International Game Technology (IGT) has successfully retained its role in managing the Italian lottery, a position it has held since 1993. The tender for continued operation faced competition from notable companies such as Novomatic, Allwyn, and reportedly, Flutter. IGT's current license is set to expire in November this year.
Today, IGT revealed that it will lead a winning consortium named LottoItalia, which also includes Allwyn, Arianna 2001, and Novomatic Italia. This new contract will extend until November 2034.
The consortium's bid features an upfront payment of €2.23 billion, which is expected to be paid in three installments between the contract award date and April 2026. The first two payments of €500 million and €300 million are scheduled for 2025.
Barry Jonas from Truist Securities noted that this new upfront fee is significantly higher than the €770 million paid in 2016, with estimates for the current bid ranging from €1.3 billion to €1.5 billion.
In an earnings call last week, IGT CEO Vince Sadusky stated the company has allocated $500 million for investment in the Italian lottery, contingent upon winning the license. This investment is part of a broader €1 billion term loan agreement.
Sadusky emphasized that the substantial operational fee underscores the “significant value” of the renewed license, and he is optimistic that this investment will enhance revenue and long-term profitability, despite a 10% decline in group revenue reported in Q1.
Additionally, Sadusky mentioned plans to significantly increase iLottery sales while utilizing this growth to enter the Italian B2C iCasino, sports betting, and other digital gaming markets.
Allwyn will hold a pro rata 32.5% share of both the license fee and the associated capital expenditure. CEO Robert Chvatal expressed enthusiasm about continuing the collaboration with IGT in Italy for another nine years.
Chvatal remarked, “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. We look forward to working together to grow the Italian Lotto while developing innovative solutions to support responsible play.”
In a report by the Financial Times, it was noted that the concession rate from total wagers is set at 6%, in addition to an 8% gross fee collected through digital channels for distribution.
IGT’s executive chair of the board, Marco Sala, called the Italian lottery concession one of the most significant lottery contracts globally. He stated, “IGT and its predecessor companies have successfully managed the license for over 30 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.”
In the Truist analysis, Jonas indicated that IGT was expected to win the rebid due to the regulator’s scoring system, which allocates 60% to financial aspects and 40% to technical considerations. Though an official announcement is pending, IGT has emerged victorious based on this scoring.
Jonas also commented on Flutter’s position, suggesting there would not be any major negative repercussions from losing the Italian lottery bid to IGT. He noted that the traditional lottery business, seen as a lower multiple affair, might not align with Flutter’s primary focus on digital ventures.
