“Good, but not as good.” That was Truist Securities analyst Barry Jonas’s summation of International Game Technology’s earnings prognosis after the company paid $2.6 billion to extend its Italian lottery contract.
Although IGT will be paying more to provide lottery services, it expects to recoup the increase through a mix of long-term growth in online lotteries and cross-selling players into igaming. “Shares have reacted unfavorably, also reflecting a likelihood of less than anticipated returns to shareholders,” Jonas reported.
Jonas stuck with his Hold rating and $18-per-share price target. IGT shares were trading at $16.07 apiece at the time of his report.
The analyst opined that IGT would no longer be outperforming, but that its results would be comparable with most online-lottery earnings. “Driven by ilottery-related growth, Lotto should still generate a ‘similar amount of cash (net of minorities)’ after amortizing for the new upfront fee as it did in the previous nine years,” he explained.
Pivoting to digital gaming, IGT perceived (according to Jonas) considerable upside, not just in lotteries, but in sports betting, igaming, and bingo as well. It noted a 25 percent overlap between online-lottery players and online-casino gamblers.
Jonas explained further that online lottery sales grew at a 26 percent clip over the decade-plus between 2013 and 2024. IGT, he said, drove this growth with 35,000 online-lottery terminals, as well as its brand identity.
Domestically, IGT is looking to catch up with its European counterparts. In the United States, it currently enjoys three percent market penetration, compared to 14 percent in France, 17 percent in eastern Europe, and 45 percent in the United Kingdom and Scandinavia. IGT management said it would be using its online-lottery database of 20 million to market bingo, sports betting, and igaming.
IGT’s Italian scratch-and-win contract comes up for renewal in 2028. Jonas wrote, “We don’t see any significant parallels to the competitive Lotto process, given the limited number of alternative bidders.”
