Scientific Games predicts Q4 lottery revenue of up to $275m ahead of Brookfield buyout

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Scientific Games expects its lottery division to generate total revenue of between $265m and $275m for Q4 2021.

In a report submitted to the SEC yesterday (25 January), the supplier set out its expectations for the division, which is in the process of being acquired by private equity specialist Brookfield Business Partners for a total consideration of $6.05bn.

That transaction is expected to close in Q2 2022 and consists of a $5.83bn payment in cash and an earn-out of up to $225m based on the achievement of certain EBITDA targets in 2022 and 2023.

Projected revenue for the lottery segment represents a year-on-year increase of between 4% and 7% when compared to the $256m it generated in Q4 2020.

The business also expects to announce operating income of between $70m and $75m, compared to $68m in Q4 2020, with adjusted operating income expected to fall between $110m and $115m when accounting for depreciation and amortisation, restructuring and other costs, EBITDA from equity investments and stock-based compensation.

The business’ EBITDA from equity investments is calculated by adding together $7m in earnings, $3m in income tax expenses and $10m in depreciation, amortisation and impairments, minus $1m in net interest income.

Scientific Games’ Q3 2021 financial report showed the business generated $539m in revenue from continuing operations during the quarter, up 24.8% year-on-year.

Discontinued operations, including its sold-off lottery and sports betting divisions, brought in revenue of $285m.

In addition to the sale of its lottery business to Brookfield, SG entered into a definitive agreement with Endeavor Group, which is set to acquire its sports betting business OpenBet in a deal worth $1.2bn. This transaction is also expected to close in Q2 2022.

In the supplier’s Q3 2021 interim report, president and CEO Barry Cottle said: “With the sale of our lottery and sports betting businesses we are transforming our company and raising $7bn which will significantly de-lever the balance sheet and enable us to invest for growth. 

“With our streamlined organisation we have all of the pieces in place, and are singularly focused on building games fully cross-platform.”

The business’ iGaming CEO Dylan Slaney told iGaming NEXT earlier this month that the new-look SG is always on the lookout for businesses that can help to achieve its growth ambitions.

Hinting at a potential entrance into new technologies, Slaney said: “I don’t think as an industry we’ve truly understood the impact of blockchain and how that can help the industry to achieve not just its growth goals, but also help with compliance and from a regulatory point of view.

“I think the world of NFT gaming is also something that is getting more airtime and more credence and ultimately will play a major role in our industry as well over the coming years.”

With the sales of its lottery and sports betting businesses scheduled to close over the coming months, the business is left with heightened strategic clarity and an enviable balance sheet for possible future acquisitions in the gaming content space. 

About the author

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Conor Mulheir

Conor entered the gaming industry in 2018 producing high-level live event content for audiences in London, Amsterdam and São Paulo. From 2020, he went on to report news and commission exclusive content for various gaming media brands before joining iGaming NEXT as editor in January 2022.

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