IGT upbeat on Italy lottery plans as licence decision looms, Q1 revenue takes a hit

International Game Technology CEO Vince Sadusky opened up on the provider’s preparations for retaining control of the lottery in Italy, on its Q1 earnings call on Tuesday, revealing it had set aside $500 million in funds for use if it is awarded the licence.

The revelation came as IGT published its results for the first quarter. Group revenue was down 10% year-on-year to €583 million, with declines across three of its four core operating segments.

Geographically, revenue was lower across all markets, although Italy saw the shortest decline, with revenue down 3%. It is here that Sadusky and IGT see significant opportunity for the provider, particularly with the lottery licence.

IGT has controlled the Italian lottery since 1993. However, it faces fierce competition to keep hold of the licence after its current term ends in November this year. Novomatic, Allwyn and Flutter are among those also said to be in the race.

According to IGT, the licence process is “well under way”. The Italian gaming authorities have informed participants the economic proposals they submitted in the concession tender will be opened on 19 May, although news is expected before then.

“We also understand that the evaluation of the technical proposals is complete,” Sadusky said. “We expect the results of the technical evaluation to be announced before this date.”

In preparation for the licence award, IGT has issued a new €1 billion term loan. Of this €500 million has been used for debt repayment under existing credit facilities. The other €500 million will only be utilised if it secures the licence for another term.

How are tariffs impacting IGT?

The Q1 update also addressed wider issues for IGT, including the impact of tariffs and threats it could lead to another recession. Tariff concerns were addressed by Light & Wonder in their Q1 earnings call earlier in the month.

Sadusky said that, while these issues have fuelled fears of a recession, IGT remains upbeat on its own performance, backing the provider to continue to succeed in two of its core markets – the US and Italy.

“As you know, the world is currently faced with significant macroeconomic and geopolitical uncertainty,” he said. “We feel good about the things we can control and the long-term prospects for our business, but we’re not immune to these challenges.

“However, history has shown that lottery sales in the US and Italy have proved to be resilient in both absolute and relative terms during recessions.”

Sadusky also addressed the pending sale of its gaming and digital assets to private equity giant Apollo Global. The deal was struck last July and, according to Sadusky, is on track to complete in Q3 this year.

Should the sale go through as expected, IGT would become a lottery-only business.

Reasons for revenue decline in Q1

Going into more detail on its Q1 performance, IGT put the drop in group revenue primarily down to lower instant ticket and draw-based revenue. In total, revenue in this segment dropped 3% to $500 million.

IGT also noted a 46% drop in US multi-state jackpot wager-based revenue. This, it said, was caused by higher activity in the previous year, as well as associated lottery management agreement incentives and multi-year central system software licences and terminal sales in 2024.

Other revenue also declined by 28% to $89 million, although up-front licence fee amortisation improved slightly year-on-year.

In total, service revenue fell 10% to $557 million, with product sales revenue down 38% to $26 million.

In terms of geographical performance, US and Canada remain the primary source of income – just – at $259 million. This was, however, 20% less than the previous year. Italy revenue was also down, but only by 3% to $246 million, while rest of world revenue slipped 7% to $79 million.

Bottom-line net profit down 204%

Turning to spending, operating costs were level year-on-year at $445 million, although non-operating expenses jumped 78% to $82 million.

After finance costs, pre-tax profit hit $8 million, down 93%. However, when including $52 million in profit from discontinued operations, net profit only fell 53% to $60 million.

After discounting profit from non-controlling interest, bottom-line net profit was $27 million, a drop of 204% from last year. In addition, adjusted EBITDA fell 24% to $250 million.

“While the world is currently faced with great uncertainty, we are excited about the initiatives we are working on to drive sustainable, long-term growth and shareholder value,” Sadusky said.