SG to divest lottery/sports betting to unlock value

Scientific Games expects its digital businesses to be the same size as its land-based operations within three years following major restructuring plans to unlock value for shareholders. 

The supplier has been carrying out a strategic review, focused on cutting debt on the balance sheet and unlocking value from its products and technologies.

As a result of that review, the company said it plans to divest both its lottery and sports betting businesses, although the exact form of the divestment has still to be decided.

SG may consider an initial public offering, a combination with a special purpose acquisition vehicle or an outright sale. The company didn’t give further details on a conference call, but said it is advanced in its deliberations and will soon release more information on structure and financial details.

“Today’s announcement reflects key steps to optimize our portfolio and strengthen our balance sheet by significantly de-levering while also targeting investments in our largest growth opportunities,” SG President and CEO Barry Cottle said. “These steps will accelerate our path to become a content-led growth company focused on leading in both land-based and digital markets.”

After the restructuring, the company will consist of gaming, igaming and its SciPlay social gaming business. 

“We will capitalize on the increasing convergence of these businesses, as players look to play their favorite games wherever and whenever they want to play,” Cottle said.

SG said it may consider acquisitions to bolster its position in its core businesses to complement organic growth.

The company’s Q1 results showed a marked improvement from the same period a year earlier as its digital businesses helped to offset the continuing decline in its land-based gaming products.

Lotteries was the stand out with a 36 percent increase in revenue, with social gaming rising 33 percent and digital up 9 percent. Revenue from land-based gaming was down 23 percent.