KEY TAKEAWAYS
CONTENTS
Summary: two ways to earn from a casino floor
A gaming supplier earns money in two broad ways. It sells products once, such as slot cabinets, and it places or licenses products that keep earning, such as machines provided on a revenue-share basis, systems services and online game content. Light & Wonder, a supplier that reports both lines separately, shows the split. In fiscal 2025 its Gaming segment earned $2,183 million, of which gaming operations were $860 million, or 39.4%, and machine sales were $821 million, or 37.6%, according to its February 24, 2026 earnings release.
The mix is moving toward placements. Gaming operations grew 24.6% in fiscal 2025 while machine sales fell 5.1%, and the company reported that recurring revenue was about 73% of consolidated revenue in the first quarter of 2026. Recurring revenue is steadier but more capital-intensive, because the supplier funds the machines it places.
This article uses one company as a worked example of a business model, with every figure tied to its period and source. It analyzes how a supplier works as a business, not how any game plays, and it is not investment advice. Figures are as reported, and the most recent quarter verified was the first quarter of 2026.
Background: what a gaming supplier sells
A gaming supplier sells to operators, not to players. Its customers are licensed casinos, lotteries, charitable gaming entities and online operators. According to Light & Wonder’s annual report on Form 10-K, its products include game content and gaming machines, casino management systems and table game products, and it reports three segments: Gaming, SciPlay (social casino games for retail customers) and iGaming.
The two land-based models are easy to state. A sale is one-time: the casino buys the machine and the supplier earns the price. Participation is the 10-K’s term for machines provided through service or leasing arrangements in which the supplier is paid on (1) a percentage of the amount wagered less payouts, (2) fixed daily fees, (3) a percentage of the amount wagered or (4) a combination of fixed daily fees and a percentage of the amount wagered. The 10-K defines net win as coin-in less payouts, the land-based counterpart to the hold explained in our guide to how sportsbooks make money.
In digital gaming the model is different again. The 10-K says most iGaming revenue comes from casino-style game content that operators offer through aggregation platforms, and that the company generally hosts the play of its content, so revenue is tied to the volume of play. In fiscal 2025 the company reported $109.0 billion of wagers processed through its Open Gaming System, up from $91.0 billion. SciPlay, the social casino business, generates revenue from in-app purchases of virtual coins, chips and cards.
The numbers: Light & Wonder’s Gaming segment
The Gaming segment splits into four lines. Gaming operations and machine sales together made up 77.0% of the segment’s $2,183 million of revenue in fiscal 2025, with systems and table products making up the rest.
Light & Wonder Gaming segment revenue by line of business, fiscal 2025 and 2024 (years ended December 31), $ millions. Source: February 24, 2026 earnings release. Shares and changes calculated.
| Line | 2025 | 2024 | Change | Share of 2025 |
|---|---|---|---|---|
| Gaming operations | $860 | $690 | +24.6% | 39.4% |
| Gaming machine sales | $821 | $865 | −5.1% | 37.6% |
| Gaming systems | $285 | $302 | −5.6% | 13.1% |
| Table products | $217 | $211 | +2.8% | 9.9% |
| Gaming segment total | $2,183 | $2,068 | +5.6% | 100% |
where: $860M is fiscal 2025 gaming operations revenue; $2,183M is fiscal 2025 Gaming segment revenue.
An acquisition drove much of the growth. Gaming operations rose by $170 million, and the company says $102 million of that came from Grover, the charitable gaming business it acquired on May 16, 2025. Excluding Grover, operations rose $68 million, or 9.9% ($758 million against $690 million), which is the company’s own figure of about 10%.
Unit economics show why suppliers like placements. The company reported average daily revenue per unit of $47.06 in the U.S. and Canada in fiscal 2025, and $16.00 for international units.
where: average daily revenue per unit is the company’s measure, on a net basis for wide-area progressive jackpots, and the U.S. and Canada installed base includes Grover units; the average sales price of a new unit was $18,797 in fiscal 2025, for comparison.
What the model means for the business
A placed U.S. and Canada unit earned about $17,177 of revenue in a year, close to the $18,797 average price of a new unit, but the two are not the same thing. Placement revenue is spread over years and the supplier bears the cost of the machine, while a sale brings the price at once and passes the cost to the casino. The company’s capital expenditures were $310 million in fiscal 2025, up 5.4%, and it said fourth-quarter spending of $93 million was primarily to support gaming operations growth.
Margins reflect the mix. Gaming AEBITDA, the company’s adjusted earnings measure, was $1,162 million, a 53% margin against 50% a year earlier, and the company attributed the first-quarter 2026 margin gain to a favorable revenue mix, including gaming operations. The mix is not the only driver, since the company also reports cost efficiencies, and the reports reviewed show no margin by line.
Customers can also be competitors. Flutter’s 10-K, discussed in our profile of Flutter Entertainment’s business model, describes a shift toward in-house developed games and five in-house gaming studios, which shows that operators can reduce their reliance on supplier content.
Selling versus placing: how the models differ
The two models differ in who funds the machine, when cash arrives and what the supplier is exposed to. The table summarizes them using the company’s 10-K and release.
Machine sale versus participation (placement), as described in Light & Wonder’s Form 10-K and fiscal 2025 release.
| Feature | Machine sale | Participation |
|---|---|---|
| How the supplier is paid | One-time price | Daily fee and/or share of wagers or net win |
| Funds the machine | Casino | Supplier (capital spending supports installed base growth) |
| Main demand driver | Casino replacement and expansion budgets | Player activity on the placed machine |
| Main risk | Slow replacement cycle | Placed units replaced on short notice if they underperform |
| Seasonality (10-K) | Strongest in second half, slowest in first half | Highest in spring and summer |
The first quarter of 2026 shows the swing. Gaming operations rose 38% to $239 million from $173 million, while machine sales fell 25% to $156 million from $208 million, so operations went from 34.9% to 46.7% of the segment’s $512 million. The company cited lower North American request-for-proposal-based video lottery terminal sales, hardware cycle timing in Australia and fewer international openings.
Risks, limits and misreadings
Replacement demand drives sales. Of the 39,778 machines shipped in fiscal 2025, 36,926, or 92.8%, were replacements, and the 10-K warns that slow replacement cycles have reduced demand and can lead to inventory charges. International shipments fell 27.2% to 15,534. The company’s recurring revenue also includes SciPlay and iGaming, so its definition is broader than placements alone and is not comparable with other suppliers’ figures.
Placed machines can be removed. The 10-K says premium and daily fee participation machines are replaced on short notice if they do not meet revenue and profitability expectations. Financing matters too: total debt rose to $5,163 million from $3,870 million, and the company reported a net debt leverage ratio of 3.5x at December 31, 2025. Reported profit differs from adjusted profit: net income was $276 million, down 18%, after $219 million of restructuring and other costs.
Finally, this is one company’s model. Other suppliers split revenue differently, and a single year can mislead because shipments are lumpy. Figures here end with the first quarter of 2026.
Key figures and definitions
Key figures with periods and sources. Calculated figures are marked.
| Metric | Value | Period | Source |
|---|---|---|---|
| Gaming segment revenue | $2,183M (+5.6%, calculated) | Fiscal 2025 | Earnings release |
| Gaming operations revenue | $860M (39.4% of segment) | Fiscal 2025 | Earnings release |
| Gaming machine sales | $821M (37.6% of segment) | Fiscal 2025 | Earnings release |
| Average sales price per new unit | $18,797 | Fiscal 2025 | Earnings release |
| Average daily revenue per unit, U.S. and Canada | $47.06 | Fiscal 2025 | Earnings release |
| Gaming AEBITDA margin | 53% | Fiscal 2025 | Earnings release |
| Recurring revenue | $574M, about 73% of revenue | Q1 2026 | Q1 2026 presentation |
| Total debt | $5,163M | At Dec. 31, 2025 | Earnings release |
Handle-style terms differ on the casino floor. Coin-in is the amount wagered, net win is coin-in less payouts, and the supplier’s participation fee is a share of that net win or a daily fee. AEBITDA is the company’s non-GAAP adjusted earnings measure. The company’s recurring revenue includes gaming operations, ongoing systems maintenance, table service and rental agreements, SciPlay and iGaming.
Related analysis and next steps
To see how a casino or sportsbook turns wagers into revenue, read how sportsbooks make money, which defines the hold and net win that supplier fees are often based on. For the operator side of the relationship, our profile of Flutter Entertainment’s business model shows how a large operator describes its own content strategy. The next logical reads are other supplier models, such as online content studios and sports data providers, and a period-specific look at a supplier’s quarterly results using the same definitions. Primary documents are listed below.
Frequently Asked Questions
Sources & References
- Light & Wonder, Inc. — Reports Fourth Quarter and Full Year 2025 Results, earnings release (Form 8-K exhibit, February 24, 2026)
- Light & Wonder, Inc. — Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (U.S. Securities and Exchange Commission)
- Light & Wonder, Inc. — First Quarter 2026 Earnings Presentation (ASX announcement, May 2026)
- Flutter Entertainment plc — Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (U.S. Securities and Exchange Commission)
