Morocco seeks new lottery operator for MDJS

There is no element of the global gaming business quite as complicated as the operation of lotteries. A seemingly simple statement that Morocco’s State Lottery is looking for a new operator comes with dozens of facets to understand and just as many layers and twists to delve into and unwind.

At its simplest, La Marocaine des Jeux et des Sports (MDJS) is offering up an 8-year contract with another 2-year option for renewal. The contract will begin on January 1, 2023, with bids due by April 4 when the proposals will be opened and read into the record. Bids can be presented to MDJS in person on opening day in Casablanca up until the first bid is opened.

Sportsbetting and other activities will be managed by the successful applicant along with lottery services.

Administrators are asking for two separate proposals with candidates invited to submit bids for either or both.

One “lot” should cover bids for parimutuel sportsbetting, but not include horses or dog racing. The other lot is for raffles, instant sports lotteries, and lotteries.

Not the Only Lottery Operator in Morcco

However, MDJS is not the only lottery operator in the African country just across the Straight from Gibraltar, there is also Loterie Maroc – which is serviced by Italy’s Sisal. Sisal’s partnership in that venture netted the company about five million euros in 2021, up 94.7% from 2020 numbers.

Sisal signed a 10-year contract with Société de gestion de la loterie nationale (SGLN) in early 2018 and extended that contract last summer.

Also of interest is the recent development of Sisal agreeing to an acquisition by Flutter, the Dublin company best known for Paddy Power and now PokerStars. Sisal was acquired by CVC Capital Partners in 2016 for €1 Billion.

Intralot is the Greek company that currently holds the MDJS contract. The company operates gambling products including sports and lotteries in over 40 jurisdictions worldwide and has handled over 19 billion euros in wagers. Worldwide, the company has its fingers on over 300,000 terminals.

Intralot has operated the Morrocan sportsbetting and lottery market since 2010 and signed a new 8-year contract in June 2019 that included about 1,600 retail terminals.

Longterm Contract Cut Short

In March of this year, Intralot cut short its commitment with La Marocaine Des Jeux et des Sports setting a new end date of December 31, 2022. This followed expansions and continuing commitments in Australia with Lotterywest and in Holland with Nederlandse Loterij to add and service a sportsbetting platform for the Dutch lottery operator.

Intralot also expanded its heft in the US market but sold 100% of its stake in LatAm lottery interests to a private equity firm for $21m while anticipating reduced earnings of a little more than that for the COVID-year, 2020.

Intralot is considered to be among the top three lottery companies in the world, standing shoulder to shoulder with GTECH (IGT/Lottomatica) and Scientific Games in several markets.

And here is where the landscape looks like a foggy shoreline or even a tumbleweed-infested tornado as seen through a sandstorm.

Two Biggest World Lottery Businesses Change Course

The former CEO of IGT Europe (all countries save Italy) made a private equity offer for an undisclosed sum through his new company Games Global Limited for the Godfather of Slots, Microgaming, and the offer was accepted.

Scientific Games has agreed to sell its lottery businesses to Canada’s Brookfield Business Partners for a little over $6b.

Shortly thereafter, IGT proper sued the United States Department of Justice for a declaratory judgment stating once and for all whether or not online gambling is legal in the United States – and if so – to define the limits.

Games Global’s Walter Bugno doesn’t need to state much about intentions to dominate the online casino gambling space – his acquisition of Microgaming’s portfolio of more than 3,000 titles, the world’s largest progressive jackpot network, and perhaps dozens of semi-dependent and independent studios says it all.

Scientific Games, however, being a publically traded company, did state that their move was intended to position the behemoth to become the driving force behind international iGaming, or words to that effect.

The two most powerful gambling interests in the world have decided to change course at about the same time.

Top Spots in Flux

What does this mean for Intralot or what might be seen as a financial or investment vehicle in the case of Flutter?

There is still plenty of low hanging fruit for the mergers and acquisitions machines fueled by “blank check” companies otherwise known as SPACs (special purpose acquisition companies), but as consolidation increases, players may be reduced to the eventuality of two polar opposite concerns controlling all regulated online gambling and bookmaking.

As long as they spin off enough revenue to the host countries or states, there’s no reason to think they won’t eventually reduce the actual return to player percentage of all games down to what they are for lotteries – about 42% – as opposed to the Las Vegas minimum of 75% or the current online reality of about 95%, thanks to competition in a more or less open marketplace.

Perhaps Intralot is acting with prescience in leaving the Moroccan space early. Perhaps Flutter will not bid to “compete with themselves” there. However, Flutter’s acquisition of Sisal opened the door to being chosen to run Great Britain’s National Lottery, so it would seem they are not averse to staking more claims in the game. Sisal saw 3rd quarter earnings from lotteries up over 500% this year with Turkey’s National Lottery, Milli Piyango contributing €72.0m in revenues.

Perhaps, as we watch the horizon, some unexpected company such as Playtech will take the billions they are about to cash out via their sale to Australia’s Aristocrat – and go “back” into the lottery business.

We can’t read tea leaves here, but from this chair, the whole world of online gambling seems to be changing in a very big way. Little things, like Intralot canceling what can only be imagined as a highly lucrative contract, adds to the curiosity.

Source: Moroccan State Lottery seeks new operator, Gambling Insider, December 31, 2021