Flutter Completes Acquisition of Lottery Operator Sisal

Posted on: August 8, 2022, 07:51h. 

Last updated on: August 9, 2022, 01:18h.

Sisal is now officially part of the Flutter family of companies. The Italy-based Italian lottery and gaming operator adds to Flutter’s ever-changing portfolio.

Sisal's office in Milan, Italy
The reception area of Sisal’s office in Milan, Italy. The lottery and gaming operator is now officially part of the Flutter group. (Image: Sisal)

Flutter began working on the $2.2-billion acquisition last year and announced that the two companies had reached an agreement in December. Next, it needed to secure all the regulatory permissions that would allow it to take control of the company’s operations legally.

That happened last week, with Flutter announcing on Friday that all regulatory requirements were in place. This will strengthen the company’s operations in Italy and give it small boosts in Turkey and Morocco.

Sisal operates the national lottery in Morocco, games of chance, and the national lottery in Turkey. However, around 90% of its gross revenue comes by way of Italy, the second-largest gambling market in Europe. Only the UK’s market is larger, although it recently slipped.

Flutter’s portfolio includes Betfair, FanDuel, Paddy Power, PokerStars, and many others. It already has a presence in Italy through Betfair and PokerStars.

Flutter Continues to Grow

Sisal has been on an upward climb this year, reporting a year-on-year increase in revenue of 58% in the first half. However, last year’s revenue suffered because of COVID-19, which alters the strength of the recent performance.

Flutter completed the acquisition about six months after it spent $541 million to buy Tombola, an online bingo operator in the UK. Both acquisitions are part of the company’s continued interest in M&A activity across Europe, the Americas, Australia, and Africa.

Sisal will also boost Flutter through a deal it signed this year with Evolution. It gained access to the company’s NetEnt and Red Tiger brands, providing an extension to a deal to offer Live Casino gaming options.

Flutter Reaching Deep

Flutter’s growth initiatives come at a small cost. It purchased Sisal using the agreed-upon credit lines when it announced the transaction last December. This raised the company’s weighted average cost of debt to approximately 3.4% for the second half of 2022.

The company is still in a good spot, though. Last year may have brought a decline in revenue, but 2022 is on the rebound. The first quarter of the year saw it report a 6% increase in combined revenue, mostly as a result of a strong performance in the US.

Despite the climb, Fitch Ratings urges caution. Last month, it changed the company’s outlook from stable to negative and lowered its Long-Term Issuer Default Rating (IDR). That change was a direct result of the Sisal acquisition.

There are also concerns about how the UK gaming market might impact the company’s operations. It already announced a reduction in revenue as it implemented changes to tackle problem gambling.

The impending gambling reform may cause another slide. Fitch forecasts that, between the reforms and Flutter’s responsible gambling initiatives, it will lose around $120.86 million in gross revenue between now and next year.