Brightstar Lottery’s recurring government contracts and near-49% EBITDA margins look undervalued at 5.14x EBITDA, but leverage, Italian amortization, and jackpot-driven comparisons remain key execution tests.
Overview
Brightstar Lottery PLC (NYSE: BRSL), formerly IGT, became a pure-play lottery technology and operations company after selling Global Gaming and PlayDigital to Apollo-managed affiliates for $4.05 billion in July 2025. It serves nearly 90 jurisdictions across six continents, with approximately 94% of revenue from recurring services and 6% from product sales. North America generated about 47% of FY2025 revenue and Italy about 41%; Brightstar supports 26 U.S. state lotteries and 8 of the world’s 10 largest central lottery systems. Q2 2026 revenue declined 7.4% to $584 million, missing consensus, but Adjusted EBITDA rose 4.4% to $286 million and margin expanded 540 basis points to 48.9%; adjusted EPS of $0.11 beat estimates. Reported revenue is burdened by $175 million of annual non-cash Italian concession amortization. Management reaffirmed 2026 revenue of $2.50–$2.55 billion and EBITDA of $1.16–$1.19 billion, and expects normalized operating cash flow of about $750 million in 2026 and $800 million-plus in 2027–28. At $9.36, BRSL trades at 5.14x EV/Adjusted EBITDA and carries a roughly 9.7% dividend yield; the five-year probability-weighted target is $26.83. Near-term catalysts include debt reduction, OPtiMa savings, iLottery adoption, and contract retention.