IGT Chosen to Retain Control of Italy's Lottery
International Game Technology (IGT) has successfully renewed its pivotal contract to operate Italy's national lottery, a deal considered central to the company's business operations. The announcement was made on May 19, confirming that IGT will continue its decades-long role in managing the Italian lottery through a high-value bid that secured the renewal amid competitive industry conditions.
LISTEN TO THIS ARTICLE:To retain its position, IGT submitted a bid amounting to $2.6 billion. The financial structure of the deal includes two upfront payments scheduled for 2025. The first payment will total €500 million, approximately $562 million, followed by a second installment of €300 million, or about $338 million. The remaining balance of approximately $1.7 billion is due in 2026, bringing the full commitment to the agreed total.
Related: IGT Gains Another Responsible Gaming Certification in ItalyIGT operates the Italian lottery through a consortium composed of multiple partners, including Allwyn, Arianna 2001, and Novomatic. IGT maintains a controlling interest in the consortium, holding a 61.5% stake.
This continued partnership positions IGT as the leading figure in one of the largest and most lucrative lottery markets in Europe. The Italian lottery has been a cornerstone of IGT's global operations for more than three decades, underscoring the strategic importance of the contract renewal.
Equity research analysts have responded to the announcement with measured commentary. David Katz of Jefferies Equity Research observed that IGT's willingness to place an aggressive bid was consistent with its long-standing tenure and the critical nature of the contract. He explained that such a move was expected given the company's priority to maintain its dominance in the lottery sector, particularly in light of ongoing structural changes within IGT's business model.
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IGT Offloads Non-Lottery Products to Apollo
Earlier this year, IGT agreed to sell its non-lottery assets to Apollo Management, a move that will streamline its operations and further concentrate its focus on the lottery sector. The proceeds from that transaction are expected to total approximately $4 billion.
However, Katz noted that the scale of the Italian lottery bid would limit the immediate financial benefits of the asset divestiture. The size of the commitment reduces the potential for large-scale capital returns to shareholders in the near term, altering investor expectations.
IGT has indicated that while it is winding down its slot machine business, it aims to strengthen its presence in digital sectors such as iGaming, iLottery, and sports betting. This pivot reflects broader industry trends, with gaming companies increasingly turning to digital platforms to capture new growth opportunities. With the retention of the Italian lottery contract, IGT reinforces its position as a global leader in government-sponsored gaming and lottery operations.
Katz also remarked that although IGT's stock may experience positive movement as a result of the retained contract, the significant financial outlay could temper the degree of gains. He noted that the renewal was essential for the company's long-term prospects and stability, particularly as lottery operations now represent the core of IGT's business following the spinoff of its gaming division. The lottery sector, therefore, remains the central pillar of the company's forward strategy.
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