Scientific Games Agrees to Sell its Lottery to Brookfield for $6B

Yesterday, B2B gambling products and services provider Scientific Games announced its intentions to sell its lottery business. The buyer, the Canadian investment firm Brookfield, is putting forward $6 billion for the purchase.

Scientific Games to Sell its Lottery

Out of this total sum, $5.8 billion will be paid upfront, followed by another up to $225 million that will be paid based on the lottery’s performance in the next two years. Brookfield will power the deal with $2.6 billion in equity. Seventy percent of this will be raised from the firm’s institutional partners with thirty percent raised through existing funds.

This is an important move for Scientific Games as the business is still dealing with debt. The B2B company had piled up an $8.2 billion debt by June. Selling the lottery business can cover a lot of it. The company also recently agreed to sell its sports betting brand OpenBet to Endeavor Group Holdings for $1.2 billion although the transaction will close in the second quarter of the next year and is still a subject of regulatory approval.

Analysts predict that the deal will increase Scientific Games’ adjusted earnings before interest tax depreciation and amortization by 14%. The prediction places the company’s adjusted EBITDA for 2022 at $498 million.

Scientific Games Continues to Revise its Approach

The selling of the lottery brand demonstrates Scientific Games’ tendency of scaling down its operations and shifting its business towards iGaming content. The company’s divestment approach is already yielding results as its shares have gone up by 17.3% since June.

Scientific Games has some ideas of going public with its lotteries in Australia. Industry specialists estimated that this endeavor could have earned the B2B company more than $3 billion.

The IPO was never firmly confirmed by Scientific Games and is now out of the question as the business preferred exploring alternative options.

2021 continues to prove itself as an important year for Scientific Games’ business. Although the company has chosen a divestment approach, it has grown the zone of influence of its business and has signed some important deals.

Earlier this month, Scientific Games scored a milestone 10-year contract that will see it power the Vermont Lottery for the next decade. The B2B business also expanded its agreements with the Golden Nugget Online Gaming and signed a content deal with White Hat Gaming’s USA subsidiary White Hat Studios.

Beyond the United States, the company became one of the pioneers on the newly-launched Dutch market where it now partners with the Netherlands Lottery.