Analysts applaud Snaitech deal which could double Flutter’s Italy market share

Analysts have applauded Flutter’s €2.3bn acquisition of Playtech’s Italian B2C Snaitech business this week. Flutter could now double its market share in the country.

Flutter informed the market on 17 September it had committed to purchasing Playtech’s Italian B2C business Snaitech, after the two parties mentioned talks were ongoing back in August.

Flutter will gain a 100% ownership of the omnichannel operator, in a deal that is expected to close in Q1 2025.

Its main reasoning for the purchase is to complement its ‘local hero’ brand portfolio, which comprises leading local operators in growing markets. And to no doubt grow its presence in Italy, a key market.

Snaitech gives Flutter pole position in Italy
Jefferies estimates Flutter could end up with a 30% share of the Italian gaming market once the deal closes, thanks to its multi-brand positioning. It expects the group to maintain a top spot for online share.

Flutter had a 15% GGR share of the Italian online betting and igaming market in 2023 through its Sisal and PokerStars brands. Snaitech comes in just behind on 10%.

However, Snaitech reigns in retail betting with a 16% share, behind market leader Lottomatica’s 42%. Flutter sits behind the two with 13%.

Omnichannel is crucial for growth in betting. Italy’s 2018 advertising ban means operators with a retail presence are front of mind for customers. This is borne out by the figures; operators with both retail and online presence made up 66% of H1 revenues, said Barclays, citing H2 Gambling Capital figures.  

“As long as current restrictions on advertising hold this dynamic should persist and lead to a further mix shift within online GGR to omnichannel operators, as overall online penetration accrues to the latter set,” Barclays said in its note.

Could Flutter eye up Spain for future M&A?
Italian revenue currently makes up almost half (47%) of Flutter’s International division, says Barclays. It is also one of the operator’s “consolidate and invest” markets.

This segment also includes Armenia, Brazil, Georgia, Spain and Turkey, Barclays notes. These countries accounted for roughly 77% of Flutter’s H1 revenue and 71% of its International profits.

And – aside from Spain – it has made recent acquisitions in each territory. Adjarabet, acquired in 2019, is Georgia’s market leader with a strong presence in Armenia. Last week Flutter snapped up a 56% stake in NSX Group, parent company of Brazil’s Betnacional.

The operator has a foothold in Turkey thanks to Sisal – acquired in 2021 – winning a 10-year contract to operate the national lottery, Milli Piyango, in 2019. Sisal, of course, also strengthened Flutter’s position in Italy.

What will Playtech do with all its cash?
It’s been a very good week for Playtech. The Snaitech sale comes on the back of it reigniting its Caliplay JV with Caliente in Mexico, following a dispute and subsequent legal battle over fees.

The group is expected to net some cash from sale, even after paying a mammoth shareholder dividend of €1.7bn-€1.8bn.

Playtech has seemingly repositioned itself as a pure-play B2B behemoth on the back of this sale, giving it a simplified business structure and clear position in the market.  

“This could give scope for further simplification and cost opportunities in its B2B business,” the note said.

Playtech will make a 3x profit on Snaitech, which it bought back in 2018 for €846m. “The deal represents a very attractive price for Playtech,” Investec said.

However, Playtech will retain a B2C business in Happybet, the German omnichannel sportsbook brand. Snaitech absorbed Happybet in 2021, although it will transfer back to Playtech following the Flutter deal.

But questions around what Playtech might do with its newfound riches remain. One source told iGB it could be a potential buyer for sports betting platform provider Kambi, which has been quietly up for sale for some time.

Kambi’s sportsbook technology offering could round out Playtech’s B2B offering and would give it additional access into key emerging markets like Brazil. Playtech’s existing sports division, it’s worth noting, recorded a €72m impairment in 2023 following the loss of two “significant” retail contracts during the year.