Flutter strengthens its position in Italian market with £1.62bn Sisal acquisition

Flutter Entertainment has acquired leading Italian lottery and online gaming operator Sisal from CVC Capital Partners Fund VI for £1.62bn.

The Dublin-headquartered group said the transaction, which it expects to complete in Q2 2022, will increase its presence in the Italian market – where it already operates with PokerStars and Betfair – to 20% and therefore “secures a gold medal position”.

Sisal’s current online market share in the country is 11.9%, while its retail arm consists of 1,700 Sisal outlets and anther 40,000 concession points of sale.

It is Milan-based Sisal’s omni-channel offering that will “deliver a competitive advantage”, Flutter said, particularly in a market with “severe advertising restrictions and the prevalence of cash deposits and withdrawals through retail”.

While Sisal has 300,000 “highly engaged online average monthly players”, the operator boasts 9.6 million retail customers, it was revealed.

However, Flutter highlighted how Europe’s second largest gambling market has seen online penetration swell from 10% in 2019 to around 20% today, while Sisal’s online revenue has grown by a compound annual rate of 34% since 2016.

Around 90% of Sisal’s EBITDA in 2021 is derived from Italy, with the remainder coming from regulated lottery operations in Turkey and Morocco.

Sisal, which employs 2,500 people, expects to generate revenue (after gaming duties) of £590m and EBITDA of £211m – 58% of it from online – in the 12 months to December 2021.

Furthermore, Flutter revealed that roughly 95% of online revenue is expected to come from gaming and sports betting combined. Broken down, that is 59% from gaming and 36% from sports wagering.

Flutter CEO Peter Jackson said: “I am delighted to add Sisal, Italy’s leading gaming brand, to the group as we look to attain a gold medal position in the Italian market.

“For some time, we have wanted to pursue this market opportunity via an omni-channel strategy and this acquisition will ideally position us to do so. Sisal has grown its online presence significantly in recent years, aided by its proprietary platform and commitment to innovation.”

Flutter also highlighted how online penetration rates in Italy “remain well below the UK and Australia” but that the Italian market is forecast to be worth £3.6bn by 2024, which equates to a five-year compound annual growth rate of 18%.

Francesco Durante, CEO of Sisal, commented: “Over the last five years, thanks to CVC’s support, we have successfully transformed Sisal into a leading digital and international gaming company.

“Through our commitment to digital innovation, international expansion and safer gambling, we have achieved a leadership position in Italy’s online gaming market and developed our global footprint by winning lottery tenders in Morocco and Turkey.”

He continued: “We are delighted to join Flutter and are convinced that through its scale and operational capabilities, we will be able to further strengthen our leadership in the markets we operate in.”

Sisal is one of four entities bidding for the fourth National Lottery licence in the UK, with a decision due in February 2022.

The purchase of Sisal is the second deal in two months for Flutter after the company gobbled up privately owned, bingo-led operator tombola in a deal worth £402m.

Flutter recently topped EGR’s Power 50 rankings for the second year in a row.