How Much Should We Read Into Light & Wonder’s Live-Dealer Shutdown?

One of the leading gaming content and technology providers in the gambling industry is pulling the plug on its live-dealer efforts.

During their Q4 2024 earnings call last week, Light & Wonder executives told investors they will shut down the live dealer branch of its business. L&W began offering live-dealer games in 2023 via its acquisition of Authentic Gaming.

This decision comes at an interesting time, as live-dealer games — also known as live casino games — make up one of the fastest-growing chunks of the online casino market and operators are devoting more of their games library real estate to these types of games.

So … is this a decision that’s best specifically for Light & Wonder?

Or is this the beginning of a trend? Is L&W ahead of the curve and we’ll see other market leaders pull out too?

Fear not, live-dealer lovers. It’s very likely the first option.

“Live dealer might not drive huge amounts of [gross gaming revenue], but it does drive customer engagement and retention,” Dustin Gouker, a U.S. gambling consultant and author of The Closing Line newsletter, told Casino Reports. “And it’s a product I think users expect to have access to. The fact that you see sweepstakes operators launching with or adding live-dealer capabilities, I think, speaks to that reality.”

Why is Light & Wonder jumping ship?

During the scripted portion of their Q4 call, Light & Wonder executives said “a thorough strategic review” led them to “divest our live-casino 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,” CEO Matt Wilson said.

Later, when asked about the live-casino decision during the Q&A portion of the call, Wilson noted “changes in the operator and supply dynamics in that category” precipitated the decision to pull the plug.

“[That] resulted in some degradation in pricing,” he said. “So we made the decision to divest of that set of assets and kind of refocus the business to higher ROI investments. I think it’s an example of [how] these strategies aren’t set and forget. We review them periodically and just make sure they’re working for us. And we made the decision to divest and then just focus on areas that we can see a clear line of sight to better returns.”

Evolution, Pragmatic Play, and Playtech are three of the most notable providers currently at the top of the live-dealer market.

Light & Wonder joined the live-casino space in October 2023 when an operator it acquired, Authentic Gaming, went live with its Premium Live Dealer series at BetRivers in Michigan.

Later in the Q&A, Wilson said the divestment is part of Light & Wonder reshifting to focus “the business around kind of our wheelhouse and our core competencies” because, even though “exiting live casino obviously shuts down a portion of the addressable market for iGaming,” that portion is a smaller chunk of the market than what they “originally anticipated” when they first made the investment in their live dealer product.

Numbers say live-dealer market is doing just fine

Evolution, which is generally viewed as the live-casino industry leader, reported a 13.3% year-over-year live casino revenue growth in Q4 and noted it “continues to see a strong demand for live casino, expanding [our] studio network to over 1,700 tables by the end of 2024” in its Q4 earnings summary.

In fact, it just launched live-dealer casino games with bet365 in New Jersey to add to its growing arsenal across the U.S.

Meanwhile in its H1 2024 earnings report released in September, Playtech highlighted that it signed a deal with MGM Resorts for live-dealer casino content called “MGM Live” and enjoyed online launches in several states with BetRivers, DraftKings, bet365, and PENN Entertainment.

However, operators have differing goals and amounts of capital they’re prepared to dedicate to those goals, so it’s not fair to gauge if the live-casino sector is still thriving based solely on different decisions of Light & Wonder vs. Evolution and Playtech.

So here is a case study from Pennsylvania:

In its 2022-23 annual report, the Pennsylvania Gaming Control Board wrote that revenue from live-casino table games accounted for more than 50% of the overall online casino table game revenue that year.

Then, in its 2023-24 report, the PGCB noted this:

“The live dealer segment is witnessing growth in terms of both revenue and operators. New operators are planning to enter the market while the established operator plans to expand their presence.”

And, yes, there’s the sweeps factor

As Gouker mentioned, perhaps nothing points to the relevance of live casinos in the U.S. online gambling space more than their growing presence on sweepstakes casino sites, which represent a rapidly growing sector in the gaming market.

Stake.us, for instance, has a lineup of 18 live-dealer games. High 5 Casino, Real Prize, and Chanced are also examples of sweeps sites with live-casino options. 

Chumba Casino, meanwhile, recently released live-dealer games for Gold Coin play, per this video update from slots influencer Brian Christopher. (By the way, the provider for the first game in Christopher’s video was Playtech.)