Lottomatica continues to lead the Italian online gaming market, but a report from New York-based investment bank Jefferies reveals that this dominance is under threat from Flutter's growing influence through its Sisal and SNAI brands. According to Jefferies, Lottomatica currently holds 30% of Italy's online gross gaming revenue (GGR) in the first quarter, closely followed by Flutter at 27%.
The performance of SNAI could play a critical role in this competitive landscape. Since acquiring Sisal in August 2022, Flutter has increased the brand’s online GGR share from approximately 10% to 13%, gaining nearly three percentage points in both online sports betting and iGaming. Conversely, SNAI has seen a decline, with Jefferies estimating a loss of around four percentage points of its online share over the past few years. Should Flutter successfully reclaim this lost share, it could surpass Lottomatica.
“Flutter has a proven track record of achieving leading market shares in nearly every targeted territory,” Jefferies pointed out, highlighting that market share in Italy will be a crucial focus in the upcoming quarters.
Italy presents a significant opportunity due to its scale and a lengthy runway for online gaming growth. Jefferies forecasts the country's gambling GGR will reach €22.6 billion by 2025, making it Europe’s largest market, with online penetration currently only at 28%, compared to 61% in the UK. Projections indicate that Italian online GGR will grow at a compound annual growth rate (CAGR) of 9% between 2025 and 2030.
Additionally, Italy's advertising restrictions tend to favor established omnichannel businesses with strong branding and an extensive retail presence. The recent changes in the licensing regime have also reduced the number of online licenses available from 81 to 52, potentially benefiting larger operators.
In the recent Flutter Q2 earnings call, CEO Peter Jackson noted robust growth in Italy's sportsbook and iGaming sectors, with Flutter outperforming the overall market. This positive performance came despite some disruptions, including a migration of SNAI onto Flutter's platform that Jackson described as leading to a “brief period of share loss.” However, he claimed that the recovery has been swift, stating, “Performance recovered strongly in June as customers embraced a significantly expanded product offering, with AMPs increasing 30% in June and strong parlay penetration during the World Cup.”
Despite these claims, Jefferies’ market data through June indicated a continued decline in SNAI's online sports betting and iGaming shares, noting that there was “no material sign” of a turnaround yet. However, the completion of the platform migration could serve as a potential catalyst for improvement.
Jefferies' historical comparison with Sisal supports Flutter's optimistic outlook; Sisal has outpaced Lottomatica's online business in seven of the last eight quarters and has consistently outperformed Lottomatica in iGaming growth during the same timeframe. The acquisition of SNAI has additionally expanded Flutter's retail presence significantly, with estimates showing an increase from around 20% to 27% of online GGR and a rise in retail sports betting share from 12% to 32%. This retail scale offers a competitive edge in acquiring customers in the Italian market.
However, Lottomatica is not idle. CEO Guglielmo Angelozzi indicated that the Italian online market grew by 12% in Q2, with an acceleration to 19% in June, while Lottomatica continues to gain market share in sports betting, iGaming, and overall online gaming. He stated, “In a mix of organic growth and M&A, we’ve gone from a marginal operator to the largest operator in the market.” Lottomatica reported a 24% increase in online revenue in Q2, with adjusted EBITDA margins reaching 58% in the first half of the year, placing the company in a strong competitive position.
Lottomatica also successfully migrated its Planetwin365 platform, resulting in a recovery of its sports betting share beyond pre-migration levels, and CFO Laurence Van Lancker reported that iGaming had regained approximately half of its lost ground. This experience shapes Lottomatica’s competitive strategy as the company emphasizes quality market share over mere volume. “The point is not only acquiring market share, but acquiring quality market share at a sustainable cost,” Angelozzi explained. Van Lancker reinforced a focus on “profitable growth” and maintaining promotional discipline.
As the competition intensifies, Lottomatica aims to safeguard its leadership while maintaining high online profitability, while Flutter applies its global product and technological prowess across two of Italy's strongest brands, seeing SNAI as the key area for growth.
