Barclays Initiates Gambling Coverage, Taps Bally's Intralot on M&A Synergies

Barclays initiated coverage of the European gambling sector, highlighting the potential for M&A-driven deleveraging at Bally’s Intralot while noting a more balanced risk profile for lottery operator Allwyn.

Bullish Case for Bally's Intralot

Barclays assigned an "Overweight" rating to the Greek-listed Bally’s Intralot, setting a price target of €1.40, which implies approximately 30% upside from its September 22 closing price. The bank’s positive outlook is primarily driven by the company's proposed acquisition of Evoke.

Analysts at Barclays believe the market is overly focused on Bally's Intralot's high pro forma net leverage of 4 times as of the first half of 2026, without fully pricing in its future cash-flow potential. The Evoke transaction is expected to be a key driver of deleveraging, targeting at least €210 million in annual cost and capital expenditure synergies within two years. The deal, targeted for completion in Q4 2026 or Q1 2027, could also offer some protection from rising UK gaming taxes, according to the note.

Cautious Stance on Allwyn

In contrast, Barclays initiated coverage on Allwyn with an "Equal weight" rating and a €14 price target, citing limited near-term catalysts. This target represents about 15% upside from the company's Sept. 22 close.

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The primary concern for Allwyn is the uncertainty surrounding the renewal of its core-games concession in Greece, which expires in 2030. Barclays noted this concession accounts for 30% to 35% of the group's adjusted core earnings. The bank's analysis suggests the market is currently pricing in a 55% probability of the contract being renewed on unchanged terms. Other potential overhangs include an investment-led margin recovery at the UK National Lottery and pending contract renewals in Austria and Illinois, expected to be resolved in 2027.

Sector Risks and Outlook

Barclays identified integration risk as a key concern for Bally's Intralot, given its two large deals within an 18-month period, alongside the risk that synergies may fall short of targets. The firm is also the most exposed in Barclays' coverage to higher UK gaming duties, though the bank believes this is largely reflected in the share price.

Broader industry headwinds include significant tax increases in the UK. The online casino tax rose to 40% from 21% in April 2026, and the online sports betting tax is set to increase to 25% from 15% in April 2027. Barclays described the risk/reward profile for Allwyn as balanced, while its outlook for Bally's Intralot is more constructive, contingent on successful deal execution.