Light & Wonder Prioritizes Canadian Expansion Amid Dragon Train Challenges

the Alberta market ahead of Brazil. According to Deutsche Bank analyst Carlo Santarelli, who met with the company’s executives in Miami, Alberta has taken precedence due to its promising market dynamics and favorable opportunities for slot-based gaming growth.

While the company remains optimistic about Brazil’s potential, it is also exploring other international markets, including Thailand, Japan, and the United Arab Emirates, reflecting its broader global ambitions.

Navigating Legal Challenges and Dragon Train Redesign

Legal disputes surrounding Light & Wonder’s popular Dragon Train game have posed significant challenges. In September 2024, a Nevada District Court granted a preliminary injunction requested by competitor Aristocrat, halting future sales and distribution of the game. This resulted in a notable dip in L&W’s share price and prompted the company to announce plans for Dragon Train 2.0, designed to comply with the court’s ruling.

CEO Matt Wilson emphasized the importance of maintaining Dragon Train as a franchise, citing its enduring appeal alongside other hits like Dancing Drums and Ultimate Firelink. He clarified that the injunction impacts only specific elements of the game, leaving its branding, art, and core features intact. Wilson stated, “We expect Dragon Train will continue to be a franchise in our portfolio for many years to come.”

To mitigate the impact of the injunction, L&W has replaced or converted 95% of the affected Dragon Train units in North America. The company has also ceased Dragon Train sales in Australia, redirecting its efforts toward other titles in its portfolio.

Strong Financials and Strategic Growth

Despite these headwinds, Light & Wonder continues to demonstrate resilience. In its Q3 2024 earnings report, the company revealed a 12% year-over-year increase in consolidated revenue, reaching $537 million for its gaming segment. This growth was driven by a 38% surge in global gaming machine sales and robust performance in North America.

Social gaming also remains a key revenue driver, with SciPlay revenue growing 5% year-over-year to $206 million. While player spending on L&W’s social platforms currently averages $1.04 per day—below the $1.50 industry average—the company is actively working to enhance monetization.

On the iGaming front, revenue reached $74 million in Q3 2024, reflecting a 6% increase from the previous year. Growth in this segment is largely fueled by L&W’s market-leading position in North America and its innovative direct-to-consumer platform.

Focused on Alberta and Long-Term Goals

Light & Wonder’s strategic pivot toward Alberta signals a calculated approach to leveraging Canada’s expanding gaming market. The company’s financial health, bolstered by a $1 billion share buyback plan and a $1.4 billion consolidated adjusted EBITDA target for FY2025, positions it well to pursue sustainable growth.

While navigating the challenges posed by the Dragon Train litigation, L&W is doubling down on innovation and diversification. New game iterations, a growing slate of titles, and a focus on key international markets underscore its commitment to remaining a leader in the gaming technology industry.

Source:

“Analyst: Light & Wonder prioritizes Canada over Brazil,” CDC Gaming Reports, November 19, 2024.