PLAYSTUDIOS, Ready for Nationwide Sweeps Casino Launch

NASDAQ-listed developer and operator of free-to-play casual games, PLAYSTUDIOS, is right on track for the launch of its sweepstakes casino product before the end of the year. 

The company best known for its playAWARDS loyalty platform, which brings gamers to real-world rewards from different brands, offered the exciting update at the start of the week, while presenting its second-quarter earnings report.

Live in Open Beta in Seven U.S. States

Chief executive officer and chairman Andrew Pascal highlighted the fast speed at which the company managed to advanced its initiative.

“After just nine months since formalizing this effort, we’re now live in open beta across seven states, and the early signals are promising,” Pascal said. 

The CEO, who launched the company in July 2011 with fellow gaming and tech entrepreneurs Paul Mathews, Katie Bolich, Nicholas Koenig, Chad Hansing, and Monty Kerr, said the early signs were encouraging, with player retention, engagement, and monetization all “trending in the right direction.

The undeniable expansion of the highly criticized sweepstakes casinos is changing the way players perceive online gaming platforms and interact with them, believes Pascal.

“This trend is pressuring traditional offerings, including our core social casino portfolio,” he admitted. “That said, these dynamics were anticipated, and they’re exactly why we launched our reinvention program last year.”

“Measured and Rigorous Approach”

While advertised as “free-to-play,” sweepstakes casinos allow users to purchase virtual currency for a chance to scoop up cash prizes. According to a recent American Gaming Association survey, 90% of participants consider this to be a form of gambling. 

Moreover, two-thirds of respondents admitted to primarily playing to win money.

Because of these perceptions, regulators in several states have raised the question of whether these venues go around gambling laws, while some brick-and-mortar operators regard them as serious competition for traditional casinos.

Nonetheless, Pascal described PLAYSTUDIOS’s approach to expansion as “measured and rigurous”. 

“We’re taking a measured and rigorous approach to scaling focused on ensuring that when we open the product to all eligible states, the experience is fully optimized and delivers on our high standards, player expectations, and return on ad spend thresholds.”, his message said.

The studio that is best known for its myVegas Slots and myVegas Blackjack titles is also about to launch the Tetris Block Party game sometime in the fourth quarter. The product is expected to further increase both revenue and user engagement. 

Strong Direct-to-Consummer Business Results

In Q2, PLAYSTUDIOS’ direct-to-consumer business performed strongly, generating $6.7 million from in-app purchases, up 107% from last year. 

However, the company acknowledged it will likely fall short of its full-year sales and EBITDA forecasts, with cost-cutting efforts unable to offset softer results in some areas.

In the meantime, market watchers remain optimistic regarding PLAYSTUDIOS’s outlook. Of the analysts covering the stock, three rate it as a “strong buy” or “buy,” one suggests holding, and one has it as a “sell” or “strong sell.” 

The broader software sector carries a similar “buy” consensus. On average, Wall Street expects the company’s shares to hit $2.50 within the next year, a target that’s roughly 56% higher than the August 1 closing price of $1.09.