As part of a strategic assessment, Scientific Games Corporation has unveiled plans to sell its sports betting and lottery companies. Taking advantage of those two factors, according to the company, will enable it deleverage its balance sheet, free up investment capacity, and build a company with a “materially increased focus on digital markets.”
The newly strategized corporation will consist of three components at the end of the process: gaming, iGaming, and SciPlay, with the goal of capitalising on the rising convergence of those companies.
SG said it is investigating strategic alternatives to effectuate the sports betting and lottery divestitures, with the backing of its Board of Directors, which includes Executive Chair Jamie Odell and Executive Vice Chair Toni Korsanos.
An initial public offering (IPO) or a merger with a special purpose acquisition company (SPAC), as well as a sale or a strategic merger with another company, are among the choices.
Flexible, nimble company
Odell remarked: “When I joined the Board in September 2020, I told stakeholders that we were focused on rapidly de-leveraging the balance sheet, unlocking the value of the company’s products and technologies and creating a flexible, nimble company positioned to deliver above-market returns to investors.
“Today, we have announced major initiatives aimed at achieving each of these key objectives, recognizing significant value in each of the businesses and positioning the company for sustainable growth, all as a result of the dedicated work of our teams.”
President and CEO Barry Cottle added: “Today’s announcement reflects key steps to optimise our portfolio and strengthen our balance sheet by significantly de-levering while also targeting investments in our largest growth opportunities. These steps will accelerate our path to become a content-led growth company focused on leading in both land-based and digital markets.
“Our company will be positioned to build great games that define the future of gaming, supported by platforms that power the best operators in the world. We believe these steps will enable us to capitalize on the high growth potential of each of our businesses, including their expanding digital content offerings and platforms, unlocking value for shareholders, customers, and employees.
“Each of our businesses will be better positioned to partner with their respective customers and to deliver long-term growth and profitability.”
Unlocking the value
Odell explained the rationale behind the new strategy to investors in greater detail: “Our ultimate goal is to unlock the tremendous value of each of the individual businesses and to turn Scientific Games into a sustainable growth company with a transformed balance sheet and an enhanced focus on industry-leading content.
“We outlined three key strategic pillars to unlock this value. Firstly, optimizing our portfolio to focus on driving our key areas of differentiation in content and in digital channels where total addressable markets are large, profitable and fast growing.
“Secondly, investing in our largest growth opportunities – both organically and inorganically – to become a sustainable growth company. And thirdly, significantly de-levering, transforming our balance sheet to enhance our financial flexibility and capacity to invest in our future.”
The lottery and sports betting sectors in Singapore, according to Odell, will be better positioned for the future as standalone enterprises with their own financial structures and investment strategies.
He advised: “We are confident that separation of these businesses will provide their respective strong management teams with the best foundation to build on their current momentum and capitalize on the strengths of their business. We expect this to create exciting opportunities for their employees and customers. We will be exploring ways to work with those businesses in key areas following the divestitures.”
Finally, SG highlighted that there can be no guarantees that the company’s study of alternatives for its Lottery and Sports Betting businesses will result in any transactions or other measures.