French Gaming Operator FDJ Purchases Hospitality Platform

French gaming operator Française des Jeux (FDJ) is expanding beyond its gaming borders. In an attempt to branch out and seek new investment opportunities, it will purchase L’Addition, a company serving the hospitality industry.

A sign for French gaming and lottery operator Française des Jeux. The company is expanding into other retail commercial areas as its revenue increases. (Image: Les Echos)

FDJ announced the acquisition yesterday, acknowledging that it is an effort to strengthen its retail services arm. Like FDJ, L’Addition is headquartered in France, with 70 employees in Paris and Bordeaux. It offers management, point of sale and payment solutions for cafes, hotels and restaurants.

The 10-year-old company has a prominent place in the French market, according to FDJ’s announcement, and is present in over 10,000 establishments in the country. This was a primary factor in the operator’s decision to purchase it.

FDJ Seeks Greater Retail Presence

FDJ has its roots inside the French government, which initially introduced it as a state-run lottery operator in 1933. In 2019, the government sold most of its stake for around $2.2 billion, retaining only around 21%.

The company has since morphed into a company involved in a number of retail segments. As a result, the purchase of L’Addition will strengthen FDJ’s position in the retail market.

Earlier this month, FDJ announced that it was negotiating the purchase of Aleda, a collection and payments solutions company. Adding to that the L’Addition acquisition, FDJ is optimistic that it can become a leading payments and services provider.

[L’Addition’s] success is based on its comprehensive and scalable management services platform, its innovation strategy, its proximity to commercial users and its ability to continuously ensure the operation of a point of sale without data loss,” said FDJ in a statement.

As a result of the purchases, FDJ is showing that it can excel at online gaming and sports betting, as well as other consumer activities. In the statement, it explained that the acquisitions highlight the company’s goal of being a leading supplier to the retail industry, specializing in operational management and the development of points of sale.

2022 Revenue Climbs

FDJ reported a year-on-year handle increase of nearly 10% over the first half of 2022. Part of the increase was due to last year’s closures in response to COVID-19. At the time, one-tenth of its land-based betting shops were closed.

The company took in €10 billion (US$10.15 billion) from January to June. Its turnover, including the net income from gaming and other activities, increased by 12.1% to €1.21 billion (US$1.22 billion). Like the handle comparison, this improvement suffers from the pandemic. Health restrictions only began to see significant changes in June of last year.

Over the first six months of the current year, FDJ showed €160 million (US$162.5 million) in net profit, an increase of 9.6%. EBITDA (earnings before interest, taxes, depreciation and amortization) amounted to €308 million (US$312.9 million). This is a year-on-year increase of 18%, which represents a margin of 25.4% compared to 24.1% in the first half of 2021.

The lottery was the big winner, producing revenue of €946 million (US$960.38 million), up 17%. However,  sports betting revenue fell 5% to €232 million (US$235.52 million).

Likewise, sports betting stakes dropped 10.9%, closing at €2.02 billion (US$2.05 billion). This was due, in part, to the lack of sports activity in the second quarter of the year.

After crunching all of the numbers, FDJ was able to show positive results. Net profit for the half closed at €159.5 million (US$162.11 million), a 9.5% increase over last year.

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