A spate of mergers and acquisitions among Italian-facing operators has shaken up Europe’s second-largest online market, leading to a more heavily concentrated market share picture at the corporate level.
The Lottomatica Group’s €310m acquisition of rival online operator Betflag in November rounded off a busy year of deal making in the Italian gambling market.
Major deals completed in the year-to-date include the completion of Flutter Entertainment’s €1.9bn acquisition of domestic giant Sisal in August.
Prior to that in June, a merger of multi-channel stalwarts Lottomatica and GoldBet formed an enlarged Lottomatica Group that has since been further augmented by the acquisition of Betflag.
Elsewhere in the market, Spanish land-based gaming specialist Cirsa purchased a 60 percent stake in fast-growing Italian online brand Eplay24 in September, while 888 completed the acquisition of William Hill’s non-U.S. assets, including williamhill.it, in June.
This flurry of M&A activity has meant that the leading four Italian operators — Flutter, Lottomatica, Entain and SNAI — accounted for a majority 57 percent of Italian online gross gaming revenue (GGR) in the first nine months of 2022 on a pro forma basis, up from an equivalent 37 percent across SKS365, Entain, Sisal and SNAI in 2019.
SNAI, a co-market leader at the brand level with Sisal, was itself acquired by Playtech in 2018 and now stands as the only single brand operator among this leading group.
SNAI and Sisal held overall online market shares of 10.8 and 10.7 percent respectively in the first nine months of the year, followed by the tightly grouped quartet of Eurobet (7.7 percent), GoldBet (7.4 percent), planetwin365 (7.3 percent) and PokerStars (7.1 percent).
At company level, Flutter now leads the market with a pro forma market share of 18.9 percent between Sisal, PokerStars and Betfair in the first nine months of 2022, edging out Lottomatica, which has become the largest operator in online betting specifically and commands a total market share of 16.7 percent across the GoldBet, Lottomatica and Betflag brands.
SNAI and Entain, which combined Bwin and Eurobet under the same corporate umbrella after the acquisition of Ladbrokes Coral in March 2018, round off a new big four in Italian online gambling, each controlling 10.8 percent of the overall market between January and September 2022.
The Italian online gambling market has more than doubled in size since the country’s full introduction of a blanket advertising ban in July 2019, ramping from €1.68bn in GGR terms during the year ending June 2019 to €3.62bn in calendar 2021.
Market revenue has since plateaued around that level on a rolling 12-month basis, with online GGR contracting by 8.2 percent to €1.81bn in the first half of this year before rebounding by 23.8 percent in the third quarter amid favourable betting margins and a softer online casino comparative.
This step change in market size, benefiting domestic "omni-channel" brands with a physical presence in Italy such as Sisal and SNAI more so than international online specialists including bet365 and PokerStars, was accelerated by retail-to-online channel shift during periods of lockdown in 2020 and 2021.
A swing in online market share towards retail operators was nevertheless evident before the onset of COVID-19 and has not reversed since the reopening of betting shops in Summer 2021.
For instance, Sisal, SNAI, Lottomatica, GoldBet and Eurobet garnered a combined online market share of 45.9 percent in the year to September 2022 versus 36.2 percent in the year to June 2019.
The importance of scale and an omni-channel presence in both betting and gaming, elevated by Italy’s gambling advertising ban and shifts in consumer preferences during the pandemic, can be seen as one of the catalysts of the recent upturn in corporate dealmaking.
With stricter advertising regulations continuing to proliferate across Europe, the Italian experience may yet prove to be a portent of increased market share consolidation and M&A activity elsewhere on the continent as sub-scale online specialists feel the squeeze and retail-led "local heroes" continue to be targeted for bolt-on acquisitions.