Investment firms reportedly circling Scientific Games’ lottery unit

Two international investment firms are reportedly interested in acquiring Scientific Games Corporation’s (SGC) lottery divisions, according to Bloomberg.

Citing ‘people familiar with the matter’, the outlet reported that Brookfield Asset Management Inc.’s private equity arm and Apollo Global Management Inc are interested in purchasing the Nasdaq-registered igaming provider’s lottery unit.

SGC disclosed that it would pursue a ‘strategic divestment’ of both its sports betting and lottery units in June of this year, weighing up potential options for such a move, including the sale of the assets, a combination with a SPAC or an initial public offering.

This decision was said to have the unanimous support of the SGC board, including Executive Chairman Jamie Odell and Executive Vice Chair Toni Korsanos. Prior to the pandemic, the board had been tasked with reducing the corporation’s debt, which currently stands at $9.5 billion.

Commenting at the time, Odell stated that his role as Chairman was to take drastic decisions with the aim of “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”.

Bloomberg’s sources stated that should an IPO be pursued, the division could be valued at $75 billion, including debt. However, these same sources also informed the media company that a final decision had not yet been made, and SGC could still remain committed to retaining its lottery subsidiary.

Should SGC decide to sell its lottery offering, it would represent a significant divergence from its long-held strategy of maintaining its position as a leading systems provider for both land-based and digital verticals across sports betting, igaming and lotteries. 

The firm had previously pursued a strong M&A policy in support of this commercial objective, taking over NYX Gaming and OpenBet in 2018. The company began to move away from this strategy this year, selling the latter to Endeavor Holdings for a total consideration of $1.2 billion.

Meanwhile, for Apollo Global Management, the rumoured interest in SGC represents a continuation of its desire to further its foothold in the international sports betting and gaming industry.

The investment management firm was a keen contender in the bidding contest to purchase UK heritage bookmaker William Hill before terminating any potential buyout in November 2020 after rival bidder Caesars Entertainment launched a £2.9 billion offer.

Despite this, the company remained interested in acquiring William Hill’s non-US-assets when Ceasars announced the sell off of the company’s European and international divisions. 

However, Apollo was again outbid in this contest, this time by 888 Holdings, although the sale of William Hill’s retail units remains a possibility.

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