What is Growth Strategy and Future Prospects of La Francaise des Jeux Company?

The company is accelerating the digitalization of its lottery business. This initiative is designed to create a renewed gaming experience through an omnichannel approach.

Online lottery revenue saw a 14% increase to €79 million in Q1 2025. This growth was driven by a rise in active players, with online revenue now representing 15% of total net revenue.

The company aims to achieve 20% of French lottery revenue through online channels by 2028. This demonstrates a clear focus on expanding its digital footprint.

The rollout of its proprietary Kindred Sportsbook Platform (KSP) is underway. This unified tech backbone for European markets is projected to generate over €50 million in synergies by 2027.

The company plans to leverage past and future investments in data and artificial intelligence. These investments are intended to enhance its gaming offerings and player experience responsibly.

A strategic collaboration with Sustainable Interaction, started in January 2025, focuses on developing responsible gambling solutions. This includes a technical model for behavioral analysis and risk profiling.

The 'Play Forward 2028' plan targets an average annual organic revenue growth of approximately 5%. This growth is a key component of the La Francaise des Jeux growth strategy.

By 2028, the company aims for a recurring EBITDA margin exceeding 26%. This reflects confidence in operational leverage and efficiency measures.

Maintaining financial flexibility is a priority, with a target net debt to recurring EBITDA ratio of less than or equal to 2x.

Cumulative capital expenditure is projected between €650 million and €700 million for the period of 2025-2028, supporting the FDJ future prospects.

The acquisition of Kindred is expected to contribute significantly to revenue, though initial like-for-like comparisons show a slight decline due to strong prior-year comparables and regulatory shifts.

Anticipated increases in betting and gaming taxes in France and the Netherlands are factored into the 2025 outlook, demonstrating adaptation to regulatory changes on the French lottery company growth.

A key concern for 2025 is the anticipated rise in betting and gaming levies in France. FDJ projects this will lead to a revenue and recurring EBITDA reduction of nearly €45 million in 2025, with a full-year impact estimated at approximately €90 million.

More stringent regulations and tax hikes in crucial international markets, such as the Netherlands and the UK, have already impacted performance. This led to a 10% drop in online revenue for Kindred in Q1 2025 and an 11.5% decline in H1 2025.

The implementation of a new 15% tax on advertising and promotional spending by gaming operators in France introduces an additional financial burden. This new tax directly affects marketing budgets and operational costs.

FDJ United has developed a multi-year action plan to fully counteract the financial consequences of these tax increases by 2027. This strategy aims to ensure sustained financial health despite increased regulatory costs.

The company relies on its diversified business model, robust retail network, and expanding digital capabilities to maintain resilience. These strengths are crucial for navigating the complex regulatory environment and driving growth.

FDJ actively manages risks associated with responsible gaming, aiming to reduce revenue from at-risk players. In 2024, this segment represented 1.0% of online lottery revenue in France, a figure below its 2025 target of less than 2%.