Lottomatica currently leads the Italian online gaming market, but recent analysis from New York's Jefferies investment bank indicates that this dominance is increasingly at risk from the combined strength of Flutter's Sisal and SNAI brands. In the first quarter of this year, Lottomatica accounted for 30% of Italy's online gross gaming revenue (GGR), while Flutter closely followed with a 27% share.
The performance of SNAI under Flutter's ownership will be crucial in this competitive landscape. Since acquiring Sisal in August 2022, Flutter has boosted its online GGR share from approximately 10% to 13%, achieving gains of around three percentage points in both online sports betting and iGaming. In contrast, Jefferies reports that SNAI has lost roughly four percentage points of its online share in recent years. Should Flutter manage to recover these lost points, it could surpass Lottomatica in market share.
“Flutter has a record of capturing market share in nearly every territory it targets,” Jefferies remarked, hinting that the evolution of market share in Italy will be closely monitored in the upcoming quarters.
Italy's market presents significant opportunities, projected to generate €22.6 billion in GGR by 2025, making it the largest gambling market in Europe. Interestingly, online penetration remains low at 28%, compared to 61% in the UK. Jefferies anticipates a compound annual growth rate of 9% for Italian online GGR from 2025 to 2030.
Italy's strict advertising regulations tend to favor well-established omnichannel businesses with strong brand presence and extensive retail networks. Additionally, the new licensing regime has reduced the number of online licenses from 81 to 52, potentially accelerating the trend toward 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, surpassing the overall market performance despite some initial disruptions from transitioning SNAI onto its platform in April.
The migration initially caused a temporary decline in market share, but recovery seems to have been swift. “Performance recovered strongly in June as customers welcomed a significantly expanded product offering,” Jackson noted, mentioning a 30% increase in active monthly players and strong parlay activity during the World Cup.
Jefferies' market data up until June indicated a decline in SNAI’s online sports betting and iGaming shares, without any clear signs of an upturn; however, the completion of the platform migration might have set the stage for recovery. Flutter asserts that such an inflection has already begun.
The comparison with Sisal reinforces this position. Jefferies reported that Sisal has outperformed Lottomatica in online growth in seven of the past eight quarters under Flutter's management, consistently leading in iGaming growth as well.
Moreover, the acquisition of SNAI significantly enhanced Flutter's retail presence, with Jefferies estimating Flutter’s share of online GGR jumped from around 20% to 27%, and its retail sports betting share grew from 12% to 32%. In an environment where retail presence is vital for customer acquisition, this creates a formidable advantage.
However, Lottomatica is not resting on its laurels. CEO Guglielmo Angelozzi informed analysts that the Italian online market grew by 12% in Q2, reaching 19% in June, as Lottomatica continued to expand its shares across all sectors.
“In a mix of organic growth and M&A, we’ve progressed from being a marginal operator to the largest in the market,” he stated. The company reported a 24% increase in online revenue for Q2 and a 25% rise on a normalized basis, with adjusted EBITDA margins hitting 58% in the first half of the year.
Lottomatica has also successfully migrated Planetwin365’s sports share above its pre-migration level. CFO Laurence Van Lancker noted that it had gained 0.2 percentage points, recouping about half of the lost ground in iGaming.
This experience shapes Lottomatica’s strategic approach in this growing competitive environment. The company emphasizes a focus on acquiring quality market share sustainably, rather than merely chasing volume. “The aim is not solely to acquire market share but to obtain quality market share at a sustainable cost,” remarked Angelozzi. Van Lancker reiterated the commitment to "profitable growth" and discipline in promotions.
The stage is set for a robust competition in the Italian online market. Lottomatica is working to defend its leadership status while maintaining high levels of online profitability. On the other hand, Flutter is leveraging its global product and technology expertise with its two leading brands, seeking to tap into SNAI for incremental growth.
Flutter's initial results are promising, but the recent surge of 30% in player growth is not definitive evidence that SNAI has fully reversed its decline in market share. If it has, however, the implications for Lottomatica could be significant. Jefferies indicates that Flutter may not need to forge a new success story in Italy; it simply needs to replicate its Sisal achievements with SNAI.
