At G2E, Industry Insiders And Investors Are Swept Up In Sweeps Talk

At the 2023 edition of the Global Gaming Expo (G2E) in Las Vegas, the social casino or so-called “sweepstakes casino” model existed only on the outermost fringes of the conversation among industry insiders gathered there.

At G2E 2024, taking place this week at the Venetian, you could almost say sweeps is the conversation.

In fact, that’s exactly what Davis Catlin, the Vegas-based managing partner at Discerning Capital, communicated in a LinkedIn post Tuesday that caught the attention of much of the gaming world. Catlin wrote:

Themes of G2E thus far from my perspective:

Most common question: “What do you think about sweeps?”

Most common optimistic comment: “We are launching sweeps.”

Most Negative Comments: “We have to figure out what to do about sweeps.”

I’m interested in the sweeps space, but we don’t have any current investments in the market. From my standpoint, it has been wild to see how it has become the most common discussion point over the first day of G2E this year from relative obscurity over past G2Es.

Catlin elaborated in a conversation with Casino Reports:

“It’s the land of opportunity that everyone is talking about,” he said. “It’s the land of opportunity to the movers and the shakers and the people asking for money. It’s probably the No. 1 thing people are asking questions about. Sweeps are everywhere. It’s new hot thing.”

It depends who you talk to …

Catlin clarified, however, that his direct observations are limited to his particular circle — people who are tech-forward, focused on business development. He said if we asked 10 people on the expo floor, chances are nine of the 10 would be focused on something other than these social casinos with sweepstakes promotions, such as new slot games or historical horse racing machines.

In Catlin’s ecosystem, though, sweepstakes has more buzz this week than regulated gaming.

“I think I probably heard on the order of 10-15 possible sweeps investment opportunities. On the more traditional gambling side, I heard fewer than 10 in the last 48 hours,” he said Tuesday night.

“When I posted on LinkedIn,” Catlin continued, “I had four companies reach out to me directly off of that post to say, ‘We’re watching sweeps. Are you free to meet with us?’ I think that’s pretty reflective of the environment. And these aren’t necessarily the regulated operators that everybody knows. These are newer companies looking to get into the sweeps space.

“What I’m saying is, it is smaller players choosing the sweeps model because it has less red tape, less taxes, and therefore more attractive unit economics over regulated gaming. I mean, let’s just be very direct here: Sweepstakes is a better business model right now. So I think that’s why if you’re a smart entrepreneur, you’re definitely taking a very hard look at sweeps.”

A divisive issue

The burgeoning sweepstakes industry — which has seen brands like Chumba Casino and LuckyLand Slots gain major traction this year — was also the subject of a G2E panel discussion Tuesday afternoon, titled “The Growth & Challenges of ‘Sweepstakes’ Operators.”

The panel largely turned into a debate between individuals expressing opposition to the unregulated social/sweeps vertical, including Light & Wonder’s Howard Glaser and Spectrum Gaming Group advisor Michael Pollock, and those who support these new casinos’ and sportsbooks’ right to operate, including Ifrah Law’s Michelle Cohen and Eilers & Krejcik Gaming’s Matt Kaufman.

The panel even referenced Catlin’s LinkedIn post.

Catlin, who has been investing in the gaming space for roughly 18 years, said the closest thing he’s seen to the current vibe around sweeps came in the early days of DFS+ sites such as Underdog and PrizePicks.

“But there’s a difference,” he said. “When DFS+ launched, everyone was very standoffish. ‘Oh, I don’t know if we should be investing, I don’t know about the legality.’ There’s not as much of that with sweeps.

“I actually would say that the overall theme here is optimism around the opportunity. It feels like everyone is saying, if you’re looking for growth and you’re looking for profitability, you have to look at sweepstakes.”