Scientific Games Plans Public Listing for Social Gaming Business Unit

Posted on: April 7, 2019, 07:00h. 

Last updated on: April 5, 2019, 02:08h.

Scientific Games, one of the largest manufacturers of gaming industry and lottery equipment, has filed with the US Securities and Exchange Commission (SEC) to hold an initial public offering (IPO) for its social gaming business.

Scientific Games social gaming IPO stock
Scientific Games plans to break off its social gaming division into a newly listed stock on the NASDAQ exchange. (Image: Scientific Games)

In a statement, Scientific Games says the social gaming business will officially be known as “SciPlay” and will be traded – if approved by the SEC – under the ticker symbol “SCPL” on the NASDAQ Global Select Market.

Social gaming involves products that are free to play. However, most have in-game purchases that generate revenue. Scientific games said its gross gaming revenue stemming from social products totaled $416.2 million last year, a more than 15 percent surge.

Among Scientific’s social games are Jackpot Party, Quick Hit Slots, Gold Fish Casino Slots, Hot Shot Casino, 88 Fortunes, Bingo Showdown, and MONOPOLY Slots. The company claims to have 1,800 social casino games in its library. The company states that the social games are intended for adults over 21 years of age.

Along with its social gaming, Scientific’s portfolio includes instant and draw-based games, electronic gaming machines and content, server-based lottery and gaming systems, sports betting platforms, and loyalty rewards programs.

Rocky Road

The last year has been a turbulent time for Scientific Games.

The Las Vegas-based company was ordered last May to pay competitors $315 million after a federal court said it engaged in “frivolous lawsuits” and “sham patents” in order to monopolize the automatic card-shuffling market. The scandal led to Scientific reporting a $351.6 million loss in the third quarter of 2018.

However, following an appeal and settlement that reduced the payment to $151.5 million, SG booked a net profit of $206.8 million in Q4 2018. Traded on NASDAQ (“SGMS”), shares of Scientific Games are still lower than they were this time a year ago.

In April 2018, the stock was trading for around $42. They closed this week at $21.85, a 48 percent loss. Before the court’s judgement hit last May, the stock was trading above $60.

IPO Funds

During the company’s fourth-quarter call with investors, Scientific Games CEO Barry Cottle was asked about the potential social gaming IPO.

We are considering a possible initial public offering of a minority interest. The process is moving along,” Cottle explained. “We anticipate that the proceeds from the IPO would primarily be used to repay debt.”

SG has plenty of debt – its most recent filing showing $8.7 billion in outstanding liabilities.

“As we mentioned before, we obviously have restrictions related to the SEC that prevents us from saying a lot on this right now. But our motivation is obviously to unlock value of social … and then secondarily to help us use the proceeds to pay down debt and deliver the business from a motivational perspective,” Cottle revealed.