IGT wins tender process to continue Italian lottery operations

International Game Technology (IGT) Stands Out in Competitive Italian Lottery Tender

International Game Technology (IGT) has been at the forefront of the Italian lottery landscape since 1993. When the tender process for the lottery’s operation was initiated earlier this year, IGT faced stiff competition from industry giants including Novomatic and Allwyn, and speculation regarding Flutter’s involvement. With the current licensing term concluding in November, the stakes were high.

Today, IGT proudly announced its success in leading the winning LottoItalia consortium, which also includes Allwyn, Arianna 2001, and Novomatic Italia. This tender will secure operations until November 2034, marking a significant commitment to the Italian gaming market.

The consortium’s bid involves an impressive €2.23 billion upfront payment, to be disbursed in three installments leading up to April 2026. The initial installments, projected at €500 million and €300 million, are slated for distribution in 2025, indicating a strong financial backing for this venture.

Barry Jonas of Truist Securities emphasized the magnitude of this new upfront fee, which dwarfs the €770 million secured during the 2016 bidding process and exceeds the projected range of €1.3 billion to €1.5 billion that Truist had anticipated.

During last week’s earnings call, IGT CEO Vince Sadusky highlighted the company’s strategic planning, revealing a $500 million investment earmarked for the Italian lottery should they secure the license. This investment is part of a broader €1 billion term loan aimed at enhancing operational capabilities.

Sadusky articulated that the substantial operational fee reflects the “significant value” of the new license, expressing confidence that this investment will bolster revenue streams and long-term profitability despite a 10% decline in overall group revenue in Q1.

“We aim to significantly enhance our iLottery sales and leverage this momentum to advance into the Italian B2C iCasino, sports betting, and other digital gaming sectors,” Sadusky noted.

Allwyn, contributing a 32.5% share of the license fee and the associated capital expenditure, also expressed enthusiasm about the collaboration. CEO Robert Chvatal remarked, “We’re delighted that our proven capability in modernizing and expanding lotteries across Europe will continue to complement IGT’s stewardship of this vital national asset in Italy.” He underscored the intent to drive growth in the Italian Lotto while fostering innovative solutions for responsible gaming practices.

IGT Secures One of the Most Coveted Lottery Contracts

According to the Financial Times, the concession rate on total wagers will be set at 6%, with an additional gross fee of 8% collected through various digital channels. This financial structure reflects IGT’s commitment to leveraging technology in lottery operations.

In a statement, Marco Sala, IGT’s Executive Chair of the Board, affirmed the significance of the Italian lottery concession, calling it one of the world’s most critical lottery contracts. He stated, “IGT and its predecessor companies have effectively managed the license for over 30 years through constant innovation and the deployment of cutting-edge technology.”

“This award is incredibly gratifying. We are honored and excited to continue our collaboration with ADM [Customs and Monopolies Agency] for another nine years,” Sala added.

In his analysis, Jonas from Truist noted that IGT’s anticipated success in the rebid was aligned with the regulator’s scoring criteria, which weights financial aspects at 60% and technical aspects at 40%. He indicated that IGT emerged victorious under this scoring system, with an official announcement pending.

Despite the loss of the Italian lottery license to IGT, Jonas believes this will not substantially affect Flutter, stating that their pursuit of traditional lottery operations diverged from Flutter’s core digital focus and lower historical multiples (~5.5x). This perspective underscores the evolving landscape of the gambling industry, where traditional and digital platforms increasingly intersect.