G2E 2026: Searching for clarity
Operators and suppliers are searching for clarity while trying to find something to anchor to for the coming year.
Please note, this was also posted as a LinkedIn article from Rick Arpin, KPMG US Gaming Leader.
The tone at this year’s G2E felt distinctly different from that of the last few years. We’d seen some doubt and uncertainty creep into the discussions more recently, but this year we seemed to turn a corner to doubt. There are so many areas that need resolution—prediction markets, regulatory posture, new competitors, customer dynamics, macro-economic conditions and geo-political concerns. Operators and suppliers are searching for clarity while trying to find something to anchor to for the coming year.
KPMG continued to be “all in” on G2E this year. Over 30 KPMG professionals from the US, UK and Japan joined the event. We hosted over 40 meetings with clients, facilitated executive roundtables with over 30 C-level executives and saw nearly 100 clients, colleagues and friends join our second annual karaoke fundraiser and social event (with all proceeds benefiting responsible gaming research at UNLV’s International Gaming Institute). We also spoke on several panels, joined clients and industry participants for a myriad of social events during the week, and were once again the proud adjudicator and co-host of the Global Gaming Awards.
Through it all, we saw lots of smiles and warmth—our industry is full of smart leaders who understand the benefits of collaborations and strong relationships. There are some big opportunities and challenges ahead for the industry, and we always come away from G2E energized by the capabilities of those leading our industry to advance the industry’s position.
However, this year there were some clear clouds over the event…and I’m not talking about the early-week thunderstorms that even led to some leaks on the show floor. Rather, the more than 25,000 attendees at G2E were suffering from numerous recent blows such as the sudden shutdown of online gaming in Brazil, interest rate increases, clear signs of oil and gas prices impacting their business, and the continued overhang of prediction markets.
More importantly, there seemed to be a recognition that while these issues are “near-term” they continue a relentless pattern of disruption and challenge to the industry. Year after year there are new substantial shocks, that require management to address while pausing/slowing other initiatives.
The investor and capital communities seemed particularly weary of what the next 12-18 months hold for the industry and appeared to be entering a period of high selectivity in the bets they make.
Constant challenges for a tired industry
It may be that we are nearing an inflection point where the industry realizes there will always be new “incidents” (Brazil this year, UK tax rate before that, tariffs before that), and there will always be new competition (collectibles now, prediction markets before that, sweepstakes before that). We sensed that traditional gaming companies now feel that continuing to play “whack-a-mole” with constantly shifting issues is likely not sustainable. The top two issues that fit this theme are competition and regulation.
Land-based operators are wary of online gaming, and question if the online operators are doing enough to protect customers and the industry. Many online operators are “hedging their bets” in relation to prediction markets, with a future as uncertain as any given the fundamental legal issues at play. All of these companies are being challenged at a much faster rate by new entrants—additional companies in the skill gaming and fantasy areas as well as whole new categories of gaming like collectibles and advanced deposit wagering mechanics for online games.
On the regulatory front, the state-by-state model continues to be challenged and continues to provide complexities for operators and suppliers, while the federal landscape looks no simpler to an existing operator.
With operators and suppliers continuing to battle on so many fronts, it could be the time for broader and more holistic solutions to these issues. The underlying issue in all cases is that consumers are going to have access to engage in the way they want across multiple products and jurisdictions; and traditional operators and suppliers need to determine how best they can meet the customer where they are.
While these varied and complicated issues require aligned industry stakeholders, we also heard from leaders that they are frustrated by the lack of cooperation among all the players in the ecosystem. Examples included sports leagues entering into partnership and sponsorship agreements with prediction markets companies and regulators “double penalizing” existing operators by adding additional regulatory burdens without allowing operators to avail themselves of new products, or outright threatening existing licenses if they do.
Capital and transactions: Hurry up and wait
There is a consensus that the industry is ripe for additional mergers and acquisitions (M&A) activity, as well as increased investment from private equity. Structurally, the industry remains decentralized and has a lack of consolidation; with market coverage and scope being an important differentiator on the consumer side, and scale being critical for both operators and suppliers.
There are distinct blockers to additional consolidation. A year ago, the industry was hopeful that lower interest rates would help with capital availability and valuation alignment. However, we are now in a rising interest rate environment (again), and that is putting pressure on capital at all levels (PE, strategic and venture). This topic may have driven the difference in levels of optimism we saw in CEOs (relatively high) and CFOs (much more tempered).
One area of gaming that has seen much more activity in recent years is the emerging space and associated venture capital investment, a form of capital that was almost non-existent in gaming 10 years ago. The time may have arrived in gaming for large industry players to look for opportunities such as corporate venture funds and investments into the ecosystem (i.e., incubators and accelerators). The large operators have already been the beneficiaries of acquisitions of smaller companies for product portfolio enhancements, and given what we see being developed in emerging companies, the pace of product innovation is only accelerating.
“Traditional” risks still in focus
Even with so many “big picture” issues to deal with, we were impressed with companies’ ability to still understand the nature and extent of more tactical risks and giving functional leaders the ability to manage those risks.
As examples, we heard from risk and compliance leaders that they are focused on the risks posed by legacy technology and “tech debt,” especially given the challenges of layering AI onto older systems. Companies also remain focused on the potential for regulators and legislators to impose onerous requirements or pull back on allowed products, and are working to educate regulators and legislators as to how gaming companies are investing in compliance.
A source of optimism: Technology
On the heels of our State of AI in Gaming report with UNLV’s International Gaming Institute, we were encouraged by what we heard from attendees regarding their progress. There were indications that industry leaders feel optimistic that technology may finally be able to assist us with major improvements we’ve been thinking about for decades—customer personalization, more effective compliance procedures, and more certainty in product development.
On the supplier side, it now seems clear that AI can help the chain move faster – develop games faster and test games faster. The final step of the path—regulator approval—still needs to be addressed, but we heard of exponential (not incremental) improvements in cycle times and productivity in the game design process. On the operator side, there is a view that tools can significantly enhance customer relationships and provide a counterbalance to increasing supply and labor costs.
Companies are deepening their engagement with AI tools across the organization, though still not fully enabled with agentic AI in many cases. ROI on those implementations is harder to manage given token and other costs that are more recent considerations.
Governance is still a focus area and the industry may be “catching up” a bit, with resources being put into data protection and managing increasing cyber threats. In addition, companies have gotten more serious about “basic” governance practices such as acceptable use policies, strict controls over AI use cases, and better assessment of risk; often using a cross-functional steering committee to ensure visibility into risks and developing policies that can be quickly operationalized.
Looking ahead
For the last few years, our connections at G2E believed that more certainty was “just around the corner.” That sentiment weakened significantly this year. For all the challenges we heard about the past year, one key player of the ecosystem has remained resilient – the consumer. Heading into 2027, attendees seemed more concerned than ever that macro forces would finally negatively impact the consumer’s ability to maintain or increase their level of spending on gaming. In particular, the notion of the “K-shaped economy” is top of mind, where those interacting mostly with luxury customers feeling much better than those dealing with the mass market. Operators and suppliers also do not perceive that costs will be stabilizing any time soon, so they are challenging themselves and their teams to be even more creative and hoping technological advancements help mitigate cost increases.
Finally, like last year, the disruptive nature of innovation is happening at an incredibly rapid pace. This is making it more difficult for companies to know where to “place their bets” related to product development investments, M&A, and hiring.
With all the areas covered in this article, we believe it is more important than ever to engage with others in the industry at events such as G2E. Operators and suppliers need to help regulators get comfortable with new technology. We need investors and companies to evolve their definition of value and reasonable returns. We need industry participants to compromise on core industry beliefs around the purpose of regulation and the definition of gaming. Resolution won’t happen overnight, but given the pace of the world around us, we must act quickly and thoughtfully to ensure the long-term viability of the industry.
How can KPMG help you?
KPMG LLP helps gaming companies with their complex issues such as transactions, international tax compliance, risk and regulatory concerns. We also provide our audit, tax and advisory services across the spectrum of gaming—land-based, online, supplier, tribal, lottery, and racing. We collaborate with our global firms as well as our US counterparts in video gaming, media and sports where our gaming industry converges with theirs.
We take responsibility to do our part in promoting a sustainable industry. We help our trade associations and their members with timely and complex issues and support our industry’s most important initiatives like responsible gaming, inclusion and market expansion.
We also have (in our humble opinion) the best social event at G2E, so please be on the lookout for our third annual karaoke event at G2E 2027!
We invite you to review the KPMG Gaming portal for the latest insights, trends, events, and information on how we can help you manage growth, navigate risks, and transform your business.
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