All-out Shakeout

1 February 2006

Lottomatica's recent acquisition of Gtech appears to be the start of a shakeout in the gambling industry, and Scientific Games Corporation has stepped up as the next major buyer.

Sci Games followed the Gtech deal by signing an agreement to acquire all of the online lottery assets of the Swedish firm EssNet AB for approximately $60 million, and its latest move is purchase of the Global Draw Ltd. from Walter Grubm├╝ller for $183 million.

Formed in 1997, U.K.-based Global Draw is a leading supplier of fixed-odds betting terminals and systems as well as interactive sports betting systems. It is beginning to extend its core product, the fixed-odds system, to meet the needs of European video lottery markets. The group also operates terminals and betting systems in Austria and other parts of Europe, and recently established an Internet sports betting operation called Omnibet.

The consolidation trend shows that suppliers and operators are aiming to form integrated total entities, and the frontrunner in this trend was Greece gambling company Intralot, which is an international operator and supplier. The next "shaker" could be the Greek Organization of Football Prognostics (OPAP), which is reportedly looking to venture into the casino and lottery industries, possibly via acquisition.

Surprisingly, the companies driving the trend (Lottomatica, OPAP, Scientific Games, Essnet, Lotomatica and Gtech ) are members of the World Lottery Association and the European Lotteries, as it is written in the bylaws of both organizations that the members must effectively prevent advertising, sales and distribution of their products--either directly or indirectly--in foreign EU jurisdictions.

Further, the crown jewels--Milli Piango (Turkish National Lottery) and the U.K. National Lottery, both EL members--are waiting to be picked up. Will their suitors be EL members as well?

Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.