Allow me to introduce you to Fabio and the team. Obviously, Fabio will introduce the team. Me and Fabio go back a long time. Right, Fabio? To 2007, probably.
Yeah.
Before the market started, and we started basically having conversations about the combination of Playtech and Snaitech. I can say many years before, as a concept, as an idea that can really make a difference, many years before, we acquired the business, maybe three years before. We always believed together that we can really make a huge difference to Snaitech and Playtech, obviously, should we combine the efforts. I'm happy to say that actually it worked extremely well for us as a company, hopefully for Snaitech and the team as well. Without further ado, Fabio, my brother in arms. The floor is yours.
You disclose our history, our past, so now they all know that we're getting old together.
Exactly.
You are wearing glasses, I'm not.
That is true.
No.
Enjoy, and I will join you back in a few minutes.
Thank you very much, Mor. Really appreciate it. Ladies and gentlemen, good morning and welcome to this 2022 Snaitech Investors Day here in London. Happy to see a lot of you after a few years of forced distance, many of you. I see Susan, she was financing our first bonds when we were Cogetech, and Roberta, a lot of friends from the past. You got today some anticipations of our results and current trading from Mor and Andy. I think it's worth now to know why now we got out from the pandemic crisis so well, and what could be the next stage for Snaitech.
Today's presentation aim is to make a little bit of analysis on the current health state of our organization, getting to know its solid, strong pillars and possible future alternatives for a sustainable value creation. We will go through the different business lines, the variety of products and the current performances to understand areas of possible development and strategy to support it. That's why I, together with Edo, which is my usual partner, I brought these nice folks here with us. Let's start the presentation of Snaitech Day. A bit of introduction of the team. Edo Rinaudo, as you may know, is our Chief Financial Officer. Agostino Romano, the first one on the table, he is the Head of Retail. Alessandro Graziosi, which is the biggest one in terms of volume, is the Head of Online.
Now, he is the biggest one because online is booming. Yes, that's why. Again, it's a real pleasure for me and my team to come back here again to spend some time with investor and analyst on Snaitech, its people and its performances. It's been a while since the last time we met in Milan. It was 2018. We were in our premises in San Siro, a beautiful racetrack. Brian hasn't had the pleasure to know already, but he will. When we saw each other at the last investors meeting, we came out with three goals.
First one was to reach in the mid-term an EBITDA of EUR 180 million, which we have been already spoiled by Mor with the LTM at EUR 263 million, which is the best results ever in our history, has been smashed. That's considering the exceptional second half of 2021 getting out from lockdown, which has been booming. We left each other with a promise of being leader in brand. The brand leadership was one of our targets, especially in the online. We achieved this not only in the online, but we are also the brand number one in sports aggregated retail plus online. We had another target for the disposal of the San Siro land.
San Siro is a major betting area in Milan where we have two racetracks, and we completed the deal in 2020. First half results booming with 132 EBITDA for the first half, implied LTM of 263 to accomplish the first goal. Now I'm sad that Mor left momentarily for a moment the room because we had a symbolic bet, Brian, when we were in Milan. We were betting EUR 20. It's all, let's say, for fun, not of course. We are betting EUR 20 to achieve the goal of being number one. I'm still waiting, Mor to cash me back my EUR 20+ the odds.
I think that we can at least celebrate with a couple of Diet Cokes, but I see that they all disappear from the stage. Finally, we were approaching the end of a negotiation. We were just in that phase in the negotiation for the sale of this portion of our land in Milan. It has been sold in 2020 for a consideration of EUR 55 million to the Hines Group. I think full delivery of our results, but let's have a look a little bit of our current trading. First, I'm proud to confirm that we have stably recovered our retail performances, which are now representing 50% of our margin, as we will see in a while.
The concession tender is postponed to 2024, and given our cash efficiency that allow us to produce resources for the new license, we are ready for the auction to come. We were talking with the gentleman in the front row of the Venice day about the auction. Gaming machines are extended till June 2023 for free to mitigate lockdown. We've been given this aid from the government. In July, we also started, as more anticipated, our journey into the international markets, finalizing the acquisition of the German and Austrian businesses of HappyBet, which we will see now why is the first step of our international development. A look to financial KPIs. Our LTM EBITDA is EUR 263 million, which is double than 2016.
Even more surprising is EUR 100 million incremental compared to pre-COVID performances. I'm convinced, besides the numbers, that the most brilliant result in the E of our company is the transformation of our business model, shown in this slide. From a strong brick-and-mortar gaming machine business in 2016, as you can see in the last part of the slide, and you can see the pie with the different components of the EBITDA. To a more balanced but still mostly retail-based one in 2019, in the middle of the slide, to the current perfect balance between retail and online and between gaming and betting. It's almost 50/50, the four components of our EBITDA. Marginality on net revenues. Edo will show you in a while a breakdown from gross revenues to net revenues.
Marginality has been rising from 39% in 2016 to 60% in 2022, generating more than EUR 700 million cash in the period, thanks to the wonderful cash conversion, which we will be talking about. Let me say that I'm very proud about all of that because I think this is exactly what shareholders should be looking for. For value creation, balance, to minimize risks, and a solid base for growth and consolidation. A little bit of education now for those that are not familiar with the SNAI, the full SNAI ecosystem. Let me give you a brief introduction on us. We are a diversified gaming and entertainment group in Italy, employing more than 1,000 employees between Italy and now, as I said before, Germany and Austria.
SNAI is the leading brand in online gaming and betting, with 11% market share, and also number one in sports, retail, if we add retail sports and online sports. We manage an extended network throughout the territory of more than 10,000 gaming machines point of sale and 1,600 betting shops, and a strong and loyal customer base of more than 600,000 players in the online. That's why Alessandro is so big. Agostino and Alessandro I keep joking. Agostino and Alessandro will be talking about all different components afterwards. Besides the core businesses, we also successfully run Epiqa, which is the horse racing broadcasting business, acting as the official producer and distributor for all the horse races in Italy, also to other betting operators.
We have Snai Service, which is servicing all the network with a platform of commercial services and a wallet to link retail and online experiences. Finally, we own and manage three of the most important racetracks in the country. People, brand, technology are behind the successful track record we built up in the last 10 years as you can see. I keep talking about brand. You know, I don't have to spend a lot of time about the Snai brand, which is absolutely the first brand in sports betting in Italy. The first company was incorporated in 1906, so we are the oldest, like Hill and Ladbrokes in the UK. I keep talking about brand because this has been our special ingredient in a world that is consolidating a lot.
In Italy, in Europe, there's a consolidation of different brands, increasing the level of competition. Now, a bit of reshuffle on the Italian market. Italian is stably the biggest gambling market in Europe, with more than EUR 20 billion in GGR, under 10 billion in wagers, and contributing to the state budget with more than EUR 10 billion in taxes. I would define it a very strong market. Industry GGR has totally recovered from COVID crisis with a strong rise in the online verticals, which has shown 74% growth versus 2019. As you will see in the following slides, while the market has been dropping on the retail side, Snaitech has been keeping positioning and increasing market share level, market share in all verticals. In the last three years, market shape has changed a lot with the online vertical growing massively.
We're expecting more changes to happen. In the future, given the digital space barely underpenetrated, as more was anticipating before, being 24.5% on the total versus, for example, 55% in the UK. Let's have a look now into post-COVID performances, comparing first half 2019 with the 2022 market and also performances of Snaitech. Here is what happened at Snaitech level. As we were saying before, while retail space has shown quite a sensible loss, -8%, Snaitech has been increasing market share in all verticals. Each and every vertical of our positioning has been showing an incremental position.
It could be useful to remember that in the same period, gaming machines and retail betting have been hit not only by the lockdown, by the pandemic crisis, but also by the counter effect of local restrictions, winning taxes, social card, introduction for VAT. Many things that were being headwinds to our performances. Online division, Alessandro, has overperformed in case of market share of more than two points in two different channels. Alessandro will spend some time on that because it's one of our best success. We overperformed, and we delivered the number one position in sports, as I was saying, and in online. How did we manage to get to those results considering the exit from the pandemic crisis?
Edo, in his session, will be drilling down a little bit on metrics of our franchising business model, on the lean core structure, on the balance between products that supported our resilience. Let me now put the spotlight a little bit on two peculiarity of Snaitech capability worth to mention. First one, our capacity to cross-sell. Our capacity to leverage our strong brand and presence in the territory. Bear in mind that we have 1,600 betting points over the territory, which is a massive billboard, especially, you know, during lockdown and especially in a country that has a strong marketing ban that doesn't allow us to do any communication on sports. Cross from retail is the privileged acquisition funnel in terms of quality for sure, but in terms of ARPU, and looking also at loyalty of brand.
The numbers are very clear. Omnichannel, the second aspect. We used wisely the forced prolonged stops in these two years to develop new tools to align experience between online and offline. The retail player. You know, I don't know if you're familiar with Italian regulatory environment, but we can't use a unique wallet to make the player journey unique between retail and online. We have two different licenses, two different concessions and two different wallets. We have to, let's say, give our players kind of same player journey, same environment in terms of tools to get the user, and then we have Snaipay to get the user to cross-sell. Technology is another strong point in our strategy.
When it comes to talk about technology, the big dilemma is always the same, better making it or buying it? Our answer is shown in this slide. It's a balance between the core functions and system managed through proprietary technology, as you can see in the left part of the slide, with, combined with the best offer by the industry top providers you can see on the right. From a game content perspective, on the other side, we are well-balanced between, our group capacity, bear in mind that we have 50% of our GGR in the online made with Playtech content, and also third-party provider because we are a B2C operator, so we need to accomplish also our customers, giving them the best and what they require.
Playtech integration gave Snaitech the possibility to leverage on an exclusive angle with advanced solution and continuous innovation. More worth mentioning in this wrap up, HappyBet being one important part of our future strategy. We are strong in our domestic market with a set of reliable platform and best-in-class management team to deliver our co-target. With international expansion, Snaitech want to go in the next phase. It officially started in June. In July, sorry, following the acquisition of the Trinity Bet group with its retail and online operation in Germany and Austria under the HappyBet brand. HappyBet network counts a total today of 130 shops and two online platforms.
I say today because when we're beginning to work at it, the network was bigger, but we reduced to start with the best point of sales. As we saw in the previous chart, Germany is the third gaming market in terms of GGR, with a young regulation and possibility to be further developed by the newly incorporated regulator. During 2021, we performed a smooth and efficient. I say efficient because our CapEx in this project was less than EUR 2 million. Migration of all retail and online operation into Snaitech systems. We are now in the toughest part, Ian, of our journey, which is the turnaround. We are now focusing on people with a new, completely new and talented and young team.
We are reviewing ops and solution to rebuild the network, starting from this 4% market share I was talking about before. We have to build up the online offer, enforcing cross-selling for retail. Online was practically zero before. We will search for M&A opportunities in this very fragmented market. Our target here with HappyBet is to break even in 2024, reaching positive contribution for the group in 2025. That's for you. It is when it comes to comment this slide that I really realize how successful our journey has been. Everybody knows how many times we've been updating the regulatory scenario in the last 10 years to come to this stable point, but maybe we don't remember all the action and remedies we have taken to be here.
Each and every point in this slide represented a strong headwind to our development, which has been more than offset every time by our capacity to adapt, by our flexibility, by our lean cost structure, an efficient business model, and let me say it, by the quality of the customer network and also about the management. Sorry. If I talk about us, I keep being in difficulty. Taxation increases in gaming machine from 2017 to 2020 have been cutting more than EUR 40 million of net marginality, partially mitigated by EUR 15 million throughout payout adjustment. Social Security cut itself introduced in VLTs cut 25% of the GGR, equal to EUR 100 million cut from 2019 figures in GGR, which is something like EUR 20 million in marginality.
Marketing ban, local restriction, distance, opening hours, have been every time mitigated by successful management and strong positioning. Those, all those things are already factorized in our numbers. What about the future in our domestic market? As I was anticipating before, given the postponement of the big tender auction in 2024, we can enjoy the growth in result driven by our gaming component, by our capability at doing performing trading and risk management, avoiding a big cash out in 2022. The tender was expected to come before 2021, 2022, so being postponed to 2024 means two more years to cash in. We will continue with the annual extension fee for the expired betting licenses. Just to remember, this annual fee counts EUR 11.5 million a year.
With the gaming machine ones, I was saying before, postponed for free till June 2023. After that, the annual cost of extension will be probably EUR 25 million a year if the same approach as betting is applied from July 2023. The big tender auction is expected to happen in 2024, with an estimated effort in the range of EUR 250-300 million for a 9-year concession, and practically no risk since the auction doesn't carry any binary risk, like in the monopolistic concession tenders like in the lotteries. The amount of the bid will be paid in two installments, and considering our cash generation, Edo will highlight now, seems to be achievable with Snaitech financial capabilities.
We are already working to secure partnership with the tier one franchisees in retail betting and gaming, and to prepare the best offer to successfully pursue our goal of renewal. Our land. As for the beginning of our presentation, the disposal of a portion of our huge real estate asset in Milan was a goal in 2018, which has been successfully delivered in 2020, with the sale to Hines Funds of this portion of land, which is 150,000 square meters for EUR 55 million. Now we're in a binding process to sell another piece of it, which is not a focus on our strategy, for EUR 20 million. We already signed a binding agreement.
Our goal is now to complete the full turnaround of the horse racing businesses, the two tracks in Milan and one in Montecatini in Tuscany, and to grow the other revenue lines. We have other revenue lines in the area, like food and beverage, sport event management, and entertainment services, to transform this area from a loss-making asset to a strategic and profitable asset of the group for our future. We are a big European gaming operator aiming to grow in the relevant continental regulated markets, and we do understand the role of Snaitech in our community, the importance to build a sustainable business, to care about the environment, and act responsibly with our customers, giving them the most protected and secure tools. ESG focus in a big organization is increasing more and more every day.
From this perspective, our goal is not simply to tick the box of compliance with the ESG principles, but really to reinvent behavior, culture, approach of any single element of our organization. We are all committed in all the activities we do. We are committed to the United Nations Global Compact Goals every day with our CSR initiatives, with our strong effort in responsible gaming, with the relationship with our communities, and with the recent active role supporting Ukrainian population. We are G4-certified since 2015, so a long time, being truly focused on safe and responsible gaming. We truly believe that gaming industry must play its role in this massive transformation of all businesses and also of our lives. Before leaving the stage to Agostino, you have to wait a little bit more.
I would run a very small video that sums up a little bit about us. Thank you. By the way, we are hosting the European Jumping Championship from August 29 to September 3rd next year, which are the last round for qualifying to the Olympics. You're all invited, by the way, to our show.
Thanks. Thanks, Fabio. After this wonderful video, it's difficult for me to take the stage, but anyway. Good morning, ladies and gentlemen, and thanks, Fabio. I'm very happy to be here today. In a way, I'm going to dive you into retail business, which is, as Fabio said before, an important part of our business recently affected by COVID restrictions, but still in a very strong shape. Let's have a look at it then. As you can see, we manage an extended retail network throughout all Italian territory, with a strong concentration in Northern and Central Italy, but we're balanced also in terms of product offered.
Today, Snaitech manages 34,000 AWPs, the first generation of AWP or gaming machines introduced in Italy in 2004, installed in 9,000 points-of-sale, 10.2 video lotteries installed in 1,150 points-of-sale, 700 betting shops, 900 betting corners, and almost 500 additional points of sale belonging to independent bookmakers. In the betting and video lotteries business, we have kept approximately 50% of the share with our franchisee model. In the AWP business, the NGR share is a bit different due to an historical presence of other operators in the value chain. Only in that case we maintain an average of 18% of the NGR share.
Our constant transformational approach suggests we continue pursuing the opportunity of integration in the value chain business and to continue with the franchising model for the betting and video lotteries, which has proven strong resiliency during the pandemic crisis. The COVID period was terrible, but our retailer reacted in an extraordinary way. In this slide, I'd like to show you how Snaitech reached this target to stabilize the net revenues in the gaming machines business, notwithstanding the COVID and the change of rules. We need to remember that in the last years, we also had to fight against gaming hall restrictions in terms of positioning and opening hours, social card on board on the video lotteries, higher winning tax, big change in the gaming machines taxations.
Today, a stable margin in the AWP's business and only -20% in the video lottery net revenues in the period 2019, LTM 2022 could be seen as a great success. In one word we can call it resilience. The gaming machines business changed a lot from 2015 till 2021 due to a media campaign against this kind of entertainment. Today, we can say the mood is different. In Europe, the Italian gaming legislation seems to be more and more an example to follow. As we've seen before, Snaitech stabilized gaming machines performances, notwithstanding the higher taxations. As you can see in the first graph, today, the AWP taxation is at 24% of the wagers, and in the video lotteries, 8.6% of the wagers.
At the end, the Italian government almost doubled the taxation in both these verticals. With this premises, how have we obtained these great results? With continuous step up in the gaming taxation, we had to balance this increase, maintaining a reasonable level of NGR, and we did it with a leverage of the payout ratio. A constant caring and management of game content. Only that way we were able to keep the margin intact for Snaitech and for our customers too. As we've seen before, the stabilization of the AWP's net revenues is also the effect of our strategy explained in our previous meeting in 2018. AWP's vertical integration was indeed our challenge. The target to integrate the largest share of the value chain.
As we can see in this vertical, we have gone from 10% of the share in the standard business model to 30% of the NGR with the vertical integration without insourcing any additional OpEx. Snaitech is currently managing nearly 9,000 own machines with EUR 19 million of net revenues in LTM 2020. Compared to the 5,000 of machines and EUR 30 million of net revenues in 2018. We have a rationale. We have a top quality potential pipeline and a proven capacity of execution. Considering all of these and adding an attractive market evaluation for these kind of deals with buyer three times, we want to continue with this strategy of bolt-on. As we said before, the pandemic in Italy caused a big economic crisis.
At the end, we were amazed that we lost only 3% of our point of sales. During the lockdown, Snaitech financially supported its network and delivering various tools to promote cross-selling with the online business. The betting active point of sales in June 2022 were 1,555, against the 1,584 of the end of 2019. We lost those we won't lose in any case. If we compare the full 2019 with the last twelve months, July 2021, June 2022, we can see a stable GGR and a growth in the net revenues. Hard to believe. The odds for a bookmaker are also crucial. Indeed, a good operator is successful when it holds and manages a good sport trading and risk management.
Today, Snaitech manages EUR 2.5 billion book with a qualified team of 80 people, covering pre-match and live for all sports and horse racing. We manage trading and bet acceptance with a proprietary platform and the support of top international feed providers. This chart clearly shows us Snaitech trend against the Italian market. We are continually running 200-300 basis points below the market. This means approximately EUR 50 million of extra GGR. Great numbers are confirmed if the market share support your results. In the gaming machines vertical, our trend is perfectly equivalent to the market. This is not new, because the rights are capped till the end of the concession. In the period 2019 to first half 2022, our market share remained stable with approximately 15% of the GGR.
In the betting, the situation is a bit different. Starting from sport, we have the confirmation that Snaitech continues to be the first brand in Italy with approximately 18% of the market share, 4% more than the second operator in 2022 ranking. It is obvious that this graded list would not be the same if we divided per legal entities. As we said before, in such a competitive market, to reach our goal, the daily challenge is to have a dedicated team with solid expertise in pre-match odds, to have more than 40,000 live events per month, to have new display tools to improve customer experience. In the virtual, we are the second brand after GoldBet in terms of GGR. We have maintained a stable payout of 84%, -2% compared to the market.
Snaitech runs this business in betting shops with seven available channels and three suppliers. In addition, there is a continuous work on improving our platforms to make them more appealing to the customer. For the horse racing, as you can see in the chart, we are firmly the strongest operator in this business with 40% of the market share. In the past, we weren't able to push on the product variety as we wanted because the offering was slightly fixed by law. It was slightly poor with respect to the other verticals. The good news is that with a new decree approved in the last month, we finally have the opportunity to extend our offer in this specific vertical, so we can easily strengthen our position and also create value.
You can be in a strong market, exploiting a strong brand through a well extended network, but in 2022, you really need to have a state-of-the-art approach and technology if you want to succeed. Snaitech smart technology is recognized as one of the Italian market best-in-class solution. 3,300 self-service devices installed, smart desk and new cashier systems. The new smart show are today the present of our technology. The future is Snago, the new way to bet on the retail network. Indeed, all the shop features are available on their customers' smartphone. In short, a new application in the middle between physical and digital. With this app, the customer is now able to bet on sports, live and pre-matches, virtual events and horse racing, or just simply booking their slips. That's why we are so excited.
To increase its margin in this competitive market, Snaitech must pursue a relentless activity to maximize network performance. Obviously, new selected openings and building on new, on competitor best points of sale is one of the key factors of, but having a strong and loyal customer base, we must continue our in-store managing, focusing on technology, innovation and layout redesign to improve shop revenues, obviously. Following this trend, Snaitech, notwithstanding the COVID in the last three years, obtained the refurbishment of 211 shops completely renovated, and the opening of almost 290 shops with new multiplayer shops, sorry, with an innovative concept. Not bad. At the end, I would like to draw your attention to the Snaitech retail strategy for growth.
On the gaming machine side, to look more to the future, we are convinced that the group will play a primary role with the introduction of the new generation of AWPs, so-called mini video lotteries, with the scope to increase our space in the value chain. The asset management on our shops and the synergy job with the group to improve Playtech game content performances are our obligation. On betting retail, we want to leverage the brand awareness and the loyal customer base to attract the best deals. Relentless pursuit of technological innovation and maintaining the better payout performances. Finally, for both retail businesses, Snaitech will be able to catch the best M&A opportunities to continue AWP vertical integration and to buy top performer betting shops.
These bullet points are the pillars on which Snaitech retail in the future must concentrate on for our future success. I'm done, the end of my speech. I'm very pleased to leave the stage to my colleague, the one who is guilty of having stolen from me, a good part of the retail revenues. Alessandro Graziosi. Thanks.
Thanks, Agostino, for this introduction and for the nice words. When you work with friends, everything is simple. As Fabio defined me, I'm the big Alessandro Graziosi, the Business Unit Digital Director of Snaitech. I'll take the next 10 minutes of your time to drive you through the Italian digital Italian marketplace and how Snaitech is showing up and acting within it. Let's see some an overview of figures. We have about 600,000 active accounts. We lead the market with a share of almost 11%, and we are obviously present in the two segments in which the regulator uses to divide the business, betting and games. Some differences between the two, we have more people playing betting.
We have a higher penetration of mobile with respect to the games in which we are stuck at 70% versus an 85% of the betting. It is pretty normal if you think at the player experience. To place a bet is an operation that requires few seconds. To attend a poker tournament or play in slot is natural that is making people to prefer a more comfortable desktop seat and so another player experience. We have a bit more females playing games with respect to the betting and also this is normal because we are all sport experts as men. Going into the geographic. Yeah. No. Okay. I think we are all coach. I wanted to say that.
Okay.
Now going into the geographical distribution, you see that it's really balanced. There is a slightly higher concentration in the north, in which the GDP is higher. Second is the south because of number of people living there and propensity of gambling. Well-balanced is also the contribution of the two segments to overall GGR, which is almost 50/50. We just have a 56% concentration in the north, but there is no strong dependencies on one of the two segments. We think it's a really healthy business. Going to the lower level of the definition that the regulator uses, speaking about vertical products, we see that betting is composed by sport, virtual, and horse racing. While games are divided into slots, other casino games, live casino, poker, bingo, skill games, and lotteries.
It's worth to note that where Playtech is acting in the marketplace as a supplier, we always give a premium to our shareholder. They are the sole provider for bingo, poker, live casino, and they are first by far when we need to keep a certain product variety to accomplish player preferences. Because last meeting we had was back in 2018, let's see what happened since there. Let's compare the first half of 2019 with the same period of 2022. Look at the table in the lower part of this chart. Obviously, as said by all my colleagues, we went through the pandemic, and this has triggered a digital legalization process that has accelerated migration of people into digital. This happened across all the industries, and also in gaming.
If you look at the last column, you see that each KPI that we use to define the digital business grew in the industry double-digit. If you look at the column before, which is related to Snaitech, you see that we were able in this period to overperform all the rest of the market. We doubled the GGR on betting, almost tripling the one on games, increasing the account active playing of 75%-77%, preserving the productivity, which grew of 73% against 33% of the rest of the market. The acquisition funnel was really strong, and we will comment on that in a while, because we made progresses of 61% against the rest of the market that was stuck at 22%.
The other thing we have to notice in the graphics at the top of this slide is how this happened. The massive migration of people, as you can see, didn't happen in the first wave of lockdown, but in the second. The reasons behind it are various. The first is obviously in the first lockdown, also sports events were stopped, so there was a lack of offering. Secondly, people were scared, and they didn't know what was going on and for how long. And thirdly, there were resistances from the retail environment to send their customer base over the digital that was felt as a competitor and not as an opportunity, like Agostino still is thinking. Next slide. Thanks. Why it's important to speak about acquisition from retail?
You see in this slide the value of a player coming from the retailer environment in respect to the pure online acquired. You see that even though they are less than 10% of the total number of head acquired, the productivity of each of those is three times the other. They are loyal. The churn is 21% against 46. The overall contribution, less than 10% of people, is contributing to almost 40% of the total GGR. That's why we felt the importance of having people coming from retail over the digital. We put in place some actions to win the resistances we spoke about. Various. Organizing poker tournaments with the customer base, taken by them, staying close to them during the pandemic, so not leaving them alone.
At the end of the day, we matched the compensation on the GGR generated by the account opened by them to the same level they had had if people were playing inside the shop. Finally, this happened. The migration happened, and then omni-channel is real, is a fact in Italy. Because of this value, last bullet, we also opened another channel of acquisition on the ground, which is not a specialized channel. They don't. This point of sale do not own a license. They cannot accept bet inside the shops, but they can perform some activities. The most important one is open new accounts. We tried to multiply the point of contact in the ground to have more people coming into the scope from the ground. Now let's give an overview of the product offering and positioning.
As said, we are, you know, on the betting segment, we are first. You see that we are more beyond 14% in market share, and this is good news because we were not. If you look at the row of first half 2019, you see that in the past we were overtaken by bet365 and Planetwin365. The other thing to notice in this chart is that just to confirm what we were speaking about one second ago, all the green arrows are related to omni-channel operators. The other are declining. Obviously, we have a really strong brand equity. In Italy, if you think of betting, mainly you think about SNAI as a brand.
Growing when you start from a leading position is never that easy, but we made it, and we gained two points of market share on sports, eight points in virtual, in which the right move was putting the offering into the sport app. That is the front end, the touch point that is concentrating the majority of the traffic of the wagers of the player. Horse racing, we are stable in a market that is declining. Because it's our DNA, and we are so big in market share in horse racing, keeping the market share in a market decline is in any case a good result to us. Why we are so good? We obviously cover each need of the player. We have more than 80,000 streaming events offering some disciplines that are really niche for a niche player that can.
You can attract also really specialized players on something that they cannot find in other competitors' offerings. We also have the best acceptance policy. Because of the broad customer base we have, we are able to accept whatever bet, basically, without putting at risk the overall marginality. Then we are fast in the payment cycle, so we make available the sum won immediately, so they can reinvest in other gambling activities. Games, the other segment. Games is something we are really proud to speak about because Snaitech brand equity is not that strong in this segment as it is in betting. Growing here is more challenging than in betting. We made it. We gained two points in market share, which is a lot.
As you can see from this slide, we overtaken Lottomatica that was ahead of us in first half of 2019, and we are third in the market just behind PokerStars, who is leading the market since the very beginning as the first mover, and Sisal. However, if we concentrate this analysis just into the casino product vertical that is part of the category of games, we are second, and we made it to overtake Sisal in the first half of 2022. How did we make it? Obviously enlarging the offering. We put a lot of other supplier and content, new content, with adequate promotional plans, and tailoring and customizing the offering, coming up to a single tailor-made offering for the single player.
This has been the real, the really winning move we made in, into this segment. To keep this pace of growth, you need to have a really clear, solid, and effective strategy, and we think we have to move into do the two direction, the organic growth and the inorganic one. The organic growth is made of thousands of day-to-day activities I won't bother you with, so I will mention just the major projects we have in our desk that we are going to deliver within this year or early next year. The main one is the complete renewal of the digital technological infrastructure of the digital environment of Snaitech with a data lake approach that will accomplish two main objectives. The first, scalability.
This means that a new function or a new service, when it's developed and delivered, will be immediately available not only for the website, but also for the MSite, for the apps, and for all the jurisdictions in which we are playing. The first tangible output of this project, as Seba anticipated me, thanks, is a brand-new artificial intelligence new website that will use predictive algorithms to really customize the offering to the single player, so that if I sign in, I find some contents, some suggestion, a kind of offering. If Agostino, whenever he will open an account, will do the same, we'll find another page with other suggestion because we studied his preferences and behavior. As Fabio anticipated, we always keep an eye on responsible gaming, and this is another example of utilization of artificial intelligence.
We are about to deliver a tool provided by Playtech called BetBuddy. Again, a predictive algorithm that is sending alerts to the central when a potential risky behavior of a player is detected, so that the central can take the right counter measures. Last project we have is this loyalty program. We launched last year a gamification tool that is called The Game. It worked really well for a certain cluster of customers, but because we see really potential in it, we thought to extend the scope of this instrument, making it a real tool to support a loyalty program with inside some gamification functions. This is what we want really to highlight and underline. Inorganic growth opportunity. Just a snapshot on how the digital marketplace appears today in Italy.
We have 79 active concessions. I said we are first with almost 11% of market share. If you take the first 15 operators, they are concentrating almost 80% of the total GGR. That means that you have more than 60 operators that are owning each less than 1% of market share. Because the renewal of the concession that sooner or later will come will not be that cheap as it has been in the past, we think that these are really opportunities that we have to scout on. Also, because we know how to do it and to create value. I will just mention briefly a case history that is really recent for Snaitech. We acquired in the summer of 2020 a small company, casino oriented, so no sports offering, just casino, just website, called Best in Game.
Big is the logo. We bought it for less than four times the EBITDA. We made some operation like merging it into SNAI and blending the customer base and advising the two customer base that something new was happening, so that the big customer base was able to surf and find the wide offering provided by SNAI, and as well as Snaitech's player were able to go into another look and feel product line with another promotional plan approach. This worked perfectly, and as you see, we were able to more than double the customer base, go up to 60% of the GGR, and we expect an EBITDA that is more than double.
At the end of the day, summarizing, we believe that cross-selling and omni-channel utilization of the most modern instruments like artificial intelligence, M&A activities, and customizing the offering are the ingredients that can make SNAI growing with this pace also in the future and become first in the few vertical products in which we are still not. Thanks for your attention. I will now pass the lead to Edo, that will give you the funniest part of the presentation, which is finance. Thanks for your attention again.
Thank you, Alessandro. Thank you most of all, Alessandro, Agostino, for your job that will make my presentation easier, so I can use a smile showing the numbers that already the Chairman, Mor, Andy and Fabio Schiavolin before said before. Starting for the first slide, the 37, after a deeper dive into our retail and online business, let's now have a look at the financial KPIs. Just to fix a little bit the most significant takeaways from Agostino, Alessandro sessions, here is a summary of the most important trends that, in my opinion, are the real pillars of our financial performance. I will try to recap some names and some pillars used by Agostino and Alessandro before.
I just would like to underline the online migration, the cross-selling, the strong brand equity, the franchising model, the proprietary and the scalable platform, the virtuous payout management and the bolt-on acquisitions. This set of capabilities has been driving our financial KPIs over the last six years in terms of stable EBITDA, stable growth on the online EBITDA, revenue and margin protection in the retail business, effective risk management, and I would also add the strict cost control on different areas of spending. For example, the maintenance and the logistics costs thanks to the franchising model, the IT CapEx, this thanks to the historical platform built in-house over the last 20 years. Finally, the marketing cost. We are still under the advertising ban in Italy, but we can leverage on the number one brand in the Italian market.
The most significant result has been a double EBITDA from EUR 128 million in 2016 to the current EUR 263 million LTM as of June this year. The EBITDA also improved in terms of marginality from a 39% performance up to a 60% on net revenue. You will see afterward what net revenue means. On top of that, the company showed a strong financial resilience. The flexible cost structure allows SNAI to keep a positive cash generation, even during the lockdown, and during the hard lockdown when all the sports events were not available in Italy. Let's now go through the interim result, first half 2022 to have a better view on what the numbers have been. The chart shows the P&L of the interim compared with the same period of the former year.
Just a few preliminary comments on the different layers of the table from the GGR on the top of the chart down to the net revenues and EBITDA. GGR, obviously, all of you know that is a gross gaming revenues, is turnover minus payout for each different vertical. Revenue is GGR minus taxes and bonuses. It's basically the net cash box, including both the distributor margin and our marginality. Obviously, the distributor margin is a sort of cost for us. Net revenue is the SNAI portion of the cash box, taking out the distributor cost. In our analysis, we generally use the net revenue as the best reference to measure our real EBITDA marginality. Going through the numbers, in the first half of 2022, the EBITDA was EUR 132 million versus EUR 52 million posted in the previous year.
Obviously, being the first half 2021 impacted by more than five months lockdown, the comparison cannot be on a like for like or apples to apples basis. What we can say is that following the reopening of the shops, we had a strong recovery across all the retail verticals, and retail EBITDA is now close to 50%, or if you look at the LTM, it's exactly 50%. The marginality bounced back again to 58% on net revenue. The other side of the retail is the online, which is showing a limited cannibalization after the retail reopening. The limited cannibalization is just on betting. On the other hand, online games are still growing at 14% year-over-year.
The other business line that you can see, the one after the net revenues breakdown includes Hippodromes, Equity Shop Management, Epiqa, the B2B betting provider, and Snaipay. All these ancillary businesses, as we call them, are now back again to their full speed and are showing together a positive contribution to our EBITDA. Overall, having posted a +150% performance on EBITDA, we can easily affirm that we are very pleased with the result. Necessarily, we need to widen the analysis over a more homogeneous time horizon to pick up some more consideration on the sustainability of our growth. Let's move to the other slide. Thank you. As a first step, let's widen the analysis over the last four quarters. Let's focus on the LTM performance.
The LTM EBITDA was EUR 263 million, by far the best result ever in Snaitech history. Most importantly, the performance should sound solid and steady across for two reasons. First, we had a fully balanced EBITDA. Fabio explained in a chart that we are now 50/50 in retail versus online, but also 50/50 in betting versus gaming, which also have helped us in mitigating the impact of some small seasonality in the retail that you can see in the chart between Q3, which is red and lower, and Q4, which is green and stronger. Second effect, the monthly EBITDA has been stably over EUR 20 million per month since September 2021.
If this trend is confirmed in the third quarter this year, there will be room to increase again the LTM, even in the current quarter. Anyway, on this subject, Fabio will provide you some more indication about the current trading and the perspective, our midterm perspective in a few minutes. Okay, having seen the current performance, let's now extend again and more the analysis to the historical EBITDA since 2016. Four messages are coming out from this chart. The first and the most evident, the EBITDA more than double from 2016. Second, if we just focus on the online performance, the growth, again from 2016, is close to seven times, from 19 up to EUR 130 million and from 15% up to 50% of the EBITDA.
Third outcome is the acceleration on the EBITDA annual growth from 9% until 2019 to 39% on average after 2020. The difference is related to the strong acceleration in the online migration seen during the lockdowns, mostly in the second lockdown, as shown before by Alessandro in the chart on the customer base growth. Fourth and last message, the marginality on net revenues has been constantly improving from 39% up to 60%. This is related to a better quality on the revenue mix. Fabio said that we became number one in sports betting, online and retail, and online games, and these are the verticals with the higher marginality for Snaitech. There is also another ingredient supporting the marginality improvement, which is the continuous cost control, but this will be more evident in the next slide.
Let's compare three key moments in our recent history. The 2016 year, this is the year of the Cogetech merger and the SNAI turnaround after the merger when we created Snaitech. The 2019, which is the full integration into the Playtech group. Finally, the LTM as of June 2022, that is 20 months without any retail lockdowns. In the first bridge from 2016 to 2019, EBITDA was up by EUR 35 million, leveraging a general growth of the gaming market, mostly obviously in the online verticals, as you can see from the GGR performance, but suffering in the same period, as Agostino explained, the tax increase that impacted the retail net result. In the second bridge, LTM versus performance 2019, post versus pre-COVID, we posted a EUR 100 million growth on EBITDA, despite an Italian gaming market basically flat or even decreasing.
What has been driving such an extraordinary growth? Three main factors. First, and the most important, Snaitech has been fully exploiting the retail to online migration. We will see in the following chart how profitable is the change in marginality for Snaitech when a bet is moving from a shop, a physical shop, to a smartphone or a desktop, or from a physical gaming machine to a digital slot. The second factor, we succeeded in protecting the retail marginality from VLT downturn caused mainly by the social card introduction. As you can see from the chart, for a reduction of more than EUR 250 million on the retail GGR, the final impact on Snaitech marginality was EUR 10 million.
We have been able to smooth the impact, basically thanks to the asset management of machines and shops, and the bolt-on strategy that Agostino showed before. Third, and common factor between the two periods, is the OpEx reduction. Synergies with Playtech, lower advertising costs helped us, but the cost control program is always present in our strategy. As a result, EUR 7 million saving between 2016 and 2018, and another EUR 16 million from 2020 onwards. On this subject, from the second part of 2022, we'll be likely suffering from a general increase of energy costs and other inflationary effects. The same dynamics may affect also the marginality of our retailers. We are currently working with our energy providers to smooth the impact on our internal OpEx.
Fabio will provide you some more colors about the commercial strategy to support also our retailers in mitigating this risk. This chart, as promised, is showing some metrics to evaluate the €100 million marginal increase driven by migration between different verticals, mainly from retail to the online. Each column starts from GGR, so you can consider for simplicity a EUR 1 stake flowing down each vertical, and going down through the value chain, being split between taxes before, then bonuses, the retailer stake, and finally, in yellow, our net revenue. As you can see, migration from gaming machine, first two columns, may represent an increase on our net revenue from 5%- 48%, so close to 10 times for AWPs, and from 21% up to 48% for VLTs, that is more than twice.
Second part of the columns, migration from retail to online sports represents an increase from 40% to more than 50%, that is 30% up on net revenues. The table on the right part of the chart shows also that in the comparison LTM versus 2019, retail lost EUR 250 million, and the online grew by EUR 210 million. If we now apply the metrics on the marginality increase to this important migration, we'll obtain a full explanation of the EUR 100 million growth in the same period. Moreover, looking at the same table, the GGR table, you can see that retail GGR size is currently four times larger than the online. There is fuel enough and left to support a further migration and additional marginality for Snaitech in the future.
Let's now move down from EBITDA to cash flow, as Snaitech may rely on four specific drivers supporting our outstanding cash generation. The first driver is the low level on your CapEx, EUR 32 million as an average since 2017, of which EUR 80 million related to ordinary and maintenance CapEx, EUR 7 million to the vertical M&A activity explained both by Agostino and Alessandro, and another EUR 7 million, again on average, for concession renewals. In this case, this amount of money will become EUR 11.5 million following the betting rights expansion that was explained by Fabio before, and starting from July this year. Why low CapEx for Snaitech? The answer is a combination of the proprietary technology, the franchise model, and the selective M&A strategy. The second driver is the real estate, so the land disposal.
Fabio explained the real estate strategy for the wide area of San Siro. As a result, Snaitech cashed in EUR 55 million from the sale of the trot area in 2020, and will cash another EUR 19 million within 2023 for the remaining part of La Maura area. The third driver is the favorable working capital dynamic. We have a limited impact from working capital needs, thanks to some structural and positive dynamics in our cash flow. Basically, and simplifying, the cash dynamic, cash collection from retail distributor happens in advance versus the tax payments. We can take profit even in the moment when the business is restarting, that happened after the lockdowns. On the other hand, the online business is a purely and totally prepaid business, which means cash in hand before playing, no credit, and obviously no bad debt.
Also, the cross-selling strategy adopted by Snaitech and explained both by Alessandro and Agostino a few slides before has a positive side effect on our working capital. Since the increasing fee returned to our retailers and coming from the online accounts that are opened by them is a key driver to support their profitability. For us, on the other hand, contributes to lower our working capital exposure, since we can offset part of the retailer credit that we must collect with the same fee that we have to pay them. The last important driver is the huge tax shield that has been accrued, thanks to the previous losses posted until 2016.
This has represented EUR 80 million cash saving from 2017 up to now of lower tax paid, and should bring another EUR 60 million cash saving from now on up to 2024, keeping the current level of earnings. Let's check if these drivers have been working properly on our cash generation. The answer is in the chart and mostly in the statement at the bottom of this page. The cash generation more than doubled from 2016, from EUR 92 million in 2017 up to EUR 206 million . Remember that in the cash calculation, we are considering any cash component except the interest, the intercompany interest, that we paid up to the Playtech Group, so intercompany interest.
The total cash generation achieved by Snaitech since Playtech acquisition amounts to more than EUR 500 million. At the current speed, Snaitech will be able, as Fabio was saying before, to self-finance the potential cash out for the next concession renewal that we estimate in the range between EUR 250 million and EUR 300 million within 18 months of ordinary cash generation. This is the last chart for the financial section, and I'm now leaving the stage again to Fabio to get his view on the future strategy for growth.
Brilliant, Edo. It's brilliant. It's very interesting, as usual, clear, and also funny, as Alessandro would define. It's nice to find a CFO funny, but that's happening. Yes, because by the way, I'm the chief entertainment officer, and he is the chief funny officer of the group. Okay. A break, you know, a little bit. It's been a long presentation with a lot of information we gave you today. I would like now to sum up this long piece of presentation in a few takeaways from the next investors meeting. More, maybe not in four years, maybe not in London, in Milan again. We enjoy all the big premises we have in Milan. First point, business model.
Our business model is in a very good and balanced shape that was confirmed by resilience during the two prolonged lockdowns. Second, online is a driving factor, given also a relatively under-penetrated market, as Mor was anticipating before, and as I said at the beginning. Then let me talk about this funny word we invented in 2018, the B2B2C model is there. It is delivering a strong intercompany contribution to the group, and vice versa, we are receiving a lot of support from the group. Cash generation is our strong point. It's strong, thanks to a low level of CapEx, ordinary CapEx, you see only EUR 32 million a year, and a lean cost structure that will support any future plan if my chairman let me.
Our platforms are scalable, both in terms of size and geography, and that's what we are beginning to do with international expansion. Concession renewals are not an issue on a country, and we see it at a discontinuity moment to increase our market positioning. Bolt-on and business combination, we have quite a good track record from the past. We started with Cogetech in the very past, buying the Lightbox Italian activity. It was a full turnaround of Lightbox in Italy. We continued with Cogetech and SNAI integration, delivering 21 synergies. We performed another big retail takeover with SIS. Agostino, Alessandro on the other side, showed you the interesting metrics, very interesting if you follow well, both the retail ones with Agostino and also the Best in Game case shown by Alessandro.
Given our current trend, delivering since September, as Edo was saying, an average of EUR 20 million monthly EBITDA. Given the expected evolution of the market, we see feasible an organic growth target in the range between EUR 300 million-EUR 350 million in the midterm, which again, to be compared at the target we were setting in Milan at that time, starting from EUR 130 million-EUR 180 million, is another big challenge for us. My colleagues on the board and more are keeping, giving, preparing you, increasing expectation because they want us to exceed, but they keep increasing. It's a bit complicated. But you know, before ending, let me slow down a little bit for a while.
We have strong ideas, focus management, but we also have to cope with some headwinds, potential headwinds. The new updated competitive scenario with the new leaders in the country. We've been talking, we've been showing a lot of slides in which there were a lot of logos, a lot of brands. We have new leaders like Flutter in the online with Caesar and PokerStars and the other brands, and Entain in sports, NOVOMATIC in gaming, mainly. Apollo companies, the combination between Lottomatica, GoldBet, Intralot, and GameNet, of course, is becoming to be a strong competition. There could be still a space to consolidate in our market horizontally. I think we have to look at it.
On the other hand, the increasing competition may influence negatively the book pricing, thus reducing margins mainly on betting. Regulation is stable, and it's an example for many other jurisdictions. It's said to be for us our regulation to be the indication for many markets that are now complaining about, for example, marketing ban or things like that, but that it is what it is. We have solid barriers to entry, but you know, the new concession will carry on investment even though with a limited portion of risk as I was anticipating given the structure of the auction.
From a macroeconomic perspective, current global situation and energy crisis, Edo was talking about, could limit both the customer spending from one side and also expose the retail to difficulties and continuing their work. We will continue to support the network with a specific pro tempore credit support, which is what we did in the first lockdown, and continuing promoting dedicated cross-selling campaigns, which is our secret ingredient that worked very well. Online further development would be indeed the way to mitigate all of that. To end up, this is the last one, I promise. It's long. Sorry. How to find the extra mile, because I've been always asked to give an extra mile and to do more.
Let me leave the stage today with the last to-dos for me and also for you guys, for the team, for the next years. First, we will grow organically and inorganically, as we see increasing the penetration of online, maximizing the value in the retail business, continuing delivering best risk management and trading that assure us the best margin, and pursuing bolt-on acquisition to reach the EBITDA target we were anticipating. As both Andy and Mor were anticipating in the range between EUR 300 million and EUR 350 million in the midterm. Second focus, HappyBet. HappyBet would be the first big business case for our team. We will exploit our capacity to cross-sell, to care about the network, and our target is to break even in 2024, while continuing to scout for opportunistic bolt-on acquisitions to speed up the growth.
Third, there is a clear momentum of consolidation in Europe in the B2C area. We need to be looking at what it is happening across Europe and to leverage our capacity to integrate businesses looking at both opportunistic and strategic transformational deals in cross-border markets. For all the above reasons, I'm strongly convinced more Snaitech has to become a Pan-European platform to successful consolidation across B2C businesses, leveraging its solid know-how, its assets, and its unique management team. We are confident that Playtech and shareholder support will be the secret weapon in this new journey. Thank you very much again, and see you in Milan. Thank you. Now I think we're open.
Yeah. More will come up to the front.
I don't know. Okay. Mor. I leave you the podium.
[crosstalk]No, no.
No, no, no.
No, no.
No, no, no.
No, no.
No. Louis?
More.
Okay.
No, stay. More.
Lot of confusion, you know?
Thank you.
You see, you are like, a star.
[crosstalk]Nothing without you guys. Thank you. Let's see.
Hola, hola. Ay, ay.
Thanks. I'll kick off, if that's okay. Richard Stuber from Numis. Just two questions, please. First is on the EUR 300 million-EUR 350 million target. You said it's medium-term. Could you be more specific in terms of how many years is that? And how much of that growth will be M&A, and how much of that is organic? And the second related question is, if Snaitech were to be a standalone company again, what sort of synergies or what sort of dis-synergies would they have with Playtech? Yeah, how dependent are you on Playtech to reach that number? Thank you.
Do you want me to take the first one or you happy to do it? I'll give him more of a chance than Fabio anyway.
Could you take the mic?
Sorry. Yeah, sure. I mean, look, we were deliberately slightly vague, as you can imagine, Rich, as you would expect any company to be. Look, if you double or if you take their run rate on an LTM basis, that's EUR 260 million. If you add HappyBet in, you could, a bit of a turnaround, you're not a million miles off EUR 300 million. Now, the business is firing on all cylinders at the moment. Sporting results have been pretty favorable. Look, you have to anticipate things could go wrong. You could say, look, if you said medium-term is three years, well, actually then EUR 300 million might not look that exciting from where we are. EUR 350 million does.
If you said the medium-term might be a little bit shorter than that, look, we gave ourselves a bit of wiggle room. I think the starting point was. I think there were a lot of people in the market that frankly didn't believe these current levels were sustainable. The starting point is the current levels are sustainable, and actually, if you get to 200-350 range, whether it's in two years or four years, it's still pretty good going, actually. It was just to really underpin people's confidence. Do you wanna be more bearish?
No, now in English, so we do. No, I think he said probably everything. I wouldn't mention a specific number of years, but we saw last time in 2018, so if we consider every time we're seeing each other expressing mid-term, maybe it's four to five years. We're not considering that as we have our own speed, our organic speed already the capacity to reach the bottom part of the range. We're not considering any specific M&A strategy, but continuing to pursue the bolt-on and organic growth. Even though, as I was saying, per the slide before the last one, we still have to face some headwinds. The energy crisis is really something that we can't measure now.
We are beginning to plan specific canvass with our network in order to try to offset, to support our retailers, in their costs of bills that is going to increase massively, probably in the next quarter, so we will be able to better update this kind of effect in the next couple of quarter. Yes, we think that this target is achievable, since everything we are doing, continuing to with our strong pillars in lean management and trading and risk management.
The cross-selling, as Mor was saying, is one of our secret ingredients that you know, together with the under-penetration of the digital market, can work very well to deliver this target. Anything else should be on top.
All right, next question.
Can I ask about synergies? What's the main benefits?
I didn't want to answer this question because this is the most dangerous one, and I have my chairman in front of me. Anything I can answer to this question puts me in a very bad spot then. We've been working since 2018. As Mor was saying, our friendship, not only in terms of human beings, but also in terms of organization, starts very much before. We've been working a lot with Playtech and much before the acquisition of Playtech. We work in a competitive market, which of course we can't rely only on Playtech solutions. It would have been foolish to adopt the full package of Playtech solution, avoiding our customers to have other alternatives.
That limits a little bit cost of possible synergies. On the other side, we did a lot of revenue synergies, and when Alessandro was talking about future development and what we're doing for the future for our customers, and the tools we're using, most things are, of course, generated by the fact of being part of the Playtech family. I wouldn't want to. I don't know if you wanna add something more, but I think that this is, of course, you know, we are a different animal within the Playtech group. That puts us in a position of not being totally depending on Playtech from one side.
On the other side, of course, we and the numbers are confirming this. We fully exploited the fact of being part of the Playtech group to sustain our growth.
Roberta.
Hi, it's Roberta Ciaccia from Investec. One question for you, Fabio, and one for Alessandro. You said before that you think the regulatory environment in Italy is stable. Can you elaborate more?
You know what? No, this is a huge statement from my side because if I look at you and then she left, Senan. No, to Senan, with who we've been working on our first bonds back in the days, I always been in a very uncomfortable situation when I was talking with investors on our roadshows and on our one-to-one, because when it came to the point to be talking about regulation, I was always wishing to have a crystal ball, you know, to answer, you know, this year is going to be X percent or Y percent. I do think it's stable. It's stable since 2020, 2019.
We've been working and we've been having the chance to live with the worst gaming regulations, the government possible with the populist Five Star Movement. They were fully against gaming, and we survived. We find out the way to mitigate any potential action. I consider this moment being a stable moment for the regulation in Italy. Regulation is being copied and mitigated in other jurisdictions. I do maybe foresee an incremental action from the regulator on responsible gaming, on security protection, but I would consider the next discontinuity moment being the tender action that will be in 2024. We're actually working a lot.
One of our points of strength is also being so big, our capacity to cooperate and to talk, to interact with the regulator. For the shaping of the new regulatory scenario, we do think 2024 would be another massive point in our growth trend, because as Alessandro was anticipating, for example, in the online arena, there's no sense of having such a long tail of operators. Barriers to entry in the online are so low. Maybe we're expecting an incremental price paid for the online licenses, which we are supporting also with the regulator. Actually, in Italy, an online concession costs EUR 250 thousand, which is nothing considering those numbers.
We are suggesting also regulator to increase barrier to entry to avoid also, you know, small operators that dare to act roughly also in terms of commercial policies to enter the market. Yes, that's the reason why I stayed stable.
If I may, just one as an observer, because obviously, Fabio speaks about the Italian market and his experience with the Italian regulator.
Yeah.
It actually brings me back to the time we announced the deal, and I was asked the same question, and people questioned us on the deal itself. They said, "Why did you want to go into Italy? The country is not stable, the government is not stable, the regulatory environment is not stable." I remember sitting alongside Fabio, and Fabio drew down and said, "You need to educate them that there is an ongoing dialogue between the operators and the regulators. So we will not be just bombarded with something without the dialogue," which is a first and very, very different to what you find here in this country. In this country, they launch a gambling review, and everyone waits to see what will happen.
There is a clear distinction between the regulator and no dialogue almost between the regulator and the operators, and at times even between the operators, which is not the case in Italy. You know what? They increased the taxes three times, and they introduced municipality regulations or regulations that gave a lot of power to the municipalities and introduced an advertising ban. They introduced social cards. It was all a result of a dialogue with the regulator. The payouts were changed at the same time, and a dialogue was held with the municipalities. You know what? Four years later, after all these changes, you look at the results.
Look at the numbers.
2018, we said medium-term target EUR 180. We are almost double for the next four years, doubling again the original target that we had at the high-end 350, right, going forward. I think that if you think about the stability of the market and the opportunity it presents, not to mention the huge investments by companies like Flutter and Apollo and various others, it's all there to suggest it's one of the best markets, if not the best market to be in Italy, as evident by the numbers and the medium-term target we set going forward.
If I may to add on to what Mor was saying, which I subscribe 100%. This is the same reason why we're looking even though the numbers now are very bad, we are looking good at positive German evolution of the market. Because we see in Germany exactly the same path of evolution, regulatory speaking, that's happened in Italy. You know, the regulator in Germany has been incorporated two and a half years ago, the Glücksspielkollegium, and then the new regulator. Of course, Germany has been, you know, a country which started with dot-com operations, then a huge operator. An operator became huge after the acquisition of CDC. I'm talking about Tipico. Now we are exactly in the same situation.
There are a couple, two, three, four operators that may speak with the regulator and may also interact with the regulator to draft the future of the regulation of the country. That is a country which is sports-oriented, gaming-oriented, with a lot of fragmented operators. That's the reason why, you know, even though it was not really a gift, I always joke with this by Mor Weizer to give us, sorry, the responsibility of this turnaround. I see a possible positive evolution also in the German market because it's becoming really like ours, like many other will follow.
Okay. The answer was, you know, super exhaustive. Thank you so much. Can I ask you, Alessandro, what do you think of the online penetration in Italy? You think it will ever come to the point where it's similar to what we're seeing in the UK, or do you think there are structural differences?
Well, I think so, because two years ago, if you had asked me this question, I wouldn't even respond with the response we had from the market. The digitalization process is absolutely there. We see in the behavior of people in all the industries, you know, Amazon or also groceries. I see that their attitude is changing. On sports, I think that we are almost there. There is a complete omni-channel also in the mind of people. What we are still missing a bit is an homogeneous regulation for slots and gaming. Because the land-based environment is treated really differently from the other one.
I speak about identification of the player, even though we now have the social card, which is different from passing through a key, a complete KYC process, different payouts or usage of cash. I think that there is room to get the customers. Keep in mind that, as Agostino said, also in the retail environment, we have other players inside the value chain that they are making kind of resistances because they get a piece of the value chain. Like it happened in betting with the retailers, I think that there is really room to migrate a good portion of the wagers and the GGR that are into the retail environment for gaming machines, especially into the digital one.
If I may. Sorry. If I may, those customers are not all lost in retail because Agostino was highlighting in his slides, we had a huge migration in the first lockdown in which we were offering table tennis and something else, Nicaragua, second league, soccer. But then, the majority of them went back to retail. I think we are mostly. We are not totally migrating players, but we are breeding new digital players that play both in retail and online. A lot of those players, maybe they were already playing in other platforms. What we really did was, you know, trying to get them back to the loyalty of the brand to our offer. We have been.
There's been a strong education, let's say, project on the retailers which were reluctant to adopt this new culture, but they're now ready for the hopefully not the third lockdown, but for the next future. Sorry, Mor.
If I may, just to put it into perspective, because we talk about the market and online penetration in the market. Let's talk about Snaitech and the key strength of the brand, right? The market online penetration in Italy only grew from 14% to 26%.
24.5.%
24.5%-24%
Could be.
24.5%-25%. It doubled and increased by 12%. What happened in the business since we bought it? It generated EUR 25 million EBITDA in 2018, and now it generates in excess of EUR 120 million. 12% increase in online penetration. Imagine that it will only increase by 12%, right, to 35%-37%. There is a lot of room for growth. You should not ask yourself. The point here is the market only grew by 12% online penetration, and we grew the online EBITDA by 4.5 times due to the strength of the management team, their capabilities, their initiatives, and the brand and the strength of the brand of Snaitech. We don't need it to go to 50% or 60%.
We simply need it to be 35%-37% in the next two to three years, and this is where the opportunity for us as a business with the best brand that exists in Italy, specifically SNAI.
I love you, Mor. You keep increasing the expectation.
We set the target already.
No, no, it's okay. No, it's okay.
Now we can give whatever color we want.
No, then the five of us, we fly back to Milan, and we convene and see how to do it. Okay. Sorry.
Arpad, did you have a question? Before Mor and Fabio get a room,
I don't think I understand the gaming machine business, but I think you have VLTs and AWPs in locations that are not SNAI locations. So do you add value to that? And can you sell it and realize capital from it? 'Cause it doesn't feel like it's part of the strategy of the group of everything else you're talking about. Or have I misunderstood that business?
No, I'm looking at Agostino because every time someone is saying something, either they're saying, "Okay, we have to migrate your customer," or, "You have to close and sell your machines." Agostino is about to take the ticket, the wallet, and the suitcase and to go back to. No, no. Joking. No, gaming machines are a strong pillar in our business, since, you know, our history, but yet they are really integrated with the offer we are giving to our customers. We have two-
Let me just-
Yeah, yeah. No, no.
Understood. Because I get that answer in relation to the machines that are in SNAI-branded locations.
Yeah.
Like a betting shop I would understand.
Understood. Yeah.
I'm talking about the machines that are not in the Snai-branded locations.
The AWP network. We were talking about 10,000 points of sale in which machines are, you know, managed. The network of AWPs is a network in which we do a lot of breeding. Alessandro was talking. I don't know if you get the last point. The last point in one of the last slides of Alessandro, which he was talking about PBR, which are points with no license in which we do promotion of the online. Those PBRs are mainly selected from the network of gaming machines we have in Italy. With gaming machines, we have a huge, I think, a massive network managed by third parties in which we can successfully sell our other products and our brand. It is delivering us.
It's costing us a very, you know, from a CapEx perspective, notwithstanding of course the license renewal, but it costs us running the business from a CapEx perspective, a very limited amount of resources. Then on the other hand, it allow us to have a widened network to sell and to promote all the other services. We don't see it feasible to spin off this business because it's totally. I wanna explain to you to make my answer a little bit more understandable.
The people that are managing the AWP network, in most cases are also owners of group of retail betting shops, our franchisees, or they control the service product in the other vertical of the company. It's very difficult to think to spin off just the AWP business. The AWP business is strongly related to the VLT one. The VLT one, as Agostino was mentioning, it would be a focus for future development also exploiting Playtech platform. One thing that was just mentioned by Agostino, but it would be, let's say, one of the theme of the future, with the introduction of mini VLTs for which we're already working and talking with the Videobet colleagues in Playtech.
We will have the chance to transform the AWP business, which is now totally serviced and operated by third parties, into a business which is pretty similar to the VLT one, in which we control remotely contents, so we can get a bigger portion of the value chain.
If I may add, Fabio.
Yeah.
There's also a reason why all these business are tied together because the concessionaire is the only one who is managing a single network, having all those different points and different kind of games tied together. We manage a single ADSL and mobile network that is providing all the events that happens in a game machine, AWPs, VLTs, betting, virtual, to the regulator at the same time, which is the main task that the regulator ask to concessionaire to be accomplished. It would be quite easy to separate, and there would be many synergies in separating the single network in different network, having someone that is just managing AWPs. 50% of the times you are in the same bar and tobacconist where you can have a corner with betting.
To be the concessionaire and managing all the costs related to this stuff is a big economy of scale. This is one important point that must be considered. Consider that a concessionaire like SNAI manages maybe the fourth private network in Italy in terms of broadband network, because all the 1,600 points for betting, all the 500 halls for the VLTs are managed through broadband network. It's a huge cost for ADSL that we are bearing. You can compare us like a big bank in Italy in numbers of points of presence that we have throughout Italy. That's the reason why we are also, with the same network, we are able to provide payment services, Snaipay, broadcasting.
The same network is also linking all the main hippodromes in Italy. This is done with fiber optics. We have an uplink signal for virtuals, because virtuals use two links, terrestrial with the fiber and the satellite. If you start shrinking and separating this network in different tranches, you will have EUR 1 million dyssynergies in doing that. Having seen the marginality for those games, you don't have room to do that. Let's keep-
See, that is an engineer, huh? Now from the answer.
Thank you. That was really interesting. Thank you. You've talked about the strength of the franchise business from a SNAI point of view. What does life feel like for the people on the other side of that relationship, the owners of the locations with the machines and the people who are franchising the shops? I guess you mentioned the migration of revenue online not necessarily being positive for them. What have the last couple of years been like for them, and do they survive on a five-year view?
Yeah. Another point in the Agostino part of presentation was this fantastic result and unexpected result we got out from the second lockdown. We were thinking to be possibly hit by 20%-30%. Looking at the other, I was talking with another colleague of yours before mentioning other industries in which lockdown has been, like restaurants and food and beverage, has been more dramatic.
In our case, we did a lot of activities, a lot of support, because, you know, today we didn't mention all of them for the sake of time, but we never left them alone. We support it with credit support, so we freeze the credit position, and we've been going door by door to all our franchisees, to organize their operation, to perform the cross-selling and the migration, to educate them that stream of revenues would have not been wasted for the future times. We provided them also with a lot of content services to offer.
We organized, for example, poker tournaments between franchisee shop closed by hiring their customers, onboarding their customers in online tournaments, to wait, you know, that the shops to reopen. The result of that has been, as Agostino was underlining, that we lost, probably, the same quantity lost in terms of relationship, of course. The same quantity of points of sale we would have scratched the same, because of low-performing figures or because of bad relationship. As Mor has been mentioning many times, and, you know, we are in the U.K. here, so it may be difficult to understand, but the SNAI brand is really strong.
You know, having such a strong brand and supporting them during the lockdown has given us the possibility now, as I was saying at the end of my presentation, to be in the position to start renegotiating the agreement in light of the future renewal of the concession. Loyalty is very strong and it's also shown in digital numbers. I don't know if you got the point, not only on ARPU, but on churn. Churn on digital customer coming from the online or from the retail is 20% versus 46% on the normal online acquisition.
I think that the whole ecosystem, which is a combined ecosystem between retail and digital, it's unique, and it's our specific know-how and expertise we wanna exploit in Germany or in other countries in which there could be opportunities to operate both retail and online.
That's great. Thank you. Just maybe one last one. You've given us sometime in the future target of EUR 350 million. What does SNAI have to deliver in terms of profit for management to hit their performance targets?
What did he say?
Now, how is this?
Help me here.
No, no. You know, because I always look at Andy, he's always comfortable. You know? He's always in comfortable position, giving targets.
Yeah, that's comfortably one day in the future. How-
Okay. We didn't mention.
How is-
We didn't mention, okay, which day.
Yeah. Now, how is the Snaitech management incentivized, and what are the targets for this year? Because we can see the group management, but Snaitech is very important, and we can't see the Snaitech targets.
Oh, first of all, a disclaimer, we don't know each other. The first time I see him. Happy to get to know you. I leave the answer to Mor. Sorry.
I will say.
I don't think we should answer it.
No, I will say that it is.
Why is he always talking?
It is being discussed.
I don't know. It's kind of noisy in the background.
I will say, and I commit to it, right? Because obviously it's important. Regardless of this, it's important because of the relationship and the commitment. I ask in return to meet the targets and exceed them as they always did. I'm not suggesting more than what we suggested, but at least within the range we suggested. Which is, you know, quite a good medium-term.
Challenge.
A good medium-term target for us. Again, reminding everyone the EUR 180 we had before. I would say it's being discussed, and I can tell you that this medium-term target was recently agreed with the management team of Snaitech in light of the fact that we had six months of lockdown last year, and in the beginning of the year, we were very busy with the Ukraine situation. Me and Fabio have ongoing discussions. I can guarantee you that the incentivization package will be such that will be to the full satisfaction of the Snaitech management team, but more so important, will be fully aligned with what we try to achieve strategically. It will refer to the medium-term targets, the online, and the criteria we use.
Actually, in the back, we have our Chair of RemCo, and he can vouch for me suggesting that I started these conversations with him, and we intend to do that with no further delay, as I promised SNAI. I think that we owe it to the team and, you know, this is what we intend to do in the coming weeks.
Thanks everyone for coming.
Bye.
Thank you.