Analysts have welcomed Flutter's acquisition of Italian B2C business Snaitech for €2.3 billion, which took place in mid-September. Flutter can now double its market share in the country.
On September 17, Flutter announced its plans to acquire Playtech’s Italian B2C operation, Snaitech, following discussions between the two companies in August. Flutter intends to acquire a 100 percent stake in the omnichannel operator, with the transaction anticipated to finalise in the first quarter of 2025. This acquisition aims to enhance Flutter's portfolio of "local hero" brands, which feature prominent operators in emerging markets, as well as to strengthen its footprint in Italy, an important European market.
Snaitech gives Flutter a pole position in Italy
Jefferies projects that Flutter could capture a 30% share of the Italian gambling market following the completion of the deal, leveraging its multi-brand strategy. The company anticipates that Flutter will maintain its leading position in online market share.
In 2023, Flutter held a 15% share of the Italian online betting and gambling market, primarily supported by the Sisal and PokerStars brands, with Snaitech closely trailing at 10%. Conversely, Snaitech dominates the retail betting segment with a 16% share, while market leader Lottomatica holds 42%. Flutter trails in this area with a 13% share.
Omnichannel capabilities are vital for betting industry growth. Since the advertising ban enacted in Italy in 2018, operators with a retail presence have gained significant customer attention. Supporting this trend, Barclays reports, using data from H2 Gambling Capital, that operators combining retail and online operations accounted for 66% of revenue in the first half of the year.
Barclays stated, "As advertising restrictions persist, we anticipate this trend will continue, resulting in an ongoing shift in online gross gaming revenue (GGR) favouring omnichannel operators, while overall online penetration grows at the detriment of others."
Flutter's Focus on Spain: M&A?
Barclays reports that revenue from Italy now constitutes nearly half (47%) of Flutter's international operations. Italy is considered one of the operator's key markets for "consolidation and investment." Other countries included in this segment are Armenia, Brazil, Georgia, Spain, and Turkey. Collectively, these nations generated approximately 77% of Flutter's revenue and 71% of its international profits in the first half of the year.
Flutter has made recent acquisitions in all these markets except Spain. For instance, Adjarabet, which was acquired in 2019, leads the market in Georgia and has a significant presence in Armenia. Additionally, last week, Flutter secured a 56% stake in NSX Group, the parent company of Brazil's Betnacional.
In Turkey, Flutter established its presence through Sisal, which it acquired in 2021. Sisal won a 10-year contract for the national lottery, Milli Piyango, in 2019, while also bolstering Flutter's position in Italy.
What will Playtech do with the money??
Playtech has experienced an exceptionally positive week, highlighted by the sale of Snaitech. This development coincides with the resumption of operations for Caliplay's joint venture with Caliente in Mexico, which had previously faced a dispute and legal challenges regarding royalties.
The company anticipates generating profit from the sale, despite the substantial dividend payout to shareholders ranging between €1.7 billion and €1.8 billion. With this transaction, Playtech is positioning itself as a pure B2B powerhouse, allowing it to streamline its business model and define its market presence more clearly.
Company representatives noted, "This could create an opportunity to further simplify operations and cut costs in our B2B division." Playtech is set to realise a threefold profit from the Snaitech acquisition, which it initially purchased for €846 million in 2018. Investec described the deal as an attractive opportunity for Playtech.
Despite the sale, Playtech will keep its B2C operations through Happybet, the German omnichannel sportsbook brand. Happybet was acquired by Snaitech in 2021 but will return to Playtech following the Flutter agreement.
However, uncertainties linger about how Playtech will utilise its new capital. Industry insiders suggest the company may be a potential acquirer of Kambi, a sports betting platform provider that has been quietly up for sale for some time. Kambi’s sports betting technology could enhance Playtech’s B2B offerings and expand its reach into crucial growth markets like Brazil. It's important to mention that Playtech's sports division recorded a €72 million impairment charge in 2023 after losing two major retail contracts during the year.
