Brightstar Lottery (BRSL) Status Update summary

Italian Lotto license renewal and strategic update

• Awarded a new nine-year Lotto license in Italy, extending operations through November 2034, with a €2.23 billion upfront fee payable in three installments.

• Plans to grow revenue and cash flow by investing in iLottery, launching a B2C digital iCasino and sports betting platform, and enhancing retail and digital integration.

• Received the maximum technical score in the tender, reflecting technology leadership and a strong track record, including a 3% CAGR in retail Lotto wagers since 2010.

• Innovation pipeline includes new games, expanded terminal capabilities, and a mobile-first approach via the My Lotteries app, which is already the top gaming app in Italy.

• Digital iLottery wagers have grown at a 26% CAGR over five years, with significant headroom for further growth compared to other European markets.

Digital and B2C expansion strategy

• My Lotteries app enables cross-selling into iCasino, sports betting, and bingo, leveraging a 20 million player base and 35,000 POS network.

• Digital licenses earn an 8% gross fee on wagers, with incremental profit expected from higher digital penetration and cross-sell opportunities.

• Digital business expected to be incremental, not requiring market leadership to create significant value.

• CapEx for digital expansion is €30 million over nine years, with €150 million for Lotto infrastructure upgrades, mainly in 2025-2026.

• Digital and retail integration aims to increase player engagement and attract new, younger demographics.

Financial outlook and capital allocation

• Projected IRR for the new license is in line with historical lottery returns, despite a higher upfront fee.

• All partners in the LottoItalia consortium will contribute pro-rata to license fees and CapEx, with IGT maintaining operational control.

• Enhanced efficiency and cost savings expected through technology investment, automation, and AI, targeting €10-20 million annual savings.

• Share repurchase authorization expanded from 10% to 15% of outstanding capital in anticipation of Voyager closing.

• Commitment to returning capital to shareholders, with details to be announced soon.