Evolution Group Considers Mergers and Acquisitions in Competitive Live Dealer Market

Introduction

According to a recent report by Eilers & Krejcik Gaming (EKG), Evolution Group is strategically assessing its position and considering mergers and acquisitions as the competition in the US live dealer industry heats up.

Challenges in the Market

Although Evolution has been doing well in the live casino market in North America, it has had issues with its random number generators (RNG). In order to preserve its position in the market, the corporation has been forced to consider strategic choices in response to these problems. Earlier fixes included acquiring companies like NetEnt in Europe and Asia and Ezugi in the US live casino industry in its early stages.

Potential Acquisition Target

EKG’s report sheds light on Evolution’s potential interest in International Game Technology’s (IGT) online arm. IGT, a significant player in the gaming industry, has been exploring strategic alternatives for its global gaming and PlayDigital units. Evolution could be eyeing IGT’s internet business as a viable acquisition target, potentially forming a formidable entity in the live dealer space.

Market Share Declines Raise Concerns

Investors are concerned, though, since both Evolution and IGT have seen their market shares decline. According to EKG’s statistics, Evolution’s market share, which was formerly 28%, dropped to 21% in less than a year, while IGT’s fell from 22% to 17% in the same time frame.

Evolution's Position in the Market

With a market valuation of almost $19 billion, Evolution is more likely to be a buyer than a seller in the present environment notwithstanding these difficulties. The Swedish corporation may need to restructure its activities in Asia and the gray market in order to attract purchasers, even if there may not be many possible suitors. This may involve private equity groups.

Strong Financial Results

Evolution also announced strong financial results for the third quarter, with operational sales of €452.6 million ($476.9 million), up 19.6% from the same time in 2022. In the third quarter, the company’s operating profit increased by 21.5% to €287.1 million ($302.5 million), while its EBITDA increased by 22.1% to €318.6 million ($335.9 million). Evolution achieved an EBITDA margin of 70.4% and credited its performance to high demand and cost-effective strategies. The firm intends to focus on building its network and satisfying the increasing demand for live casino goods by establishing new studios throughout Europe, Latin America, and North America.

Consolidation in the iGaming Space

Analysts for the industry predict consolidation in the iGaming space, including live dealer ideas. Given the likelihood of further mergers and acquisitions in the sector, Evolution could actively look to acquire companies to strengthen its position and fend off unsolicited approaches.