Rumours swirl that Scientific Games will list lotteries business on ASX

by Mia Chapman Last Updated
Scientific Games’ lotteries arm receives varying valuations from investors

Private equity firm and known casino and gaming investor Apollo Global Management is mulling an offer for Scientific Games’ lottery business.

Casino.org reports that rumours have surfaced that since Apollo was beaten in its quest to acquire William Hill’s international businesses, assets 888 Holdings is purchasing from Caesars Entertainment, it has turned its attention to Scientific Games’ lotteries.

In June, Las Vegas-based Scientific Games said it is selling its lottery and sports wagering units and those divestments could arrive in a variety of forms.

Those include an initial public offering, a merger with a special purpose acquisition company or an outright sale or a combination with another firm.

Apollo has international lotteries experience

Apollo has some lottery exposure via a financing agreement with Czech lotteries company Sazka Group, and is rumoured to have previously examined the SG lottery businesses.

Scientific Games is parting with the SG Lottery unit and the Don Best sports betting platform in an effort to pare debt, an effort that is earning praise on Wall Street.

Since the gaming device manufacturer made the announcement in late June, speculation swirled regarding the fate of the lottery business.

Those rumours include the possibility that Scientific Games could list the business in Australia.

It is believed the Sydney listing is a viable option for the SG Lottery operation and that management could commence an IPO roadshow later this month.

Apollo is unlikely alone in its SG Lottery interest.

There are reports by Australian media that rival private equity firms Carlyle Group and TPG Capital may also be mulling bids for the business.

SG Lottery, which provides the systems used to generate Mega Millions and Powerball tickets, generated $430 million in earnings before interest, taxes, depreciation and amortisation for the 12 months ending June 30.

Analysts estimate its IPO valuation could be more than 10 times that figure.

Investment bank Jefferies previously said an SG Lottery IPO could be valued at $3.44 billion to $5.16 billion.

That could unlock significant value for Scientific Games shareholders, as the company currently sports a market value of $7.13 billion.

Apollo active in the gambling and wagering space

The SG Lottery rumour is the latest involving Apollo and a wagering business.

As noted, the investment firm missed out on William Hill’s international assets after trying to acquire the sportsbook operator outright in late 2020.

The private equity firm was also in the mix for Australian Tabcorp’s media and sports betting businesses before the Australian gaming firm opted to retain those operations and spin-off its keno and lottery outfits.

The latest large-scale speculation involving Apollo is that it could be a suitor for the Cosmopolitan Las Vegas, as counterpart Blackstone is said to be shopping that venue at a price tag of $5 billion or more.

While Apollo has some recent misses in the gaming space, it’s also been successful in acquiring some assets, including Venetian, Palazzo and Sands Convention Centre on the Strip, Great Canadian Gaming Corp and an Italian sports wagering entity.

Australian bankers warmly welcome the proposal of Scientific Games to spin off its lotteries arm, which if consummated would see Scientific Games join other ASX-listed gaming firms such as Aristocrat, Tabcorp, Crown Resorts and Star Entertainment Group.

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