Lottomatica currently leads the Italian online gambling market, but its position is becoming more precarious as Jefferies, a New York-based investment bank, highlights a significant challenge from Flutter’s SNAI and Sisal brands. In its latest analysis, Jefferies reported that Lottomatica commanded 30% of the Italian online gross gaming revenue (GGR) in the first quarter, while Flutter closely trails with 27%.
The shift in market share could hinge on the performance of SNAI under Flutter's ownership. Since acquiring Sisal in August 2022, Flutter has successfully increased its online GGR share from approximately 10% to 13%, regaining roughly three percentage points in both online sports betting and iGaming. In contrast, Jefferies noted that SNAI has seen a decline of about four percentage points in its online share over recent years. If Flutter can recover this lost territory, it might secure the top spot away from Lottomatica.
Jefferies acknowledged Flutter's history of gaining the leading market share across multiple regions, suggesting that attention will shift toward how the Italian market evolves in the coming quarters. This opportunity is substantial, as Italy presents a vast market with an extended online growth projection. Jefferies anticipates Italy's gambling GGR to reach €22.6 billion by 2025, making it the largest in Europe, while online gambling penetration stands at 28%, compared to 61% in the UK. Between 2025 and 2030, the online GGR in Italy is expected to grow at a compound annual growth rate (CAGR) of 9%.
Additionally, Italy's advertising restrictions favor established omnichannel companies with strong brand recognition and extensive retail networks. The new concession regime has also decreased the number of online licenses available, reducing them from 81 to 52, which may accelerate the movement towards larger operators.
During Flutter's recent Q2 earnings call, CEO Peter Jackson highlighted that Italy continues to show "exceptional levels of growth" in both sportsbook and iGaming segments, outperforming the broader market. This positive trend occurred despite what Jackson described as a temporary setback during the completion of SNAI's migration onto Flutter's platform in April, which resulted in a "brief period of share loss". However, Flutter has since seen a robust recovery, with key metrics such as active monthly players increasing by 30% in June, particularly bolstered by strong betting during the World Cup.
While Jefferies’ market data, which extends through June, still showed SNAI’s online sports betting (OSB) and iGaming shares declining, there was hope for a turnaround linked to the successful platform migration.
Analysts noted that Sisal has consistently outperformed Lottomatica in online business growth during the past eight quarters since Flutter's acquisition, with Sisal also leading Lottomatica in iGaming expansion during that time. The acquisition of SNAI has further bolstered Flutter's standing, allowing its market share for online GGR to climb from approximately 20% to 27%, while its retail share gained from 12% to 32%. Given that retail presence significantly aids in customer acquisition, this combination poses a notable advantage.
However, Lottomatica is not complacent. CEO Guglielmo Angelozzi reported that the Italian online market grew by 12% in Q2, accelerating to 19% in June, while Lottomatica itself has been gaining share across multiple verticals, including sports and iGaming. Online revenue surged by 24% in Q2, with normalized growth of 25%, and adjusted EBITDA margins reached 58% in the first half of the year.
Lottomatica has also seen success with its own platform migrations, most notably with Planetwin365’s sports share exceeding pre-migration levels, along with iGaming recovering some of its lost momentum. This experience shapes its strategic approach to competition, with Lottomatica emphasizing the importance of acquiring high-quality market share at sustainable costs.
Angelozzi reiterated this stance, stating the focus is not solely on gaining market share but doing so profitably, a sentiment echoed by CFO Laurence Van Lancker, who underscored the importance of maintaining promotional discipline.
The upcoming competition is poised to be intense, with Lottomatica striving to maintain its leadership while ensuring profitability, and Flutter utilizing its global resources to optimize its two top brands. Although Flutter’s early results are promising, demonstrating a 30% increase in players in one month, it remains to be seen if this uptick signifies a reversal of SNAI's long-term market-share decline. If such a turnaround has occurred, the competitive landscape could become increasingly challenging for Lottomatica, as Jefferies indicates that Flutter need only replicate its previous successes with SNAI to solidify its position within the market.
