new structure will include a dedicated management team, more cash, and the ability to pursue M&A opportunities. The firm recently hired Joe Asher to take over as President of Sports Betting and former Bet365 executive Gil Rotem as President of iGaming.

In the firm’s investor day release, IGT said: “As a part of its ongoing commitment to ensuring appropriate strategic flexibility for its Digital & Betting business, the Company is also undertaking a legal entity and organizational realignment over the next 12 months designed to provide the Digital & Betting business with dedicated management, a more nimble organization and governance structure and the ability to pursue organic and inorganic growth opportunities.

“As part of this process, the Company may evaluate a potential separate public listing of its Digital & Betting business to further enhance its strategic flexibility while maintaining a controlling interest following the consummation of any such potential separate public listing. There can be no assurances as to the form and timing of any separate public listing or other strategic activity that may result from this evaluation or if any such listing or activity will be consummated at all. 

“IGT does not currently intend to disclose further developments regarding its evaluation of a potential separate public listing for its Digital & Betting business until such time as a final determination has been made or IGT otherwise determines that further disclosure is appropriate.”

There is no guarantee the listing will go ahead and it will likely depend on wider market developments and the appetite for US sports betting operations.

What is IGT Digital & Betting?

IGT may not be a household name like typical sports betting and online casino brands, but its products are quite well-known.

IGT’s PlaySports technology powers roughly 50 US sports betting operations across online and land-based channels. The London-based firm’s current customers include market leaders like FanDuel.

According to the latest financial report, during Q3 2021 the Digital & Betting operations grew 37% year-on-year to $43m while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was up 66% to $15m.

Are more gambling firms going public?

While several heavy hitters in the gambling space have gone public, some have decided to abandon plans to go public. 

US betting firms are struggling lately, including DraftKings and Penn National Gaming stocks down 40% from their all high points.

Last week, Wynn Resorts and Austerlitz mutually agreed to terminate their previously announced agreement and plan of merger, which contemplated the combination of Austerlitz I and Wynn’s subsidiary Wynn Interactive.

The merger would have taken Wynn’s digital operation public. At the same time, Wynn announced changes to its marketing strategy.