Flutter, the gambling company that owns Paddy Power and SkyBet, has agreed to buy the Italian operator Sisal in a £1.6bn deal that could have a significant bearing on the competition to run the UK’s national lottery. In a statement to the stock market, Flutter said it had struck a deal with the private equity group CVC Partners to buy Sisal, a major Italian gambling and betting firm which also operates lotteries in Italy, Turkey and Morocco. The Flutter chief executive, Peter Jackson, said buying the Milan-based firm would give the company a “gold medal position” in Italy, the second-largest regulated gambling market in Europe, after the UK. Flutter said Sisal was fast-growing, particularly in online gambling, which increased by 20% in Italy as the Covid-19 pandemic drove punters to migrate online. The takeover puts Flutter, whose brands include Betfair, Paddy Power and SkyBet, in contention to take over the UK national lottery. Sisal is one of four firms bidding for the next 10-year licence to run the lottery. The Gambling Commission is expected to make a decision in February 2022 after a competition that has been prolonged several times, with the new licence due to start in 2024. Sisal is up against Camelot, which has run the Lottery since its inception in 1994, and the media tycoon Richard Desmond, who already owns the Health Lottery. The biggest threat to Camelot’s 27-year incumbency is thought to be the Czech operator Sazka, which is bidding via a special purpose vehicle set up in the UK called Allwyn. All of the bidders have submitted their final proposals and are waiting for the Gambling Commission’s decision. However, Flutter did not mention the UK lottery in a statement attached to the announcement of its takeover of Sisal. The Guardian understands that Flutter has not factored the bid into its plans. The takeover is not due to complete until April, by which time the national lottery decision will have been made. While the Gambling Commission oversees all gambling activity in the UK, including lotteries, sports betting and casino games, it has typically treated the national lottery as a separate entity with specialist staff devoted to it. Flutter is also the subject of an investigation by the commission, after the Guardian revealed that its SkyVegas brand offered “free spins” to recovering addicts. If Flutter is not considered a suitable firm to run the lottery, that would leave Camelot, Sazka and Richard Desmond fighting it out for the lucrative 10-year licence. Camelot has faced criticism, including from a parliamentary public accounts committee (PAC) report in 2018, that charitable donations have not always risen as fast as profits under its tenure. In the first year of the current lottery licence, Camelot booked an after-tax profit of £31.5m after ticket sales amounted to £5.45bn, raising more than £1.5bn for good causes. In the year that so exercised the PAC, 2016-17, Camelot’s profit was more than twice as high at £70m but it raised only a little more for good causes, about £1.6bn. Since then, Camelot has rebalanced things somewhat. Profits for the year to March 2021 have not been published in full but are thought to have reached £80m on the back of record sales of £8.37bn, with good-cause money also hitting an all-time high of £1.85bn. In the first half of the current financial year, to 30 September, Camelot recorded sales of £3.9bn, up 2.7% compared with the same period in 2020. The amount Camelot returned to good causes was £884.5m, up 2.4% on the previous year.