Paddy Power owner Flutter Entertainment has announced a deal to buy Italy's Sisal from CVC Capital Partners Fund for €1.913 billion as it looks to expand its footprint in Europe.
About 90% of Sisal's earnings this year will be generated in Italy with the rest coming from regulated lottery operations in Turkey and Morocco.
The business, which employs about 2,500 people and is headquartered in Milan, expects to generate EBITDA of €248m this year.
The group is also in the race to run the UK National Lottery.
Flutter said today's deal fully aligns with its strategy of investing to build leadership positions in regulated markets globally.
It said the deal is likely to complete during the second quarter of 2022 and is expected to be accretive to adjusted earnings in the first 12 months after that.
Peter Jackson, Flutter's chief executive, said the company had for some time wanted to pursue this market opportunity via an omni-channel strategy and today's acquisition will ideally position it to do so.
"Sisal has grown its online presence significantly in recent years, aided by its proprietary platform and commitment to innovation. I'm excited to see how Flutter can complement these capabilities through our scale, differentiated products and operational capabilities," he added.
Francesco Durante, Sisal's chief executive, said that over the last five years Sisal has transformed into a leading digital and international gaming company.
"Through our commitment to digital innovation, international expansion and safer gambling, we have achieved a leadership position in Italy's online gaming market and developed our global footprint by winning lottery tenders in Morocco and Turkey," Mr Durante said.
"We are delighted to join Flutter and are convinced that through its scale and operational capabilities, we will be able to further strengthen our leadership in the markets we operate in," he added.
Italy is the second largest regulated gambling market in Europe after the UK, with total estimated gross gaming revenue in 2019 of €19 billion.
Before the Flutter announcement, Sisal had been planning an initial public offering (IPO) to list its shares on the Milan Stock Exchange.
Flutter last month acquired Tombola, one of the UK's leading online bingo operators, for £402m.
Flutter shares moved higher in Dublin trade today.