Accel Entertainment (ACEL) Q3 2025: Developing Markets Drive 30%+ Revenue Growth, Bolstering Local Gaming Expansion
Accel’s Q3 highlighted the accelerating contribution from developing markets, with Nebraska and Georgia each posting double-digit revenue gains that offset softness in Nevada. The company’s distributed gaming model, focused capital allocation, and disciplined M&A pipeline signal a steady path toward margin expansion and cash flow resilience. Management’s outlook remains bullish on core markets and new bolt-on acquisition opportunities, particularly in Louisiana and growth states.
Summary
- Developing States Accelerate: Nebraska and Georgia’s high growth rates are reshaping ACEL’s revenue mix.
- Capital Discipline Anchors Expansion: Rigorous investment and M&A processes underpin continued margin strength.
- Louisiana and Fairmont Park in Focus: Early returns and pipeline development position ACEL for multi-year upside.
Performance Analysis
Accel delivered broad-based top-line growth, with total revenue up 9.1% year over year to $330 million, reflecting both core market stability and outsized gains in newer geographies. Illinois, the company’s anchor market, contributed $239 million, up 7%, driven by continued route optimization and new machine placements. The focus in Illinois remains on optimizing for higher-yield locations and deploying ticket-in, ticket-out (TITO) technology, which is still in early rollout but expected to drive both revenue per machine and operational efficiency as utilization increases through 2026.
Montana delivered modest growth at 2.1%, while Nevada experienced a 7.4% revenue decline due to the loss of a key customer in 2024. However, developing markets Nebraska and Georgia stood out, posting 30% and 49.3% revenue growth respectively, with Nebraska reaching $9 million and Georgia $5 million for the quarter. Louisiana, a new market, contributed $9 million, demonstrating successful integration of the Toucan Gaming acquisition.
- Shift Toward Higher-Yield Locations: Illinois route optimization led to fewer but more productive sites, supporting win-per-day growth.
- Developing Markets Outpace Core: Nebraska and Georgia’s rapid expansion is reshaping the growth profile and diversifying revenue streams.
- Fairmont Park Ramps Sequentially: The new racino property’s monthly revenue continues to climb as customer engagement deepens.
Adjusted EBITDA rose 11.5%, outpacing revenue growth and reflecting strong cost discipline. Capital expenditures remain tightly controlled, with 40% directed toward high-return growth initiatives and a full-year CapEx reaffirmed at $75 to $80 million. ACEL’s new $900 million credit facility further enhances liquidity and reduces cost of capital, supporting continued investment and opportunistic share repurchases.
Executive Commentary
"Growth this quarter was supported by higher gaming terminal counts, stable machine performance, and improved efficiency in capital deployment. This demonstrates the strength and resilience of our distributed gaming model and our discipline, return-focused approach to growth investments, including Vermont Park."
Andy Rubenstein, Chief Executive Officer
"Our balance sheet remains strong with ample liquidity and conservative leverage, providing the flexibility to invest in growth while continuing to return capital to shareholders."
Brett Sommerer, Chief Financial Officer
Strategic Positioning
1. Distributed Gaming Model Drives Flexibility
Accel’s distributed gaming model, which places gaming terminals in a wide variety of local establishments rather than large destination casinos, enables the company to rapidly scale in both mature and emerging markets while diversifying risk. This model supports capital efficiency, allowing ACEL to shift investment to the most promising geographies and optimize its location mix for higher returns.
2. Capital Allocation and M&A Discipline
Management underscored a rigorous, return-driven approach to capital deployment, with a focus on bolt-on acquisitions in Louisiana and ongoing route optimization in Illinois. The company’s new $900 million credit facility, with extended maturities and lower rates, enhances its ability to pursue both organic and inorganic growth opportunities without overextending leverage.
3. Technology and Operational Enhancements
The ongoing rollout of ticket-in, ticket-out (TITO) technology in Illinois is expected to drive both revenue and cost efficiencies, though the full benefit will not be realized until mid-2026 as utilization expands. Additionally, investments in proprietary gaming content and route management systems are helping to increase profitability per location, especially in Montana and developing states.
4. Developing and New Market Scale-Up
Developing markets now account for over 12% of revenue, with Nebraska and Georgia leading growth and Louisiana ramping quickly post-acquisition. Early results from Fairmont Park’s racino operations are promising, with sequential revenue gains and a strong pipeline of future customer engagement and expansion opportunities.
5. Shareholder Returns and Balance Sheet Strength
Share repurchases and balance sheet optimization remain a priority, with $6.8 million repurchased in Q3 and year-to-date buybacks totaling $23.7 million. The company’s conservative leverage and ample liquidity provide flexibility for continued shareholder returns and strategic investments.
Key Considerations
This quarter’s results reinforce ACEL’s ability to deliver consistent growth and margin expansion through disciplined capital allocation, market diversification, and technology-driven operational improvements. The evolving revenue mix and new market momentum position the company for continued upside, but execution in scaling new geographies and integrating acquisitions will be key watchpoints into 2026.
Key Considerations:
- Developing Market Momentum: Nebraska and Georgia’s outperformance is critical to offsetting legacy market volatility and supporting overall growth.
- Capital Efficiency Focus: Tight control over CapEx and a data-driven approach to investment underpin margin stability and free cash flow generation.
- Louisiana Expansion Pipeline: Early returns from Toucan Gaming and a robust bolt-on pipeline set the stage for material revenue contribution in coming years.
- Technology Rollout Timing: Full benefits from TITO and other operational upgrades will materialize gradually, with peak impact expected in late 2026.
Risks
Key risks include regulatory changes in core and developing markets, integration challenges with new acquisitions, and the potential for underperformance in new or ramping properties like Fairmont Park. Competitive intensity and macroeconomic headwinds could also pressure margins, particularly if consumer discretionary spending softens or if legislative expansion in new states is delayed or fails to materialize.
Forward Outlook
For Q4 2025, ACEL expects:
- Continued sequential revenue growth in Fairmont Park and developing markets
- Ongoing TITO rollout in Illinois, with utilization moving to double digits by February 2026
For full-year 2025, management reaffirmed CapEx guidance:
- $75 to $80 million in capital expenditures, with 40% devoted to growth initiatives
Management emphasized that bolt-on M&A, technology upgrades, and disciplined capital returns will remain priorities as the company enters 2026, with a focus on scaling Louisiana and deepening penetration in Georgia and Nebraska.
- Watch for new state legislative developments, especially in Pennsylvania, Missouri, North Carolina, and Virginia
- Monitor the timing and scale of Fairmont Park’s Phase 2 expansion plans
Takeaways
Accel’s Q3 results highlight the success of its distributed gaming model and the growing contribution of developing markets, which are increasingly shaping the company’s growth trajectory and margin profile.
- Revenue Growth Diversifies: Developing states now provide a meaningful offset to legacy market softness, supporting a more balanced and resilient revenue base.
- Capital and Operational Discipline: Tightly managed CapEx and a clear M&A framework underpin margin expansion and cash flow strength.
- Execution in New Markets: The pace of ramp in Louisiana and Fairmont Park, as well as legislative progress in new states, will be key for 2026 upside.
Conclusion
Accel delivered a quarter marked by broad-based growth and strong operational execution, with developing markets and disciplined capital deployment setting the stage for continued expansion. Investors should watch the pace of TITO adoption, new market ramp, and legislative developments for future catalysts.
Industry Read-Through
Accel’s performance signals a broader industry shift toward distributed gaming and local market penetration, as operators seek growth beyond saturated legacy markets. Rapid expansion in states like Nebraska and Georgia, along with bolt-on M&A in fragmented regions such as Louisiana, reflects a playbook that could be replicated by peers. The emphasis on technology upgrades and operational efficiency is increasingly vital in a sector facing both regulatory complexity and evolving consumer preferences. Investors in regional and distributed gaming should monitor legislative trends, especially in states on the cusp of route gaming legalization, as these represent the next frontier for industry growth.