A prominent figure in the gaming investment industry recently postulated that social casino giant Playtika may be for sale — and that perhaps a sweepstakes gaming company could be among the logical candidates to buy it.
Jeff Cohen, Head of Origination at PvX Partners, an investment fund that provides non-dilutive growth capital to consumer-focused apps (including gaming apps), shared on LinkedIn last week a screenshot of Playtika’s declining stock price since 2021. It’s now down to $3.20 and peaked near $35 in early 2021.
“For the second time in 5 years, Playtika has announced a ‘review of strategic alternatives,’” Cohen wrote. “For those not versed in Wall Street-speak, that basically means it’s putting out a for-sale sign on the front lawn.
“It’s not hard to understand why. The stock has been steadily declining and out of favor for years. With a market cap of just over $1B, I think there is a lot of value to unlock here — but it’s going to take some creativity.”
First of all, what is Playtika?
Founded in 2010, Playtika was one of the original pioneers of mobile social casino gaming, and despite the steadily declining stock price, it still boasts tens of millions of active users worldwide.
Among its portfolio are some of the most well-known titles in the social casino industry: Slotomania, Caesars Slots, House of Fun, World Series of Poker (WSOP), and Bingo Blitz, to name a few.
Within the broader social casino industry, Playtika consistently ranks as a top-tier operator. It’s considered one of the largest and most successful companies in the space, competing with the likes of Zynga and Light & Wonder (SciPlay) and often ranking near the top globally by player spending and market share.
But, even despite that, Playtika’s overall growth has slowed significantly as the market matures.
‘A cash rich sweepstakes business’ looking diversify
That’s where Cohen’s post comes in.
And he carries considerable knowledge in the social casino world.
Before his current role, Cohen served as Vice President of Corporate Strategy and Investor Relations at Esports Entertainment Group, followed by a role as Vice President of Corporate Development at mobile game developer Homa Games.
Earlier, prior to those positions, Cohen worked as an equity research analyst at Stephens Inc., where he covered sectors including video games and online gambling. In that capacity, he developed a deep, analytical view of companies such as Zynga and Light & Wonder’s SciPlay — two of the world’s leading players in the social casino gaming space, and direct competitors of Playtika.
“The company’s been for sale before, and it doesn’t seem like there is a buyer out there — neither financial nor strategic,” Cohen wrote of Playtika. “However, this is a clear case where the sum of the parts is greater than the whole. If you split the company’s slow-growth but highly profitable social casino assets from its high-growth casual business (SuperPlay, Innplay Labs, Solitaire Grand Harvest), you should be able to unlock value.”
Cohen then suggested three types of companies he thinks could take a crack at purchasing a social casino business:
- A European iGaming company that wants to kickstart its portfolio in the United States
- A private equity firm “attracted to steady cash flows at a presumably super cheap price”
- A sweepstakes gaming company
Or, more specifically: “A cash rich sweepstakes business diversifying into a more sustainable revenue stream / cross-selling opportunities.”
How plausible is this?
When one pictures a “cash rich” sweepstakes casino operator, a few obviously come to mind.
VGW is the behemoth of the industry, owning Chumba Casino, Global Poker, LuckyLand Slots, LuckyLand Casino, and soon-to-launch United Slots.
Yellow Social Interactive, which owns Pulsz and Pulsz Bingo, is a major player. Same with A1 Development LLC (NoLimitCoins, Tao Fortune, FunzCity, Funrize, Fortune Wheelz, and Storm Rush) and B-Two Operations (McLuck, Hello Millions, SpinBlitz, Mega Bonanza, Jackpota, and PlayFame). Stake, which owns Stake.us and runs crypto gaming worldwide, has money too.
As unlikely as a Playtika purchase feels, it certainly would be a noteworthy pivot in this post-California world for sweepstakes casinos, where operators are scrambling to come up with alternative game models and revenue sources as states continue to clamp down on Sweeps Coin legality and the market continues to restrict.
Companies have tried rolling out single-currency models where the platform is being promoted as an education resource (ClubWPT Gold) or where casino-style gaming is a secondary element to another type of online video game entirely (Card Crush).
Companies have also turned to live bingo as another offering in their portfolio, and others are even venturing into the world of advance deposit wagering and launching online casino-style gaming platforms where the results are dictated by live horse racing results.
Then, others, like VGW, have continued to hold true to the dual-currency system of Gold Coins and Sweeps Coins (and even expand their portfolio, in VGW’s case), while also shutting off Sweeps Coins gaming in states where that becomes illegal — hoping to ride out the storm of sweeps scrutiny until something newer and shinier consumes the legislative and regulatory community’s attention. (Hello, prediction markets?)
Still … a massive purchase to immediately boast one of the social gaming industry’s most well-regarded libraries and try to leverage that into short-term and long-term revenue gains in their own creative way is at least an intriguing possibility to consider for some of these successful sweepstakes casino companies. Because it’s hard to ever envision lawmakers and regulators coming after social gaming. It’s a safe play, at least in the realm of future legality.
