Scientific Games Shares Lottery Financial Details
Scientific Games has shared detailed financial information on its lottery business. The igaming provider is trying to attract a buyer for the business division. The company has also revealed its long-term strategy in the industry.
Scientific Games have taken the highly unusual step of revealing the financial details of their lottery arm. The company is looking to offload its lottery division and hopes this transparency will encourage interested parties to place a bid.
The company, which is a global lottery, sports betting and igaming provider, decided on this transparency as part of an internal strategic review.
This review highlighted the company’s desire for divestment of its lottery operations. They also intend a similar approach for their current sports betting business, focusing on becoming a digital gaming business. To achieve this, they believe concentrating on content will be key for long-term growth.
Scientific Games are open to the prospect of an initial public offering (IPO), a reverse merger special purpose acquisition company (SPAC), or a straight sale for the lottery division.
The figures released by the company show that the vast majority (73%) of its lottery business’ full-year revenue came from contracts with North American companies. European contracts at 24% are the secondary source of revenue, with just 3% from other areas.
Scientific Games – lottery division current financial Position (as of June 30, 2021, all figures in $m)
- Cash and equivalents – 31
- Cash (restricted) – 2
- Net receivables – 165
- Inventory value – 73
- Assests (contract) – 72
- Total current assets – 363
- Property – 170
- Lease right-of-use assets 31
- Goodwill – 353
- Intangible assets – 63
- Software – 63
- Equity investments – 251
- Other SG lottery assets – 10
- Total assets – 1,304
As the above figures show, the lottery division is in good health, and it is delivering on its stated four pillars of growth. These are; Encouraging new customers to use its ‘enhanced partnership’ solution and attracting new customers in the US to its turnkey ilottery product, expanding the division’s systems and focusing on retail to consumer business and assessing similar companies with an eye on mergers and acquisitions.
Uniquely, Scientific Games also released details of contracts that the company has in place. These reveal that the contract with Keystone State has been ongoing for 46 years. Additionally, the contract accounts for 14% of the total revenue for the division.
The company reveals the lengths of their relationship with their longest-running contracts, the average length of contracts of their top ten customer contracts by revenue is 35 years. The average length of the current contracts these companies are on is fifteen years.
These top ten contracts create full-year revenues of $408m, a figure that is 44% of the total revenue of Scientific Games’ lottery division.
In the first half of 2021, the division’s operating cash flow before taxation was $189m, with a predicted full-year figure of $386m. The company predicts this figure will grow to $398m in 2022.
Industry insiders have expressed the opinion that the lottery business is a “drag” on Scientific Games’ longer-term ambitions and believe a sale is the right course of action for the company.
Scientific Games CEO Barry Cottle is believed to be keen on a quick deal and hopes the division’s future will be known by the end of 2021.
You can read the full press release on Scientific Games’ website.