Investment Focus: Gaming Sector Outlook, DoubleDown Interactive, Bally's Corporation, U.S. RevPAR, Sale of IGT in Wall Street Bets Discussion
The US gaming sector is experiencing a surge in growth across commercial casinos, iGaming, and sports betting. This expansion is driven by the expanding online gaming market and robust retail sports betting performance.
Commercial Casinos and Gaming Revenue
May 2025 saw the commercial gaming industry revenue hit a record $6.73 billion, up 10.9% year-over-year. Through May, total revenue was $31.89 billion, a 7.1% increase from the prior year. Land-based gaming revenue grew 4.8%, with retail sports betting revenue doubling (+101.8%). Traditional casino games revenue rose by 3.9%. Online gaming revenue grew 27.5%, driven by iGaming (+33%) and online sports betting (+21.4%).
iGaming and Sports Betting Providers
Flutter Entertainment, a leading sportsbook and iGaming operator, reported a 17% overall U.S. revenue growth in Q2 2025. Their iGaming segment grew 42%, supported by a 32% increase in average monthly players and more frequent play. Adjusted EBITDA rose to $400 million, reflecting strong operating leverage and efficient cost management; the company also expanded revenue margins by 70 basis points to 13.6% amid steady promotional spend. Sports betting margins showed slight year-over-year challenges due to less favorable sports results but remained profitable with a minor revenue benefit.
Gaming Console Market and Suppliers
The global gaming console market is valued at $29.4 billion in 2025, expected to grow at an 8.0% CAGR to $63.4 billion by 2035. This growth is fueled by next-generation consoles supporting 4K/8K gaming, virtual reality (VR), augmented reality (AR), and cloud gaming. Increasing adoption of integrated gaming ecosystems and rising disposable incomes worldwide support sustained supplier growth over the next decade.
Additional Insights
The overall video game market grew 5% in 2024 to approximately $219 billion, with a projected annual growth rate of about 4% through 2028. Consumer preferences in gaming are evolving, shifting towards “games as a platform,” live services, and immersive experiences.
Potential Challenges and Opportunities
Bally's Corporation's Rating Watch Negative (RWN) is due to elevated EBITDAR leverage from the pending combination with Intralot and execution risk regarding the Twin River sale-leaseback transaction. On the other hand, DoubleDown Interactive's current net cash of ~$9 per share is comparable to its share price. Bain notes that DoubleDown Interactive's negative CY25E/CY26E EV/EBITDA valuation is rare in equities.
Proceeds from the Twin River sale-leaseback transaction are expected to be used to repay a large portion of Bally's senior secured 2028 term loan and increase financial flexibility for Bally's Chicago project commitments. Jefferies' David Katz also noted that IGT disclosed plans for allocating the funds, including a $3/sh special dividend and a $500 million buyback program.
Fitch Ratings has placed Bally's Corporation and its debt on Rating Watch Negative (RWN). For Sportradar, Katz's estimates are adjusted due to FX changes and the expected value of the IMG deal. Estimates for Rush Street and Gambling.com remain unchanged, according to Katz.
In summary, the US gaming sector outlook remains positive with steady innovation and expanding consumer engagement. The sector is poised for robust long-term growth, particularly in the online gaming market. Leading companies maintain healthy margins despite some variability in sports outcomes.
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