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Karel Komarek's KKGC owns Europe's biggest lottery

operator

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Lottery operator Allwyn secures big UK, U.S. deals

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Technology innovations key for bigger share of global mkt

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Allwyn rules out IPO for now

By Michael Kahn

PRAGUE, June 13 (Reuters) - A Czech billionaire who

turned a regional energy company into a global business empire

after the fall of the Berlin Wall is now betting on selling

lottery tickets in places like Chicago and London to drive

international growth.

Karel Komarek, the second-richest Czech behind the widow of

Petr Kellner and ahead of deal maker Daniel Kretinsky, is

pushing lottery operator Allwyn as a flagship for his KKCG

investment group, telling Reuters: "Growth in lottery-led

entertainment is absolutely key to our wider group strategy."

Allwyn is already Europe's biggest lottery operator, running

national schemes in Italy, Austria, Greece and elsewhere.

Two recent deals - to operate the UK national lottery and

the U.S. state of Illinois lottery - have put Allwyn in sight of

a bigger share of the global market, which is set to grow to

$425 billion in 2028 from $283 billion in 2023, according to The

Business Research Company's Lottery Global Market Report 2024.

"We are always open to new opportunities - primarily in

Europe and in the U.S. - particularly when we can lean on

existing expertise from within the group to unlock growth

potential," Komarek, 55, said in an interview by email.

Allwyn has eclipsed KKCG's energy businesses, generating

revenue of 7.8 billion euros ($8.60 billion) in 2023, or roughly

70% of KKCG's total revenue.

It took over as operator of the UK national lottery in

February after winning a tender against incumbent Camelot, the

sole operator since the UK scheme's launch nearly 30 years ago.

Industry sources said Allwyn's technology offerings and plan to

distribute a hefty chunk of profits to charitable causes helped

secure the deal.

Rising disposable incomes and technology such as

smartphone apps, QR codes and innovations to make lotteries more

interactive are driving growth in a global market where

International Game Technology ( IGT ) , Scientific Games

and Intralot are among the biggest players.

DIGITALIZATION TREND

Komarek used a $13,000 loan from his father to start a

valves and piping business in the early 1990s in then

Czechoslovakia before acquiring oil and gas exploration company

Moravske Naftove Doly - a move that laid the foundation for his

fortune. But it was his 2012 deal to take over bankrupt Czech

lottery operator Sazka that propelled KKCG's overseas expansion.

"It was clear that there was a lot of untapped potential

and that we could replicate this approach internationally and

use it as a platform from which to build," said Komarek, whose

net worth has tripled since 2020 to $9.5 billion, according to

Forbes.

KKCG's more recent interests include biomedicine and the

group sees opportunities to push deeper into technology, real

estate, energy and evolving industries including AI and Web3,

Komarek told Reuters.

Allwyn aims to expand further in the $100 billion U.S.

lottery market, its Chief Executive Robert Chvatal said.

Most U.S. states operate their own lotteries but Chvatal

believes these entities will increasingly turn to private

providers like Allwyn to generate more technology-fuelled

profits.

Allwyn, which has not disclosed the value of any of its

recent investments, also bought a majority stake in U.S. online

lottery games supplier Instant Win Gaming in February.

"The digitalization trend in this sector is inevitable,"

Chvatal told Reuters.

"We did not go and acquire the Illinois lottery because we

only want to stay there for the next 20 years."

In 2022 Allwyn cancelled a deal with blank-check firm

Cohn Robbins Holdings Corp., citing volatile market conditions,

that would have seen its shares list in New York at an

enterprise value of $9.3 billion.

Chvatal ruled out an initial public offering for Allwyn for

now, saying the company was well financed through bank loans and

bonds.

"We have the size and the product to do an IPO but it

doesn't mean we have to do it," he said. "The market and timing

have to be right. An IPO is a distraction now."

($1 = 0.9301 euros)

(Additional reporting by Jason Hovet and Jan Lopatka; Editing

by Susan Fenton)