Flutter Entertainment, the parent company of Paddy Power and FanDuel, is reportedly exploring the possibility of submitting a bid for Italy’s national lottery license. The Italian Agency for Customers and Monopolies (ADM) recently opened the bidding process for the nine-year contract, which carries an estimated gross value of €4.3 billion. The minimum bid requirement has been set at €1 billion, and the deadline for submission is March 17.
The current license holder, International Game Technology (IGT), formerly known as Lottomatica Holdings, has managed the lottery for the past 30 years and is expected to participate in the bidding process to retain its position. Flutter, on the other hand, is considering whether to enter the bid independently or form a partnership with another company to mitigate the significant financial commitment.
According to sources cited by The Irish Times, Flutter sees the Italian lottery as a strategic opportunity due to its cross-selling potential. Through its subsidiary, Sisal, acquired in 2022 for €1.9 billion, Flutter leverages its existing lottery operations to drive traffic to its online gaming and sports betting platforms. Since direct advertising of online gambling remains banned in Italy, the lottery business serves as a crucial channel to engage customers via ticket scanning features.
Industry analysts believe a joint bid could provide Flutter with financial flexibility and reduce upfront costs while enabling the company to focus on expanding its gaming portfolio. “Clearly, the Italian lottery license would be a good strategic fit for Flutter’s portfolio given the cross-selling opportunities it would present,” said John Blake, an analyst at Cantor Fitzgerald Ireland. However, Blake emphasized that Flutter’s management would likely remain cautious about financial discipline throughout the bidding process.
Expansion On Multiple Fronts
Flutter has been expanding its presence in Italy, recently announcing its acquisition of Snaitech, the country’s third-largest online gambling operator, from Playtech for $2.6 billion. This move is expected to consolidate Flutter’s market share in Italy, potentially reaching 30% of the country’s online betting sector. The acquisition is anticipated to be finalized in mid-2024.
Despite its recent focus on the rapidly growing U.S. market through its FanDuel brand, Flutter remains committed to expanding in markets with strong growth potential, such as Italy and Brazil. In addition to its Italian investments, Flutter recently acquired a majority stake in Brazilian betting firm NSX Group as part of its broader expansion strategy.
The Italian lottery market remains highly competitive, with IGT being the primary contender for the new license. Under the updated contract terms, the concessionaire will see an increase in commission rates from 6% to 9% on lottery turnover. In 2023, ticket sales for the Italian lottery reached €8 billion, underlining the contract’s profitability.
A spokesperson for Flutter declined to comment on the company’s bidding strategy, and sources indicated that no final decision has been made. However, the potential collaboration with a partner could allow Flutter to capitalize on the lottery’s predictable revenue streams while minimizing financial risks.