A positive second quarter for Light & Wonder was tempered by challenges facing the developer’s Sciplay social gaming division.
The segment’s revenue dropped 9% year-on-year to $182m as Chief Executive Officer Matt Wilson described heightened competition among sweepstakes companies driving up player acquisition costs.
This decline occurred despite the average monthly revenue per paying user increasing by 4% year-over-year.
Despite these challenges, Walsh emphasised optimism within the company that the segment will return to growth as a wave of legal action against sweepstakes providers in states across the US turns the tide in favour of SciPlay and reduces user acquisition costs.
“SciPlay continues to be an integral part of the business as a complementary channel, not only for A/B testing, but also for franchise exposure to a broader audience,” he added.
Elsewhere, Light & Wonder enjoyed revenue growth across its land-based gaming segment of 5% year-on-year to $554m, while online casino remained a key driver of growth for Light & Wonder during the second quarter of the year, as revenue increased 14% year-on-year to $92m.
Overall revenue exhibited a modest rise of 2% to $828m, while net income grew 26% to $120m.
Mitigation plans for UK tax hike
During the company’s earnings call, Wilson and Chief Financial Officer Oliver Chow cautioned investors that the UK’s new 40% tax era will weigh on its earnings through the second half of the year despite a strong start to 2026.
Like many across the industry, the supplier is bracing for the impact of the UK government’s decision to hike remote gaming duty from 21% to 40%, which came into effect in April.
A 25% general betting duty rate for remote betting will also be introduced in April 2027.
“We do expect that to have some level of impact here through the rest of this year,” Oliver Chow, Light & Wonder’s Chief Financial Officer, told investors.
“The one thing we are doing is we are working with our customers and our partners to figure out how we can best move forward together in this new dynamic regime.”
Chow emphasised that Light & Wonder will now be focusing on first-party content proliferation and the expansion of its partner network to mitigate the impact of the tax changes, and the company expects to ‘lap’ the hike next year and return to ‘requisite growth rates’.
Given that the tax change only came into effect in April, companies are now only beginning to report on the impact of the decision on the industry, with contrasting fortunes.
FDJ United reported that the UK continues to remain a challenge for the operator as it navigates the impact of the hike, alongside similar increases in tax burdens in other markets in Europe.
On the other hand, Super Group revealed a 34% year-on-year increase in UK revenue during Q2, and the group’s Chief Executive Officer Neal Menashe spoke of the chance to acquire new users as operators fall by the wayside in the wake of the changes.