Scientific Games Aims to Grow Digital Business Through Lottery, Sports Betting Divestment

  • The supplier believes the divestment will open the door to new opportunities and digital growth
  • SG is exploring multiple options, including a sale or strategic combination with another business
  • The company’s land-based segment has struggled in the pandemic, while digital has seen growth
  • The move comes as SG continues its US expansion, signing multiple deals over recent months
Scientific Games logo on phone
With the aim of growing its digital segment, US-based gaming supplier Scientific Games has announced plans to divest its lottery and sports betting businesses. [Image:]

A new strategy for SG

After completing a strategic review, US-based gaming supplier Scientifc Games (SG) has announced plans to divest its lottery and sports betting businesses to position the company for “enhanced growth”.

The firm announced the news in a press release on its official website Tuesday, also taking to Twitter to publicize the “decisive steps” later that day:

According to Barry Cottle, president and CEO of SG, the measure will allow the company to de-leverege its balance sheet, opening the door to new investment opportunities and digital growth. “These steps will accelerate our path to become a content-led growth company focused on leading in both land-based and digital markets,” he commented.

In regard to executing the divestment, SG is exploring multiple options. These include an initial public offering, a combination with a special purpose acquisition company, and a sale or strategic combination with another business. Despite plans to explore the possibility, the company has affirmed that there is no guarantee a transaction will go ahead.

Targeting digital growth

In Tuesday’s press release, Cottle made clear that one of the main aims of the divestment was for the company to grow its digital segment. “We are targeting our digital businesses to be comparable in size to the land-based gaming business within three years,” he said. Cottle expressed confidence that the divestment would make this possible.

land-based gaming was the only sector to see a decline from 2019 levels, down 36%

The new strategy comes as SG’s land-based business continues to struggle with the impact of the pandemic. For the first quarter of 2021, the company saw an increase of revenue of almost 1% year-on-year to $729m. However, revenue from land-based gaming fell 23% from 2020 levels. It was the only of SG’s segments to register a loss, continuing a trend from the full-year 2020.

Although easing of COVID-19 restrictions in a number of states has increased commercial gaming revenue, the sector still remains impeded by the pandemic. According to the American Gaming Association’s latest data, approximately 80% of the US’s 463 casinos remained constrained to between 25% and 75% of full occupancy in April.

SG continues its US expansion

Over the past 12 months, SG has signed deals with multiple US operators as it continues its expansion across the country.

the company powered FanDuel’s sportsbook launches in West Virginia, Illinois, and Indiana

A number of these agreements centered on the supplier’s sports betting technology, OpensSports. In September, the company renewed its partnership with betting giant Flutter Entertainment, meaning SG will continue to provide Flutter with its OpenSports technology for the next five years. More recently, the company powered FanDuel’s sportsbook launches in West Virginia, Illinois, and Indiana.

Outside of sports wagering, SG secured a cashless payments technology cross-licensing deal with IGT in March. The agreement will allow the two suppliers to sell the same cashless gaming products in the US market. Matt Wilson, CEO of Scientific Games, said the cross-licensing would benefit customers and the industry as a whole. 

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