Lottomatica is currently the leader in Italy's online gaming market, but New York-based investment bank Jefferies indicates that its dominance is increasingly being challenged by Flutter’s combined brands, Sisal and SNAI. According to Jefferies, Lottomatica held a 30% share of Italy's online GGR in the first quarter, with Flutter trailing closely at 27%.
The performance of SNAI under Flutter's ownership could be crucial. Since acquiring Sisal in August 2022, Flutter has elevated its online GGR share from approximately 10% to 13%, improving its standing by around three percentage points across both online sports betting and iGaming.
In contrast, SNAI has seen a decline, with Jefferies estimating a loss of approximately four percentage points in online market share in recent years. If Flutter can regain that lost ground, it might be sufficient for Flutter to surpass Lottomatica's market share.
Jefferies noted that Flutter has a proven history of capturing leading market shares in various regions, hinting that the evolution of Italy’s market share could become a critical focus in the months ahead.
The significance of the Italian market lies in its substantial scale and the relatively slow adoption of online gambling, currently at just 28%, compared to 61% in the UK. Jefferies anticipates that Italy's gambling GGR will reach €22.6 billion by 2025, marking it as the largest market in Europe, with a forecasted growth rate of 9% CAGR from 2025 to 2030.
The restrictive advertising regulations in Italy favor established omnichannel businesses that possess strong brands and retail presence. Additionally, new concession rules have reduced the number of online licenses from 81 to 52, which could accelerate consolidation among the larger operators.
Flutter’s recent Q2 earnings call offered initial indications that its strategy with SNAI might be gaining traction. CEO Peter Jackson stated that Italy is witnessing “exceptional levels of growth” in both sports betting and iGaming, with Flutter outperforming the broader market.
This growth is notable despite interruptions during SNAI’s platform migration, completed in April, which Jackson described as resulting in a “brief period of share loss.” However, post-migration, recovery appears to have been swift. Jackson highlighted a strong recovery in June, with customer engagement increasing 30% and a notable uptick in parlay bets during the World Cup.
Jefferies’ market data through June showed SNAI's shares in online sports betting and iGaming still dropping, with no significant indication of a turnaround yet. Nonetheless, the completion of the platform migration is expected to be a potential catalyst.
The historical comparison with Sisal reinforces Flutter’s optimism. Jefferies reported that under Flutter’s ownership, Sisal has outpaced Lottomatica's online business growth for seven out of eight quarters and has consistently led in iGaming growth over the same period.
SNAI also provides Flutter with a significant retail advantage that Sisal alone could not offer. Jefferies notes that Flutter's acquisition of SNAI increased its online GGR share from around 20% to 27% and boosted its retail sports betting share from 12% to 32%. In a market where physical retail presence aids customer acquisition, this broader scale presents powerful advantages.
However, Lottomatica is not complacent. CEO Guglielmo Angelozzi reported that the Italian online market grew by 12% in the second quarter and accelerated to 19% in June, while Lottomatica has increased its shares in sports betting, iGaming, and overall online sectors.
“Through a mix of organic growth and acquisitions, we’ve evolved from a marginal player to the largest operator in the market,” he stated. The company reported a 24% increase in online revenue in Q2, with adjusted EBITDA margins hitting 58% in the first half of the year.
Lottomatica’s own successful migration story is also noteworthy. CFO Laurence Van Lancker indicated that Planetwin365’s sports betting share has surpassed its pre-migration level, gaining 0.2 percentage points, while iGaming has recouped approximately half of its lost share.
Lottomatica maintains a disciplined approach to competition, emphasizing the importance of not pursuing market share at any cost. “The point is not only acquiring market share but doing so sustainably,” Angelozzi stressed. Van Lancker echoed the focus on "profitable growth" and promotional discipline.
As the competition escalates, Lottomatica is defending its leadership while maintaining high online profitability, while Flutter seeks to leverage its global product and technology advantages across two leading Italian brands. Despite the positive early signs for Flutter, a single month of 30% growth in player engagement does not prove a reversal of SNAI's previous market-share decline. However, should this turnaround be realized, the implications for Lottomatica could be significant, as Jefferies suggests that Flutter only needs to replicate its success with Sisal to achieve a similar outcome with SNAI.
