iGaming Daily

Fernando Noodt (00:09.189)
This morning, Lotomatica announced to Milan Markets its bold play to tie the knot with Heritage Spanish gambling group Cirça. The wedding date? Yet to be confirmed, but the proposed merger will unite the market leaders of Italy and Spain while creating a stronger platform for expansion across Latin America. Standing beside a happy couple, private equity giant Blackstone, whose backing of the deal promises another significant return.

From its gambling MA portfolio and a track transaction, sorry, that will reshape the upper ranks of global gambling PLCs. Welcome to iGaming Daily, where we will cover this major story that has surprised the gaming world this week, of course. I know it surprised me. I'm Fernando Not, Media Manager for SVC, and your host for today's episode of iGaming Daily, or should I say

Ted and Ted Talking Time because I'm joined by Ted Memier, editor at large for SVC, and Ted O C Ted R. McLay, editor for SVC News, who giggled at my Ted and Ted Talking Time. I I'm I'm sure it's a giggle of respect and and admiration. Ted, how are you today?

Ted Orme-Claye (01:20.558)
Ha

Ted Orme-Claye (01:26.958)
Absolutely, I love your commitment to the brand, Yeah, I'm a big fan.

Fernando Noodt (01:31.941)
Yeah yeah yeah. Actually commit commitment is my middle name, but I don't know I know I know Ted is Ted's middle name is Balor. Ted Balor Memir, how are you today?

Ted Orme-Claye (01:37.783)
Nice.

Ted Menmuir (01:43.266)
Very well Fernando and yeah looking forward to talking about this I put it down as a Latin marriage Spicy

Fernando Noodt (01:54.938)
Yeah, yeah, yeah, Latin marriage, I love that. a little bit of a spicy soap opera for today's episode of iGaming Daily, which is brought to you by Optimove, the creator of positionless marketing and number one player engagement solution for iGaming and sports betting operators. So team, big news, big Latin marriage. So like an on-field reporter after a game, a football match.

Ted Orme-Claye (01:57.537)
Ha

Fernando Noodt (02:23.099)
What are your feelings? How are you feeling? What was your reaction to to what happened today? and did any of you saw this see this deal between Lord Marica and Cirusa coming?

Ted Menmuir (02:40.098)
Duff. Yeah.

Ted Orme-Claye (02:40.11)
Do wanna go Ted? I just said, all this talk of marriage, I feel like I should be wearing a suit and feeling a bit underdressed. But no, go on Ted, you've been following Sursa for some time, so go on.

Ted Menmuir (02:44.482)
Okay, I'll give you one of my first thoughts because I was very surprised when this kind of this morning and in particular, look, I mean, we do track Lottomatica, the Italian market and Spain.

Historically and the rumors in Italy were that lot of Matic would prioritize an &A to kind of strengthen its online offering especially with the reorganization of Italian gambling and At one point it was considered a suit for kind of the offcuts of triple eight However, kind of CEO CEO Guggenmo Angelo si

has also kind of previously sounded out that he wanted kind of international expansion post IPO. Then if we go to kind of Spain, Thurser was much in the same place as Lotomatica. It's a very kind of localized brand. And the eyes there were placed on kind of Blackstone and figuring out kind of its options in a gambling company it's invested in since 2018.

This merger is a blockbuster for Spain and Italy and other South American markets. But for me, it's whether kind of this combination really unlocks the the top tiers of the global gambling PLC orders. Ted, I'm kind of like waiting for your thoughts on this. What do you think?

Ted Orme-Claye (04:13.314)
Yeah, mean, know, the big ones to keep a lookout for is obviously pending regulatory approvals and so on, the usual hurdles and such that need to be cleared. Yeah, as and when this marriage is finalized, there'll be another big player in town in the top ranks of the industry. mean, the valuation puts this in the billions of euros, right, Ted? It was around 2.2.

Ted Menmuir (04:40.149)
Yeah.

Ted Orme-Claye (04:41.858)
2.8 billion is a figure I think off the top of my head from what I read this morning. It was one of the lower estimates. So yeah, this will be a very big company, a very considerable enterprise in the international gaming space. Like you said Ted, it's a merger of two of the giants in Italy and Spain, which are respectively two of the top five biggest markets in Europe. think Italy might be second after the UK and Spain fifth off the top of my head there.

as well as CS obviously having quite a wide range in presence in Latin America. it's whether or not this will be quite disruptive on international scene, I think, and how some of the other big players, the publicly listed players in the space, your flutters, your entanes, and so on, will respond. I was also surprised as well, though did not expect to see this coming at all.

Particularly, know Ted has mentioned that Lotomatica have hinted in the past that they're interested in international expansion. I just didn't expect a Spanish company to be the acquired firm, to be honest. That was the thing that surprised me there. And at the moment, the new Italian market, as it was re-regulated late last year,

Ted Menmuir (05:51.147)
Yeah.

Ted Orme-Claye (06:01.688)
has been getting a lot of attention and has been getting quite a good reception from the incumbent companies. To me, it almost seemed like an acquisition would be more likely in Italy as people try and get in on that and not an Italian firm acquiring a Spanish one. Yeah, the geography of this deal is probably the most surprising element of it, I think, to me anyway.

Fernando Noodt (06:27.908)
Yeah, absolutely. But I think regardless of Siriza being a s Spanish company because of course it's probably number one in in in Spain or or close to it,

Is controlled by Blackstone, right? So it's business is has been happening in there for quite some time. In 2018, it was Blackstone acquired Cirsa from from from the Lao Hernandez family. So so yeah, a lot going on, but every time or any time somebody gets married, what what's the first question you ask? What was the proposal like? What is actually Loto Matica offering Circa and how will this new

Ted Menmuir (06:42.508)
You

Ted Orme-Claye (07:07.623)
Ha

Fernando Noodt (07:10.576)
business look between this new power couple like what's what's the dowry for for for Cyrza here?

Ted Menmuir (07:19.414)
Okay so let's break it down. Look this is an all share proposition.

So it's very much a paper transaction, not with no cash. And effectively what Lotomatica has gone up to Thursa is that in the combination, Thursa shareholders will get 32 % of the company. Of that 32%, it is likely that 25 % goes directly to Blackstone as the majority shareholder of Thursa. That tells you what kind of an influence the PE company has on the deal itself.

The remaining 67 % will be owned by outstanding Lotomatica investors. Lotomatica has placed the valuation, or Italian Alis has placed the valuation on Thursa in the range of 2.83 billion.

And the mergers very much is going up with this kind of tagline of creating global gambling's second largest betting and gaming operator, generating a combined income of 4.4 billion in pro forma and adjusted a beta. No, sorry, and then adjusted a beta of two, two billion.

2 billion euros, that would place it kind of in the second tier behind Flutter PLC. But again, I've got to reiterate that that calculation is done on adjusted EBITDA.

Fernando Noodt (08:45.124)
And of course I was mentioning private equity fund giant Blackstone, an absolute giant in the gaming industry b by now. so how important is it is is this this tie up, this this merger to its proceedings, and how do you see Blackstone's involvement in this new venture unfolding?

Ted Orme-Claye (09:13.998)
Do you want to take that one, Ted?

Ted Menmuir (09:16.074)
Okay, I'll do all the telework to say.

Ted Orme-Claye (09:20.222)
You just go with it. I mean can offer my opinion afterwards but you know the facts better than me.

Ted Menmuir (09:21.3)
Okay, okay. All right. Fernando, go again.

Fernando Noodt (09:29.294)
Yeah, sure. And of course, I mentioned Blackstone before the private equity fund. so they are blessing this this tie up. So how important is that to its proceedings and how do you see Blackstone's involvement in this new venture unfolding?

Ted Menmuir (09:48.834)
Look, Baxter announced 75 % of the current shareholding of Thursa. And in many ways, the PE fund is the guaranteed winner of this deal. It gains a premium return on its investment of its funding of Thursa since 2018, but it also gains kind of a quick road out of the Spanish market that it's been looking for since 2024.

Yet most, I think most importantly for Blackstone is that it can now transfer kind of investment into 25 % shareholding in an enlarged lotomatica. And there you can have an influence over kind of a new venture and what it chooses to do.

If the enlargement goes successfully, can elevate its holding. If it under delivers, it can sell its shares at zero risk. There is little to no downside for Blackstone in this &A. And this is a P fund that always finds a way to never get burnt on a gambling &A. They just have this knack of doing it.

Ted Orme-Claye (10:58.892)
Yeah, mean, just to sort of piggyback on what Ted said, really is, like I said, there's no downsides for them. It's just a win-win-win-win-win situation, really, if you look at their outlook. They've gone from being the majority shareholder in Circe, which, fair enough, is a very formidable company in Spain. But Spain is, it has a tendency to be a tricky market. There's been a lot of political conversations there for the past year.

Well going back more than that actually, you know around marketing, bonusing and so on that's made life difficult for a lot of the operators there so it's gone from being just the major stakeholder in that to now being a stakeholder in a global company with a lot of visibility and exposure in Italy which like I said earlier is a market that a lot of people have been singing praises about and then there's all the Latin American markets as well

Ted Menmuir (11:43.286)
Mm-hmm.

Ted Orme-Claye (11:55.787)
So yeah, from their perspective, like Ted said, they've got that kind of reduce the presence in Spain a bit whilst gaining more of an international reach, more fingers in different eye gaming pies across the world. And they're now a solid shareholder in what looks set to be one of the...

one of the biggest players in the industry as and when this merger is pulled off. So yeah, it's looking positive for Blackstone based on today's reporting.

Fernando Noodt (12:31.481)
So Loto Loto Cirusa, Cirso Matica, what's what's the name of this ship? You know how they do in social media when they they say two people should be together and they like Brangelina? but yeah, in all seriousness, second largest global gambling plc, since you guys are not following my my joke here. but second largest gambling plc. how how how serious is that statement? Do you believe this will

turn out to be the second largest gambling PLC in the world, or is this just a romantic thought to keep it in the marriage line of of speech?

Ted Menmuir (13:13.26)
Okay, I'm gonna be here and I'm gonna say yes, it's a headline-crabbing statement.

And to our audiences, this has to be understood. It's delivered on the metric of adjusted a beta of 2 billion. That puts it second to Flutter and its current guidance of 2.6 for 40 year 2026 trading. Now, look, I don't think that any analyst is buying that tagline on adjusted beta alone. And the proof will be in the post merger of cashflow and profitability that investors are placing a premium on.

I went through one of the Lotomatica accounts and for 2025 it generated net profits of $150 million versus $70 million. These are results that kind of need vast improvements under a bigger corporation. If Lotomatica wants to sit on the big boys table, in particular in comparison to valuations of US enterprises, it has a long way to kind of meet that tagline. That's been sold to markets.

Ted Orme-Claye (14:17.602)
This wouldn't be the first time that tagline's been used either would it? pretty sure Didn't Alwin bill itself as the second largest gaming PLC last year after the prize picks take over? I think this label is often used The other thing I just said off the back of that is that the gambling markets have proven themselves to be, as we all know, often incredibly volatile

Ted Menmuir (14:21.055)
Yum.

Ted Menmuir (14:30.344)
It, yeah.

Ted Orme-Claye (14:45.656)
Flutter was the largest last year and was on top of the world and now its share price is down by what over 50 % year to date. When you've got a lot of international exposure, yes it gives you lots of different revenue streams but it can also leave you exposed to a lot of big regulatory changes as and when they happen in whatever markets you're in and that can affect your cap and your outlook. So yeah, I'd always just say to...

proceed with bit of caution with big ambitious statements like this but fair play to them, there's some pretty impressive figures in there.

Ted Menmuir (15:25.594)
Remember, it's always a prospectus.

Ted Orme-Claye (15:28.076)
Yeah.

Fernando Noodt (15:28.281)
Mm-hmm.

Proceed with caution like most marriages, but right now we're gonna proceed with a very quick outbreak and we will be right back with more iGaming Daily.

Ted Orme-Claye (15:36.525)
You

Fernando Noodt (15:46.05)
And we're back with more iGaming Daily to continue discussing a major deal that was announced recently, Lotomatica and Circa merger. So another Euro MA has been struck. So these are two heritage businesses from hit from Italy and from Spain. Can they be a good match both at home in their home countries and abroad, Ted?

Ted Menmuir (16:18.602)
Okay, so I think look, they're saying lot of them have to go to highly localized brands in Spain and Italy. And, know, prospectus aside, I actually don't know how much they want to rock the boat of kind of these podium positions in their home markets with talk of kind of merger synergies, right? So I think that position secured.

Now Fernando, I'll just turn to you in South America and where do you kind of see their kind of potential of CERSA and Lottogram, Maticam merging, because they are in very kind of, you know, distinct markets in Mexico, Colombia, in Peru and Panama.

Fernando Noodt (16:59.107)
Yeah, of course that Mexico is the first thing that comes to mind and Colombia with a very established market. But Cirusa did have presence in in Panama, Costa Rica, I think. And recently they have acquired mm company for for eye gaming in Paraguay. So I think that there is some good prospects in Latin America, not only for this new merged company.

but for all the gaming industry. So right now Latin America is a big opportunity for the the gaming industry. But with Cirça

having already a foothold on on these countries, I think that they can do a a good job there. And with the expanded power brought in by by by this automatic emerger, I'm sure that that they can they can continue to grow, especially in markets like Mexico that has a lot of potential to grow, even though that

The country still needs a regulation reform and regulation update for the industry. But once that happens, the the Mexican market will will really take off. And I think that Siriza has a has a strong position there to really make the best out of this of this whole situation for sure. so moving on. why do you think?

Ted Menmuir (18:06.807)
Yeah.

Fernando Noodt (18:30.051)
that the time why the time is now for Lotomatica to expand actually outside of Italy because of course like we said heritage business in Italy but why is it time to to to move abroad, to move elsewhere, to expand? And what has CEO Guglielmo Angelozzi stated about the business and its current state?

Ted Orme-Claye (18:53.39)
I think again, mean Ted broke the story so he might know the facts a bit better than me but I mean like I said earlier the Italian market has been getting a lot of attention lately. Lottomatica is one of the big players there. I think they've been from what I remember over some of their financial results over the past year they've been making progress so there could be an element of just like strike while the iron is hot kind of attitude.

We've been getting good momentum. Let's keep the ball rolling. Let's go international now. I think another part of it as well is because of all that attention that the Italian market has been getting is becoming more competitive. You know, we've seen Flutter now own two brands there. Betzen are there. You know, they've been focusing very heavily on Italy actually from I remember from their recent financials as well. Bet365 have been pushing for growth there as well.

Ted Menmuir (19:34.764)
Hmm.

Ted Orme-Claye (19:47.887)
So as much as Lotomatica has got a very strong position there itself as one of the top brands, yeah, there's probably two elements to this. There'll be one thinking, let's keep the ball rolling and keep the momentum going and B, unlock some more revenue streams as Italy becomes more competitive. Yeah, I think that'd be my two cents on the issue, Ted, don't know about you.

Ted Menmuir (20:12.276)
Yeah, I mean, I'll just add to that and say that the CEO, Kichok Manjarozi, he's been in charge of Lotomatica for the past 12 years and he's seen the company through many transitions. It's split from IGT Lotteries, it's ownership under Apollo and 2024 is relisted on the Milan Exchange.

He, as a leader, has cited that Lottomatica has to kind of broaden its horizons, move away from Italy. And part of the reason I think why it's pulled the trigger this early is because Angelozi said after H1 that the company can no longer just wait on this kind of reorganization of Italian gambling. It has to kind of proceed with an expansion and it has to kind of...

take on these opportunities that are presented to them. I think that this is kind of an evolution full automatic.

Fernando Noodt (21:15.062)
And of course, this is not the first big MA announcement in the gaming industry. big mergers before have failed to deliver on prospectus plans, FDJ Kindred, Tap Court Tats, 88A William Hill, etc. etc. do you think Lotamarica and Searsa merger is any different? And what do you think could wreck this marriage and and their evaluation amongst industry plc?

Ted Menmuir (21:49.283)
Okay, I don't want to wreck the marriage. Well, I'll give them six months. No. I'm thinking about this and I think, look, this is an asset test for both of these businesses.

And I think that Lotomatica and Cerser have never been tested on this large scale of an &A or integration. Yes, both companies have acquired, but they've acquired local brands. Goldbet, for example, by Lotomatica at a much smaller scale in terms of spend and in terms of resources. This is going to test the whole group. And I think what what markets need to find out is what is the roadmap towards kind of the synergy creation

and how much savings dealmakers expect to generate.

The integration phase is going to be critical and I think that that's really undone a lot of kind of new PLCs in the market I look at FD chain Kindred tab Corbin tats these being you know These yeah, they're being kind of significant liabilities carried out in how they kind of integrated the companies Ted You've seen this before What do you think what do these on the horror?

for

Ted Orme-Claye (23:12.91)
I don't know, don't really know how much more I expand on what you've said. think often it will, you know, you, sometimes with this industry, well with business in general, it is just a bit of luck of the draw, but especially with such a high risk and highly regulated industry as gambling, betting and gaming, it does just depend on what happens in the markets you're in and you're exposed to. So, know, FDJ and Kindred, I think was just, there was a bit of an unfortunate.

Ted Menmuir (23:26.102)
Yeah.

Ted Orme-Claye (23:38.859)
An unfortunate timing of that in that they bought out Kindred, obviously got the Unibet brand which counted the Netherlands as a very big market in the UK, coinciding with some regulatory reviews in the UK and new taxes there. really, like bitterly opposed taxes in the Netherlands. And if you look at their recent financial statements, that's dealt a blow to them. Obviously you've got the tax situation in France as well. So I'd say with Sur Sur Automatica, it's just the big factor is it just depends what's going on.

what could change the outlook in the markets there in Italy is going all right. Like we said, certainly with the online market, the retail side of things is as you've written about a lot Ted is a bit of a different matter and there's some outstanding kind of liabilities there isn't there for the government to reorganize that. Spain, like I said earlier, there's often a lot of political conversations there about cutting back industry marketing and bonusing abilities and so on.

We had some conversations in Mexico about a new tax, we, not long ago? was a government eyeing up at a SIN tax, as the term is. So the Peru tax as well often gets talked about in Latin America, financial conversations about gambling. So yeah, it really depends on what goes on in the markets they're in and whether that'll affect their performance there and their outlook there.

Ted Menmuir (24:42.753)
Yeah.

Ted Orme-Claye (25:04.778)
ultimately the whole group's outlook.

Fernando Noodt (25:08.386)
I guess we will have to hashtag wait and see what happens with this Lotomatica Cirsa merger. but right now we're out of time. like the remote. And yeah, subscribe to all SVC media newsletters to keep up to date with the Lotomatica Cirsa merger and all the major news in the gaming industry worldwide. And of course, follow iGaming Daily on social media and subscribe to your preferred podcasting platform.

so you can listen to this very beautiful segment which is Ted and Ted Talking Time and all the other cast members of this marvelous play, which is iGaming Daily. Thank you very much, Ted, Ted, thank you, Anea McDonald for producing this episode. I'm Fernando Nott and to our listeners out there we'll see you in the next one.