Private Equity Gaming Play: AGS Embarks on New Chapter Following Brightstar Capital's Strategic Acquisition

The gaming industry witnessed another significant private equity move in July 2025 when Brightstar Capital Partners successfully closed its $1.1 billion acquisition of PlayAGS, Inc., transforming the Las Vegas-based gaming supplier from a publicly traded entity into a private company. This transaction, which paid shareholders $12.50 per share in cash, marks the end of AGS’s seven-year run on the New York Stock Exchange and signals a new growth trajectory for one of the industry’s most dynamic gaming equipment manufacturers.

From Humble Beginnings to Gaming Powerhouse

The story of PlayAGS is one of strategic transformation and calculated expansion. Originally founded in 2005 as American Gaming Systems, the company initially focused on Class II gaming machines for tribal gaming markets. The company’s evolution accelerated dramatically when Apollo Global Management acquired it in 2013, injecting the capital necessary for an aggressive expansion strategy. Under Apollo’s ownership, AGS made its most significant acquisition in 2015, purchasing Cadillac Jack for $370 million in cash plus a $12 million promissory note, dramatically expanding its product portfolio and geographic reach.

The 2015 Cadillac Jack acquisition was particularly strategic, combining two traditionally strong Class II slot suppliers that had both made substantial inroads into Class III gaming markets. David Lopez, who became CEO in 2014, spearheaded this expansion, stating at the time that “adding Cadillac Jack to the AGS family creates a bigger, broader, and more powerful gaming solutions provider.” This acquisition added key operational regions including Alabama, Mexico, and Wisconsin to AGS’s footprint.

AGS went public in 2018, completing its initial public offering on the NYSE and transitioning from private equity ownership to public markets. However, Apollo maintained a significant 22% stake until 2022, when it liquidated its position, removing what analysts called a “longstanding overhang” on the stock.

The Gaming Equipment Manufacturing Landscape

The gaming equipment industry has undergone significant consolidation over the past decade, with the slot machine market experiencing unprecedented merger activity. The industry is dominated by several major players, including International Game Technology (IGT), Scientific Games Corporation, and Aristocrat Leisure Limited. IGT, founded in 1975, generates approximately $4.69 billion in annual revenue and remains the global leader in gaming technology. Scientific Games, established in 1973, reported $3.36 billion in revenue in 2019, while Aristocrat, founded in 1953, generated $4.4 billion in revenue.

AGS has carved out a significant niche in this competitive landscape, establishing itself among the top four slot suppliers in North America. The company’s focus on tribal gaming markets initially set it apart, but its successful expansion into commercial gaming has broadened its appeal. AGS’s product portfolio spans Electronic Gaming Machines (EGMs), table products, and interactive gaming content, with tribal gaming markets representing its historical strength.

The tribal gaming sector itself represents a substantial market opportunity. Nearly 250 tribes operate more than 500 tribal casinos across the United States, generating 38% of all annual gaming revenue in the country. This market has evolved from small bingo halls in the late 1970s to sophisticated entertainment destinations with thousands of slot machines, table games, and hotel rooms. The passage of the Indian Gaming Regulatory Act (IGRA) in 1988 provided the regulatory framework that enabled this growth.

Market Dynamics and Growth Projections

The global slot machine market presents compelling growth opportunities that likely influenced Brightstar’s acquisition decision. According to recent market research, the global slot machine market was valued at $16.8 billion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 5.6% through 2034. Another analysis suggests the market will grow by $5.81 billion from 2025 to 2029, with a CAGR of 14.5%.

These growth projections are driven by several factors, including favorable regulatory environments, technological advancements, and changing consumer preferences. Modern slot machines now incorporate digital payment systems, touchscreen interfaces, AI-powered gaming features, and high-definition graphics to enhance the player experience. The rapid growth of online, mobile casinos and crypto casinos has also pressured land-based casinos to upgrade their machines to attract and retain customers.

Multiple-coin/multiple-payline slot machines, which accounted for $5 billion in revenue in 2024, are expected to grow at a CAGR of 5.6% during the forecast period. These machines allow players to bet on multiple lines simultaneously, increasing excitement and potential payouts while encouraging longer playtimes and boosting revenue for operators.

AGS’s Financial Performance and Market Position

AGS’s financial performance has been robust, contributing to its attractiveness as an acquisition target. The company reported revenue of $394.87 million for the full year ended December 31, 2024, compared to $356.54 million the previous year. Net income reached $51.65 million in 2024, a significant improvement from $0.428 million in 2023, with basic earnings per share increasing from $0.01 to $1.20.

The company’s revenue breakdown by segment for 2024 demonstrates its diversified business model: the EGM segment generated $254.4 million (76.3% of total revenue), representing 13.1% growth year-over-year; Table Products contributed $45.6 million with 6.5% growth; and Interactive gaming produced $33.3 million, showing 8.5% growth. This diversification has allowed AGS to capture opportunities across multiple gaming segments.

AGS’s strong Q1 2025 performance was particularly noteworthy, with organic adjusted EBITDA growing 21% year-over-year, significantly outpacing industry peers. The interactive segment’s adjusted EBITDA increased almost nine times year-over-year and 50% sequentially, highlighting the company’s success in the rapidly expanding online gaming market.

Strategic Partnerships and Market Expansion

One of AGS’s key strengths lies in its strategic partnerships with major gaming operators. The company’s partnership with BetMGM, announced in October 2020, exemplifies its strategic approach to market expansion. Under this agreement, AGS provides online real-money game content to BetMGM for distribution across BetMGM’s market-leading casino gaming network, including BetMGM Casino, Borgata Online, and partypoker.

This partnership has been crucial for AGS’s interactive division growth, providing access to BetMGM’s broad player reach and distribution network. The games are available on both iOS and Android platforms, as well as desktop access, offering players flexibility in how they engage with AGS content. The partnership initially launched in New Jersey and has since expanded to Michigan, Pennsylvania, and other markets.

Product Innovation and Technology Leadership

AGS has distinguished itself through its commitment to product innovation, particularly in slot cabinet technology. The company’s Spectra cabinet line represents a significant technological advancement, with the Spectra UR43 featuring a 43-inch Ultra HD 4K resolution upright portrait monitor and game-controlled lighting. The cabinet’s signature element is its stunning eclipse lighting illumination via addressable LEDs, creating a seamless stream of light that wraps around the monitor, optional topper, and button deck.

The Spectra line includes multiple form factors: Spectra SL49+, Spectra SL49+ Premium, and Spectra SL75+, each designed to outfit different areas of the casino floor. These cabinets feature enhanced security with seven entry-recording intrusion switches and a four-point linkage system for quick and safe access. The user-friendly LCD touchscreen button deck keeps all action at eye level, creating an ergonomic gaming experience designed to encourage extended play sessions.

AGS has also expanded its three-reel stepper cabinet offerings with the Revel cabinet, featuring games like Triple Treasure, Liberty Diamond, and Flaming Reels. This mechanical stepper represents AGS’s ability to blend traditional gaming elements with modern innovation.

In the table products segment, AGS has developed industry-leading progressive platforms, including the award-winning Bonus Spin Xtreme system. The company has expanded this platform with new features and configurations, including a linkable version for poker rooms. AGS has also developed multiple shuffler products, including the DEX S single-deck poker shuffler, the Pax S specialty single-deck shuffler, and the MAX8 multi-deck shuffler.

Competitive Landscape and Market Position

AGS competes in a highly competitive market dominated by several established players. The company faces competition from IGT, Scientific Games, Aristocrat Leisure, Konami Gaming, and other specialized suppliers like Galaxy Gaming and Eclipse Gaming Systems. However, AGS has differentiated itself through its focus on tribal gaming markets and its rapid expansion into interactive gaming.

The recent consolidation in the industry, including Apollo Global Management’s $6.3 billion acquisition of IGT and Everi Holdings in 2024, has created both challenges and opportunities for AGS. While increased competition from larger consolidated entities presents challenges, it also creates opportunities for AGS to capture market share from customers seeking alternatives to the dominant players.

AGS’s position as one of the top four slot suppliers in North America reflects its successful execution of its growth strategy. The company has more than doubled its global slot unit sales to over 6,100 units over the past three years and grown online real-money gaming content revenue by over 150%.

The Emmett Investment Opposition

Not all stakeholders were pleased with the Brightstar acquisition. Emmett Investment Management, which owned approximately 1.5% of AGS’s outstanding stock, publicly opposed the transaction, arguing that the $12.50 per share offer significantly undervalued the company. Alexander Rohr, Emmett’s founder and CIO, criticized the timing of the announcement, which came just hours before AGS released its strong Q1 2025 results.

Emmett argued that the market had not had adequate time to digest AGS’s exceptional first-quarter performance, which showed 21% organic adjusted EBITDA growth. The investment firm also pointed to potential benefits from the IGT/Everi merger, suggesting that AGS could gain market share as operators reduce their dependence on the combined entity’s products.

Despite Emmett’s opposition and arguments that the deal offered “effectively zero or negative premium,” the transaction received the necessary board and shareholder approvals. The opposition highlighted the challenges of timing in merger transactions and the importance of shareholder communication during acquisition processes.

Brightstar Capital’s Investment Thesis

Brightstar Capital Partners, founded by Andrew Weinberg, is a New York-based private equity firm focused on middle-market companies in industrials, business services, and technology sectors. The firm’s portfolio includes companies across various industries, from used-vehicle auction services to roofing contractors and supply chain services companies.

For Brightstar, the AGS acquisition represents a strategic bet on the gaming technology sector’s growth potential. The firm believes that AGS’s full-spectrum product offering, customer-centric culture, and competitive positioning set it apart in a growing industry. Weinberg stated that the firm’s goal is to “help AGS expand into new markets and continue to use technology to create exciting games and products.”

The acquisition aligns with broader private equity trends in gaming, where firms have deployed over $21 billion across 68 deals since 2018. Private equity’s share of mid-to-large cap gaming M&A has increased from 10% to 30%, reflecting growing institutional confidence in the sector’s growth prospects.

Future Prospects and Growth Opportunities

Under Brightstar’s ownership, AGS is positioned to accelerate its growth trajectory with increased capital availability and reduced public market constraints. The company can now focus more intensively on research and development, new market penetration, and strategic acquisitions without the quarterly reporting pressures of public ownership.

Regulated digital gaming represents a particularly promising growth vertical for AGS. The company’s interactive division has shown exceptional growth, with content revenue increasing by over 150% in recent years. The expansion of online gaming regulation across additional jurisdictions provides opportunities for continued growth in this high-margin segment.

The tribal gaming market also presents ongoing opportunities. With nearly 250 tribes operating gaming facilities and generating 38% of all U.S. gaming revenue, AGS’s strong relationships and specialized expertise in this market provide a solid foundation for continued expansion.

International expansion represents another significant opportunity. While AGS has historically focused on North American markets, the company’s proven products and growing international recognition could support expansion into new geographic markets under Brightstar’s ownership.

Technology Integration and Innovation Pipeline

AGS’s commitment to “innovation with intent” has driven its product development strategy and market success. The company has leveraged technological advancements including AI-powered gaming features, enhanced graphics capabilities, and improved player engagement systems. The integration of digital payment systems and touchscreen interfaces has modernized the player experience while providing operators with valuable data insights.

The company’s mechanical stepper products represent an interesting blend of traditional and modern gaming elements, appealing to players who prefer classic gaming experiences while incorporating contemporary technology features. This approach allows AGS to serve diverse player preferences and market segments.

Looking forward, emerging technologies like virtual reality, augmented reality, and blockchain could provide additional innovation opportunities for AGS under private ownership. The reduced regulatory and reporting requirements of private ownership may allow the company to pursue more experimental technologies and faster product development cycles.

Industry Outlook and Market Trends

The gaming equipment manufacturing industry is experiencing several key trends that favor companies like AGS. The convergence of land-based and online gaming is creating opportunities for omnichannel gaming experiences, where players can seamlessly transition between physical and digital gaming environments. AGS has already begun exploring this opportunity with its exclusive omnichannel launch of Rakin’ Bacon Odyssey.

Gamification techniques, including bonus rounds, free spins, and progressive jackpot systems, are becoming increasingly important for player engagement. AGS’s expertise in these areas, demonstrated through products like Bonus Spin Xtreme, positions the company well to capitalize on these trends.

The increasing acceptance of gambling in various jurisdictions, combined with the growth of integrated resort destinations, provides additional market expansion opportunities. AGS’s diverse product portfolio allows it to serve various market segments and regulatory environments.