Evolution Navigates Challenges in US Market, Explores M&A Opportunities

In the midst of intensifying competition in the US live dealer market, Evolution Group is contemplating its position, considering potential mergers and acquisitions, according to a recent report by Eilers & Krejcik Gaming (EKG). 

Evolution Navigates RNG Hurdles and Explores IGT Acquisition

While Evolution has been thriving in the North American live casino segment, it has encountered hurdles with its random number generators (RNG). This issue has led the company to explore strategic options to maintain its foothold in the industry. Previous attempts to resolve similar challenges included acquisitions like Ezugi in the early-stage live casino market in the US and NetEnt in Europe and Asia.

EKG’s report highlighted Evolution’s potential interest in International Game Technology’s online arm. IGT, a major player in the gaming industry, has been considering strategic alternatives for its global gaming and PlayDigital units. Evolution could eye IGT’s internet business as a plausible acquisition target, creating a powerful entity in the live dealer space.

However, both Evolution and IGT have been grappling with declining market share, raising concerns among investors. Evolution’s market share, once at 28%, has dropped to 21% within a year, and IGT has experienced a decline from 22% to 17% during the same period, according to EKG.

Despite these challenges, Evolution, with a market capitalization of around $19 billion, is more likely to be a buyer than a seller in the current scenario. While potential suitors are limited, the Swedish company might need to restructure its Asian and gray market operations to make itself an attractive target for buyers, possibly involving private equity firms.

Evolution’s Q3 Performance Ignites Growth and M&A Pursuits

At the same time, Evolution reported impressive financial results for Q3, with operating revenues reaching €452.6 million ($476.9 million), a 19.6% increase from the same period in 2022. The company’s EBITDA rose by 22.1% to €318.6 million ($335.9 million), and operating profit increased by 21.5% to €287.1 million ($302.5 million) during Q3.

Evolution attributed its success to cost-effective measures and high demand, achieving an EBITDA margin of 70.4%. The company plans to open new studios in Europe, Latin America, and North America, focusing on expanding its network and meeting the growing demand for live casino products. 

However, analysts believe the iGaming industry, including live dealer concepts, is ripe for consolidation. With the possibility of increased mergers and acquisitions in the sector, Evolution might pursue acquisitions to strengthen its position and deter any unwelcome advances. The evolving landscape of the live dealer market suggests that strategic moves are on the horizon, and