Why ACEL Outshines IGT for Growth-Oriented Investors

The distributed gaming sector is undergoing a seismic shift, driven by technological innovation, regulatory tailwinds, and a fragmented U.S. market ripe for consolidation. For growth-oriented investors, the contrast between Accel Entertainment (ACEL) and International Game Technology (IGT) could not be starker. While IGT's lottery-centric business model offers stability, its reliance on mature government contracts and lack of agility in emerging markets position it as a defensive play. ACEL, by contrast, is a dynamic growth story, leveraging a scalable distributed gaming model, aggressive geographic expansion, and robust cash flow generation to outpace its peer.

A Structural Edge: ACEL's Distributed Gaming Model

ACEL's core strength lies in its distributed gaming model, which operates 27,714 terminals across 4,451 locations as of Q3 2025. This decentralized approach-partnering with local businesses and communities-creates a flywheel effect: incremental terminal deployments drive incremental revenue with minimal marginal costs.

The company's third-quarter results underscore this efficiency, with revenue rising 9.1% year-over-year to $329.7 million and Adjusted EBITDA growing 11.5% to $51.2 million.

By comparison, IGT's post-2025 strategic pivot to a pure-play lottery business has stripped it of its high-growth gaming and digital segments. While its lottery contracts with entities like the North Carolina Education Lottery and California State Lottery provide predictable cash flows, they lack the scalability of ACEL's terminal-driven model. IGT's Q1 2025 revenue of $583 million-a 12% decline from $661 million in Q1 2024-highlights the vulnerability of its mature business to macroeconomic headwinds and jackpot volatility.

Geographic Diversification: ACEL's Aggressive Expansion vs. IGT's Stagnant Footprint

ACEL's geographic strategy is a masterclass in disciplined growth. The company has prioritized high-potential markets like Nebraska, Georgia, and Louisiana, where it has achieved double-digit revenue growth. For instance, Georgia's distributed gaming revenue surged 53.5% in Q2 2025, while Louisiana's acquisition of Toucan Gaming added $10 million in Q2 revenue. These markets, characterized by low penetration of gaming terminals, offer ACEL a clear path to market share gains.

IGT, meanwhile, has struggled to replicate such momentum. Its 2025 expansion into Australasia, while notable, is limited to localized game rollouts (e.g., Mega Vault Link, Tiger and Dragon) rather than the infrastructure-driven growth seen at ACEL. Moreover, IGT's focus on lottery systems in developed markets like Italy and the U.S. leaves it exposed to regulatory and tax pressures, as evidenced by the Gaming Executives' Q3 2025 report, which cited regulatory constraints as a top operational challenge.

Cash Flow Dynamics: ACEL's Scalability vs. IGT's Liquidity Constraints

ACEL's financials reflect the power of its growth-at-scale approach. In Q3 2025, the company reported a 171.8% surge in net income to $13.4 million, driven by operational efficiency and strategic gains such as a $2.2 million contingent earnout. Its recent $900 million credit facility, maturing in 2030, further insulates it from liquidity risks while enabling reinvestment in high-margin markets.

IGT's cash flow, though robust, is tethered to a shrinking asset base. The company's Q1 2025 free cash flow of $92 million and $2.2 billion in liquidity are impressive, but these figures mask the structural decline of its core lottery business. The $4.05 billion sale of its Gaming & Digital segments, while providing a short-term cash infusion, signals a retreat from the high-growth distributed gaming sector. For investors seeking compounding returns, IGT's defensive posture contrasts sharply with ACEL's offensive capital allocation.

Conclusion: The Case for ACEL

The distributed gaming sector is poised for a decade of disruption, with market size projected to grow from $269 billion in 2025 to $435 billion by 2030. ACEL's ability to scale its terminal network, capitalize on fragmented markets, and generate compounding cash flows positions it as the clear winner for growth-oriented investors. IGT, while a reliable income stock, lacks the structural advantages-geographic agility, scalable infrastructure, and capital-efficient growth-that define ACEL's playbook. In a sector where innovation and expansion are paramount, ACEL's undervalued potential far outshines IGT's mature, casino-centric operations.