Equity Strategy
The Business of Gaming
Thu 21st October, 2021

The gaming industry, which has traditionally delivered GDP-like growth rates across many decades, is now facing a period of profound structural change. The confluence of technology, regulation and product innovation are all playing a part in determining how capital is being allocated.

New areas of gaming, particularly in digital, are growing at 4-5x GDP and look to have the ability to sustain high growth rates to the end of the decade.

Australians have over-indexed on gaming consumption since the First Fleet. A public holiday for a horse race, a game of two-up on our National holiday all suggest a deep cultural knowledge base. The industry has developed an experienced skill set of operators and investors who know and understand the sector, with skills being exported across the world.

Global facing Aristocrat Leisure (ALL) this week undertook a $A5bn acquisition of UK-based digital gaming platform Playtec (PTEC.L) - its largest to date - further shaping the company’s future along digital lines. ALL is a member of the Wilsons Advisory Australian Equity Focus List.

Tabcorp (TAH) is in the middle of splitting itself into two via a demerger, reversing what was put together less than five years ago. TAH is the likely front-runner in the pending sale/privatisation of WA TAB from the Western Australian government, which press reports are suggesting could be worth up to A$1bn.

US-based Scientific Gaming (SGMS.NASDAQ) have publicly announced the IPO of its global lotteries business on the ASX by the end of the year, with press reports suggesting the company has a market cap of ~$A8bn.

We unpack the drivers behind these companies reorganising themselves and identify where we believe opportunities are currently mispriced.

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Written by

John Lockton, Australian Equities

John is a leading investment strategist with 20 years experience.

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