Industry experts praise Snaitech acquisition, potentially doubling Flutter's Italy market control
Unleashing the Next Chapter: Flutter's Big Play in Italy
Remember when Flutter announced on September 17 they'd be diving headfirst into the acquisition of Playtech's Italian B2C business, Snaitech? Let's break it down.
Flutter's aiming for a solid 100% ownership of Snaitech, and the deal is anticipated to close in Q1 2025. The reasoning behind this move? To beef up their 'local hero' brand portfolio, which includes leading operators in burgeoning markets, and, of course, to boost their presence in Italy, a kingdom of opportunities.
Snaitech: Flutter's Italian Ace
Analysts at Jefferies predict that Flutter could secure a 30% share of the Italian gaming market after the deal seals, thanks to its multi-brand prowess. The company's expected to hold a top spot in the online market too.
In 2023, Flutter had a 15% GGR share of the Italian online betting and gaming sector through Sisal and PokerStars brands. Snaitech trails slightly with a 10%. But let's not overlook Snaitech's strong retail presence, commanding a 16% share, just behind market leader Lottomatica's 42%. Flutter stays hot on their heels with 13%.
The secret sauce to growth in betting? You guessed it: omnichannel. Italy's 2018 advertising ban means that operators with both retail and online presence remain top-of-mind for consumers. This is supported by the figures, with operators boasting both retail and online presence accounting for 66% of H1 revenues[1].
Flutter's Expansion Blueprint: Could Spain be Next?
Italy contributes almost half (47%) of Flutter's International division's revenue, as per Barclays. Besides Italy, other markets in the "consolidate and invest" segment include Armenia, Brazil, Georgia, Spain, and Turkey[3]. These countries accounted for roughly 77% of Flutter's H1 revenue and 71% of its International profits.
Recent acquisitions in each territory point towards Spain being in Flutter's cross-hairs for future M&A activities. In 2019, Flutter snapped up Adjarabet, Georgia's market leader with a strong presence in Armenia. Last week, they grabbed a 56% stake in NSX Group, the parent company of Brazil's Betnacional. Sisal, which Flutter acquired in 2021, won a 10-year contract to operate Turkey's national lottery, Milli Piyango, in 2019, solidifying Flutter's footing in Turkey.
Playtech: The Cash Kings
A triumphant week for Playtech, with the Snaitech sale following on the heels of their rekindled joint venture with Caliente in Mexico, post a dispute and ensuing legal battle over fees.
Playtech can look forward to some moolah from the sale, despite shelling out a mammoth shareholder dividend of €1.7bn-€1.8bn. The company seems poised to reposition itself as a pure-play B2B titan, streamlining its business structure and crystalizing its market position.
"This move could pave the way for further simplification and cost opportunities in its B2B business," the note says. Playtech stands to make a 3x profit on Snaitech, which they purchased back in 2018 for €846m[2][4]. "The deal represents a very attractive price for Playtech," Investec says.
Not all is said and done for Playtech though. Questions linger about what the company might do with its newfound riches. Rumors swirl around Playtech becoming a potential buyer for sports betting platform provider Kambi, which has been up for grabs for quite some time now. Kambi's sportsbook technology could serve as a mouth-watering addition to Playtech’s B2B offerings, providing it with further access to key emerging markets like Brazil.
[1] Barclays, Q3 Gambling update, September 2024[2] Playtech Plc, Snaitec Acquisition Details, September 2024[3] Playtech Plc, Company Overview, August 2024[4] Investec, Playtech Sale of Snaitec: What's Next?, September 2024
- In line with Flutter's global expansion strategy, analysts predict that technology will play a crucial role in their attempted capture of 30% of the Italian gaming market after the acquisition of Snaitech, particularly in enhancing their omnichannel presence.
- The acquisition of Snaitech, an Italian operating company, is expected to solidify Flutter's standing in the burgeoning Italian markets of 2023 and beyond, just as they bolstered their position in Spain with the acquisition of Sisal in 2021.
- With the sale of Snaitech, Playtech will pocket a significant sum of money, potentially making them a formidable player in the market for acquiring technology companies like Kambi, which could significantly expand their B2B offerings and increase their presence in key emerging markets like Spain.
