“We’re extremely excited by the news,” said Light & Wonder CEO Matt Wilson of his company’s February 18 acquisition of Grover Gaming. So excited was Wilson that he began the evening conference call by greetging the assembled Wall Street analysts with a hearty “Good morning!”
Much of the call was given over to a recapitulation of the $1 billion transaction, which was disclosed earlier in the day. Wilson called the marriage of Light & Wonder and Grover as “a new adjacent channel” that fits his company’s growth strategy.
As part of the deal, Grover employees will be subsumed into Light & Wonder (and vice versa). Grover founder and CEO Garrett Blackwelder will be retained as a consultant through mid-2028.
Wilson cited Grover’s recurring-revenue business model as an attraction and “a catalyst to accelerate.” He said he looked forward to cross-marketing Light & Wonder games over the new electronic pull tab platform Grover provided. The latter has 10,000 e-pull tab machines deployed in five American states, with six more potentially accessible.
Two states in which Grover has yet to deploy, Minnesota and Maryland, were ones Wilson “expeditiously” targeted for imminent entry, regulatory approvals permitting. He said Light & Wonder could offer “better games within the existing [Grover] structure.”
Minnesota, however, is tablet-only, so Light & Wonder is in the process of developing the requisite technology for that state. Otherwise, Wilson said, “The ROI hurdle is very low” and the acquisition will enable his company to keep “monetizing our business in an efficient way.”
The Light & Wonder CEO played up the “hyper-locality” and stable customer base of charitable gambling, along with its new-jurisdiction prospects. He also noted the similarity of e-pull tab devices to slot machines.
“Grover has built a culture with a strong foundation of humble passionate people, effective processes, and quality products,” read a Light & Wonder statement flashed during the investor presentation. To this, Wilson added that he anticipated high margins and cash-flow generation from Light & Wonder’s new vertical.
CFO Oliver Chow echoed the sentiment. “This is yet another avenue for Light & Wonder to be a compounder of growth. I’m confident that this transaction can take our content to new heights.” He pointed out that Grover’s revenue had burgeoned from $81 million in 2022 to $135 million last year.
It’s a transaction that, according to Wilson, had been gestating for quite a long time. He said it married Grover’s customer obsession with Light & Wonder’s game obsession. “It’s a significant use of our R&D engine,” he added, bringing together complementary skill sets.
“It’s really about scalability,” Wilson said of the charitable-gambling business, noting that Grover had only one major competitor, Arrow. Wilson had contemplated entering the field from scratch, but that buying Grover saved time.
“There’s a real feel-good element to this,” Wilson continued, namely helping military veterans. “If there’s one population demographic that’s more amenable than tribes, it’s veterans. They’re the ones agitating for expansion.”
Charitable gambling is, Wilson said, fairly low-end in terms of technology, hence its high margins. He said the new field will enable Light & Wonder to “sweat the R&D, which we’ve made over the past few decades.”
As much as $200 million in the Grover purchase price is tied to earnings incentives Light & Wonder must hit. Wilson said he was determined to reach those benchmarks for the sake of Grover’s shareholders. He added, “It’s in the interest of our shareholders too.”
