Hello, I'm Barry Cottle, and I'm the CEO of Light & Wonder. Welcome to Light & Wonder's 2022 Investor Day. We're excited to share with you our strategies and opportunities to drive tremendous shareholder value and meet our talented team today.
I'm Jim Bombassei, Senior Vice President of Investor Relations. It's great to see so many of you here today and joining us virtually. We have a great agenda for you today, and a great opportunity ahead. We've been looking forward to sharing with you the momentum we're seeing in our business and our exciting path forward. Before we start, please note that today's presentation may contain forward-looking statements and a discussion of non-GAAP financial measures within the meaning of the federal securities laws. Please take some time to refer to our safe harbor liability disclosures. Actual results could differ materially from what we discuss today, and these statements regarding future events are uncertain by their nature. Our risk factors are discussed in our Form 10-K filed with the SEC. After today's presentation, we'll have a Q&A session, and we're looking forward to having a continued dialogue.
This will be followed by lunch with our executive team. To pose your questions, everyone listening via the web, webcast can enter their question via the chat window. For those of you in the audience, please scan the QR code at your table, which will bring you to a webpage where you can submit your question. With that, we're very excited to turn it over to Jamie Odell, our Board Chair.
Thank you, everyone, and thank you so much for coming today from, various parts of the country and indeed, the world. It's a great pleasure to be here with you. Today's all about the future. It's about meeting our management team and, understanding our strategy. It's about going forward. I do just wanna spend two minutes on how we got here, very briefly, but today's about meeting the team. Why did we invest in this business and bring in new investors into this business? It was really the huge potential that we saw for the business. We saw a transformative opportunity. The business, as we, when we came in, really had strong underlying strengths. It had great people and great assets, strong IP, strong games, strong market positions, but it was held back by two key factors.
The first was it was really run as a group of a holding company of a number of companies, not as one portfolio. And that meant the way that decisions were made weren't optimized across best technology, best processes, best systems across all the businesses, and that meant there was a lot of wastage in the business. The second factor was clear: it was held back by a huge debt burden. And you know, when you go to a quarterly business review meeting, and the first question is, "Can we service our debt?" That the business is not focused on growth and not focused on how they can become the best in the industry.
When we saw those factors and saw the quality of the leadership team, we realized we had an opportunity to make transformative change and to build a new, integrated, and aligned company of businesses which were worth so much more than the sum of the parts. And that's what we want to do, a content-led, leading technology company, and to do that, we had to make certain changes. So having recognized, frankly, what is huge and rare potential in an organization like this, and having moved in, we worked closely with management, Barry and his team, and the board, to develop a new strategy, which we've already articulated. But to be very brief and clear about it, the strategy was really about optimizing the portfolio as a beginning, and that meant exiting lottery and sports.
Two great businesses, actually with unlocked value within them, but those businesses had the potential to drive growth by investing in other parts of the business. So we divested those two and to focus on content and our strengths in technology, content capabilities going forward. The second was to significantly deliver, and that would allow us, therefore, to invest and to get rid of this concern constantly about debt and to make ourselves a company which could invest and compete in the future, and the third was about growth, the having an aligned portfolio of companies which could really work well and be the best growth company in the organization. Sustainable growth, sustainable cash flows, and sustainable value for our shareholders. Every decision we make is based on value for our shareholders, and all of that will be underlined by having great people.
That was the clear strategy we've articulated. Briefly, where are we now? We're ahead of where we thought we would be. We're very pleased with the outcomes we've had to date. We exceeded our expectations for the pricing of our lottery and sports businesses, and we've already had the lottery monies come in, and we anticipate sports coming in in Q3. That money has already been invested in the commitments we have made to our shareholders. We significantly reduced our debt. We now have less than half the amount of debt we had a short time ago. Our leverage is below four times and well on its way to our targeted range of 2.5x- 3.5x .
As we went forward in terms of growth, we think about where we want to be, and we want to be the global cross-platform gaming company. With recurring revenue 75%, we're already at 75%, and that level of recurring revenue means continuous confidence in cash flows going forward, and also 50% digital mix, which we're not yet at. We're close, but clearly, we need to do that. We need to invest wisely in those areas, and our investments will always be disciplined, and we will always think about where we can make the best return. As I've said previously, where we can't make a better return than purely returning capital to shareholders, then we won't do it. But where we can, and where we can make it profitable growth in key areas of content and technology, we will.
That progress we're now making is by putting new studios organically into the team, because studios deliver these great games that you see today. You've also seen some, some smaller digital acquisitions, which Barry and the team will talk about, which are already yielding for us and helping us to grow our digital mix. . . . In summary, things have changed. Things have changed materially, and we want to make sure that you know that and you understand that by seeing the quality of our team. We've introduced new disciplines, new disciplines in strategic planning. Surprisingly, this business did not have a three-year strategic planning process. It now does. It has a very robust three-year plan. Connie will talk you through some of the elements of that.
Without a three-year plan, it's very hard to commit to investments, to how you allocate resources, your technology, your dollars, and your people. We now have that, and we know exactly how we want to allocate them, and we are very, very, pleased with the outcome that management have driven from the bottom up on the three-year plan. The other key disciplines we've brought in are to do, with the way that we spend our dollars and investment. We have very strict rules now around investment dollars, very strict gateways, which means that every single dollar is considered in terms of its future potential value to grow capital for our shareholders. So in a very brief summary, when Toni and I came in, we saw this huge potential in the business. We've actually seen that potential exceed our initial thoughts.
We now see more potential than we saw 18 months ago. We're very excited about that. And finally, we have great confidence in the strategy. We have confidence in the strategy because it's addressing large, accessible markets which we know well and which we have already succeeded in, and we already have the capabilities to continue to succeed in. And we're also very confident in our talent, in our people, who you will see today. The reason for that, very simple: we know them, they're the best in the industry, and frankly, they've done this before. So we are very confident in our future. We hope that today you see that and you join us on this journey over the next many years to grow sustainably cash and returns for our shareholders. And with that, let's get on with the show!
Thank you, Jamie. From where I sit, there's no better time to be in this industry, and nobody is better positioned to take advantage of this market opportunity than we are. The gaming market is huge, growing, and converging. We have unmatched market leadership and competitive advantages. We have the best people and culture in the industry. We have a clear roadmap to take even more share, drive cash flow, and long-term value creation. Taken together, this adds up to a very compelling investment thesis. Games is a huge market, a TAM of $70 billion. People love to play games. People want to play the games they love, the franchises that they recognize, you know, the game mechanics that they're familiar with, and they want to play them wherever they are.
Building great games that become evergreen franchises that players can play anywhere provides sustainable differentiation and a competitive advantage, and we know how to make them, and we believe we're the best position in this industry to deliver on this. We see the future as cross-platform, and no company can match our capability to deliver that. I've seen this before because in the course of my 30-year career, I've had the pleasure to be at the forefront of driving digital entertainment multiple times across both the film and the video game space, where it's become commonplace, and while the gaming industry has lagged other markets, convergence is inevitable, and today, we're the only game company with market-leading positions across gaming, iGaming, and social, with content that can be delivered anywhere, and with the technology that can provide a seamless player experience.
And now, as Jamie says, we have transformed ourselves to take full advantage of this unmatched position. We're singularly focused on building great games and franchises that players can play anywhere. And with a healthy balance sheet, for the first time ever, we can unlock tremendous shareholder value. So what gives us so much confidence? To start, we have unparalleled competitive advantages with an entrenched position that is next to impossible to unseat. Others may say they have similar assets. I'm sure you've heard that before, but we're the only ones with leading market positions across gaming, iGaming, and social, and the only ones that have a leadership role in both the content and platform piece of the value chain. On the content side, we have a treasure chest of assets with the biggest collection of epic evergreen franchises in the space.
And now we have the best collection of hit-making game creators that this company has ever had, executing in a high-performance, player-first culture. We also have industry-leading player data so that nobody else has. So with this, we can optimize our R&D to build the most effective and efficient product roadmap. We have the data insights to build great games, and we can launch in all three markets at the same time to get maximum player impact. And we have the leading digital aggregation platform and player account management. We've had this now for over a decade. That lets us partner with more than 300-plus operator brands around the world, along with a leading systems business globally.
That means we are already managing player relationships with our partners today, both in land-based and in digital, so we alone have a unique opportunity to connect them across these markets, creating a compelling, seamless player experience and also making unified wallet a reality. Again, taken together, no one can match our unique asset mix and leading market positions to deliver content fully cross-platform. And we have a clear roadmap for taking even more share and driving long-term value creation. With better player data, better market segmentation, and game design talent, we're creating even more hit games and franchises that players love to play, and building them so they can play them anywhere that they want, because, again, that's what players expect. And to deliver on that player expectation, we've increased our investment in R&D while still driving net savings to the bottom line.
We've reconstituted our expense base to drive revenue growth. We're expanding in high-growth digital markets as we invest both organically and inorganically, with investments like our Las Vegas iGaming studio, and with, you know, targeted, capital-efficient acquisitions, such as Alictus or Authentic. We're enabling a seamless player experience in our industry, leading platforms as we invest to marry them across land-based and digital. We're significantly de-levering and maximizing cash flow, which is at the core of our value creation strategy, driving shareholder returns. And because our high-performance culture underpins all that we do, our global team members, our creators, are our most important assets, and we are focused on building a high-performance, highly inclusive culture, being the employer of choice. This results in very attractive and sustainable growth profile. We have a high mix of recurring and digital revenues, which drives sustainable growth and high cash flows.
This translates into even stronger growth on the bottom line. We're targeting a $1.4 billion AEBITDA in 2025, a target of a CAGR of 15%. Our strong profile, strengthened balance sheet, and asset divestitures will produce a targeted $10 billion of incremental capital through 2025, which will fuel our capital allocation priorities: pay down debt, share repurchases, and invest in growth. All of this adds up to a very compelling investment thesis. We are poised to win a large part of the $70 billion TAM that's in front of us. We have leading positions across all markets: gaming, iGaming, and social. No one can match our ability to deliver content fully cross-platform or a seamless player experience.
We have a clear roadmap for taking more share, and our high mix of recurring revenues, strong margins, high-quality cash flows, and disciplined capital management will deliver superior shareholder returns. And that's why I'm so confident that Light & Wonder is the one to lead the future of the game industry. You will hear today how we're already winning. With the right strategy in place to drive long-term, sustainable growth going forward, with the right people to lead this industry, grounded in our company's core values that have always been the center of our mission: diversity, equity, and inclusion, sustainability, and responsible gaming. Our talented team is relentlessly driving results as we build the leading cross-platform global game company. Now, let me turn it over to Matt Wilson, our head of gaming.
Hey, good morning. I'm Matt Wilson. I'm the CEO here at Light & Wonder. I've been in the gaming industry for nearly 20 years, worked in all major markets, Australia, hence this accent. I've worked in Asia Pacific through the growth years and also in the U.S. here for the last 10 years. I'm leading the global transformation of the gaming business here at Light & Wonder. I live and breathe this industry. I love it. I've been in it pretty much my whole career. And it's. I've seen it grow and change over the years, but one thing has remained constant over that time, that players just love to play games, and our business is built on that very foundation, and so is this incredible investment opportunity I want to share with you today. I can sum it up into five critical points.
First is we're playing in a $7 billion market that's been proven to be incredibly stable and resilient over the years, powering through economic cycles. The second is the industry's competitive dynamics are very favorable to incumbents. We've got huge barriers to entry, which I'll talk you through in the presentation. Third is we have incredible market positions in every single market in the business, with an especially large growth opportunity in two of the largest revenue pools, which I'll talk you through in a moment. Fourth is we have a proven playbook, one that's delivered exceptional results in this industry before and one that's already showing signs of success here at Light & Wonder. And fifth is we've assembled the unrivaled leadership team in the industry, a team whose potential we've only just begun to unlock.
Before I talk you through those bullets in detail, I want to take a step back and look at our business from 30,000 ft. Light & Wonder's gaming division is the industry's leading end-to-end solutions provider. And when I say end-to-end, we operate in every single category: slots, tables, systems, ETGs, VLTs, cashless. We run the full gamut. If there's a sector, we participate in it. And we're not just the top end-to-end solutions provider, we're the only one. No one has the collection of assets that we have. Nobody else can do it at the scale and the breadth that we do it. Here's some stats that kind of underlie the portfolio of our businesses within the gaming division. I told you that the gaming industry is stable and resilient. Let me show you exactly what I mean.
The market marches forward regardless of where we are in the economic cycle, because people's passion for games doesn't depend on the state of the market. It took a once-in-a-generation pandemic, one that literally shut the industry down, to break the pattern of steady growth. And you can see we're already back on track, and players are not only coming back to casinos, they're spending at record levels, and we expect the overall market to be fully recovered in shape and size by 2023. Even operators who hit the brakes on investment during the pandemic, and not all of them did, by the way, are back and looking to the future. And when they think about the future, one thing they absolutely must have is new and fresh content on their gaming floors. Their players simply demand it.
So it's critical for operators to keep unveiling the next big thing, which creates consistent demand for our world-class games and systems. Meanwhile, the industry is surrounded by a moat or really a series of moats. These barriers to entry include the highly regulated nature of gaming, the significant CapEx and long development cycles necessary to produce great games, and the limited pool of top talent, just to name a few. Operators form long and lasting relationships with companies like ours. These relationships are built on trust, and they're built over time. And what it means for the industry is that the incumbents enjoy a significant advantage. If you look at each sector within the industry over the course of a decade, the market has grown considerably, but the top four suppliers have maintained their collective market share.
Let's look at the size of this opportunity as a whole. Overall, the market has a projected TAM of, in 2025, of $7 billion. North America represents 80% of this market, but it's a global market, and our portfolio is not just the broadest in terms of what we offer, it's the broadest in terms of where we offer it. Our products are installed in all major North American gaming jurisdictions and international markets, and our revenue mirrors the geographic distribution of the market. If you dig a little deeper, you can see where the real growth opportunities lie. One of the greatest growth opportunities we have is in slots. There's two sides to our slot business. There's the outright sale business, and then there's the gaming lease business, which offers us a high margin, recurring revenue stream.
I want to underscore just how big this opportunity is here. Leases represents a third of the overall TAM, and gaming sales represents another third of that TAM. Right now, we're number two in slots, which means we have our greatest growth opportunity in a sector that represents more than half of all of the overall TAM. When it comes to table games and systems, we're the clear market leader here with a strong number one position, and we intend to defend and extend that through investments in IP and in talent. But again, I think our biggest growth opportunity is in slots, and our strategy for seizing that opportunity is the reason why, as the market continues to rebound, that we intend to outpace that recovery, continue to grow and take share.
It really comes down to three things: discipline, management of the business, investment in R&D to fuel our growth, and then focusing on our talent to fully unlock its full potential. Immediately upon joining the organization, it became clear to me that there was a fundamental need to change the way the business operated and how we invested our dollars, and we swiftly moved to establish a global operating model, execute on a more strategic and disciplined management system, and reconstitute our cost base. For example, in 2020, we took out $50 million in structural costs out of the gaming business alone. It's cost savings like this that allow us to make disciplined investments into what we consider to be the engine room of our business, R&D. That engine, to be frank, was in need of a repair. Here's the situation that we inherited.
By 2019, overall investment in R&D had shrunk as a percentage of revenue at a time, for example, when some of our peers were raising investment levels in R&D to levels of 11% or 12% of revenue. Capital expenditures were also down, which means we had an aging install base in our gaming operations fleet. Meanwhile, the R&D program was decentralized and regionally structured. Designers weren't making the right games for the right markets, and there was also no overall strategic focus on the largest revenue opportunities. Thus, from 2016 to 2019, we lost share in these two key markets I mentioned earlier, gaming sales and gaming leases. But now, under the product leadership of Rich Schneider, we've turned things around. For starters, we've increased investment in R&D as a percentage of revenue by 12%.
We've also increased CapEx to ensure we have the right level of investment in our gaming operations fleet. Just as importantly, we're now aligning our spend to the highest ROI opportunities based on key market and player segmentation, which I'll describe in a moment, and we're gaining new insights from our global operating model. By executing this playbook, increasing our R&D investment, prudently investing in CapEx, and making sure all of our efforts are aligned at the new growth opportunities, we've been able to achieve seven consecutive quarters of growth in the industry's largest profit pool. Again, this is a critically important sector, more than a third of the overall market TAM. For three years in this category, we were losing ground.
Now, with seven straight quarters of consecutive growth, and we've delivered an all-time high of 43% of our North American install base in the premium game leases category. We've also grown our share in the North American gaming sales replacement segment, the second-largest global revenue pool. That right there is our playbook in action, and we're only just getting started. Let me take you a little deeper into our playbook. One important aspect of our strategy has been to develop market-leading, innovative hardware offerings in each critical segment that we address. Think about our hardware offerings, like the automobile segment. Now, each cabinet serves a distinct product segment, analogous to an SUV, a compact, a luxury line, a minivan. We're now competing in all of these categories, and we're making the necessary investments to constantly and systematically refresh the hardware lines going forward.
We've also taken a global approach now, which allows us to take these hardware offerings to international markets, reducing marginal costs and expanding margins. However, perhaps the most critical part of our new R&D program is our focus on game development, and for more on that, let's hear from Nathan Drane. Three things to call out from that video. First is the exciting opportunities that our cross-platform strategy has for game designers. Our collection of social casino, iGaming, and land-based gaming is unrivaled. Nobody has the collection of assets that we have, and that's very exciting for our game designers. The second is our focus, relentless focus on talent, which starts with this leadership team here, which brings decades of experience to the job. At every level, we're really focused on unleashing the potential of our people.
When it comes to game development, we're doing that by establishing global creative centers in Chicago and Las Vegas and Australia, and we're aligning our top talent to those growth opportunities. You just met Qin You . Qin's one of the world's great game designers, and she's been based in the Asia Pacific region for a long time, and she's long been the most successful designer building games for the Asian market, as evidenced by our 45% market share in that market. But now, with the establishment of our global R&D centers, she's able to build games for even larger markets, bringing her talent to bear on even larger profit pools like the North American gaming ops market, where, by the way, one of the fastest-growing categories is Asian-themed games. The third thing I wanna highlight is the strength of our game and franchise portfolio.
Our competitive advantage really begins with our content. We have a wealth of proprietary franchises that are evergreen. Games like Dancing Drums, 88 Fortunes, Gold Fish, Quick Hit, and many more. And we're also proud to have three of the top four third-party licenses in the industry: Willy Wonka, Monopoly, and Wizard of Oz. But we're confident that we'll have the next great game franchise, too, the next big hit, because we have the hit makers, and we have a strategy designed to maximize their full potential. So all it's really taken is a shift in our organizational focus to maximize our results that we can deliver, thanks to our talented team, and it's already paying dividends. North American gaming operations revenue exceeded 2019 levels last year.
As I said earlier, our North American gaming ops premium install base grew for seven consecutive quarters and stands at a record high of 43% of our install base. In addition, North American outright sales continues to accelerate, with 3,400 units sold in the first quarter in the replacement segment. In Australia, another key market for us, we've doubled our share in that market to 14% in 2021. Let me finish where I started with the value proposition available to you for the games that our players love. You're looking at an industry that has proven over the years not just to be sizable, but be resilient, an industry with great competitive dynamics. You're looking at a company with a set of talent, a set of...
Sorry, a set of assets that no other player in the industry can match, and yet with significant room to grow over the coming years. You're looking at a proven playbook, one that's delivered results in the past and is already delivering results here at Light & Wonder, and you're looking at an unrivaled leadership team, the best in the industry, whose impact is magnified by our revitalized strategic plan. That's why I'm so excited to be a part of this team here, so excited to be at Light & Wonder and all the things that the future brings here. And with that, I want to hand it off to Dylan Slaney to talk about iGaming.
Good morning. I'm Dylan Slaney, the CEO of iGaming here at Light & Wonder. I've spent more than fifteen years working in and around the areas of data science, global innovation, and product development. And over the course of my career, I've seen this kind of digital transformation come to one industry after another. And now that it's come into the gaming industry, I believe no company is better positioned to take advantage of the exciting growth opportunities ahead. We have assembled a winning team of creators from within the industry and beyond, who are focused on delivering unparalleled digital experiences for players across the globe. And today, I want to tell you how we're seizing the opportunity afforded to us by our unique and unrivaled position within the iGaming marketplace. We believe we are not just well-positioned, but uniquely positioned to lead.
We have a truly one-of-a-kind offering that makes us an invaluable partner to both content studios and operators, backed by a platform that can easily scale as the market and industry grows. We have an unmatched collection of games and franchises that cannot be found anywhere else. We have an unparalleled aggregation platform that connects gaming operators with third-party studios and allows those operators to integrate any of our content onto their system with ease. And we have in front of us a tremendous growth opportunity and a position to capture share within key markets, in particular here in the U.S. And finally, because we are a technology provider and a content provider, we participate in multiple layers of the value chain. This is a differentiated and unique position, allowing us to create value and drive strong returns. Let's explore this unique position and how we're set up to win.
We are in the business of entertaining people. Winning for us is about delivering the best entertainment experiences to players. It's the epicenter of everything that we do. It's our core DNA. And we do this today through one simple integration: connecting operators and game studios to players across the globe, making the journey seamless, frictionless, and above all, engaging. And we accomplish this through three major products. We have one of the most broadest content offerings in the marketplace, including our own proprietary content and IP and world-leading franchises.... We have a leading platform in OpenGaming and our PAM or digital wallet. And recently, through the acquisition of Authentic Gaming, have added live casino, and this is an important player segment and U.S. growth opportunity. We're the only company who plays in all these spaces, and we are a leading and trusted iGaming ecosystem.
But the key driver of the relationship between player and game is our extraordinary content. Our iGaming offering today boasts one of the largest content offerings in the industry, with more than 3,000 titles, which means we enjoy tremendous demand, both from operators and from players for our games. We build content. Our first-party content now accounts for over 50% of the volume that we see through our platform. But we also know that players don't just play our games, so we also allow and help partners to use our technology and build games, and we distribute games for other studios. And later on, I'll talk about how our recent acquisition of Playzido will help us to do this even more effectively. And through this strategy, we have built a leading, regulated content ecosystem. Our OpenGaming platform is a unique and strategic asset.
It's where we host all our content. It's our two-sided network, demand from operators and content from studios, and it's the only place where our content can be accessed. We provide a rich set of features for operators and studios to use, making the experience for them frictionless and seamless. And all of this content gets distributed to more than 300 operator brands around the world, and nobody has this scale in regulated markets. But we don't only provide this platform, we can also provide the digital wallet that goes with it. Now, with nearly 40 instances live across the world, executing over $2.5 billion of transactions annually. Let's take a look at the growth opportunity ahead.
The regulated TAM that we're pointed at is estimated to reach over $27 billion by the end of 2025, and our products and capabilities are set up to take advantage of the opportunity ahead. The key driver of the growth is that widespread legalization and regulation of iGaming in North America is coming. We believe every state where land-based gaming is legal, iGaming will inevitably be legalized. It's a question of when, not if. And just recently, the province of Ontario came online in Canada, and at maturity, that's expected to be a $1 billion-$1.5 billion market, roughly the size of potentially New Jersey or Michigan, today. And Ontario was our biggest-ever market launch, and is a tremendous opportunity for future growth. But let's take a look at the opportunity in the U.S. in a little bit more detail.
Last year, the U.S. iGaming market ended just shy of a $4 billion TAM, but has grown at over 50% during Q1 this year. Here at Light & Wonder, we're strongly positioned. We have a 25% market share, and over 8 billion game rounds are expected to be played this year on our platform. We're also seeing some interesting player dynamics. We're seeing that in the U.S. at the moment is three times the average bet size than the U.K., one of the most mature iGaming markets. And in New Jersey, that's nearly 4x the average bet size of the U.K. We've also seen nearly 1 million players play through our platform already this year. But is there more potential than what we are seeing today? What if iGaming followed all mobile sports states? And we know that policymakers have reacted quickly to demand.
PASPA has just this week had its fourth anniversary. And estimates for iGaming range from anywhere from $7 billion-$12 billion TAM by the end of 2025. And what drives this growth is not just the organic growth that we're seeing already today with states that are already live, but it's the adoption or rollout of iGaming in new states. But could the opportunity be even bigger? If we take a low base of $120 GGR and extrapolate that out through the same kind of like profile that's been built through the adoption of online sports, we can quickly see line of sight to a $20 billion opportunity or TAM within the U.S. And at a 50% penetration of the U.S. consumer base, this would make the U.S. iGaming market bigger than the combined size of U.K. and Europe today.
Online sports betting is predicted to be at 60% penetration by the end of this year. While we can't predict the future, what we do know is we have a decade of growth tailwinds ahead in the US alone.... Whoever is first in line has a huge opportunity, and that's going to be Light & Wonder. We have four key strategic growth pillars that we have set out to go and execute against the growth opportunity ahead. We want to take a leading position with our first-party content and extend that leading position out. We obviously want to win in North America, in the U.S. and Canadian markets. We want to accelerate the growth of our OpenGaming platform and launch live casino to take meaningful share in the U.S. market. I'm gonna explore each of these in a little bit more detail.
First, how we extend our leadership with our own content. Our passion for creating games and franchises is part of our DNA, and you've heard that today from Barry and Matt, and you'll hear it later from Josh as well. Combining our land-based games and franchises with our digital native games creates an unrivaled position within the market that nobody else can match, and that players today love. It's a unique competitive advantage that allows us to target all player segments and utilize the strength we have across our full game portfolio. And we're seeing some tremendous results from the execution of this strategy. 16 out of the top 20 games in the U.S. that we see via OpenGaming are our proprietary games. 88 Fortunes is still the top-performing grossing game in the U.S.
Recently, in the U.K., we did an extension to the Rainbow Riches family, and that's become our biggest single game launch in the last two years. We've got focused roadmaps in all our regions driving growth. And hot off the press, two weeks ago, we launched Hurricane Horse, which is part of the Coin Combo family in the U.S., and this has been our biggest single launch to date. Record turnover, record GGR, a record number of players. We are also seeing great success with our digital native content and recent acquisitions. Lightning Box have just gone through seven consecutive months of growth post-acquisition, and with the launch of 100x Ra in the U.S., have had their biggest ever game launch. ELK recently launched a game called Nitropolis 3, and this was their biggest ever week one launch in U.K. and Europe.
They've had a record year-over-year Q1 and a record April. These strong capital efficient investments that enhance our strategic growth agenda, not just today, but also for the outer years. Let's take a look at our next pillar, which is winning in the U.S., When it comes to North America, we're already capturing more than a quarter of the highly competitive U.S. market, and more than double that of the regulated Canadian market. No other supplier plays across the whole value chain. We have an unmatched position in content. We have thirty-one instances of our digital PAM live today in the US, and we are adding live casino. This unique position will be the foundation of our future growth in the U.S. as we look to grow share in the fastest-growing iGaming market, and who else is going to lead and win in the iGaming ecosystem in the U.S.?
We're also investing in our core product portfolio. We want to bring more of the great franchises and great IP that we see on land-based over for digital players to consume and love, and as Barry mentioned, we've done an investment in a new studio in Las Vegas, which, at maturity, will give us the ability to bring two times the volume of land-based content into the North American market. Later on in the fall, we'll be launching a new jackpot product as well, to really go after a segment that we know that players are engaged with and excited about. It's true innovation, it's leading, and it's focused on sustainable growth, but we also continue to invest. Our recent acquisition of Playzido, which was announced last week, will turbocharge our ability to provide more exclusive and unique content, especially into the U.S. market.
This builds on our existing capability and strong position in this space. It's a platform where we can incubate more studios for future growth. Let's take a look at our third pillar, the growth of OpenGaming . We continue to drive more exclusive partnerships and accelerate the growth of OpenGaming . It's already the leading aggregation platform in the U.S., with unrivaled scale. OpenGaming is a key strategic asset, providing us with rich data and insights. Annually, we collect just over 50 billion game rounds, and we see all games played through that platform, and it's why OpenGaming is truly important to us. The insights inform which games we build, but also how we build them, and these insights are also starting to inform the decisions we make in land-based gaming. Live casino.
The market for live casino is expected, at maturity in the U.S., to be around 25%-30% of the iGaming TAM. With the acquisition of Authentic Gaming, we're focused on building out the core product portfolio and scale to win. They have the smarts. We are adding scale and IP to the business, and we want to be disruptive and have a real focus on the overall player experience. When we look at the Authentic Gaming acquisition, it really is a capital-efficient investment that will add growth into our business for future years. While those are our four key strategic pillars for growth, underlying all of them is the added layer of cross-platform and convergence, and there's going to be more to follow on this in the panel later.
Finally, when we add it all together, we have an unbeatable and really unrivaled platform from which to seize the opportunity offered by the soon-to-expand iGaming market. We have an unmatched ecosystem to offer players. We have an unmatched advantage from our unique position as both developer and distributor. We're already winning big shares in growing markets and continuing to invest in the things we know will drive future sustainable growth, and we're also at the heart of digital convergence and Light & Wonder's cross-platform strategy, and most of all, with the broader changes at the company, we're even more empowered to keep our focus where it's always been and where it belongs, and that's on great games, the platforms that power our business, and the experiences we offer to players across the globe.
And that's why I'm so excited to be at this particular company at this particular moment in time, and why I believe so strongly that there's a tremendous opportunity ahead. It really is game on. Thank you for your time. Next up, we're going to take a ten-minute break, and then we'll hand over to Josh Wilson, the CEO of SciPlay. Thank you very much.
Yeah! How are you guys doing today? I am Josh Wilson. I am the CEO of SciPlay, and I'm so excited to talk to you guys about our business. I personally have been making video games for about half of my entire life. I've been in multiple different genres, multiple different platforms, and like, Matt said earlier, the thing that is constant is convergence and change. And I'm very excited today to talk about our business and how we're going to continue evolving and becoming the next great company out there. So today, we're going to cover a few different things. What is our secret sauce? What's our opportunity? What are we going to do to continue taking market share? And finish it off with a look at where we've been so far.
SciPlay is built of a team of industry experts, on average of twenty-five years of digital and gaming experience. We have talent from all different companies all over the world: Playtika, Scopely, Zynga, Yahoo!, EA, King, and we take all of this knowledge and put together to evolve SciPlay into who we are. We are humble enough to know we don't know best, and this is why you bring experts in, because experts come in and help you evolve. Because the more you know from what everyone else does, the stronger and stronger your company becomes. We also have studios all over the world. We have three main studios, the founding studio in Cedar Falls, Iowa, which, you know, the hub of video games, obviously, followed by Tel Aviv, Israel, and Austin, Texas, but we didn't stop there.
We continued to build studios in places that had dense talent and expertise in different genres, and use this in order to continue evolving the business and making us stronger. We use this talent to build who we are today. Since launching into the social casino market back in 2012, we've more than two X'd the market growth. Put this in numbers: in 2012, we did $22 million. In 2021, we did $600 million. How did we do this? One, we were able to increase the engagement of the user, which led to higher ARPDAU, growing 48% since 2019. And in the previous quarter, we were able to set all-time payer records with 8.9% and over 600,000 paying users. When we look at all of this, we start focusing on the larger mobile video game TAM.
Mobile video games are becoming the leading form of entertainment for everyone around the world, and today is more than $1 billion. Inside of that $1 billion is where SciPlay focuses its growth opportunity. It's about a $36 billion part of it. It breaks into two major chunks. First, where our core business is, which is social casino, which is $8 billion today, and second is the casual division, or the casual genre, which is $28 billion today. The casual has different games or different genres, such as puzzle games, card games, board games, and hyper-casual. So now that we've spent some time talking about the market and a little bit about our background, let's talk about how we actually make games. How do we make them, and how do we run them?
Video games start with a simple core loop, and I do not care what year they were made or how, when, what platform, they start with a simple core loop, and what is a simple core loop? The simple core loop is the thing that everyone comes in and they do over and over and over again to burn the virtual currency of that game, right? This is the simple part of the game. You see this all over in mobile video games with Blast, Match 3. You see this in card games, such as Solitaire, so you have Klondike, TriPeaks. You see this in multiplayer card games like Bingo, and you definitely see it in slot machines, which happens over and over again. The key to this is no one stays in the game for the simple core loop because you get burned out.
It matters what you put around it to engage that user for long term. It starts with meta. Meta is the design. Meta is the thing that gives the user something to shoot for. So when I go in and I play a game of Solitaire, and I play hand after hand after hand, all of those hands add up to something. I go and I spin a slot over and over and over, all of those winnings take me somewhere further. This is the meta that we put inside of a game. Next comes data and economy. It's never the sexiest thing on the planet, but it's the thing that keeps the game fun. Data is the thing that mixes between how much free time should a user get to how much paid time.
This is what really causes a user to enjoy the experience that they're having. Next is Live Ops. Live Ops are the levers that you have behind the curtain that allow you to be able to change a player's behavior in a given day. Yesterday, the person burned through all their virtual currency, so today we're going to give them more so they have a better experience. Yesterday, they earned so much that we're going to give them ways to burn through it faster. They are the levers that you do on an individual basis, and when you create this entire ecosystem, it allows you to have something that could grow and expand through bringing new people in. You have heard me talk about over the past couple of quarters, the SciPlay Engine.
This is the base of it, and in a few slides, I'll definitely jump in and get in more details. Okay, so now that we talked about how we make games, let's talk about how we look at our business. We look at our business from two fundamental avenues. First is our existing core games. These are all organically built games that are all evergreen and evergreen in nature, and all are based on the simple core loop game of a slot machine. This is where our amazing relationship with Light & Wonder and the cross-platform or cross-game initiative becomes so huge because it allows us to continue giving the best content in the world inside of these franchises for each of our users to have the best entertainment value.
Next, we layer on new games, and we layer on these new games that each all have that simple core game. First came with Bingo, then Backgammon, Solitaire Pet Adventure, through our acquisition of Alictus, many more, but we won't stop there. We'll continue to add game after game, layering on new revenue opportunities, so we've talked about the SciPlay Engine. We talked about Project All Star multiple different times. Project All Star, I think, is very important to call out because it is the base of how the SciPlay Engine came about. Back in two thousand and eighteen, we kicked off an internal project that we called Project All Star.
What Project All Star was, was giving us the opportunity to make sure that we focused on all three pillars and all of our inside of Jackpot Party, giving us the levers for Live Ops, full attention to meta, and also giving the data and economy needed for the games to be enjoyable. And we saw immediate success. Jackpot Party quickly rose to the number two game in the market. We didn't stop there. We then also put it into Goldfish over the past year and a half. It's delivered with six consecutive quarterly records. We then put it inside of Quick Hit at the end of last year, and it has had double-digit growth two quarters in a row. How is that? Why is that? Because it engages the user.
The engagement stats, retention, and just pure, enjoyment of the game has gone up so much that it's converted into all-time payer metrics, increasing our payer conversion since Q1 2019, 46%. But at the exact same time, increased the value of every user. So we've increased the number of users and made each user more valuable, and all of that equals a 54% increase in ARPDAU, which is average revenue per day, per daily active user. So every user that comes in has increased their value by 54% since Q1 of 2019. But we're just getting started with the SciPlay Engine. Next, we're going to layer on the ad tech investment.
Ad tech or marketing spend or UA spend is one of the largest expenses in a company our size because we have to bring in new users, because bringing that funnel of people in is so important to growth. We spend about $150 million on bringing these users in. Imagine that we could build a technology that could go and span across all of the titles and give us the efficiency to make sure that we're bringing in the right person, making sure that they retain to the maximum amount, and making sure that they create the highest LTV possible. If we could become 1%, 5%, 10% more efficient on that spend, that immediately goes to both the top and bottom for us.
We then are looking to build out and continue adding to our data science and analytics. Here's where we're going to use machine learning to continue to predict what users are doing as based on what their previous few days or few sessions have looked like. Example for this one: imagine a world where you were a business owner, and the day that someone comes into your business, you already know whether or not they have a chance to come back to your business or not. If you think there's a 70% chance that they will never come back again, wouldn't you give them more reasons to come back? But if you had a 100% reason that you know they're going to come back tomorrow, you would use this opportunity to try to engage them more to get more today.
This type of predictive analytics will help us revolutionize how we handle the MAU inside of all of our titles, and last but not least, our direct-to-consumer platform. This allows us to become much, much closer with our user because now we're able to control the entire environment that the user sees inside of our games. It also gives us a big, a big benefit in the fact that the 30% platform fee that we are paying today goes all the way down to 6%-10%, making each individual user more valuable to SciPlay. All of this together is the framework for the SciPlay Engine. We're super excited about it, and we've already seen success, and we're going to continue adding to this base layer. Okay, so we talked about, the core business a little bit. We talked about, the SciPlay Engine.
Now let's talk about how do we layer on new games and new opportunities. So it starts with similar game loop. We need to ensure that the, the games that we're focusing on are the type of games that are very fast in nature, they eat up the virtual currency, and they're very, very, very repetitive. These type of games are very much dependent on live ops and meta because we believe this is where we are stronger. Let me ask you guys a question. In the room, raise your hand if you play mobile video games at all. All right. Anyone in the room play either Jackpot Party or Quick Hit? All right. I have a whole bunch of potential customers in here. Does anyone play Candy Crush or Royal Match? Yeah.
How surprised would you be to know that the meta games and live ops are about 80% the same in Royal Match, Candy Crush, than they are our games? Why is that? Because we share the same player. It is a thirty-five and over, a female who is looking for video game entertainment to pass the time. They're looking for long-term adventures. They're looking for long-term engagement. The simple core loop is very exchangeable. It's what's around it that makes the user go, "This is the game I choose." With this philosophy, we're going to look to continue adding one to two new games a year, focused on executing on this plan. We've been layering on new games for quite a while. We've just been doing it different ways. Up until now, every game that we had is organically built. We designed it ourselves.
We wrote every line of code ourselves. It is our games. In 2018, we did our first acquisition of a multiplayer card game. It is a totally different simple core loop than a slot machine, but the team that knew how to build it were experts in how to build this bingo game. We came in and plugged them into our system of adding live ops, meta, ability to reach, and within a year, we were able to triple the daily run rate of the company. We next acquired a small company out of Tel Aviv, Israel, which had been building a backgammon game and became pretty successful inside the backgammon market. They then switched to solitaire, and they had made two or three iterations, making themselves experts at the game of solitaire, but not how to launch, run, do the economies.
This is where we were able to plug in, and with the acquisition of Alictus , now we've been able to integrate AdMob into it, which is something that is very necessary for Klondike Solitaire. And last but not least, our Zynga Finland, Koukoi, operation. We sat down together, the entire group, designed out a game, and we wanted to take a game that was a mashup of a couple of different genres and make sure that it was something that would hit home with our demographic. So we took a puzzle, meets a spinner, put them together, and let me introduce you to Spell Spinner. Hit the video, please.
RPG, puzzle, slots, three of the top game genres, all mixed into one brand-new game coming soon. Our story begins with you. Become the hero you are. From a respected knight to a frost goddess, use the weapon of the gods. Introducing the Spell Spinner, a unique artifact with the power to create or destroy. Battle monsters and other players. Remember, sometimes they're the same. And when you're done fighting, you can finally rest. I'm sorry, did I say rest? I meant fight again! Never let your guard down. You better strategize and beat them to it. At any given moment, your enemies can sneak into your kingdom and wreak havoc.
If that game doesn't excite you, I do not know what will. I'm expecting the next time I'm in this room and ask who plays games, and I better see a way more hands than that. This game is amazing. The team that we have is proven veteran, proven genre veterans and casual. This game's going to be amazing for us. All of the games, all of the platforms, everything that we're going to do is still based on... Oh, sorry, one slide off. Next is a larger scale acquisition. Okay, so this is a place where we are looking for companies that know how to create great games and already know how to operate them. They're companies that have a set talent and culture base. They've already have proven products and technology.
They have the capabilities to continue producing, and they know how to run the business because it is important to them to be profitable and scale over time. Companies like this add immediate scale to Zynga, such as our acquisition of Alictus did. On day one, they broaden our player network. They give us access and expand their first-party data, having almost 28 million MAU. And they diversify our revenue revenue streams into the $13 billion mobile game in ad advertising market. And they just know how to make games, creating six number one top free games in just two years. Now, every game, like, all the platforms in the world, all the games in the world, still come down to talent.
It comes down to having best-in-class, the best of the best out of each of the genres, and building an employer branding that makes you want to work for this company. It comes with creating a culture that embraces innovation, but also embraces wanting to fail, wanting to try and push the box to become great. It also is about mentoring and growing and taking people to where they want to be and creating superheroes, because they are the people who will change the industry over time. As I come to the end here, I want to talk a little bit about... I guess maybe sum up everything that I talked about. We started in social casino. This is our organically built from the ground up, our core business, and continues to outperform market.
We now layer in a set of tools, giving an advantage to not only all of our core business, but every new casual game that we layer into the business. All of this leading us to a very diverse portfolio. Let me show this to you another way. Our core business over time, we expect to keep growing and outpace the market. Over the same time, we're going to layer on more games, giving us a more diverse growth profile over time and giving us a more diverse portfolio over time.
We've been on this strategy since 2018, and we've been seeing really great results. Since going IPO, we've increased the revenue of the company by 30%, and at the same time becoming more efficient and scaling, growing our EBITDA by 52%. And at the same time, increasing our cash generation to 82%, leaving us with a very healthy margin and a very cash generative business. I can't be more excited to share with you guys today what our strategy is and how we're going to execute on it. But I want to leave you with a few points. One, we're going to continue focusing on the core business. We're gonna launch new revenue streams in the form of new games. We're going to invest in our SciPlay Engine, giving the tools to all of our portfolio to maximize growth.
Investing in talent will continue to be the core of SciPlay, and all of this together should deliver increased shareholder value and drive long-term sustainable growth. Thank you for your time today, and let me hand the mic over to the cross-game panel.
To submit questions, please visit the URL https://newworldsofplay.com/questions. Randy is also handing this information out now for easy reference.
Hi, everyone. My name is Siobhan Lane. I'm the Chief Commercial Officer in our gaming business here at Light & Wonder, and I'm happy to be with all of you today to moderate our panel on the power of cross-platform. It's a concept you've heard a lot about this morning, and as you saw in the video, the data is clear: the cross-platform player base is both real and significant, and operators on the forefront of cross-platform really see the tremendous opportunity that lies ahead.
BCLC is one of those operators, and they see that players engage 30% more with them when they engage across dual channels compared to a single channel. 30% more. Cross-platform is here, and Light & Wonder is leading the way with our unique ability to distribute content across social, digital, and land-based channels. And we'll continue to harness the power of cross-platform to drive differentiated value to players, operators, and to Light & Wonder as a collective business. Joining me today are our four panelists to explore the benefits and value of cross-platform. Cameron Stewart is our Vice President of Product Management at SciPlay, Rich Schneider, our Chief Product Officer at Light & Wonder, Rob Proctor, our Vice President of Game Development within our digital business, and Nathan Drane, our Senior Vice President of Global Product Management within our gaming business. Welcome, gentlemen.
Thanks.
Thanks.
Thank you.
All right, so Rich, maybe we'll start with you. Can you just touch on what are the reasons that Light & Wonder can really leverage this strategy of cross-platform?
Yeah, happy to do that. So look, I've had just the distinct pleasure of leading these amazing teams for the last thirty-plus years that create these wonderful innovative products that drive company growth through market share, grabbing market share, and really transforming industry. Really right now, I think, is yet another moment in time where we're gonna see transformation in industry. That's really driven, I think, by our sort of desire as consumers to have these shared experiences, you know, that delight us in the land-based world, and then have coupled complementary experiences in the mobile and digital channels.
That sort of cross-platform delivery, I believe, really serves to amplify that player experience to make it more exciting and engaging, and in that process, also amplifies the affinity and power of Light & Wonder brands. I think there's some real value in that. There's value in giving a more entertaining and engaging experience for players that they can consume anywhere, anytime. For operators, it really, that engagement really turns into, you know, powerful, you know, a powerful, you know, profit for building capabilities for their companies, and especially for us, because I believe we're uniquely, you know, capable of delivering this. I think it gives us great benefit.
Really, I choose to be here at this time in my career right now because I believe that we, Light & Wonder, are really the most able to do that. Why I say that is really for a couple reasons. First, we have this tremendous library, really the combination of three or four companies with a library's worth of these great titles. These titles are titles which have really players return to again and again for years and years, even decades and decades for many of these titles. They're just so strong, and we know from our experience that they resonate in all three of these channels and drive real player engagement. Finally, and most importantly, we really have strong and vital businesses in all three of these categories, and so that really.
Let us leverage the scale and monetize these brands, as well as deliver tremendous insight back into the game design and product management teams. It's a really exciting time to be here.
Great. Thanks, Rich. So convergence of channels is not a new concept. Happens across many, many other industries, but it seems, you know, now is the time where it's happening in gaming, and the pandemic, no less, prompted that. But when we think about the player benefits of cross-platform within the gaming industry, you know, what kind of things come to mind? Why would the player benefit from a cross-platform approach?
Yeah, hi, I'll tell on Siobhan. So, look, I've been in this industry now for ten years and have the distinct pleasure of leading the content team for our iGaming business. And for me, it's a really, really simple equation. For a player, we want to be able to give them their favorite game, their favorite content, their favorite franchise, anytime, anywhere they want to play, and that's ultimately what we're here to facilitate in the best way we possibly can, giving them those recognizable brand franchises that they want to be able to consume wherever they are. And we're not just, from my point of view, we're not just competing with other suppliers in the industry.
We're also, and probably more so, competing with the movie and the TV and even music content providers that we have today to get that entertainment time from players. What can we give them that makes them want to come and consume our products? All we're trying to do here really is build that brand equity, and over time, that then facilitates brand loyalty, and people recognize our content and want to come back. And again, from an iGaming point of view, I don't think anything really demonstrates that more than 88 Fortunes and, you know, $1 billion in revenue over our land-based business and over 10 million daily spins on the social side of things.
And then from my side of the fence, over the last 12 months, we've had over 1 million players, 1 billion game rounds, and over $3.4 billion in turnover on that one game alone. That demonstrates the power of brand and franchises and really, ultimately shows how we're driving strong revenues for Light & Wonder, and in turn, good experiences for our players.
That's great, Rob. Thank you. So certainly, the experience of the end user, the player, is critically important in our business and when our game designers think about creating content, but a majority of our business is B2B. So when we think about this from the operator perspective, I mean, we saw that impressive staff from BCLC, one of the operators on the forefront of cross-platform. What other benefits can the operators glean from cross-platform?
Yeah, thanks, Siobhan. I'm happy to take that. One of the key parts of my role in that product management role for land-based is really looking at what the operator needs and wants, and then synthesizing that into the studios, then we take the studio development and synthesize that back to the operator. When we talk about operator benefits across platform, I do think about BCLC 'cause we're partnering with them right now. We just launched Monopoly Lunar New Year in Q1, and you can play that in our casino next door. It's not just about that 30% increase in play, dual channel versus single. I think that's an incredibly powerful statistic, but it's also about growing lifetime value of a player. You look at players in multiple channels. That's more avenues to acquire a player, so it helps with player acquisition.
It's also more ways that you can build meaningful, deeper relationships with player. You can understand the way they interact in channels, you can understand their journey, and then ultimately, that operator can build a more meaningful loyalty relationship with those players.
Great, thanks. We've talked a lot about content, which is critically important. We're laser-focused on content, but to truly understand that back-end player journey when they go from a digital platform to a land-based platform, you really need platforms in the back of house, right? To understand how they're playing, to develop data insights off of that. So Rich, can you talk to us a little bit about our systems and platform part of our business and the plans to really connect those views of the player three sixty?
Yes, sure. It's sort of a really super exciting part of our story here, in that in the digital world, we have one of the industry-leading player account management or PAM systems. And then also in the land-based world, we have a similar system that manages player activity, our patron account management system. And really, plans are underway to unify those together, and offer that as a single product. And what that will allow you to do, obviously, you have a unified wallet to spend across the entire enterprise, and but more importantly, a full player view of everything that's going on to establish a real total worth of the player.
But the real exciting part about that for the player is then you're able to deliver loyalty and marketing offers that really delight the player, but more importantly, for the operator, really attract and retain that patron.
Yeah.
Great. Cam, let's bring you into the conversation here. It seems like there's lots of benefits of, of cross-platform, but mutually beneficial for the individual business units, as it is for Light & Wonder as a whole. So how do you think about, in the social business-... the benefits that you and the SciPlay team can, can get from cross-platform?
Yeah, no, happy to take that. First off, I'm Cam, I lead the product team here at SciPlay, and I certainly don't have as many gray hairs as Rich up here, but I have been lucky enough to have been in the industry since the Apple App Store launched, and really, our competitive advantage at SciPlay is that we have 35 million monthly active users. The most recent example of what we're able to do with that user base is we partnered with Nathan and the team on Goldfish Feeding Time, which was our first launch cross-platform, both in land and in social. Just within the first seven days, we were able to generate 300 million spins, which generated 33% of our coin in within our casinos.
Just to kind of compare that, anything that really does 10% in our casinos is considered like an epic, epic machine. So I'm talking the Dancing Drums of the world, the 88 Fortunes. This slot is competing, and, you know, doing even better than some of those brands. And I think that is the power of the cross-platform, 'cause we can leverage that data and get it back to the land-based side, and ultimately, it's going to drive our hit rate further. And then to kind of further connect that experience, and this is something that is new to us, is we're bringing influencers into it. The world has dramatically changed over the last three years, as all of you have known. And these influencers are the new thing.
It's where we're gaining more users, and, you know, when we partner with these influencers, looking at ROIs that return in three days, I mean, it's just amazing, and it wasn't that way three years ago, so we're able to partner with Brian at the Graton Casino and just kind of bring that social and land-based experience. And then just finally, just to kind of tie all this up, our A/B testing mechanism, Josh talked about the SciPlay Engine. The fact that we are able to test things, whether it's a math model, whether it's a theme, whether whatever it is, we have data at our fingertips within seconds.
When you have a development cycle that's six to eight weeks versus maybe 12-18 months, it's just really gonna help both sides of the business, just increase our hit rate and deliver the best content that we can for our users.
Yeah, it's. There's a lot of big numbers there. It's great collaboration between the businesses, though. That Goldfish example and the A/B testing potential, I look at that 35 million players, six- to eight-week speed of change, you know, it takes us 12-18 months to develop that game on the land-based side. That's only gonna make us better from a hit rate perspective. So we can A/B test, we can quickly get those games out there, we can understand user experience, we can understand user adoption, and then by the time we bring that to land-based, we have a lot more confidence in our game pipeline. And ultimately, that feeds all three channels.
Yeah.
So that, that drives down R&D costs across the whole of Light & Wonder brand. So, that's really exciting. And then if I bring it back to the operators, I mean, three hundred million spins in seven days on Goldfish? We take that to the operators, that's a marketing tool. That's velocity and exposure that we cannot get in that casino environment. Big numbers.
Absolutely.
Yeah, and just to, again, close the loop off a little bit there, you mentioned the casinos, and I think from a player point of view as well, what we see on the gaming side, in particular on iGaming as well, is really that brand persona and building that trust and familiarity with these games. So once they've played them on social and then get into the casino, and over time, they build up that trust and familiarity that breaks down the barriers of entry. You know, we see, even in iGaming, you know, the commoditization of the market is growing, and it's always gonna, it's always gonna continue to do that.
Having that advantage of the games out there and being so familiar to players really just helps them come in and breaks down any barrier for entry that they may have, and ultimately leads to more repeat play, I think, for our content.
Great. Rich, bring us home here. You oversee R&D, so what other benefits can you and the R&D teams really pull from this cross-platform approach?
Yeah, look, I think we're sort of circling all around it. Really, we really have both cost and revenue synergies on this. You know, if you think about it, you know, we each of these individual channels has great, obviously, cost synergies in that. But more importantly, or equally important, I would say, is it really lets every of our great game design talent have this larger canvas upon which to paint, and that's hugely important now.
These great game designers really wanna get their feet wet in every channel. In terms of revenue synergy, look, we know that a large play in one channel, the 35 million monthly users we'll have, we know that that drives brand affinity and awareness and increased trial in other channels. So we're super excited about that, particularly with this growth of, you know, the monthly users in social. And then there's the insights. So we get the 4.5 million spins worth of data from the digital world. More importantly, about that data, it's not just on our games, it's on our competitors' games. So think about that.
We actually get to understand how our competitor games are doing and get sort of a first and quick look, which we can react to. And then finally, the social testing. You know, these guys develop games really quick. They're able to create mechanics that we would just be sort of afraid to do because we wouldn't spend that much time, the opportunity cost would be too great. So really, really exciting opportunities that all these three things come to come together to give us. And my belief is that that combination really gives us competitive advantage.
Great. Well, thank you, gentlemen. Appreciate you sharing your insights, and really seems to be a lot of power in this cross-platform approach, and again, mutually beneficial for all of the businesses under the Light & Wonder family and for Light & Wonder as a whole. So thank you. Just hang with us for a few minutes. We're gonna do a quick stage change before we welcome Connie James to the stage. Thank you, everyone.
Thanks, guys.
Go now. Hello, everyone. It's great to be with you. I'm Connie James, CFO of Light & Wonder. What an amazing opportunity our team has laid out in front of you today. We are executing on a radical transformation. We have a new strategy, a unified organization with a singular focus on games, and new energy across our teams. There are three key takeaways that I'd like to underscore today. First, with our streamlined and integrated portfolio, we have an enviable and durable financial profile, which includes double-digit growth on both the top and bottom line, a high mix of recurring revenues, robust margins, and significant cash flow. Second, we have quickly and radically transformed our balance sheet, which has become a true asset, and third, our new path forward will lead to significant capital generation, enabling us to drive tremendous shareholder value.
The strong financial profile we've created is the foundation for which our business will grow. Recurring revenues now make up about 75% of our portfolio. Our digital mix has increased, now comprising of 40% of total revenues, with the goal of reaching 50%. With our portfolio and our expanding mix of digital, we have a business that is naturally high margin, now at 35%. And with our continued focus on operational excellence, we have the opportunity to further enhance our margins. And one of the most significant and fundamental changes we've made is radically transforming our balance sheet and credit profile. With the recent sale of our lottery business, paying down our debt and refinancing, we've reduced our adjusted net debt leverage ratio to 3.7 x. This is a reduction of approximately seven turns from the beginning of 2021.
With this foundation, we are starting our growth journey from a position of strength. Now turning to our sustainable double-digit growth profile. We have a large and growing opportunity in front of us, pointed at a $70 billion TAM. And as you've heard throughout the morning, we have multiple levers to drive significant growth with our leading positions, our unparalleled platforms and technologies, and our unmatched cross-platform opportunity. With this, we see a clear path to value creation across our entire portfolio, targeting $1.4 billion of AEBITDA in 2025, or a targeted CAGR of 15%. Let's talk about how we'll unlock that value. Starting with gaming. As Matt mentioned, gaming is a $7 billion global TAM. It's highly resilient, produces strong margins and significant cash flow.
Growth will be fueled by meaningful share gains and the tailwinds of a continued market recovery, which we anticipate we will achieve by 2023. As a result, in 2023, we expect gaming revenues and AEBITDA to exceed 2019 levels, with strong growth thereafter. In North American gaming operations, which is the largest TAM in gaming, we've made significant strides with revenues outpacing 2019. We have aspirations to grow our premium installed base to at least 50% of our mix and increase our average revenue per day. For reference, a five percentage point increase in share equates to $142 million of incremental annual revenue, and every $2 increase in revenue per day is equal to $22 million in annual revenue.
Looking at game sales, we expect to take significant share, fueled by our evergreen franchises and our innovative cabinets, resulting in a competitive product portfolio that reaches every critical segment. With every five percentage point gain we achieve in North American game sales, this translates to $80 million of incremental revenue. And in systems and tables, we are far and away the leader. With the overall market recovery and our cashless technology and systems, coupled with our unmatched tables IP, we see strong growth ahead for these businesses. In iGaming, we have a truly differentiated position. We have a rich history in this business, with a decade of experience in European markets, providing us with the know-how and unmatched capabilities to win in the expanding U.S. market. We see a $27 billion global TAM by 2025, with the continued legalization in the U.S. and internationally.
As Dylan spoke to, because we are both a content and a technology platform provider, we participate in all parts of the value chain with our unmatched content, our unrivaled aggregation platform, and our leading digital wallet. All this adds up to us receiving a percentage of NGR, so that as the market grows, we disproportionately benefit. At the same time, we continue to be laser-focused on expanding our share. In the U.S. market, where we've had the benefit of being an early market entrant, we have an approximately 25% share, and by leveraging our great land-based content, as well as leaning into digital-first content, we have an opportunity to see further growth. Another catalyst for growth is our entry into live dealer in the U.S., which is expected to occur in the fourth quarter of this year.
In our U.K. and European markets, we expect to drive continued share growth by regionalizing and expanding our original content offering. At SciPlay, we are evolving our business with our expansion into casual and are now pointed at a $36 billion TAM. SciPlay has strong momentum in its business, and we continue to expect their social casino business to outpace market growth. This will be fueled by investments we are making to increase player engagement and monetization, resulting in SciPlay's ARPDAU growing to levels in line with industry peers. We are diversifying and enhancing our revenue growth by adding new games to the portfolio and expanding into ad monetization. Additionally, we are building our direct-to-consumer platform, which will enhance SciPlay's margins over time. As you can see, we have strong growth drivers across our entire portfolio.
While we are driving top-line growth, we continue to instill operational excellence across our organization to enhance our margins. Over the last two years, we've taken out nearly $100 million of our cost base, reinvested into R&D, while other savings have dropped to the bottom line. To highlight a few specifics, we've rationalized our gaming product portfolio to allow for global scale, we've instituted a global supply chain, we've reduced our facilities footprint, we've leaned into leveraging our cost-efficient development centers, and we've reengineered our processes with a specific focus on improving our cash conversion cycle. All of this to say that cost discipline is a muscle that we've built, and where we have reinvested in R&D, we've been deliberate, focusing on the highest ROI opportunities. We will continue to have rigor in our expense base while driving incremental savings to the bottom line.
The combination of our double-digit growth profile, our focus on operational excellence, and with our significantly lower cash interest expense, will result in strong, high-quality cash flows. With the sale of lottery, we realized interest cost savings of approximately $225 million, or a 47% reduction on a run rate basis. With the sale of sports, this will drive incremental interest savings as we further reduce debt. With this, we are targeting a free cash flow conversion rate of 45%, with continued strong cash flow to come for many years ahead. The result is significant, high-quality cash flows that will drive meaningful shareholder value. All of this ladders up to tremendous capital creation. In fact, we're targeting $10 billion worth from 2022 to 2025.
Breaking this down, the combination of our completion of the sale of lottery and our pending sale of sports, we expect to generate net after-tax cash proceeds of $5.8 billion, and we are targeting $1.8 billion in cumulative free cash flow. Given our strong growth and cash profile, we will naturally and quickly deliver, providing us with targeted incremental debt capacity of up to $2.3 billion. This capital creation provides us with the opportunity to drive tremendous shareholder value, which we will do through smart and disciplined capital allocation. As Barry said, our balanced and opportunistic approach to our framework for capital allocation is based off three key priorities. First, debt reduction, the second, returning substantial capital to shareholders through repurchases, and third, disciplined investment in key growth opportunities.
Now, let's dive into this in a bit more detail. With the sale of our lottery business, we've made significant improvements to our capital structure. We reduced our adjusted net debt leverage to 3.7x , and we restructured our debt, putting in place a new term loan with a covenant-like structure, taking out some of our existing high-coupon debt and increasing the weighted average life of our debt to 6.4 years. With the pending sale of our sports business, we expect to be squarely within our targeted range of 2.5 to 3.5x . I can't emphasize enough what a significant and fundamental change this is for our business and our credit profile. Returning capital to shareholders through share repurchases is a key priority.
With our strengthened financial profile, in March, our board authorized a $750 million share repurchase program, and we've been active in the market ever since. As of May ninth, we've repurchased approximately 2.5 million shares, totaling approximately $147 million of returned capital, representing approximately 2.5% of our common stock outstanding. At these price levels, we continue to see our shares as one of our best uses of capital and are actively repurchasing. This will fuel our EPS and free cash flow per share, driving significant shareholder value. Given our strong balance sheet and cash flow generation, we have the financial flexibility to invest in high-return opportunities.
At our core, we make games that players love to play, enabled by great platforms, and that's why we've been driving smart and tailored investment in R&D and CapEx, and we plan to invest a target of $1.9 billion from 2022 to 2025 to fuel our future growth. Every dollar we invest in R&D is highly accretive and efficient as we leverage our games fully cross-platform. Regarding CapEx, we will invest to align with demand as we grow our premium gaming operations footprint, invest in our land-based and digital platforms, and scale our live dealer business. We know that organic investments provide some of our strongest returns, and with a quick payback, given our leading capabilities, and that they will also drive our future success. We have all the major pieces in our portfolio today, which allows us to be incredibly selective as we evaluate inorganic opportunities.
Targets must meet all of our strategic considerations, exceed our rigorous financial hurdles, and be more attractive than repurchasing our shares. Acquisitions have to complement our core capabilities and enhance our portfolio. The Lightning Box and ELK Studios acquisitions are two great examples of us applying our M&A rigor to achieve outsized returns. They have both achieved record GGR since we've acquired them, as we plug them into our iGaming platform and immediately expand their distribution and reach. As a reminder, we will prioritize capital for debt reduction, share repurchases, and organic investments, unless convinced that M&A activity will deliver greater long-term shareholder value than other uses of capital.
So to recap, first, with our streamlined and integrated organization, we have an enviable and durable financial profile, which includes double-digit growth on both the top and bottom line, a high mix of recurring revenues, robust margins, resulting in $1.4 billion of targeted AEBITDA in 2025, or a targeted CAGR of 15%. Second, we have quickly and radically transformed our balance sheet, clearly shifting us to an equity story. And third, all of this translates into significant capital generation with a target of $10 billion created by 2025, enabling us to deliver tremendous shareholder value. In summary, we have a clear path to drive significant growth with our unmatched positions and capabilities and our significantly strengthened financial position. I couldn't be more excited about our journey ahead and our ability to create value for our shareholders.
We will now take a ten-minute break before starting our Q&A session. Thank you.
Hello, everyone. We're gonna spend the next thirty minutes or so answering your questions. I'll be moderating the Q&A session, and we'll be asking the questions that were submitted from the webcast as well as in the room. As a reminder, if you're on the webcast, you can post your questions by entering them into the chat box, and if you're in the room, just scan the QR code and submit them that way. So now we'll pull up the questions. There we go. So the first one comes from... It's a general question on the guidance: Can you talk to us about some of the key drivers in your guidance of the $1.4 billion of EBITDA that you provided and the mix between gaming, iGaming, and SciPlay?
Sure. First of all, thank you to everybody for, you know, giving us a chance to share our plans. I hope you can see that we are extremely excited and confident in the plan that we've outlined today. Look, in terms of the key drivers, first of all, I think common across all businesses, huge TAM, you know, great, you know, market opportunities. We have great strategy and great people behind it, and each of the businesses achieving a double-digit CAGR through 2025, driven by, I think, the size of the market opportunity and some for each of the businesses are enjoying some really strong flywheels. In the case of gaming, as Matt just, you know, talked about, you know, we've got, you know, really leaning in to COVID recovery.
We're taking share in our, you know, major profit pools through superior product roadmaps and products and people. We also have, on top of that, really untapped markets beyond the major profit pools that are still, you know, at our fingertips to go after. In the course of iGaming, you've got the, you know, flywheel of player adoption and regulatory adoption, which, you know, really was highlighted very well in the United States and the size of the TAM there. You also have new markets that we're leaning into that are both, you know, material and growing, such as live dealer. We have a huge opportunity there. So again, significant key drivers, you know, for that business.
And as Josh outlined, he's, you know, SciPlay has historically been outgrowing a very robust social casino market. And now we can take the magic of the SciPlay Engine, which is the meta game, and apply it, as Josh so articulated so well, into the casual, you know, over $20 billion market there. So again, just significant, you know, opportunity and drivers across all businesses. And that really doesn't even take into account the value add above that, that we articulated today about the cross-platform piece, which, you know, will be even more of an accelerator on top of that.
Great, so we'll go to our next question. This is on the macro environment. As you think about the current macro environment, how does this impact your business in terms of demand?
I guess I would start by saying, first of all, we obviously always, you know, we're. You know, we keep a close watch on the macro environment and how to manage that and, et cetera. This team, obviously, I think, did a stellar job as we all endured the pandemic, et cetera, and as we're moving into the world of inflation. The great news here is, people love to play games, and, you know, games are an affordable luxury, you know, for players that, and the player is resilient. I think historically, you've seen the industry of games is very resilient in these times.
If you look at, you know, just in, you know, the stages that we're in now, you're seeing basically record GGRs continuing to grow across all three businesses. Again, something we'll obviously monitor on a demand basis, but, you know, I think there's still, you know, huge opportunity. The plan that we put together was put together in, you know, with the macro environment, you know, contemplated as we see it today.
I might just build on that as well, which is, we've been incredibly proactive as we see different types of volatility arise within the market. You would have heard today our real laser focus on driving operational excellence, which just allows us to navigate through various elements successfully as we've done today. So as Barry mentioned, when you think about our overall plan, not only have we taken in current opportunities and looked at the macro environment, but we've been very proactive to ensure we've got buffer to successfully navigate through anything that might change.
Great. The next question is on iGaming. So how many states do you plan or assume will legalize in your plan through the 2025 period in the U.S.?
So Dylan, I'll probably let you jump on that. I think before, you know, I would just like to, you know, again, highlight that I think ultimately that we see iGaming, you know, be legalized in every state that gaming is today. I think that's a function of the fact that that's what players demand. You know, players or consumers of entertainment, you know, demand to have entertainment at their fingertips, and ultimately, the player will decide. And I think it's also, as, you know, historically shown as well in states where sports and where iGaming has been legalized, you see two X the state revenues from a tax perspective in iGaming. And so I think there's a lot of forces behind it.
Obviously, we can't speculate on the pace of that, but Dylan, you want to talk about your plan assumptions and the like?
Yeah, absolutely. I mean, I think we've taken a conservative view of how, you know, legalization will, I guess, materialize over the next two, three years. As I said in my presentation, there's, you know, a number of different models that are out there at the moment that range from a TAM of $7 billion up to $12 billion plus. So we have a model where we've assumed a, you know, a medium size, sort of, new state opening every year over the next, sort of, like, three years. So that's where our plan's pegged.
Hopefully, we see a, you know, greater acceleration, because from a platform point of view and a scale point of view, you know, we're ready with all the constituent parts to take advantage of when the U.S. does go live with iGaming legalization at a faster pace than we're seeing currently.
Even in the case where legalization is somewhat slowed, you got to remember, I mean, last quarter, we grew 63% year-over-year in the current regulatory environment that exists in the United States today, and we still haven't unlocked the live dealer, which, as we look at Europe, is up to 30%. So I think we have you know, we have tremendous upside in iGaming-
Mm-hmm.
You know, even in light of whatever pace the U.S. goes.
Great. Our next question is on our cross-platform initiatives. What are the specific advantages necessary to be able to increase the number of titles you run through your cross-platform? Rich, you might have that one.
Yeah. Yeah, hey, how much time do we got? I could talk for a long time here. Look, a lot of advantages here that will drive us to increase this. You know, first off, we have, obviously, these tremendous franchises that decades old, worth of brand affinity. That's the obvious thing. You know, just some of the other less obvious things, you know, we have these great studios and brands also in digital, right? And these are brands which actually resonate with the younger consumer, right?
We're actually looking at Dylan's portfolio, and because we have the data that comes from his OGS that he's aggregated, not only our games, but our competitors' games, we can look, and we can cherry-pick those games, whether they're our games, which we'll take right over, we're doing that now, or we'll look at competitors and say, "Hey, this is something that we need to be inspired by." So that's one example. Another example, in Josh's org, you know, he's able to just produce games so quickly. He's able to take these edgy titles, he's able to really do a lot of inspired games.
We're able to see, hey, what, you know, what works for him, and we're able to pull that back into the land-based. So we really see a lot of synergies going all different directions. And really, because every organization is really so finely tuned to monetize what we do is just this tremendous, wonderful thing.
Yeah, it's, you know, that's... Rich, nailed it. I think that, you know, it comes down to four categories. One is, you know, this coordination between the groups gives us a consolidated roadmap to eliminate redundancies in bets on market, and we'll have that, and that will help us to be more efficient and get more wood behind the right bets. We'll have, you know, a single reference build that all business units can use. That's going to save, you know, in R&D. We're going to have data and research that people will share that'll make it more efficient.
Mm-hmm.
Obviously, launching into a single market. I think Rich really hit on that platform conversation, which I think is dead on, which is you don't want to rush out and just have a formula or playbook to go do this. They're iterating. The team's iterating and iterating so we can optimize that, and as we optimize it, we'll increase the number of titles that we run through the formula as that gets better. And that's just upside. I mean, that is just, you know, huge value creation that sits here from my perspective. So, it's exciting. It's really exciting, and the work between the groups is amazing.
Mm-hmm.
Okay, our next question is on our digital goal. So is the 50% digital mix applicable for the $1.4 billion of 2020 revenue or EBITDA?
Yeah, I'm happy to jump in there. When we speak to the 50% digital mix, we are referring to revenue. If you think about our AEBITDA mix, that on a percentage perspective, digital actually yields a slightly lower AEBITDA margin than our gaming business does, albeit it generates significant cash flows with its digital and recurring revenue mix. So, as you're thinking about the digital mix, it would be in regards to revenue. I'd build, though, that, you know, the beauty of the strategy that's been outlined for you today is that we've just got a phenomenal portfolio, and we see continued momentum, and we know that there's tremendous growth in both of these digital businesses. So looking forward to all of that coming to fruition.
Great, thanks. Now switching to gaming. Can you speak on your strategy of taking market share back in gaming? How much is from regaining ship share in existing product channels versus expanding into those that you have historically not been as strong?
Yeah, I think there's two parts to that. There's the focus on the macro segments, as I mentioned in the presentation. We had been in cyclical decline in the gaming operations portfolio for many years, and we put a lot of energy and effort into deploying the playbook, the right talent, the right level of investment, and we're seeing consistent gains in a market where we'd been in decline for a long time. So it's about taking that playbook and taking it to these other subsegments. So there's segments within the segments, if you like. Think about game sales as an example. The biggest subsegment within the game sales business is the dual screen category. We hadn't launched a dual screen cabinet in a very long time. You'll see in the showroom next to us, our launch for the new dual screen Kascada cabinet.
It just got launched late in Q1, so we're in the very early innings of deploying that cabinet. So that's an example of where we're going after a subsegment within these broad macro segments. But we feel really confident that we've got the right talent, the right focus to go into these categories and be successful. We also mentioned in the presentation, we took $50 million worth of structural cost out of the gaming business alone. We redeployed a portion of that back into R&D, which self-funds our future success. So raising R&D, focusing on the right categories, and deploying a playbook that we know works and is already working here at Light & Wonder.
Great.
Yeah, and look, we're seeing a tremendous amount of success, as you guys have seen from the progress on a quarter-by-quarter basis. But I just had a conversation out there. I just wanted to, that just struck me, you know, having been here, you know, for a while. And the thing I'm most excited about, incredible progress that Matt highlights here, but from where I sit, you know, we have this, like, treasure chest of IP and franchises that's been created over decades. And, you know, we now have a group of folks, Matt and Siobhan, Rich, and team, and the creators, we've never, this organization has never had. And for me, it's like the equivalent of, you know, I'm walking up, and, you know, I got Michael Crichton.
I've got this book, Jurassic Park, and I'm going to hand it to Steven Spielberg. You think he can do anything with that, right? And we've got a boatload of these Jurassic Parks, and we have the best team I've seen ever, with a playbook. They know what they're doing, their approach from a segmentation. Everything about it is truly phenomenal. I think we're just starting to see the benefits of that. So it's exciting from my perspective.
I agree. Okay, Josh, this looks like a question for you. For SciPlay, the targeted one to two new titles per year, is that organic, or does it require acquihires or new teams?
Yeah, great question. I think the first way to think about it is, what are you doing? Okay, so first, what is a simple core game? Do we have the talent and the expertise internally to do that? If the answer is yes, we organically build that. We take the team, we build it around it, and move forward. If we need to, bring in that expertise, then we look to do that as either an acquihire or look to hire in the individual talent and start it, or potentially even find a company that is doing it well and at scale and do an acquisition at that point. I would say it's going to be a mixture of everything, and just how quickly we can find the opportunities is, what comes first.
Great. This one's for Dylan and iGaming team. Regarding live dealer, do you believe that the 25% share of this segment will add to GGR per adult in existing markets or cannibalize other markets? Is there a player who may not be as engaged now or dormant that could rise up with more live dealer?
That's a great question.
Mm-hmm.
If we look at what we know today, then the live dealer isn't really, you know, or live casino, as I like to call it, live casino isn't cannibalizing other segments. It's you know, completely accretive in the states where it's live. So, we know that there's you know, crossover from table games players into live casino, and whether that's land-based or digital. But we also know that it appeals to you know, to slots players as well, especially when you start to round out what live casino can actually do, which is ultimately the bridge between what happens in a physical environment, but is played out on digital.
We've got, you know, some huge ambitions for how we want to go and tackle the live casino market and bring all our, you know, brilliant IP and heritage and history of being in the table game space and having a dominant share of the table games market within, you know, land-based. Yeah, for us, it will be, you know, accretive to the overall pie.
Great. This is on cross-platform. If an average digital slots player is a forty-year-old female versus an average retail slots player, a sixty-year-old female, are there cross-promotional benefits?
I'll take that. Or you want it?
Sure.
You go, and I'll, I can-
Flip a coin.
Yeah. Yeah, look, here. I mean, here's what we know. We know that 95% of the players in Jackpot Party and other apps that Josh creates play in land-based casinos, right? So there's huge overlap. We know from our operator partners that have digital and land-based casinos, that not only is there overlap, but the overlap exists at the highest earning levels of their players, so the players they care about the most. So the answer is yes, there's huge value in that. There's huge value in the overlap, but also there's huge value in the differences, because, look, we're really trying to attract a younger player on the land-based side.
So I look at the younger players that Dylan has, that skew not only younger, but male, and say, "Wow, that's a tremendous opportunity in the land-based world." It's the overlap and the differences that add value to us, I believe.
Yeah.
I just add to say, look, anytime you cast a wider net, right, to people who are engaged in their phone, you know, twenty-four seven, et cetera, you're absolutely gonna increase the top end of the funnel, which is gonna be beneficial. We are the only ones that play across all three of these markets. 35 million MAUs sitting there with Josh. It's an advantage, and that's what we plan on doing.
It also speaks to the opportunity in convergence. We have the industry's leading CMS platform and the industry's leading PAM platform. As an operator, you need to understand where those opportunities are. Is the 40-year-old player not playing in the retail channel? How do you know that if your systems aren't connected and speaking to that? And it's an opportunity we're investing in now to give operators the tools to understand how do they look for those opportunities within their database to really optimize their play.
Okay, here's another cross-platform question: How much are the land-based studios and SciPlay using insights from OGS?
I'll go. Yeah, yeah. Right now, we absolutely use it in product strategy. We look at that data, and remember, it's... I'll say it again, it's competitors' data, and it's our data. We evaluate, and we make decisions about what games will be in and not in our portfolio based on that information. I think we'll start to use it deeper as time goes on to really start to segment that data better and get more detailed information that will actually drive not just product strategy, but what game design.
And it's such a, you know, such a rich data asset that not only are we using it to, you know, inform the decisions about, you know, which games to build, but also how to build those games. So, you know, how to, how to bring the, the insights to bear so that we can understand, you know, the, you know, how to interpret, you know, different math models that exist in certain games and how they appeal to certain player segments. But then also, it's been the fuel for, you know, at least two of the acquisitions that we've done in, you know, Lightning Box and ELK, where we've seen, you know, their content, you know, really appeal to certain player segments, that again, as we've talked about, add value into our overall product portfolio.
It is a, you know, it is one of our most strategic assets, and it's something that we're gonna continue to use to drive the growth of the business.
... Great. This is, next question is on the capital allocation side. As Light & Wonder becomes a more investor-friendly owned name, are there opportunities for a dividend which could further broaden out investors?
Sure. I love the investor-friendly tone. Music to my ears. You know, we're incredibly thrilled with the financial transformation that we've just undertaken and also the plans that we laid out for you today. We've been really explicit about our capital priorities. First, it was debt paydown, which we've made tremendous progress on. The second is share repurchases, and the third, investing for growth prudently and very disciplined. You know, we're always going to look at all of our opportunities to best enhance shareholder value, and right now we see those as the largest three, but we'll continue to explore. What I will say is, you know, the beauty of our financial transformation and these amazing businesses with this amazing team is that we're going to have significant cash, which will allow us, again, just to drive tremendous shareholder value.
Great. This question's for iGaming and for Matt. You highlighted that the top four have maintained share for leased and sold games. What do you believe the main fire starter is for share shift? Is it a premium game, or is it an introduction of a well-performing cabinet?
Yeah, it's the age-old question: Is it the cabinet or the game? We believe it's the content. There's no panacea to ignite R&D success, and what I would say is that we have a CPO that's a Hall of Famer right here in Rich Schneider. Rich is. He's not a creative. The people who make these games, there's a few in the back room there, but many of them are back in their office making games today. It's not about one game, it's about an R&D program. That's what Rich is able to create. He's maybe the least creative guy I know. He's an engineer by trade.
But what he's very good at is creating a program where R&D talent, creators want to come, want to be a part of it, and focusing them at the biggest market opportunities, and putting a program around that that's systematic and that evolves over time. We've seen it in the past to great success, and we're already seeing it here. He's brought a wealth of enthusiasm to the business. He's brought talent with him. We have an individual on the sidelines called Ted Hase, who you may know, who's made the industry's biggest hits in the biggest, most competitive categories. He's on the sidelines, or he's just joined us, actually, but his games are about to hit the marketplace. You'll see them later this year, November, December.
So we're just starting to see this talent really kind of hit the ground running and, you'll see it evolve over time.
I think just building on that, one of the key advantages we have, Barry, which you have to talk about, is just our evergreen franchises. We've got the rhythms, we've got the discipline, we've got the talents. Now mix in our amazing portfolio of evergreen franchises, and it's a winning formula.
Yeah.
Okay, next question is on SciPlay. With your recent acquisitions of Alictus, you now have in-app purchases and in-app advertising revenue streams. How does in-app advertising differ in terms of retention, stickiness, or any other major differences?
Yeah. Great question. I can't be more excited about being able to diversify into ad advertising. It really does change the outlook of everything. As Barry said earlier, everything is about reach, and what ad advertising does is it allows us to go after another large set of users in the market. Today, in our current core business, we monetize about 10% of the entire portfolio, which means we have 90% who don't. This 90%, 100% can watch ads in order to get more gameplay, in order to get a better experience. Not only that, but when we start thinking of the world from a UA standpoint, spending the $150 million, it is all about, hey, you're going to spend double-digit CPIs in order to get a ROAS.
Now you can take a much lower approach in order to get lower CPIs because you're going to monetize them through the ads. I think you'll see this come into our portfolio more and more as we're diversifying into casual because here's where the breadth of people are, and we're able to do what Alictus is doing today, where they are bringing in, you know, twenty some million people a month and becoming ROI positive on that spend very, very quickly because the cost of the individual is so low, but the ads that we're showing them, they continue watching over and over again. And last but not least, we don't pay a platform fee on that.
So we immediately get that 30% back, and we just pay whatever the mediation fee is, which is a very low percentage of the overall cost.
Mm-hmm.
Great. Now switching to iGaming. Is WAP an opportunity in iGaming? Does OGS give you an advantage versus peers to do this?
Yes and yes.
Mic drop.
I mean, what l ook, jackpots, whether they're local, wide area, are a, you know, important way to engage players and also to engage operators. OGS, when you think about the scale in 300 operator brands, in 60 partner studios, within a specific geographical region, then obviously, we have scale, and it's that single integration point where studios and operators come to consume content, and where players can get access to a wide variety of content that meets their needs and choices. So absolutely, it's a great player segment that we want to be in, and OGS provides us with a fundamental competitive advantage because that's the only place where our content is consumed.
Okay, this next question is on investment. The mix of investment between R&D and CapEx is a bit different from historical percentages, while the total is similar. What, what's behind this? And is there any implication we should take away?
Sure, I'll take that one. First, you know, we're really thrilled that we have the financial flexibility to invest appropriately into the organization. You know, as we think about our organic investment, in what I would say is there is a portion of CapEx which is capitalized development, which is probably you're seeing a little bit of a toggle in that number. But we know that R&D is at the core of our success, building great games and platforms that enable games that players love. And so, you know, I would say that we are going to lean into an element of CapEx to really fuel Matt's business, in particular. The majority of our CapEx, again, is directly aligned to that revenue.
But we feel really good about the mix, and we'll continue to take a very deliberate approach to that, making sure that we're getting the right ROI on all of our organic investment. Mm-hmm.
Okay, a couple of questions here on the guidance. Within the framework of your $1.4 billion EBITDA target, what, if any, of the growth is attributed to acquisitions, and what level of spend are you underwriting for acquisition activity, if it does exist in the guidance?
I'll start by saying just, again, we're in a position now where we have all the major pieces we need in order to grow and tackle our plan. So, you know, and obviously, with the capital that we're generating, et cetera, our priorities remain the same. You know, paying down debt, staying within the, you know, 2.5%-3.5%, shareholder repurchases, and we will invest in growth, obviously prioritizing organic over inorganic. But we'll obviously be, you know, looking in the marketplace for new markets, teams, studios, tuck-ins type, you know, type of M&A to, you know, to do.
Again, I think, you know, we have a robust plan, but the fortunate thing right now is we have, you know, the right assets in place to go after it and take advantage of the market opportunity.
Mm-hmm. Yeah, and just building on that further. Right now, with the great building blocks that we've outlined for you today, the target $1.4 billion is an organic plan. Again, we see real momentum in each of these businesses, with a number of levers for us to drive growth.
Another question on the overall guidance: How do you get to the 45% Free Cash Flow conversion you gave in your guidance? What are the key drivers?
Sure, happy to take that one. Again, we're incredibly thrilled that we are finally in a position whereby we will have the ability to yield incredibly strong cash flows with the recurring revenues, high margins. The key growth drivers there is, first and foremost, AEBITDA scaling. You know, we have a really exciting growth plan in front of us that will help drive free cash flow. I think if you think about the mix of our business also, we know that our digital businesses have significant yield. As iGaming, in particular, continues to scale, we know that more of that AEBITDA will start to flow through to cash flow.
And then, really importantly, you know, as we've really shifted from this debt to equity story and we've gone through our refinancing, we're gonna see significant reduction in our interest expense go forward, you know, circa 50%, which just allows, again, more cash to drop to the bottom line. And then I'd say, lastly, we're gonna continue to lean into ensuring that we've got operational efficiencies, and that cash conversion cycle just really spins to produce high yields of cash.
Thanks. Next question is on gaming, and how should we think about the Class II opportunity, and how do you plan on taking market share?
Yeah, I think we should be excited about that. It's a market that we haven't really addressed up until this point. Rich and I have been spending some time in Oklahoma with customers. It's the biggest Class II market on the planet, and we have not a single game in Oklahoma in Class II. So it's definitely a segment that we can explore. We have the talent, we have the investment in technology to address that market, but it's certainly a market we have optionality in over the coming years. There's many markets just like that. If you think about the Asian market at the moment, it's completely dormant in most of the majority of the Asia region. We're a 40%, 40%+ share player there, so as that market comes back online, there's great optionality for us there.
VLT markets are another great opportunity for us, so we're putting a lot of effort into our core markets at the moment, where we've lost share over the years, and we're seeing great success there, deploying the playbook and raising our level of share in that market, but there's lots of markets that we can grow into over time, and, Rich and I will sequence those effectively, and you'll see us taking share in those, I can guarantee it.
Another question in gaming: What are the keys to success in growing share in Australia? Why wasn't this a focus historically, and it is now?
I mean, it always comes back to focus and talent. It wasn't a focus for us. We're a very U.S.-centric company. That's changed. Obviously, I have this accent because I'm from there and I know the market well. We have a chairman who's there. We have an executive vice chair who's in the market. Rich has had a lot of success in that marketplace. We've invested in talent. We've scaled the teams down there. We have an amazing game designer that's joined the organization, who's made, you know, some of the industry's best games in Australia and the U.S. So I think that's exciting. I think the other thing that's interesting about Australia now is we're seeing product requirements converge. For a long time, you needed a very different portfolio strategy to address the U.S. and Australia. They were very different, divergent product strategies.
Now, we're seeing similar games be very effective across all those markets, so we have the talent, we have the focus now, and we're serious about taking share in the Australian market. You can see the early signs of success there.
In fact, you already have, right? I mean, in... It's still early stages, but you've-
Yeah
... nearly doubled, you know, just in the time that you've been here.
Yep, and we've raised the number of games we're launching in that market by about 30%, and we had a great show at the AHG show in Brisbane in March. And the industry's looking for a competitor to come in and give them another option. We want to be that option, and we think we have an opportunity to do that.
Yeah.
Next question is iGaming. Why is 2PP content or second-party content important? How does the acquisition of Playzido help you?
I think content in general is important, and, obviously, we, you know, we develop content, ourselves through all the great proprietary and franchises IP that we've talked about today. And we also know that, you know, players don't just play, our content and want to consume, you know, other genres. So having the technology platform, that allows us to open those services up for other studios to build, on our network, enhances, again, the overall value chain that we can go and target. So obviously, we take revenue from that, you know, from that opportunity, both in the, you know, form of, game development costs and also then on back-end revenue share, as well. So we see it as an important part of the mix that, again, just extends the opportunity to create value from our ecosystem.
Yeah, if I could add as well, the other thing Playzido does is it's the custom development, right? And the ability to work with major operators on customized or exclusive content. You know, major operators want to have a differentiated offering and not just compete on marketing spend. And you know, it's not that the answer to that is trying to scale up a studio and get really strong hit game makers. What they want is a differentiated offering, and what Playzido provides is our ability at scale to actually provide that exclusive and custom content for those operators. And so you know, that combination is, again, a very inexpensive, but I believe, outsized impact that that business is gonna do for us, which is great. It's exciting.
Great.
We'll have, we're on our last question, so this will be the last one we take. How much of your debt is fixed versus floating? And what is your ideal long-term mix? What is your interest expense going forward? Take a guess, but I think that's Connie's. Dylan?
End of the line.
As I spoke to earlier, and one of the really exciting things for our organization as we move forward, is that we just have an incredibly healthy balance sheet. We've radically transformed the structure there. We found a window to go into the capital markets post-receiving the lottery divestitures, very quickly took out a new TLB, paid down a number of our high coupon bonds. But right now we're sitting at about a 60-40. But I can tell you that, you know, the great news is when sports comes on board, we're gonna be able to take out another one of our high coupon debts. So we're gonna continue to make progress. You know, interest expense, I think you should expect that to be about 50% reduced from where it was previously.
So again, just a radical transformation for the balance sheet, really setting us up for success for the future.
Okay, great. So with that, I wanna thank you all for your time today. I hope you can see why the team here is so excited about our future because I think this all adds up again to a very compelling investment thesis. We are poised to win a huge part of the $70 billion game TAM that's in front of us today. We're uniquely positioned. We have unmatched asset mix, and we have the leading market positions that can capitalize on this cross-platform opportunity, which we believe is tremendously valuable. We have a clear roadmap to take even more share than we have today. And we have a financial profile. We have a really strong mix of recurring revenues, strong margins, high-quality cash flows, and disciplined capital management that's gonna deliver superior shareholder returns.
That's why we are so confident that we're going to be the ones to lead the future of the game industry. So thank you again very much for your time and participating in this with us, and now we'll break for lunch.