Issue link: https://maltatoday.uberflip.com/i/1465278
5 INTERVIEW 21.4.2022 You have been working for over two years to be in a position to add the operations of the National Lottery to your existing portfolio of land-based gaming services. How does the National Lottery operation fit within the portfolio of the Group and what are your aspirations for taking over a national concession of this magnitude? The IZI Group has been operating in the local land-based gaming indus- try for 20 years, having grown from strength to strength to become one of the most established and reputable operators in the industry. In the past 10 years through the op- eration of the Dragonara Casino and the establishment of IZIBET as a gam- ing brand synonymous to sports bet- ting we have established ourselves as a market leader in all those business verticals that we operate in. Our jour- ney towards becoming the National Lottery concessionaire for the next 10 years started over two years ago, through the setting up of a working group that devised the overall strategy for the new National Lottery of Malta. The strategy included amongst others thorough market research, engage- ment of world-class strategic part- ners (especially in the area of product delivery and technology), raising of finance and granularly detailed busi- ness planning. The result of our preparatory efforts led to National Lottery plc being de- clared the 'Preferred Proponent' in the competitive RFP process and the sign- ing of the concession agreement with the Government of Malta. The oper- ation of the National Lottery elevates the overall positioning of the Group, creates several synergies amongst var- ious functions within the Group and opens timely opportunities for inter- national growth. It also enables the Group to pursue its overall mission to seek growth opportunities through the relentless investment in technol- ogy. Our aspirations are to grow the business of the National Lottery such that Malta as a lottery market can reach European benchmarks. What do you consider to be the key strategic areas for attaining the principal goals for the National Lottery? The operation of the National Lot- tery of Malta bestows onto us great responsibility but also unparalleled opportunity. There are intrinsically three areas of strategic importance to ensure that our principal goals for the National Lottery are attained. Firstly, a product-oriented strategy in which current products are rationalized ac- cording to their true potential and the introduction of new products. Our product strategy is very market-driv- en and will be a strong pillar onto which we will build our business. Second, is the distribution of the products. We will work closely with one of the most important stakehold- ers in this business, namely the agents and sellers of National Lottery prod- ucts, to ensure a more efficient, in- novative, and accessible distribution network. We will bring to the fore, years of experience in operating the largest privately owned network of re- tail gaming stores in Malta and trans- fer this knowledge to the National Lottery network. Product accessibility is fundamental to drive growth in the market. Third, is the player experience. As explained prior, the National Lottery bestows great responsibility because the products of the National Lottery are in demand by hundreds of thou- sands of players. To this end we will endeavor to provide a product portfo- lio that is accessible in a safe and fair environment, in full compliance with the requirements of player protection and responsible gaming. The National Lottery project requires a substantial capital investment. What are your investment plans going forward? The nature of the business is as you are saying very capital intensive. The Group has committed approximately €125 million over the next 10 years to deliver a modern National Lottery service. An outlay of €105 million is payable to the Government of Malta for the 10-year exclusive concession for the National Lottery and a total capital expenditure of a further €20 million is being made to deliver the infrastructure onto which the Nation- al Lottery services will be delivered. We have presented our business plans to the local capital market a few weeks ago as we launched a €30 Million public bond issue, which was fully-subscribed. The proceeds of the bond issue are targeted principally to- wards the capital investment required for the National Lottery project but also to the growth programmes of the other subsidiaries of the Group oper- ating the Dragonara Casino and the IZIBET retail network. The bond is- sue was very well received by the mar- ket and was fully subscribed. The re- sponse of the capital markets towards our future business plans provides us with the necessary confidence to con- tinue pursuing our strategic objec- tives. What do you consider to be the key external factors impacting the National Lottery? There are two principal factors which require a concerted effort between all stakeholders. Most notably is the problem of illegal gambling, especial- ly in the game of Lotto, which remains extremely high in Malta. Apart from being economically harmful, illegal gambling is also fertile ground for abuse as it does not offer the right protection for players. Whilst this challenge must be addressed through a collaborative effort of all stakehold- ers (including the competent authori- ties), we will combat this through the provision of a better mix of products and better return to players. The second challenge lies in ensur- ing player protection and providing a safe and fair environment to players such that they continue to trust the National Lottery and the products offered through the National Lottery concession. Unfortunately, the market is inundated with online 'secondary lotteries' promising jackpots of mil- lions of Euros which can never materi- alize. The term 'secondary lotteries' is a misnomer in fact. Secondary lotter- ies are the purest form of online gam- bling and are by no means a lottery type game, despite being misleading- ly advertised as such. It is important that yet again the competent author- ities, in particular the Malta Compe- tition & Consumer Affairs Authority, address these issues to ensure that the market retains confidence and trust in a service that has been in the market for nearly one hundred years. On 5 July 2022, Maltese-owned National Lottery plc, a fully-owned subsidiary of IZI Group plc, will take on the responsibility of operating the National Lottery of Malta, operating Lotto, Super 5 and other games for the next 10 years. BusinessToday met Franco De Gabriele, Chief Commercial Officer of IZI Group plc, to better understand what this major development will mean for the Group and how the Group aims at transforming the National Lottery of Malta into a European best practice in the sector New era for National Lottery of Malta €30 million bond issue fully subscribed