Industry analysts have recently brought to light that Flutter Entertainment may be gearing up for a significant investment in the Italian market. This comes on the heels of Flutter’s confirmation that it is in discussions to acquire Playtech’s Italian B2C brand, Snaitech. The proposed move is generating buzz as it aligns with a broader strategic shift and reflects ongoing changes in Italy’s lottery landscape.
Italian Lottery License Up for Grabs
According to regulatory tracking, Flutter Entertainment is reportedly considering allocating over €1 billion ($1.11 billion) to its Italian subsidiary, Sisal, for the purpose of bidding on Italy’s main lottery license. The current license holder, IGT (formerly Lottomatica), has enjoyed a 30-year tenure, but with its license expiring in November 2025, the Italian government’s new regulatory framework means the license is now open for competitive bidding.
The tender for this coveted license is expected to be issued around late October or early November, setting the stage for a high-stakes contest.
Flutter’s Strategic Divergence
This potential investment by Flutter appears to represent a strategic shift from its core focus areas. Traditionally, Flutter has concentrated its efforts on expanding its sportsbook and online betting operations, with a primary emphasis on the U.S. market. The proposed foray into the Italian lottery market marks a departure from these priorities.
Sisal, which Flutter acquired in 2022, has faced challenges in its lottery segment compared to its betting and gaming businesses. For instance, the performance of one of its major lottery games, SuperEnalotto, has seen a significant decline, with sales plummeting by 55% since 2008 and a 40% decrease since 2019.
Assessing the Risks
Analysts have raised concerns about whether this investment aligns with Flutter’s broader strategic objectives. Given Flutter’s recent focus on the U.S. market and its emphasis on sportsbook and online betting expansion, the proposed investment in Italy’s lottery sector could be seen as a risky deviation.
Sisal’s previous attempt to secure a lottery license in the UK ended in disappointment, as the company lost out to Allwyn in the competition for the UK’s national lottery.
Possible Strategic Rationale
Despite these concerns, industry analysts have suggested a possible strategic rationale behind Flutter’s interest in the Italian lottery market. In 2018, Italy enacted a law banning gambling and betting advertising, though state-run national lotteries were exempt. This regulatory environment could potentially offer Flutter an opportunity to cross-sell its other products, such as gaming and sports betting, to lottery customers.
During Flutter’s Q4 2023 earnings call, CEO Peter Jackson highlighted the appeal of cross-selling, particularly within the Italian market. This suggests that Flutter might view the lottery investment as a way to leverage limited marketing opportunities to promote its broader portfolio.
While the potential investment in Italy’s lottery market may seem incongruous with Flutter’s recent strategic direction, it could also represent a forward-thinking strategy in a market that continues to grow. Whether or not this investment will come to fruition remains to be seen.
Flutter’s potential €1 billion investment in Italy’s lottery market reflects a complex interplay of strategic ambition and market dynamics. The outcome of the forthcoming license tender will be closely watched by industry observers and could have significant implications for Flutter’s future direction.