Gambling Giants Lottomatica and Cirsa Propose Merger to Create Global Leader

A seismic shift is occurring in the European gambling industry. The two heavyweights Lottomatica and Cirsa have officially announced their plans to merge. This move will create an entity that, according to their own statements, will become the second-largest listed betting and gaming operator globally. The boards of directors of both companies agreed on Wednesday morning to a framework for an all-share combination that could permanently change the market in Europe.

The distribution of roles within the new structure is particularly interesting. While the name Lottomatica will remain as the brand for the combined entity, the current shareholders of Lottomatica will hold a significant majority of 67.5 percent of the capital. Cirsa shareholders will account for 32.5 percent. A decisive player in the background remains the US private equity firm Blackstone. As Cirsa's largest shareholder, Blackstone will retain a powerful position following the combination, owning around 24 percent of the total share capital. This secures the investor a strategic foothold in one of the continent's most lucrative markets.

Numbers and facts

The economic power of the new company is impressive. Pro-forma, an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of €2 billion is targeted. The listing is intended for Euronext Milan as well as the Spanish stock exchanges, highlighting the international ambition. The headquarters of the new group will be located primarily in Rome, Italy, with an additional strategic hub remaining in Barcelona, Spain. Guglielmo Angelozzi, Chairman and CEO of Lottomatica, sees this step as a historic opportunity for both companies.

"The merger will create the undisputed leader in Italy and Spain, among the best gaming markets globally, complemented by leadership positions in other very high growth geographies." - Guglielmo Angelozzi, CEO of Lottomatica

This optimism is shared by the other side. Antonio Hostench, CEO of Cirsa, emphasized the diversity of the new giant. He envisions a world-class diversified gaming leader with leading positions across its core markets. Lionel Assant of Blackstone, who is also Vice Chairman of Cirsa's board, noted that the merger brings together two companies with shared values and strong brands.

Background

The merger fits seamlessly into a series of large acquisitions in Europe. Recently, Banijay Group made headlines by acquiring Tipico Group. FDJ United has also gained significant ground by incorporating Kindred brands. The trend is clearly toward consolidation to compete against global competition from overseas and the unregulated market. Through size and geographic diversification, Lottomatica and Cirsa hope for increased innovation and better economies of scale.

Why it matters for German players

For German players, this news is significant, even if the primary focus is on Italy and Spain. Large corporations like Lottomatica often have an indirect influence on the German market, whether through subsidiaries or as technology providers. In Germany, the State Treaty on Gambling 2021 (GlüStV 2021) regulates the market extremely strictly. Anyone wishing to play legally in this country must stick to providers listed on the official whitelist of the Joint Gambling Authority of the States (GGL). These companies guarantee compliance with the €1,000 monthly deposit limit and the strict €1 per spin limit for virtual slot games.

Whether this merger will push more brands into Germany remains to be seen. However, it is certain that monitoring via the LUGAS system and the OASIS exclusion file remains mandatory for all legal providers. The increased market power of such giants could lead to technological innovations in player protection being implemented faster, as financial resources for complex IT solutions are available. However, players should always critically check whether a casino holds a German license to avoid ending up with illegal MGA or Curacao providers that offer no legal protection according to German standards.

What it means for GGL-licensed casinos

Competition for already established German GGL casinos is growing due to such mega-mergers. A company with €2 billion EBITDA has enormous marketing budgets at its disposal. Nevertheless, the German legislature protects licensed providers from unfair competition by more consistently prosecuting illegal offers. For the local industry, the Lottomatica-Cirsa merger means one thing above all: the pressure to professionalize is increasing. Anyone wanting to play in the big leagues must not only offer an excellent game portfolio but also perfectly implement the strict German requirements for youth and player protection. Only in this way can they hold their own against international dominance.