In a Whole New World of Light and Wonder, Scientific Games Rebrands, Returns to Profit

As it decides to shed its lottery and sports betting verticals and rebrand as Light & Wonder, Scientific Games (SG) returned to net profit during its financial year 2021.

SG has reported combined revenue, from continuing and discontinued operations, of US$3.31 billion (£2.47bn/€2.98bn) in FY21, ending December 31, compared to US$2.72 billion (£2.03bn/€2.45bn) in FY20, and recorded a combined net income of US$390 million (£291.8m/€351.2m) in the period — against a loss of US$548 million (£410m/€493.5m) in 2020.

Last October–in a major move to refashion itself post-peak Covid19–the Atlanta, Georgia-based company announced that it had decided to sell its lottery and sports betting divisions.

The radical plan, set to finalize by this upcoming Q2, will raise at least US$5 billion (£3.74bn/€4.5bn) in cash from the sale of the lottery business to private equity firm Brookfield Business Partners, alone.

SG’s sports betting vertical, meanwhile, is set to be sold to the Endeavour Group, a global talent and media agency holding company.

The restructuring is designed to refashion Scientific Games as a relatively debt-free enterprise with a new name that captures the company’s fresh direction and zeitgeist.

“[We] will immediately shift from a debt to an equity story,” asserted SG Executive Chair Jamie Odell in a company statement.

“We couldn’t be happier with the way the entire team has executed the transformation strategy, and our initial expectations are already being exceeded.”

Barry Cottle, SG President and CEO, affirmed: “We expect to dedicate more than 90 per cent of the lottery proceeds to pay down debt, which, combined with the expected sports betting proceeds, will put us within our target range.

“The board has [also] authorized a three-year, US$750 million (£561m/€675.4m) share repurchase program. We see buy-backs at current share price levels as highly accretive to shareholder value.

New Chapter

“We will always prefer using our capital for buy-backs, debt reduction and organic investments unless we are convinced that M&A will deliver greater long-term shareholder value than other uses of our capital,” underlined Cottle.

Newly-refocused Scientific Games/Light & Wonder is now determined to reinforce its position as one of the world’s leading cross-platform game companies.

Returning to a closer look at SG’s FY21 performance, its gaming division reaffirmed its position as the group’s core business, generating US$1.32 billion (£987m/€1.18bn) over the year, almost 43 per cent up on FY20.

SciPlay, SG’s social gaming vertical–which has just acquired Alictus, a Turkish origin global developer and publisher of mobile games, for US$100 million (£74.8m/€90.05m)–brought in US$606 million (£453.4m/€545.7m), up just over four per cent, year-on-year, and iGaming revenue closed at a record US$226 million (£169m/€203.5m).

The group’s combined AEBITDA was recorded as US$1.33 billion (£995m/€1.19bn), compared to US$800 million (£598.5m/€720.4m) the previous year. Total operating expenses, up five per cent, came in at US$2.04 billion (£1.52bn/€1.83bn).

After all interest, debt and special costs were taken into consideration, the company posted a pre-tax loss of US$294 million (£220m/€264.7m).

But this was offset by receiving US$318 million (£237.9m/€286.3m) in tax benefits, leaving a net profit from continuing operations of US$24 million (£17.95m/US$21.63m), compared to a loss of US$801 million (£599.3m/€721.3m) in 2020.

Added Cottle: “We begin [a] new chapter [with] a new name, Light & Wonder, a name that evokes the kind of feelings we want to capture in the work we do every day: excitement, inspiration, imagination and maybe even a little bit of magic.”

Welcome to a whole new world.

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