Scientific Games sells lotteries business to Brookfield for $6.05b

Scientific Games

Scientific Games said it has agreed to sell its lotteries business to Brookfield Business Partners for $6.05 billion as part of its strategy to focus on becoming a cross-platform gaming company.

The consideration consists of $5.8 billion in cash and an earnout clause of up to $225 million. The deal is scheduled to close in the second quarter of next year.

“We conducted a thorough review of paths to divest the Lottery business and this transaction maximizes value and the timing and certainty of proceeds, while minimizing complexity and execution risks,” CEO Barry Cottle and Connie James, chief financial officer, said in a joint statement.

“The significant near-term proceeds from this transaction, as well as our previously announced sale of Sports Betting, enables us to aggressively de-lever, transform our balance sheet and position us with the financial flexibility to invest organically and inorganically in our largest growth opportunities.”

The supplier announced in June that it had carried out a strategic review and planned to divest its sports betting and lottery units to focus on its digital businesses, which it forecast would be the same scale as its land-based business in three years. One option that had been discussed was a potential initial public offering in Australia.

In September, it announced the sale of its sports betting unit, OpenBet to Endeavour for $1.2 billion.

The lotteries arm has been one of the best-performing segments of Scientific Games’ business. It has long-standing relationships with approximately 130 government and non-government lottery entities in over 50 countries. It is also the market leader in instant games with a broad array of products and services powering approximately 69 percent of instant product retail sales globally.

Gaming suppliers have been pivoting to expand in the online segment, driven by catalysts such as the opening up of legal online gambling in the U.S. and the Covid lockdowns.

Earlier this month, rival Aristocrat proposed a A$5 billion ($3.7 billion) cash offer for the full acquisition of PlayTech plc, a move which will allow the supplier to enter the fast-growing online real money gaming segment. 

Aristocrat said it believes the acquisition will accelerate its growth strategy and deliver strategic benefits, including providing material scale in the US$70 billion online RMG (real money games) segment – particularly in North America.