IGT wins tender to continue Italian lottery operations
International Game Technology (IGT) has operated the Italian lottery since 1993, although when the tender to operate the lottery was launched earlier this year, it faced competition from the likes of Novomatic, Allwyn and, allegedly, Flutter. IGT’s current term ends in November this year.
IGT today announced it will lead the successful LottoItalia consortium, which will also include Allwyn, Arianna 2001 and Novomatic Italia. The tender will run until November 2034.
The consortium’s bid is made up of €2.23 billion up front and it is expected that will be paid in three instalments between the date of the award and April 2026. It expects the first two instalments of €500 million and €300 million to be made in 2025.
Barry Jonas of Truist Securities said in a note this morning that the new upfront fee is substantially larger than the 2016 process (€770m at the time) and estimates from Truist, which has been between €1.3 billion and €1.5 billion.
IGT CEO Vince Sadusky said in its earnings call last week the company had set aside a $500 million investment in the Italian lottery if it were awarded the licence. This is part of a larger €1 billion term loan.
Sadusky believes the hefty operational fee reflects the “significant value” of the new licence. The company is confident the investment will benefit its revenues, and longer-term profitability, despite it posting a 10% drop in group revenue in Q1.
“In addition, we plan to significantly grow our iLottery sales and leverage that momentum to expand into the Italian B2C iCasino, sports betting and other digital gaming business,” Sadusky said.
Allwyn will contribute a pro rata 32.5% share of the licence fee and capital expenditure and its CEO Robert Chvatal is “thrilled” to continue the partnership with IGT in Italy for another nine years.
“We’re pleased that Allwyn’s positive contribution to the consortium, including our proven track record of modernising and growing lotteries across Europe, will continue to support IGT’s exemplary stewardship of an important Italian national asset,” Chvatal declared. “We look forward to working together to grow the Italian Lotto, while developing innovative solutions to support responsible play.”
IGT secures ‘one of the most important lottery contracts‘
According to the Financial Times, the concession rate from total wagers will amount to 6%, with a further 8% gross fee to be collected through digital channels for distribution.
In a statement released today, IGT’s executive chair of the board Marco Sala said the Italian lottery concession was one of the world’s most important lottery contracts.
“IGT and its predecessor companies have successfully managed the licence for 30-plus years through constant innovation and the introduction of cutting-edge technology.
“The award is very gratifying and we are honoured and excited to continue working with the ADM [Customs and Monopolies Agency] for nine more years,” he said.
In the Truist note Jonas said IGT had expected to win the rebid based on the regulator’s scoring system. “Recall the award is based on a scoring system weighting 60% financial, 40% technical. Based on the scoring system, IGT has emerged successful, although an official announcement is forthcoming.”
Jonas said he doesn’t see any major negative impact for Flutter in the loss of Italian lotto to IGT. “Our view on Flutter owning Lotto at all costs was mixed. We have always seen traditional lotto as a lower multiple business (~5.5x historical multiple) somewhat straying from Flutter’s core digital focus.”