Las Vegas based Scientific Games, an organization registered under the symbol “SGMS” on the NASDAQ Stock Exchange is giving a peek at the lottery unit in order to attract potential bidders for the unit. SG Lottery, owned by the organization has over 130 customers that are spread across 50 countries. In June 2021, Scientific Games has confirmed the Don Best Sports and the SG Lottery units being put up for sale. The intention behind the same is to increase shareholder value and could be achieved in one of three ways i.e. outright sale or a merger/combination with some other entity, merger with an SPV (special purpose vehicle), or IPO (initial public offering).

Financial information of Scientific Games and the SG Lottery Segment

A large percentage of the earnings of the Lottery segment for the company are earnt in North America and Europe. In the 2020 fiscal year, North American sales accounted for 73% of the earnings while Europe accounted for 24% of sales of SG Lottery. Scientific Games issued a statement as regards a clear number 1 position in instant games that account for 69% of the global share in the sales of instant retail games. The statement also mentioned a strong momentum in sales and revenue as regards other segments, accounting for nearly 13% in the iLottery segment in the United States and 17% market share in terminal generated sales in the United States.

Valuation of SG Lottery

SG Lottery powers the systems that are used to generate Powerball and Mega Millions of tickets. SG Lottery earned a revenue of $430 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year ending June 30, 2021 (12 months). Analysts have predicted that the unit could earn up to  10 times the EBITDA figure and could potentially earn more in case of an initial public offering (IPO). According to Jefferies, an SG Lottery initial public offering (IPO) could potentially earn up to $5.16 billion. In case Scientific Games opts for an initial public offering (IPO), it is possible that SGLottery could be listed as a public company in Australia.