Scientific Games To Sell Lottery Business For $6bn To Brookfield
Scientific Games announced this week that they have finalized an agreement to sell their lottery operations to Brookfield Business Partners LP and its institutional partners. Scientific Games is expected to make $6.05 billion from this sale.
Scientific Games has a solid track record of being a great performer in the gambling industry. The company has been providing casino software and equipment for years and also running a huge lottery business. So it is always interesting when they move to sell off a part of their business.
The deal between the two companies involves a basic payment of $5.825 billion to Scientific Games and then an additional earn-out of $225 million that will be paid in the coming years.
The earn-out is based on the expected performance of the business in 2022 and 2023. The deal will close in 2022 as long as all the regulatory requirements are met and the final approval of the deal is done.
While Scientific Games is a known name to a lot of gambling enthusiasts, Brookfield Business Partners is more of a mystery. It is a business services provider and a part of a larger asset management company, Brookfield Asset Management Inc. It handles $625 billion of assets all over the world in various businesses. With its purchase of the Scientific Games lottery business, it becomes a significant player in the gambling market.
The Scientific Games lottery business is huge, since the company works with over 130 lotteries in over 50 countries. The business has been lucrative for Scientific Games over the years and some analysts are surprised that the company decided to sell its lottery operations.
However, Scientific Games CEO, Barry Cottle, thinks that it is a good move for the company to move away from a money earner so that it can streamline its operations and invest in future growth. The company has done a review of potential future paths and cutting down on extra complexity seems to be its best bet for continued success. Additionally, the billions earned from the sale gives the company a large amount of cash and flexibility for it to explore different options going forward.
Scientific Games Continues To Sell
This is not the first time that Scientific Games has sold off a part of its business. Scientific Games sold its OpenBet sports betting platform in Sep 2021 to Endeavor Group Holdings Inc. for $1 billion in cash payments and $200 million in stock.
This is in line with the company’s decision to move its focus to online gaming and its SciPlay businesses.