Key points:
- Peter Jackson confirms Flutter is looking at the main Italian lottery licence
- IGT currently holds the lottery licence in the country, which sells 2.2 billion tickets each year
- The Italian Government is reportedly looking to open up bidding starting at €1bn
Flutter CEO Peter Jackson recently confirmed that the industry giant is interested in the main Italian lottery licence. This was something industry analysts discussed with Gambling Insider back in September. Before we dive into this, we need to take a look at the wider picture.
What’s happening with the main Italian lottery licence?
The Italian lottery licence is currently under IGT but is due to run out in 12 months' time.
Of course, this ticking clock hasn’t gone unnoticed. IGT has held the main Italian lottery licence for the last three decades, much like Camelot had held onto the UK National Lottery for 30 years. And much like Camelot had to give up its licence in an unexpected turn of events, so might IGT.
Over the last few months, the Italian Government has made a few changes to its gambling laws, including scrapping the automatic renewal of the lottery licence.
If the licence does go up for bidding, it’s expected that the minimum amount will be set at €1bn ($1.05bn) which would be paid in instalments.
Would Flutter invest €4.2bn into acquiring Italian companies in two years, just to ignore the Italian lottery licence once it went up for auction?
The Customs and Monopolies Agency (ADM) submitted these plans to the Supreme Administrative Court in late August and the papers were officially discussed on 16 October.
The first details regarding the process are expected to be made public in December, which means 2025 could start with several major operators clashing to claim the licence by the end of the year.
Italy passed a law in 2018 that banned gambling advertising in the country, but this does not apply to state-run lotteries. This presents a unique opportunity for cross-selling for whoever holds the licence.
At the moment, there are three main operators in this race: IGT; Française des Jeux (FDJ), an operator which has experience in foreign lotteries and has been looking to move into Italy for some time; and Flutter, the operator which recently acquired Snaitech and Sisal.
What makes Flutter a likely contender for the Italian lottery licence?
When compared to IGT and FDJ, Flutter might seem like a left-field choice when it comes to lottery. After all, the other two already manage different lottery operations all around the world. That hardly makes Flutter a rookie, though.
In Flutter’s Q3 report last week, revenue increased 27% year-on-year to $3.25bn and its adjusted EBITDA was up 74% to $450m. While it is still operating at a net loss, this fell from $262m last year to $114m this year.
From this, the international segment grew 15% and contributed $781m in revenue, with Italian operator Sisal being noted as a particular driver of this.
As for FDJ, this operator has a history of its own. Not only has FDJ signed many deals with IGT over the years for cross-licensing and distribution opportunities, it is also no stranger to purchasing lotteries from other countries
We also speculated several months ago that Flutter might be investing heavily into Sisal to position itself for an Italian lottery licence bid. This was after several industry analysts reached out to Gambling Insider with information regarding recent financial decisions made by the company.
Of course, Flutter acquired Sisal on 4 August 2022 for €1.91bn and then announced on 17 September 2024 that it would acquire Snaitech from Playtech for €2.3bn.
Would Flutter invest €4.2bn into acquiring Italian companies in two years, just to ignore the Italian lottery licence once it went up for auction?
What about FDJ and IGT?
It would be disingenuous to discuss the Italian lottery licence without mentioning the other two main contenders in this, FDJ and IGT.
These three-letter initialisms are both giants in their own regard and have a valid stake in the Italian licence respectively.
IGT has operated the Italian lottery for three decades by this point, so it’s fair to say the company knows what it’s doing by now.
It would also have the funds necessary to bid for the lottery licence. In its latest Q3 report, revenue totalled $587m, even if this was a drop of 2% while its operating income also fell 33% to $110m.
However, it is worth noting that, while revenue fell in North America by 7% and Rest of World by 3%, it actually grew 5% in Italy.
It seems unlikely IGT would so easily let go of a core business component in one of the only markets that displayed growth during this quarter.
According to the IGT website, it has a 93% market share of the Italian lottery scene as it is the exclusive concessionaire for both Lotto and Instant Lotteries, making it one of the largest lotteries in the world.
Each year, over 2.2 billion tickets are sold and this equated to over €20bn in sales in 2021, although the precise final figures since then are tricky to find.
IGT has operated the Italian lottery for three decades by this point, so it’s fair to say the company knows what it’s doing by now
As for FDJ, this operator has a history of its own. Not only has FDJ signed many deals with IGT over the years for cross-licensing and distribution opportunities, it is also no stranger to purchasing lotteries from other countries. In early November 2023, FDJ purchased Premier Lotteries Ireland (PLI) after the move was approved by the Irish National Lottery regulator.
PLI, and by extension FDJ, holds the exclusive rights to operate the Irish National Lottery until 2034.
With the recent €2.45bn acquisition of Kindred Group, it’s difficult to tell whether FDJ is going to focus on the wider European assets it already has, or if it’s ‘in for a penny, in for a pound’ when it comes to its expansion.
When will we know the rest of the details?
The Italian Government is still yet to go public with the details regarding its lottery bidding process, but these are expected to be published any time between now and the start of 2025.
Until then, it’s unlikely that we’ll see too many more developments in this regard between any of the companies involved. Where the Italian lottery licence is concerned, it seems like it could be a quiet Christmas and a very busy New Year.
