000075000412/312021Q3FALSEExclusive of D&A(2) Includes $63 million gain for the nine months ended September 30, 2021, related to the SportCast acquisition transaction (see Note 1).Includes $63 million gain for the nine months ended September 30, 2021, related to the SportCast acquisition transaction. 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to        
Commission file number: 001-11693 
SCIENTIFIC GAMES CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
81-0422894
(State or other jurisdiction of
(I.R.S. Employer Identification No.)
incorporation or organization)
 
6601 Bermuda Road, Las Vegas, Nevada 89119
(Address of principal executive offices)
(Zip Code) 
(702) 897-7150
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $.001 par value SGMS The NASDAQ Stock Market
Preferred Stock Purchase Rights The NASDAQ Stock Market
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer  ☐
Non-accelerated filer 
☐
Smaller reporting company 
☐
Emerging growth company  
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

The registrant has the following number of shares outstanding of each of the registrant’s classes of common stock as of November 3, 2021:
Common Stock: 96,512,420



SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL AND OTHER INFORMATION
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
 
Page
Item 1.
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Item 3.
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Item 1A.
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Glossary of Terms
The following terms or acronyms used in this Quarterly Report on Form 10-Q are defined below:
Term or Acronym Definition
2020 10-K 2020 Annual Report on Form 10-K filed with the SEC on March 1, 2021
2025 Secured Notes 5.000% senior secured notes due 2025 issued by SGI
2026 Secured Euro Notes 3.375% senior secured notes due 2026 issued by SGI
2026 Unsecured Euro Notes 5.500% senior unsecured notes due 2026 issued by SGI
2025 Unsecured Notes
8.625% senior unsecured notes due 2025 issued by SGI
2026 Unsecured Notes 8.250% senior unsecured notes due 2026 issued by SGI
2028 Unsecured Notes 7.000% senior unsecured notes due 2028 issued by SGI
2029 Unsecured Notes 7.250% senior unsecured notes due 2029 issued by SGI
AEBITDA Adjusted EBITDA, our performance measure of profit or loss for our business segments
ASC Accounting Standards Codification
ASU Accounting Standards Update
COVID-19 Coronavirus disease first identified in 2019 (declared a pandemic by the World Health Organization on March 11, 2020), the resulting pandemic and the associated impacts on the macroeconomic environment in general and our business environment specifically
D&A depreciation, amortization and impairments (excluding goodwill)
Exchange Act Securities Exchange Act of 1934, as amended
FASB Financial Accounting Standards Board
FOBT
Fixed odds betting terminal
KPIs Key Performance Indicators
LBO licensed betting office
LIBOR London Interbank Offered Rate
Note a note in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, unless otherwise indicated
Participation refers to gaming machines provided to customers through service or leasing arrangements in which we earn revenues and are paid based on: (1) a percentage of the amount wagered less payouts; (2) fixed daily-fees; (3) a percentage of the amount wagered; or (4) a combination of (2) and (3)
R&D research and development
RMG real-money gaming
RSU restricted stock unit
SEC Securities and Exchange Commission
Secured Notes refers to the 2025 Secured Notes and 2026 Secured Euro Notes, collectively
Senior Notes the Secured Notes and the Unsecured Notes
SciPlay Revolver $150 million revolving credit facility agreement entered into by SciPlay Holding Company, LLC, a subsidiary of SciPlay Corporation, that matures in May 2024
SG&A selling, general and administrative
SGC Scientific Games Corporation
SGI Scientific Games International, Inc., a wholly-owned subsidiary of SGC
Shufflers various models of automatic card shufflers, deck checkers and roulette chip sorters
SportCast
SportCast Pty, Limited
Unsecured Notes refers to the 2026 Unsecured Euro Notes, 2026 Unsecured Notes, 2028 Unsecured Notes and 2029 Unsecured Notes, collectively
U.S. GAAP accounting principles generally accepted in the U.S.
U.S. jurisdictions the 50 states in the U.S. plus the District of Columbia, U.S. Virgin Islands and Puerto Rico
FOBT recovery
recovery from customers of U.K. value-added tax charged on FOBTs
VGT video gaming terminal
VLT video lottery terminal
Intellectual Property Rights 
All ® notices signify marks registered in the United States. © 2021 Scientific Games Corporation. All Rights Reserved.

The MONOPOLY name and logo, the distinctive design of the game board, the four corner squares, the MR. MONOPOLY name and character, as well as each of the distinctive elements of the board, cards, and the playing pieces are trademarks of Hasbro for its property trading game and game equipment and are used with permission. © 2021 Hasbro. All Rights Reserved. Licensed by Hasbro.


3


SGMS-20210930_G1.JPG and James Bond indicia © 1962-2021 Danjaq, LLC and MGM. SGMS-20210930_G1.JPG and all other James Bond related trademarks are trademarks of Danjaq, LLC. All Rights Reserved.

THE FLINTSTONES™ and all related characters and elements © & ™ Hanna-Barbera.

Michael Jackson™; Rights of the Publicity and Persona Rights: Triumph International, Inc. © 2021 Triumph International, Inc. Licensing Representative: Authentic Brands Group, LLC

©2021 Playboy Enterprises International, Inc. PLAYBOY, PLAYMATE, PLAYBOY BUNNY, and the Rabbit Head Design are trademarks of Playboy Enterprises International, Inc. and used under license by Scientific Games Corporation.

4


FORWARD-LOOKING STATEMENTS
Throughout this Quarterly Report on Form 10-Q, we make “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as “may,” “will,” “estimate,” “intend,” “plan,” “continue,” “believe,” “expect,” “anticipate,” “target,” “should,” “could,” “potential,” “opportunity,” “goal,” or similar terminology. The forward-looking statements contained in this Quarterly Report on Form 10-Q are generally located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” but may be found in other locations as well. These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of timing, future results or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks and uncertainties and other factors, including, among other things:
•the impact of the COVID-19 pandemic and any resulting unfavorable social, political, economic and financial conditions, including the temporary and potentially recurring closure of casinos and lottery operations on a jurisdiction-by-jurisdiction basis;
•risks relating to the pending divestitures of our Sports Betting and Lottery businesses and proposed acquisition of public SciPlay equity, including lack of assurance regarding the timing of completion of the pending and proposed transactions, that certain deferred tax assets may not be realized relative to the anticipated tax gain from the Sports Betting divestiture, that the transactions will yield additional value or will not adversely impact our business, financial results, results of operations, cash flows or stock price;
•our inability to significantly de-lever and position the Company for enhanced growth with certain net proceeds from our pending divestitures;
•slow growth of new gaming jurisdictions, slow addition of casinos in existing jurisdictions and declines in the replacement cycle of gaming machines;
•risks relating to foreign operations, including anti-corruption laws, fluctuations in currency rates, restrictions on the payment of dividends from earnings, restrictions on the import of products and financial instability, including the potential impact to our business resulting from the continuing uncertainty following the U.K.’s withdrawal from the European Union;
•difficulty predicting what impact, if any, new tariffs imposed by and other trade actions taken by the U.S. and foreign jurisdictions could have on our business;
•U.S. and international economic and industry conditions;
•level of our indebtedness, higher interest rates, availability or adequacy of cash flows and liquidity to satisfy indebtedness, other obligations or future cash needs;
•the discontinuation or replacement of LIBOR, which may adversely affect interest rates;
•inability to reduce or refinance our indebtedness;
•restrictions and covenants in debt agreements, including those that could result in acceleration of the maturity of our indebtedness;
•competition;
•inability to win, retain or renew, or unfavorable revisions of, existing contracts, and the inability to enter into new contracts;
•the impact of U.K. legislation approving the reduction of fixed-odds betting terminals maximum stakes limit on LBO operators, including the related closure of certain LBO shops;
•inability to adapt to, and offer products that keep pace with, evolving technology, including any failure of our investment of significant resources in our R&D efforts;
•changes in demand for our products and services;
•inability to benefit from, and risks associated with, strategic equity investments and relationships;
•inability to achieve some or all of the anticipated benefits of SciPlay being a standalone public company;
•dependence on suppliers and manufacturers;
•SciPlay’s dependence on certain key providers;
•ownership changes and consolidation in the gaming industry;
•fluctuations in our results due to seasonality and other factors;
•security and integrity of our products and systems, including the impact of any security breaches or cyber-attacks;
•protection of our intellectual property, inability to license third-party intellectual property and the intellectual property rights of others;

5


•reliance on or failures in information technology and other systems;
•litigation and other liabilities relating to our business, including litigation and liabilities relating to our contracts and licenses, our products and systems, our employees (including labor disputes), intellectual property, environmental laws and our strategic relationships;
•reliance on technological blocking systems;
•challenges or disruptions relating to the completion of the domestic migration to our enterprise resource planning system;
•laws and government regulations, both foreign and domestic, including those relating to gaming, data privacy and security, including with respect to the collection, storage, use, transmission and protection of personal information and other consumer data, and environmental laws, and those laws and regulations that affect companies conducting business on the internet, including online gambling;
•legislative interpretation and enforcement, regulatory perception and regulatory risks with respect to gaming, especially internet wagering, social gaming and sports wagering;
•changes in tax laws or tax rulings, or the examination of our tax positions;
•opposition to legalized gaming or the expansion thereof and potential restrictions on internet wagering;
•significant opposition in some jurisdictions to interactive social gaming, including social casino gaming and how such opposition could lead these jurisdictions to adopt legislation or impose a regulatory framework to govern interactive social gaming or social casino gaming specifically, and how this could result in a prohibition on interactive social gaming or social casino gaming altogether, restrict our ability to advertise our games, or substantially increase our costs to comply with these regulations;
•expectations of shift to regulated online gaming or sports wagering;
•inability to develop successful products and services and capitalize on trends and changes in our industries, including the expansion of internet and other forms of interactive gaming;
•the continuing evolution of the scope of data privacy and security regulations, and our belief that the adoption of increasingly restrictive regulations in this area is likely within the U.S. and other jurisdictions;
•incurrence of restructuring costs;
•goodwill impairment charges including changes in estimates or judgments related to our impairment analysis of goodwill or other intangible assets;
•stock price volatility;
•failure to maintain adequate internal control over financial reporting;
•dependence on key executives;
•natural events that disrupt our operations, or those of our customers, suppliers or regulators;
•possibility that the 2018 renewal of the Lotterie Nazionali S.r.l. concession to operate the Italian instant games lottery is not final (pending appeal against existing court rulings relating to third-party protest against the renewal of the concession); and
•expectations of growth in total consumer spending on social casino gaming.
Additional information regarding risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-looking statements is included from time to time in our filings with the SEC, including under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A in our 2020 10-K. Forward-looking statements speak only as of the date they are made and, except for our ongoing obligations under the U.S. federal securities laws, we undertake no and expressly disclaim any obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.
You should also note that this Quarterly Report on Form 10-Q may contain references to industry market data and certain industry forecasts. Industry market data and industry forecasts are obtained from publicly available information and industry publications. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of that information is not guaranteed. Although we believe industry information to be accurate, it is not independently verified by us and we do not make any representation as to the accuracy of that information. In general, we believe there is less publicly available information concerning the international gaming, lottery, social and digital gaming industries than the same industries in the U.S.
Due to rounding, certain numbers presented herein may not precisely agree or add up on a cumulative basis to the totals previously reported.

6

PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except per share amounts)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Revenue:
Services $ 408  $ 337  $ 1,216  $ 919 
Product sales 131  95  356  300 
Total revenue 539  432  1,572  1,219 
Operating expenses:
Cost of services(1)
90  86  273  250 
Cost of product sales(1)
63  66  166  197 
Selling, general and administrative 164  146  502  459 
Research and development 47  36  140  110 
Depreciation, amortization and impairments 96  111  289  336 
Goodwill impairment —  —  —  54 
Restructuring and other 45  17  96  48 
Operating income (loss) 34  (30) 106  (235)
Other (expense) income:
Interest expense (120) (131) (360) (379)
Loss on debt financing transactions —  (1) —  (1)
Gain (loss) on remeasurement of debt 12  (24) 30  (26)
Other income (expense), net 2  2  22  (8)
Total other expense, net (106) (154) (308) (414)
Net loss from continuing operations before income taxes
(72) (184) (202) (649)
Income tax benefit (expense) 172  (3) 164  (8)
Net income (loss) from continuing operations
100  (187) (38) (657)
Net income from discontinued operations, net of tax(2)
87  76  329  193 
Net income (loss) 187  (111) 291  (464)
Less: Net income attributable to noncontrolling interest 5  6  15  15 
Net income (loss) attributable to SGC $ 182  $ (117) $ 276  $ (479)
Per Share - Basic:
Net income (loss) from continuing operations
$ 0.99  $ (2.03) $ (0.55) $ (7.14)
Net income from discontinued operations 0.90  0.80  3.43  2.05 
Net income (loss) attributable to SGC $ 1.89  $ (1.23) $ 2.88  $ (5.09)
Per Share - Diluted:
Net income (loss) from continuing operations
$ 0.96  $ (2.03) $ (0.55) $ (7.14)
Net income from discontinued operations 0.88  0.80  3.43  2.05 
Net income (loss) attributable to SGC $ 1.84  $ (1.23) $ 2.88  $ (5.09)
Weighted average number of shares used in per share calculations:
 
 
Basic shares 96  95  96  94 
Diluted shares 99  95  96  94 
(1) Excludes D&A.
(2) Includes $63 million gain for the nine months ended September 30, 2021, related to the SportCast acquisition transaction (see Note 1).
See accompanying notes to condensed consolidated financial statements.

7

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in millions)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net income (loss) $ 187  $ (111) $ 291  $ (464)
Foreign currency translation (loss) gain, net of tax (21) 11  (20) 4 
Derivative financial instruments unrealized gain (loss), net of tax 5  4  14  (10)
Other comprehensive (loss) gain from continuing operations (16) 15  (6) (6)
Other comprehensive (loss) gain from discontinued operations (11) 17  (2) 3 
Total comprehensive gain (loss) 160  (79) 283  (467)
Less: comprehensive income attributable to noncontrolling interest 5  6  15  15 
Comprehensive income (loss) attributable to SGC $ 155  $ (85) $ 268  $ (482)
See accompanying notes to condensed consolidated financial statements.

8

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions, except par value)
As of
September 30, 2021 December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents $ 782  $ 928 
Restricted cash 39  45 
Receivables, net of allowance for credit losses $62 and $76, respectively
415  438 
Inventories 105  119 
Prepaid expenses, deposits and other current assets 105  98 
Assets of businesses held for sale 475  553 
Total current assets 1,921  2,181 
Non-current assets:
Restricted cash 9  10 
Receivables, net of allowance for credit losses $2 and $5, respectively
18  19 
Property and equipment, net 218  242 
Operating lease right-of-use assets 46  52 
Goodwill 2,755  2,730 
Intangible assets, net 974  1,088 
Software, net 123  143 
Other assets 357  157 
Assets of businesses held for sale 1,429  1,362 
Total assets $ 7,850  $ 7,984 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current portion of long-term debt
$ 44  $ 44 
Accounts payable
167  150 
Accrued liabilities
382  343 
Liabilities of businesses held for sale 251  295 
Total current liabilities
844  832 
Deferred income taxes
41  44 
Operating lease liabilities
36  43 
Other long-term liabilities
170  190 
Long-term debt, excluding current portion
8,802  9,259 
Liabilities of businesses held for sale 148  140 
Total liabilities
10,041  10,508 
Commitments and contingencies (Note 16)


Stockholders’ deficit:
Common stock, par value $0.001 per share: 199 shares authorized; 114 and 113 shares issued and 97 and 95 shares outstanding, respectively
1  1 
Additional paid-in capital
1,318  1,268 
Accumulated loss
(3,253) (3,529)
Treasury stock, at cost, 17 shares
(175) (175)
Accumulated other comprehensive loss
(226) (218)
Total SGC stockholders’ deficit
(2,335) (2,653)
Noncontrolling interest
144  129 
Total stockholders’ deficit
(2,191) (2,524)
Total liabilities and stockholders’ deficit
$ 7,850  $ 7,984 
See accompanying notes to condensed consolidated financial statements.

9

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
Nine Months Ended September 30,
2021 2020
Cash flows from operating activities:
Net income (loss)
$ 291  $ (464)
Less: income from discontinued operations, net of tax (329) (193)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities from continuing operations
358  560 
Changes in working capital accounts, excluding the effects of acquisitions
51  90 
Changes in deferred income taxes and other
(172) 9 
Net cash provided by operating activities from continuing operations
199  2 
Net cash provided by operating activities from discontinued operations
260  310 
Net cash provided by operating activities 459  312 
Cash flows from investing activities:
Capital expenditures (118) (100)
Acquisitions of businesses, net of cash acquired (40) (13)
Proceeds from sale of assets and other 10  22 
Net cash used in investing activities from continuing operations
(148) (91)
Net cash used in investing activities from discontinued operations (58) (43)
Net cash used in investing activities (206) (134)
Cash flows from financing activities:
Borrowings under SGI revolving credit facility
—  530 
Repayments under SGI revolving credit facility
(400) (90)
Proceeds from issuance of senior notes and term loans
—  550 
Repayment of notes and term loans (including redemption premium) —  (341)
Payments on long-term debt (32) (31)
Payments of debt issuance and deferred financing and offering costs
(5) (9)
Payments on license obligations
(25) (17)
Net redemptions of common stock under stock-based compensation plans and other (22) (1)
Net cash (used in) provided by financing activities from continuing operations
(484) 591 
Net cash used in financing activities from discontinued operations (8) (4)
Net cash (used in) provided by financing activities (492) 587 
Effect of exchange rate changes on cash, cash equivalents and restricted cash (3) 1 
(Decrease) increase in cash, cash equivalents and restricted cash
(242) 766 
Cash, cash equivalents and restricted cash, beginning of period 1,143  375 
Cash, cash equivalents and restricted cash, end of period
901  1,141 
Less: Cash, cash equivalents and restricted cash of discontinued operations 71  101 
Cash, cash equivalents and restricted cash of continuing operations, end of period $ 830  $ 1,040 
Supplemental cash flow information:
Cash paid for interest $ 349  $ 335 
Income taxes paid
27  18 
Distributed earnings from equity investments 15  22 
Supplemental non-cash transactions:
Non-cash interest expense
$ 18  $ 16 
 See accompanying notes to condensed consolidated financial statements.

10


SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in USD, table amounts in millions, except per share amounts)

(1) Description of the Business and Summary of Significant Accounting Policies
Description of the Business
We are a leading developer of technology-based products and services and associated content for the worldwide gaming, lottery, social and digital gaming industries. Our portfolio of revenue-generating activities primarily includes supplying gaming machines and game content, casino-management systems and table game products and services to licensed gaming entities; providing instant and draw-based lottery products, lottery systems and lottery content and services to lottery operators; providing social casino and other mobile games to retail customers; and providing a comprehensive suite of digital RMG and sports wagering solutions, distribution platforms, content, products and services. We also gain access to technologies and pursue global expansion through strategic acquisitions and equity investments.
On June 29, 2021, we announced our intent to divest our Lottery and Sports Betting businesses. On September 27, 2021, we announced that we had entered into a definitive agreement to sell our Sports Betting business to Endeavor Group Holdings, Inc. (“Endeavor”) in a cash and stock transaction. Under the terms of the agreement, we will receive $1 billion in cash, subject to customary working capital purchase price closing adjustments, and 7.6 million shares of Endeavor Class A common stock (valued at approximately $200 million as of the purchase agreement date). On October 27, 2021, we announced that we entered into a definitive agreement to sell our Lottery business to Brookfield Business Partners L.P. together with its institutional partners (collectively “Brookfield”) for total consideration of $6.05 billion consisting of $5.825 billion in cash and an earn-out of up to $225 million based on the achievement of certain EBITDA targets in 2022 and 2023. We expect to complete these transactions during the first half of 2022, subject to applicable regulatory approvals and customary closing conditions. Beginning in the third quarter of 2021, we have reflected these businesses as discontinued operations in our consolidated statements of operations and reflected the assets and liabilities of these businesses as held for sale in our consolidated balance sheets, for all periods presented. These businesses held for sale are included in our covenant compliance requirements until disposed of and all of their related cash flows are available to the Company without restriction. Refer to Note 2 for further information.
Retrospective reclassifications have been made to prior period financial statements and disclosures to present the Lottery and Sports Betting businesses as discontinued operations (see Note 2). Accordingly, we report our results of continuing operations in three business segments—Gaming, SciPlay and iGaming (former Digital business segment excluding Sports Betting)—representing our different products and services. Unless otherwise noted, amounts and disclosures included herein relate to our continuing operations.
On July 15, 2021, we submitted a proposal to SciPlay’s board of directors to acquire all the outstanding equity interests in SciPlay not already owned by us (approximately 19%) in alignment with the strategy developed as part of the strategic review. Under our proposal, all SciPlay shareholders (other than SGC and our subsidiaries) would receive 0.250 shares of our common stock for each share of SciPlay Class A common stock they own. The proposed transaction is subject to the approval of an independent special committee of the SciPlay board of directors, as well as the negotiation and execution of a mutually acceptable merger agreement.
Basis of Presentation and Principles of Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The accompanying condensed consolidated financial statements include the accounts of SGC, its wholly owned subsidiaries, and those subsidiaries in which we have a controlling financial interest. Investments in other entities in which we do not have a controlling financial interest but we exert significant influence are accounted for in our consolidated financial statements using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation.
In the opinion of SGC and its management, we have made all adjustments necessary to present fairly our consolidated financial position, results of operations, comprehensive loss and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2020 10-K. Interim results of operations are not necessarily indicative of results of operations to be expected for a full year.
Impact of COVID-19
As more fully described in the “Description of the Business and Summary of Significant Accounting Policies - Impact of COVID-19” in Note 1 of our 2020 10-K, COVID-19 disruptions continue to impact our results of operations and particularly

11


certain aspects of our Gaming business segment operations. While most gaming establishments have reopened globally and have begun to operate at full capacity, there is a continued risk of future COVID-related developments impacting Gaming business segment results. We continue to see fluctuations in infection rates and regulations for various regions along with ongoing domestic and international travel restrictions or warnings, social distancing measures, reduced operating capacity and an overall economic and general uncertainty regarding the magnitude and length of time that these disruptions will continue. These circumstances may change in the future and such changes could be material. We continue to assess the situation jurisdiction by jurisdiction, actively managing our cash flows and continuing to evaluate additional measures that may reduce operating costs and conserve cash to preserve liquidity as we execute on our strategic initiatives.
As of September 30, 2021, our total available liquidity (excluding our SciPlay business segment, but including cash and cash equivalents totaling $62 million of the businesses held for sale as those are still available for our general use until a divestiture occurs) was $1,016 million, which included $503 million of undrawn availability under SGI’s revolving credit facility. In October 2021, we made a voluntary payment of $135 million on SGI’s revolving credit facility leaving the entire revolving credit facility undrawn and available.
Significant Accounting Policies
There have been no changes to our significant accounting policies described within the Notes of our 2020 10-K.
Computation of Basic and Diluted Net Income (Loss) Per Share Attributable to SGC
Basic and diluted net income (loss) per share for the three and nine months ended September 30, 2021 and 2020 were computed by dividing net loss from continuing operations and net income from discontinued operations by the weighted average number of shares outstanding.
Basic and diluted net (loss) income attributable to SGC per share were the same for the three months ended September 30, 2020 and nine months ended September 30, 2021 and 2020, respectively, as all common stock equivalents during those periods would be anti-dilutive. We excluded 2 million of stock options from the diluted weighted-average common shares outstanding for the nine months ended September 30, 2021, and 1 million and 2 million of stock options from the diluted weighted-average common shares outstanding for the three and nine months ended September 30, 2020, respectively. We excluded 3 million of RSUs from the calculation of diluted weighted-average common shares outstanding for the nine months ended September 30, 2021 and the three and nine months ended September 30, 2020, respectively.
Acquisitions
Acquisitions Related to Continuing Operations
In July of 2021, SciPlay acquired privately-held Koukoi Games Oy (“Koukoi”), a developer and operator of casual mobile games. Koukoi has been included in our SciPlay business segment.
In August of 2021, we acquired privately-held Lightning Box Games (“Lightning Box”), an iGaming content studio. Lightning Box has been included in our iGaming business segment.
In October of 2021, we signed a definitive agreement to acquire Automated Cashless Systems, Inc.’s (“ACS”) table game solution PlayOn™ (“PlayOn™”), a cashless product line that provides players with a debit solution at live table games. PlayOn™ was re-named to “Access To On Demand Money” (“AToM™”) and will be included in our Gaming business segment.
In November of 2021, we acquired Authentic Gaming, a premium provider of live casino solutions, which will be included in our iGaming business segment.
Acquisitions Related to Discontinued Operations
In August of 2020, we obtained a one-year option agreement to acquire SportCast Pty, Limited (the “SportCast Option”), a privately held sports-betting content and player engagement technology and platform supplier. We accounted for the SportCast Option by electing a measurement alternative to measure this equity investment at cost, less impairment given lack of readily determinable fair value in accordance with ASC Topic 321. In May of 2021, we exercised the SportCast Option and completed an acquisition of SportCast (the “SportCast Acquisition”), which expanded the Sports Betting business’ portfolio of sports-betting technology, services and content.
In September of 2021, we acquired Sideplay Entertainment (“Sideplay”), a digital “e-instant” content studio. Sideplay has been included in the Lottery business.

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We accounted for these acquisitions using the acquisition method of accounting whereby the total purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on respective estimated fair values. The following table summarizes an aggregate disclosure related to business acquisitions completed through September 30, 2021 and is based on the preliminary allocations of the purchase price expected to be finalized by the fourth quarter of 2021, pending completion of the valuation analyses for acquired intangible assets:
Total Consideration Cash paid, net of cash acquired
Contingent Consideration(1)
Allocation of purchase price to Intangible assets, net(2)
Weighted average useful life of acquired intangible assets
Excess purchase price allocated to Goodwill(3)
Acquisitions related to continuing operations $ 60  $ 40  $ 15  $ 21  6.5 Years $ 39 
Acquisitions related to discontinued operations(4)
106  18  25  35  6 Years 77 
Aggregate total $ 166  $ 58  $ 40  $ 56  $ 116 
(1) Contingent acquisition consideration values are primarily based on reaching certain earnings-based metrics, with a cumulative maximum payout of up to $64 million as of September 30, 2021 and were determined by fair value and included in the consideration transferred. The fair value was primarily determined using an income approach method and level 3 inputs in the hierarchy as established by ASC 820. The maximum contingent acquisition consideration liability related to continuing operations was $30 million as of September 30, 2021. The maximum contingent acquisition consideration liability related to discontinued operations was $34 million as of September 30, 2021.
(2) Intangible assets primarily consist of technology-based and customer relationship intangible assets. The fair value of these intangible assets was determined using an income approach method and level 3 inputs in the hierarchy as established by ASC 820. The discount rates and royalty rates used in the valuation analyses ranged between 15% and 29% and 1% and 52%, respectively.
(3) The factors contributing to the recognition of acquisition goodwill are based on customer offering diversification, expected synergies, assembled workforce and other strategic benefits. None of the resultant goodwill is expected to be deductible for income tax purposes.
(4) The SportCast acquisition’s total consideration transferred included $63 million in fair value of the SportCast Option, which resulted in a $63 million gain recorded in the Net income from discontinued operations, net of tax, line item in our consolidated statements of operations for the nine-months ended September 30, 2021 due to the increase in fair value of the SportCast Option. The fair value of the Sportscast Option has been preliminarily determined using an income approach method and level 3 inputs in the hierarchy as established by ASC 820. The discount rate used in the valuation analyses was 15%.
The revenue and earnings associated with all of the above acquisitions are not significant to our consolidated financial statements.
New Accounting Guidance - Recently Adopted
The FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors – Certain Leases with Variable Lease Payments, on July 19, 2021. The new guidance requires the lessor to classify a lease with variable lease payments that do not depend on an index or a rate as an operating lease at lease commencement if classifying the lease as a sales-type lease or direct financing lease would result in the recognition of a selling loss. We adopted this standard during the third quarter of 2021 on a prospective basis. The adoption of this guidance did not have a material effect on our consolidated financial statements.
New Accounting Guidance - Not Yet Adopted
The FASB issued ASU No. 2020-04 and subsequently ASU No. 2021-01, Reference Rate Reform (Topic 848) in March 2020 and January 2021, respectively. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, including derivative instruments impacted by changes in the interest rates used for discounting cash flows for computing variable margin settlements, subject to meeting certain criteria, that reference LIBOR or other reference rates expected to be discontinued, in 2022 or potentially 2023 (pending possible extension). The ASUs establish certain contract modification principles that entities can apply in other areas that may be affected by reference rate reform and certain elective hedge accounting expedients and exceptions. The ASUs may be applied prospectively. Based on our preliminary assessment completed to date, we do not expect the adoption of this guidance to have a significant impact on our consolidated financial statements.
We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements.
(2) Discontinued Operations
As described in Note 1, beginning in the third quarter of 2021, we have reflected the Lottery and Sports Betting businesses as discontinued operations in our consolidated statements of operations and reflected the assets and liabilities of these businesses as held for sale in our consolidated balance sheets, for all periods presented. The Lottery business was historically our Lottery business reportable segment and Sports Betting business was historically included in our former Digital business reportable segment, which we renamed to iGaming business segment starting with the third quarter of 2021.

13


The summarized results of our discontinued operations were as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Total revenue $ 285  $ 266  $ 860  $ 743 
Total cost of revenue(1)
148  137  431  393 
Other operating expenses(2)
63  52  184  155 
Operating income 74  77  245  195 
Total other income, net 16  1  90  1 
Net income from discontinued operations before income taxes
90  78  335  196 
Income tax expense (3) (2) (6) (3)
Net income from discontinued operations, net of tax included in the consolidated statement of operations $ 87  $ 76  $ 329  $ 193 
(1) Excludes D&A.
(2) Includes D&A of $26 million and $79 million for the three and nine months ended September 30, 2021 and $25 million and $78 million for the three and nine months ended September 30, 2020, respectively, along with stock-based compensation of $6 million and $14 million for the three and nine months ended September 30, 2021, respectively, and $1 million and $3 million for the three and nine months ended September 30, 2020.
The following table summarizes the major classes of assets and liabilities of businesses held for sale.
As of
September 30, 2021 December 31, 2020
ASSETS
Cash and cash equivalents $ 62  $ 88 
Restricted cash 9  72 
Receivables, net 209  178 
Inventories 79  72 
Prepaid expenses deposits and other current assets 116  143 
Total current assets of businesses held for sale 475  553 
Property and equipment, net 177  173 
Intangible assets and software, net 298  295 
Goodwill 631  562 
Equity investments 258  262 
Other assets 65  70 
Total non-current assets of businesses held for sale 1,429  1,362 
Total assets of businesses held for sale $ 1,904  $ 1,915 
LIABILITIES
Accounts payable $ 61  $ 53 
Accrued liabilities and other 190  242 
Total current liabilities of businesses held for sale 251  295 
Operating lease liabilities 35  34 
Other 113  106 
Total non-current liabilities of businesses held for sale 148  140 
Total liabilities of businesses held for sale $ 399  $ 435 
(3) Revenue Recognition
The following table disaggregates revenues by type within each of our business segments:

14


Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Gaming
Gaming operations(1)
$ 151  $ 92  $ 445  $ 227 
Gaming machine sales 95  71  249  216 
Gaming systems 52  43  146  115 
Table products 41  25  109  82 
Total $ 339  $ 231  $ 949  $ 640 
SciPlay
Mobile $ 131  $ 132  $ 400  $ 377 
Web and other 16  19  52  58 
Total $ 147  $ 151  $ 452  $ 435 
iGaming $ 53  $ 50  $ 171  $ 144 
(1) Gaming operations revenue for the nine months ended September 30, 2021 benefited from $44 million U.K. FOBT recovery received from certain U.K. customers related to a 2020 U.K. court ruling associated with overcharging of value-added tax for gaming operators that consequently reduced our net gaming revenues related to these customers and arrangements.
    
The amount of rental income revenue that is outside the scope of ASC 606 was $88 million and $270 million for the three and nine months ended September 30, 2021, respectively, and $62 million and $148 million for the three and nine months ended September 30, 2020, respectively.
Contract Liabilities and Other Disclosures
The following table summarizes the activity in our contract liabilities for the reporting period:
Nine Months Ended September 30,
2021
Contract liability balance, beginning of period(1)
$ 27 
Liabilities recognized during the period 26 
Amounts recognized in revenue from beginning balance (16)
Contract liability balance, end of period(1)
$ 37 
(1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our consolidated balance sheets.
    
The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on our consolidated balance sheets. Other than contracts with customers with financing arrangements exceeding 12 months, revenue recognition is generally proximal to conversion to cash. The following table summarizes our balances in these accounts for the periods indicated (other than contract liabilities disclosed above):
Receivables
Contract Assets(1)
Beginning of period balance $ 457  $ 20 
End of period balance, September 30, 2021
433  24 
(1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our consolidated balance sheets.
As of September 30, 2021, we did not have material unsatisfied performance obligations for contracts expected to be long-term or contracts for which we recognize revenue at an amount other than for which we have the right to invoice for goods or services delivered or performed.
(4) Business Segments
We report our operations in three business segments—Gaming, SciPlay and iGaming—representing our different products and services. A detailed discussion regarding the products and services from which each reportable business segment derives its revenue is included in Notes 2 and 3 in our 2020 10-K. As described in Notes 1 and 2 herein, beginning in the third

15

quarter of 2021, we have reflected the Lottery and Sports Betting businesses as discontinued operations. Accordingly, Lottery is no longer a reportable business segment and our former Digital segment has been renamed to iGaming and the presentation was recast for all periods to exclude the Sports Betting business.
In evaluating financial performance, our Chief Operating Decision Maker focuses (“CODM”) on AEBITDA as management’s primary segment measure of profit or loss, which is described in footnote (2) to the below table. As a result of our strategic changes and pending divestitures of the Lottery and Sports Betting businesses, starting with the third quarter of 2021, we re-assessed how our CODM evaluates the operating results and performance of our Gaming business segment that resulted in an immaterial change to the Gaming business Segment AEBITDA calculation, which is our primary measure of the Gaming business segment performance measure of profit or loss. The Gaming business segment AEBITDA, has been recast for all periods presented herein to exclude EBITDA from equity investments to align with this new view. The accounting policies of our business segments are the same as those described within the Notes in our 2020 10-K. The following tables present our segment information:
Three Months Ended September 30, 2021
Gaming SciPlay iGaming
Unallocated and Reconciling Items(1)
Total
Total revenue
$ 339  $ 147  $ 53  $ —  $ 539 
AEBITDA(2)
172  45  18  (32) $ 203 
Reconciling items to Net loss from continuing operations before income taxes:
D&A
(73) (4) (13) (6) (96)
Restructuring and other
(1) (2) (1) (41) (45)
Interest expense
(120) (120)
Gain on remeasurement of debt 12  12 
Stock-based compensation
(26) (26)
Net loss from continuing operations before income taxes
$ (72)
Assets as of September 30, 2021
$ 4,179  $ 676  $ 467  $ 624  $ 5,946 
(1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net income from continuing operations before income taxes.
(2) AEBITDA is reconciled to net loss from continuing operations before income taxes with the following adjustments: (1) depreciation and amortization expense and impairment charges (including goodwill impairments); (2) restructuring and other, which includes charges or expenses attributable to: (i) employee severance; (ii) management restructuring and related costs; (iii) restructuring and integration; (iv) cost savings initiatives; (v) major litigation; and (vi) acquisition costs and other unusual items; (3) interest expense; (4) loss (gain) on debt financing transactions; (5) change in fair value of investments and remeasurement of debt; (6) other expense (income), net including foreign currency (gains), and losses and earnings (loss) from equity investments; and (7) stock-based compensation. AEBITDA is presented as our primary segment measure of profit or loss.


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Three Months Ended September 30, 2020
Gaming SciPlay iGaming
Unallocated and Reconciling Items(1)
Total
Total revenue
$ 231  $ 151  $ 50  $ —  $ 432 
AEBITDA(2)
77  49  16  (25) $ 117 
Reconciling items to Net loss from continuing operations before income taxes:
D&A
(85) (3) (13) (10) (111)
Restructuring and other
(10) —  (1) (6) (17)
Interest expense
(131) (131)
Loss on debt financing transactions
(1) (1)
Loss on remeasurement of debt (24) (24)
Other expense, net
(1) (1)
Stock-based compensation (16) (16)
Net loss from continuing operations before income taxes
$ (184)
Assets as of December 31, 2020
$ 4,364  $ 564  $ 423  $ 718  $ 6,069 
(1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net loss from continuing operations before income taxes.
(2) AEBITDA is described in footnote (2) to the first table in this Note 4.

Nine Months Ended September 30, 2021
Gaming SciPlay iGaming
Unallocated and Reconciling Items(1)
Total
Total revenue
$ 949  $ 452  $ 171  $ —  $ 1,572 
AEBITDA(2)
472  138  60  (93) $ 577 
Reconciling items to Net loss from continuing operations before income taxes:
D&A
(220) (11) (38) (20) (289)
Restructuring and other
(7) (3) (1) (85) (96)
Interest expense
(360) (360)
Gain on remeasurement of debt 30  30 
Other income, net
17  17 
Stock-based compensation
(81) (81)
Net loss from continuing operations before income taxes
$ (202)
Assets as of September 30, 2021
$ 4,179  $ 676  $ 467  $ 624  $ 5,946 
(1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net income from continuing operations before income taxes.
(2) AEBITDA is described in footnote (2) to the first table in this Note 4.


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Nine Months Ended September 30, 2020
Gaming SciPlay iGaming
Unallocated and Reconciling Items(1)
Total
Total revenue
$ 640  $ 435  $ 144  $ —  $ 1,219 
AEBITDA(2)
137  144  46  (82) $ 245 
Reconciling items to Net loss from continuing operations before income taxes:
D&A
(260) (7) (36) (33) (336)
Goodwill impairment (54) —  —  —  (54)
Restructuring and other
(29) (2) (4) (13) (48)
Interest expense
(379) (379)
Loss on debt financing transactions
(1) (1)
Loss on remeasurement of debt (26) (26)
Other expense, net
(12) (12)
Stock-based compensation (38) (38)
Net loss from continuing operations before income taxes
$ (649)
Assets as of December 31, 2020
$ 4,364  $ 564  $ 423  $ 718  $ 6,069 
(1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net loss from continuing operations before income taxes.
(2) AEBITDA is described in footnote (2) to the first table in this Note 4.
(5) Restructuring and Other
Restructuring and other includes charges or expenses attributable to: (i) employee severance; (ii) management restructuring and related costs; (iii) restructuring and integration; (iv) cost savings initiatives; (v) major litigation; and (vi) acquisition and disposition related costs and other unusual items. The following table summarizes pre-tax restructuring and other costs for the periods presented:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Employee severance and related(1)
$ 3  $ 7  $ 3  $ 28 
Strategic review and related(2)
31  —  57  — 
Restructuring, integration and other(3)
11  10  36  20 
Total $ 45  $ 17  $ 96  $ 48 
(1) The three and nine months ended September 30, 2020 includes $6 million and $28 million, respectively, in severance and other benefits granted to employees as a result of COVID-19 related austerity measures.
(2) Represents costs associated with the divestitures of the Lottery and Sports Betting businesses as further described in Note 1.
(3) The three and nine months ended September 30, 2021 largely consist of costs associated with business optimization initiatives.
(6) Receivables, Allowance for Credit Losses and Credit Quality of Receivables
Receivables
The following table summarizes the components of current and long-term receivables, net:

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As of
September 30, 2021 December 31, 2020
Current:
Receivables
$ 477  $ 514 
Allowance for credit losses
(62) (76)
Current receivables, net
415  438 
Long-term:
Receivables
20  24 
Allowance for credit losses
(2) (5)
Long-term receivables, net 18  19 
Total receivables, net
$ 433  $ 457 
Allowance for Credit Losses
We manage our receivable portfolios using both geography and delinquency as key credit quality indicators. The following summarizes geographical delinquencies of total receivables, net:
As of
September 30, 2021 Balances over 90 days past due December 31, 2020 Balances over 90 days past due
Receivables:
U.S. and Canada $ 319  $ 43  $ 339  $ 85 
International 178  41  199  45 
Total receivables 497  84  538  130 
Receivables allowance:
U.S. and Canada (27) (12) (42) (26)
International (37) (19) (39) (20)
Total receivables allowance (64) (31) (81) (46)
Receivables, net $ 433  $ 53  $ 457  $ 84 

Account balances are charged against the allowances after all internal and external collection efforts have been exhausted and the potential for recovery is considered remote.
The activity in our allowance for receivable credit losses for each of the three and nine months ended September 30, 2021 and 2020 is as follows:
2021 2020
Total U.S. and Canada International Total
Beginning allowance for credit losses(1)
$ (81) $ (43) $ (38) $ (45)
Provision
1  —  1  (28)
Charge-offs and recoveries
2  1  1  — 
Allowance for credit losses as of March 31 (78) (42) (36) (73)
Provision
(2) (1) (1) (12)
Charge-offs
17  17  —  — 
Allowance for credit losses as of June 30 (63) (26) (37) (85)
Provision (1) (1) —  (1)
Charge-offs —  —  —  10 
Allowance for credit losses as of September 30 $ (64) $ (27) $ (37) $ (76)
(1) Reflects $6 million related to implementation of ASC 326 for the 2020 beginning balance.

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At September 30, 2021, 12% of our total receivables, net, were past due by over 90 days compared to 18% at December 31, 2020.

Credit Quality of Receivables
We have certain concentrations of outstanding receivables in international locations that impact our assessment of the credit quality of our receivables. We monitor the macroeconomic and political environment in each of these locations in our assessment of the credit quality of our receivables. The international customers with significant concentrations (generally deemed to be exceeding 10%) of our receivables with terms longer than one year are in the Latin America region (“LATAM”) and are primarily comprised of Mexico, Peru and Argentina. The following table summarizes our LATAM receivables:
As of September 30, 2021
Total Current or Not Yet Due Balances Over 90 days Past Due
Receivables $ 106  $ 44  $ 62 
Allowance for credit losses (39) (16) (23)
Receivables, net $ 67  $ 28  $ 39 

We increased our allowance for credit losses by $1 million and $40 million for the three and nine months ended September 30, 2020, respectively. These increases were primarily related to Gaming customers in LATAM (which transact with both domestic and international subsidiaries) as those customers were particularly affected by COVID-19 closures of gaming operations establishments with COVID-related closures lasting longer than in other geographic regions. We did not have material credit losses during the first half of 2021. We continuously review receivables and as information concerning credit quality arise, reassess our expectations of future losses and record an incremental reserve if warranted at that time. Our current allowance for credit losses represents our current expectation of credit losses; however future expectations could change as the ultimate impact of the COVID-19 disruption remains uncertain, particularly as to the financial stability of our customers during and after the COVID-19 disruption period.
The fair value of receivables is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. As of September 30, 2021 and December 31, 2020, the fair value of receivables, net, approximated the carrying value due to contractual terms of receivables generally being less than 24 months.
(7) Inventories
Inventories consisted of the following:
As of
September 30, 2021 December 31, 2020
Parts and work-in-process
$ 69  $ 86 
Finished goods
36  33 
Total inventories
$ 105  $ 119 
    
Parts and work-in-process include parts for gaming machines and our finished goods inventory primarily consisting of gaming machines for sale.
During the three and nine months ended September 30, 2020, we recorded $15 million and $45 million, respectively, in inventory valuation charges related to inventory in our Gaming business segment. The charges were a result of: (1) leadership’s strategic plan to condense the amount of legacy platforms we will continue to service and support as we roll out new products and (2) the rapid demand reduction largely as a result of the COVID-19 disruptions and continued closures in the LATAM region. For additional information regarding our inventory valuation charges, see Note 7 in our 2020 10-K.
(8) Property and Equipment, net
Property and equipment, net consisted of the following:

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As of
September 30, 2021 December 31, 2020
Land $ 6  $ 6 
Buildings and leasehold improvements 56  59 
Gaming machinery and equipment 715  701 
Furniture and fixtures 24  25 
Construction in progress 7  6 
Other property and equipment 87  86 
Less: accumulated depreciation (677) (641)
Total property and equipment, net $ 218  $ 242 
Depreciation expense is excluded from Cost of services, Cost of product sales and Other operating expenses and is separately presented within D&A.
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Depreciation expense $ 29  $ 34  $ 90  $ 105 
(9) Intangible Assets, net and Goodwill
Intangible Assets, net
The following tables present certain information regarding our intangible assets as of September 30, 2021 and December 31, 2020:
As of
September 30, 2021 December 31, 2020
Gross Carrying Value
Accumulated Amortization
Net Balance
Gross Carrying Value
Accumulated Amortization
Net Balance
Amortizable intangible assets:
Customer relationships $ 904  $ (429) $ 475  $ 904  $ (384) $ 520 
Intellectual property 903  (659) 244  893  (621) 272 
Licenses 471  (369) 102  472  (344) 128 
Brand names 126  (94) 32  127  (86) 41 
Trade names 114  (46) 68  112  (38) 74 
Patents and other 12  (7) 5  11  (6) 5 
2,530  (1,604) 926  2,519  (1,479) 1,040 
Non-amortizable intangible assets:
Trade names
50  (2) 48  50  (2) 48 
Total intangible assets
$ 2,580  $ (1,606) $ 974  $ 2,569  $ (1,481) $ 1,088 
The following reflects intangible amortization expense included within D&A:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Amortization expense $ 46  $ 52  $ 138  $ 156 
The table below reconciles the change in the carrying value of goodwill by business segment for the period from December 31, 2020 to September 30, 2021.

21

Gaming(1)
SciPlay iGaming Totals
Balance as of December 31, 2020
$ 2,425  $ 124  $ 181  $ 2,730 
Acquired goodwill —  —  39  39 
Foreign currency adjustments (11) —  (3) (14)
Balance as of September 30, 2021
$ 2,414  $ 124  $ 217  $ 2,755 
(1) Accumulated goodwill impairment charges for the Gaming segment as of September 30, 2021 were $989 million.
(10) Software, net
Software, net consisted of the following:
As of
September 30, 2021 December 31, 2020
Software $ 989  $ 992 
Accumulated amortization (866) (849)
Software, net $ 123  $ 143 
The following reflects amortization of software included within D&A:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Amortization expense $ 21  $ 25  $ 61  $ 75 

(11) Long-Term and Other Debt
Outstanding Debt and Finance Leases
The following table reflects our outstanding debt (in order of priority and maturity):

22

As of
September 30, 2021 December 31, 2020
Final Maturity Rate(s) Face value Unamortized debt discount/premium and deferred financing costs, net Book value Book value
Senior Secured Credit Facilities:
SGI Revolver 2024 variable $ 135  $ —  $ 135  $ 535 
SGI Term Loan B-5 2024 variable 4,028  (39) 3,989  4,012 
SciPlay Revolver 2024 variable —  —  —  — 
SGI Senior Notes:
2025 Secured Notes(1)
2025 5.000% 1,250  (11) 1,239  1,237 
2026 Secured Euro Notes(2)
2026 3.375% 377  (4) 373  395 
2025 Unsecured Notes 2025 8.625% 550  (7) 543  542 
2026 Unsecured Euro Notes(2)
2026 5.500% 290  (3) 287  303 
2026 Unsecured Notes 2026 8.250% 1,100  (11) 1,089  1,088 
2028 Unsecured Notes 2028 7.000% 700  (8) 692  691 
2029 Unsecured Notes 2029 7.250% 500  (6) 494  493 
Finance lease obligations as of September 30, 2021 payable monthly through 2023 and other(3)
2023 4.219% 5  —  5  7 
Total long-term debt outstanding $ 8,935  $ (89) $ 8,846  $ 9,303 
Less: current portion of long-term debt (44) (44)
Long-term debt, excluding current portion $ 8,802  $ 9,259 
Fair value of debt(4)
$ 9,202 
(1) In connection with the February 2018 Refinancing (see Note 15 in our 2020 10-K), we entered into certain cross-currency interest rate swap agreements to achieve more attractive interest rates by effectively converting $460 million of the fixed-rate, U.S. Dollar-denominated 2025 Secured Notes, including the semi-annual interest payments through October 2023, to a fixed-rate Euro-denominated debt, with a fixed annual weighted average interest rate of approximately 2.946%. These cross-currency swaps have been designated as a hedge of our net investment in certain subsidiaries.
(2) We designated a portion of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the change in foreign currency exchange rates of the Euro relative to the U.S. Dollar (see Note 12 for additional information). The total change in the face value of the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes due to changes in foreign currency exchange rates since the issuance was a reduction of $46 million, of which gains of $12 million and $30 million were recognized on remeasurement of debt in the Consolidated Statements of Operations for the three and nine months ended September 30, 2021, respectively.
(3) Includes $5 million related to certain revenue transactions presented as debt in accordance with ASC 470.
(4) Fair value of our fixed rate and variable interest rate debt is classified within Level 2 in the fair value hierarchy and has been calculated based on the quoted market prices of our securities.

We were in compliance with the financial covenants under all debt agreements as of September 30, 2021 (for information regarding our financial covenants of all debt agreements, see Notes 1 and 15 in our 2020 10-K).
In July 2021, we amended our Credit Agreement to provide for additional flexibility on executing the recently announced strategic transactions, including among other items: (a) extended the time period for conversion of securities into cash for purposes of satisfying the 75% minimum cash proceeds requirement from 180 to 365 days for proceeds received from the intended disposition of our Sports Betting business (“the Disposition Transaction”), (b) amend the basket for non-cash consideration received in connection with a permitted disposition, (c) permit any capital stock received as consideration in the Disposition Transactions and (d) require that at least 25% of the net cash proceeds received from the Disposition Transactions will be used to prepay outstanding term loans within ten business days of the Disposition Transactions.
On September 30, 2021, SGI, the Company and the guarantors party thereto entered into supplemental indentures (the “Supplemental Indentures”) to the indentures (the “Indentures”) by and among SGI, the Company, the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, pursuant to SGI’s previously announced consent solicitation with respect to SGI’s 5.000% Senior Secured Notes due 2025, 3.375% Senior Secured Notes due 2026, 8.625% Senior Notes due 2025, 5.500% Senior Notes due 2026, 8.250% Senior Notes due 2026, 7.000% Senior Notes due 2028 and 7.250% Senior

23

Notes due 2029. In connection with the Company’s previously announced evaluation of strategic alternatives for the intended divestiture of the Lottery business, the Supplemental Indentures amended the Indentures’ requirement that at least 75% of the consideration received as cash or cash equivalents to reduce that percentage to 60%, solely with respect to a potential initial public offering of the Company’s Lottery business occurring prior to June 30, 2022, subject to the terms and conditions described in the consent solicitation statement dated September 23, 2021.
For additional information regarding the terms of our credit facilities, Secured Notes and Unsecured Notes, see Note 15 in our 2020 10-K.
(12) Fair Value Measurements
The fair value of our financial assets and liabilities is determined by reference to market data and other valuation techniques as appropriate. We believe the fair value of our financial instruments, which are principally cash and cash equivalents, restricted cash, receivables, other current assets, accounts payable and accrued liabilities, approximates their recorded values. Our assets and liabilities measured at fair value on a recurring basis are described below.
Derivative Financial Instruments
As of September 30, 2021, we held the following derivative instruments that were accounted for pursuant to ASC 815:
Interest Rate Swap Contracts
We currently use interest rate swap contracts as described below to mitigate gains or losses associated with the change in expected cash flows due to fluctuations in interest rates on our variable rate debt.
In February 2018, we entered into interest rate swap contracts to hedge a portion of our interest expense associated with our variable rate debt to effectively fix the interest rate that we pay. These interest rate swap contracts are designated as cash flow hedges under ASC 815. We pay interest at a weighted-average fixed rate of 2.4418% and receive interest at a variable rate equal to one-month LIBOR. The total notional amount of interest rate swaps outstanding was $800 million as of September 30, 2021. These hedges mature in February 2022.
These hedges are highly effective in offsetting changes in our future expected cash flows due to the fluctuation in the one-month LIBOR rate associated with our variable rate debt. We qualitatively monitor the effectiveness of these hedges on a quarterly basis. As a result of the effective matching of the critical terms on our variable rate interest expense being hedged to the hedging instruments being used, we expect these hedges to remain highly effective.
All gains and losses from these hedges are recorded in Other comprehensive loss until the future underlying payment transactions occur. Any realized gains or losses resulting from the hedges are recognized (together with the hedged transaction) as Interest expense. We estimate the fair value of our interest rate swap contracts by discounting the future cash flows of both the fixed rate and variable rate interest payments based on market yield curves. The inputs used to measure the fair value of our interest rate swap contracts are categorized as Level 2 in the fair value hierarchy as established by ASC 820.
The following table shows the Gain (loss) and Interest expense recognized on our interest rate swap contracts:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Gain (loss) recorded in accumulated other comprehensive loss, net of tax $ 5  $ 4  $ 14  $ (10)
Interest expense recorded related to interest rate swap contracts 5  4  14  10 
We do not expect to reclassify material amounts from Accumulated other comprehensive loss to interest expense in the next twelve months.
The following table shows the effect of interest rate swap contracts designated as cash flow hedges in the consolidated statements of operations:

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Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Interest expense
Interest expense
Total interest expense which reflects the effects of cash flow hedges $ (120) $ (131) $ (360) $ (379)
Hedged item (5) (5) (14) (15)
Derivative designated as hedging instrument —  1  —  5 
Cross-Currency Interest Rate Swaps
In connection with the February 2018 Refinancing described in Note 15 of our 2020 10-K, we entered into certain cross-currency interest rate swap agreements to achieve more beneficial interest rates by effectively converting $460 million of our fixed-rate U.S. Dollar-denominated 2025 Secured Notes, including the semi-annual interest payments through October 2023, to fixed-rate Euro-denominated debt, with a fixed annual weighted average interest rate of approximately 2.946%. We have designated these cross-currency interest rate swap agreements as a net investment hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the changes in foreign currency exchange rates of the Euro relative to the U.S. Dollar.
We use the spot method to measure the effectiveness of our net investment hedge. Under this method, for each reporting period, the change in the fair value of the $460 million cross-currency interest rate swaps is reported in Foreign currency translation gain (loss) in Accumulated other comprehensive loss. The cross-currency basis spread (along with other components of the cross-currency swap’s fair value excluded from the spot method effectiveness assessment) are amortized and recorded to Interest expense. We evaluate the effectiveness of our net investment hedge at the beginning of each quarter.
The following table shows the fair value of our hedges:
As of
Balance Sheet Line Item
September 30, 2021 December 31, 2020
Interest rate swaps (1)(3)
Accrued liabilities/Other liabilities $ 8  $ 22 
Cross-currency interest rate swaps (2)(3)
Other assets 39  14 
(1) Gains of $5 million and $14 million for the three and nine months ended September 30, 2021, respectively, are reflected in Derivative financial instrument unrealized gain (loss) in Other comprehensive gain (loss).
(2) Gains of $12 million and $25 million for the three and nine months ended September 30, 2021, respectively, are reflected in Foreign currency translation gain (loss) in Other comprehensive gain (loss).
(3) The inputs used to measure the fair value of our interest rate swap contracts are categorized as Level 2 in the fair value hierarchy.
Net Investment Non-derivative Hedge — 2026 Secured Euro Notes
For the third quarter of 2021, we designated $180 million of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our results caused by the changes in foreign currency exchange rates of the Euro relative to the U.S. Dollar.
We use the spot method to measure the effectiveness of our net investment non-derivative hedge. Under this method, for each reporting period, the change in the hedged portion of the carrying value of the 2026 Secured Euro Notes due to remeasurement is reported in Foreign currency translation gain (loss) in Other comprehensive loss, and the remaining remeasurement change is recognized in (Loss) gain on remeasurement of debt in our consolidated statements of operations. We evaluate the effectiveness of our net investment non-derivative hedge at the beginning of each quarter, and the inputs used to measure the fair value of this non-derivative hedge are categorized as Level 2 in the fair value hierarchy.
Contingent Acquisition Consideration Liabilities
In connection with our acquisitions, we have recorded certain contingent consideration liabilities, of which the values are primarily based on reaching certain earnings-based metrics. The related liabilities were recorded at fair value on the acquisition date as part of the consideration transferred and are remeasured each reporting period. The inputs used to measure the fair value of our liabilities are categorized as Level 3 in the fair value hierarchy.
Contingent acquisition consideration liabilities (including deferred purchase price) as of September 30, 2021, are $20 million, of which $1 million is included in Accrued liabilities with the remainder included in Other long-term liabilities.

25

Contingent acquisition consideration liabilities as of December 31, 2020, were $3 million, of which $1 million was included in Accrued liabilities with the remaining balance included in Other long-term liabilities.
(13) Stockholders’ Deficit
Changes in Stockholders’ Deficit
The following tables present certain information regarding our stockholders’ deficit as of September 30, 2021 and September 30, 2020:
Nine Months Ended September 30, 2021
Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interest Total
January 1, 2021 $ 1  $ 1,268  $ (3,529) $ (175) $ (218) $ 129  $ (2,524)
Vesting of RSUs, net of tax withholdings and other —  (13) —  —  —  —  (13)
Stock-based compensation —  17  —  —  —  —  17 
Net loss —  —  (15) —  —  6  (9)
Other comprehensive gain —  —  —  —  8  —  8 
March 31, 2021 $ 1  $ 1,272  $ (3,544) $ (175) $ (210) $ 135  $ (2,521)
Vesting of RSUs, net of tax withholdings and other —  (4) —  —  —  —  (4)
Stock-based compensation —  31  —  —  —  —  31 
Net income —  —  109  —  —  4  113 
Other comprehensive gain —  —  —  —  11  —  11 
June 30, 2021 $ 1  $ 1,299  $ (3,435) $ (175) $ (199) $ 139  $ (2,370)
Vesting of RSUs, net of tax withholdings and other —  (3) —  —  —  —  (3)
Stock-based compensation —  22  —  —  —  —  22 
Net income —  —  182  —  —  5  187 
Other comprehensive loss —  —  —  —  (27) —  (27)
September 30, 2021 $ 1  $ 1,318  $ (3,253) $ (175) $ (226) $ 144  $ (2,191)

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Nine Months Ended September 30, 2020
  Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interest Total
January 1, 2020 $ 1  $ 1,208  $ (2,954) $ (175) $ (292) $ 104  $ (2,108)
Vesting of RSUs, net of tax withholdings and other —  (1) —  —  —  —  (1)
Stock-based compensation —  9  —  —  —  —  9 
Net loss —  —  (159) —  —  4  (155)
Other comprehensive loss —  —  —  —  (97) —  (97)
Impact of ASC 326 adoption —  —  (6) —  —  —  (6)
March 31, 2020 $ 1  $ 1,216  $ (3,119) $ (175) $ (389) $ 108  $ (2,358)
Vesting of RSUs, net of tax withholdings and other —  1  —  —  —  —  1 
Stock-based compensation —  13  —  —  —  1  14 
Net loss —  —  (203) —  —  5  (198)
Other comprehensive gain —  —  —  —  62  —  62 
June 30, 2020 $ 1  $ 1,230  $ (3,322) $ (175) $ (327) $ 114  $ (2,479)
Stock-based compensation —  16  —  —  —  1  17 
Net loss —  —  (117) —  —  6  (111)
Other comprehensive gain —  —  —  —  32  —  32 
September 30, 2020 $ 1  $ 1,246  $ (3,439) $ (175) $ (295) $ 121  $ (2,541)
Stock Based Compensation
The following reflects total stock-based compensation expense recognized under all programs in our continuing operations:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Related to SGC stock options $ 3  $ 1  $ 25  $ 3 
Related to SGC RSUs 23  5  51  20 
Related to SciPlay RSUs —  10  5  15 
Total(1)
$ 26  $ 16  $ 81  $ 38 
(1) The increase in SGC stock based compensation expense for both 2021 periods is related to the acceleration of the expense as a result of attainment of certain targets for grants to consultants who are also on our board coupled with the new equity awards issued at a higher fair value given the increase in our stock price compared to the prior period.
Restricted Stock Units
A summary of the changes in RSUs outstanding under our equity-based compensation plans during the nine months ended September 30, 2021 is presented below:
Number of
Restricted
Stock
Units 		Weighted
Average
Grant Date
Fair Value
Unvested RSUs as of December 31, 2020
3.3  $ 19.07 
Granted 1.2  $ 55.01 
Vested 1.4  $ 25.00 
Cancelled 0.1  $ 18.60 
Unvested RSUs as of September 30, 2021
6.0  $ 30.77 
The weighted-average grant date fair value of RSUs granted during the nine months ended September 30, 2021 and 2020 was $55.01 and $10.96, respectively. The fair value of each RSU grant is based on the market value of our common stock at the time of grant. At September 30, 2021, we had $67 million in total unrecognized stock-based compensation expense

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relating to unvested RSUs that will be amortized over a weighted-average period of approximately two years, of which $14 million related to employees of discontinued operations. The fair value at vesting date of RSUs vested during the nine months ended September 30, 2021 and 2020 was $74.1 million and $15.5 million, respectively.
(14) Income Taxes
We consider new evidence (both positive and negative) at each reporting date that could affect our view of the future realization of deferred tax assets. We evaluate information such as historical financial results, historical taxable income, projected future taxable income, expected timing of the reversals of existing temporary differences and available prudent and feasible tax planning strategies in our analysis.
As more fully described in Note 1, on September 27, 2021, we entered into a definitive agreement to sell our Sports Betting business to Endeavor Group Holdings, Inc. in a taxable cash and stock transaction, expected to close in the second quarter of 2022. Although we remain in a three-year cumulative loss position in the U.S., the taxable gain to be recognized upon disposition of our Sports Betting business leads us to conclude that a portion of our net U.S. federal and certain state deferred tax assets are more likely than not to be realized. Accordingly, to the extent that we expect to realize deferred tax assets in relation to this divestiture, we reversed our valuation allowances on our U.S. deferred income tax assets in the three months ended September 30, 2021. This reversal resulted in a $181 million income tax benefit recognized as a discrete event in the quarter.
On October 27, 2021, we announced that we had entered into a definitive agreement to sell our Lottery business to Brookfield in a taxable cash transaction for total consideration of $6.05 billion (see Note 1 for additional details). As a result of this transaction, which is expected to close in the second quarter of 2022, we believe that there is a reasonable possibility that additional existing U.S. federal and certain state valuation allowances could be released within the next twelve months. If released, they may have a significant impact on net income in the quarter in which it is deemed appropriate to release the reserve.
We continue to maintain other valuation allowances for certain U.S. and non-U.S. jurisdictions with cumulative losses.
Our income tax benefit (including discrete items) was $172 million and $164 million for the three and nine months ended September 30, 2021, and our income tax expense was $3 million and $8 million for the three and nine months ended September 30, 2020, respectively. In 2021, our effective tax rate differs from the U.S. statutory rate of 21% primarily due to the aforementioned release in the third quarter of 2021 of certain valuation allowances recorded against our U.S. federal and state net deferred tax assets. In all periods, we recorded tax expense relative to pre-tax earnings in jurisdictions without valuation allowances, including our 19% noncontrolling interest in SciPlay. Additionally, our rate is impacted by an unfavorable adjustment for the legacy U.K. Gaming reporting unit goodwill impairment of $54 million recorded in the first quarter of 2020, which was not deductible for tax purposes.
As discussed in Note 1, the COVID-19 disruptions significantly impacted certain segments of our business during 2020 and 2021. We considered the COVID-19 disruptions in our ability to realize deferred tax assets in the future and determined that such conditions did not change our overall valuation allowance positions. Additionally, we continue to monitor and evaluate the tax implications resulting from any existing and forthcoming legislation passed in response to COVID-19 in the federal, state, and foreign jurisdictions where we have an income tax presence.
(15) Leases
Our total operating lease expense for the three and nine months ended September 30, 2021 were $6 million and $16 million, respectively and were $5 million and $16 million, for the three and nine months ended September 30, 2020. The total amount of variable and short-term lease payments was immaterial for all periods presented.
Supplemental balance sheet and cash flow information related to operating leases is as follows:

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As of
September 30, 2021 December 31, 2020
Operating lease right-of-use assets(1)
$ 46  $ 52 
Accrued liabilities 16  16 
Operating lease liabilities 36  43 
Total operating lease liabilities $ 52  $ 59 
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases for the nine-month periods ended September 30, 2021 and 2020, respectively
$ 14  $ 14 
Weighted average remaining lease term, units in years 5 5
Weighted average discount rate 5  % 5  %

Lease liability maturities:
Remainder of 2021 2022 2023 2024 2025 Thereafter Less Imputed Interest Total
Operating leases $ 5  $ 16  $ 13  $ 12  $ 7  $ 4  $ (5) $ 52 
    
As of September 30, 2021, we did not have material additional operating leases that have not yet commenced.
(16) Litigation
We are involved in various legal proceedings, which are described in Note 21 within our 2020 10-K. There have been no material changes to these matters since the 2020 10-K was filed with the SEC on March 1, 2021, except as described below.
We record an accrual for legal contingencies when it is both probable that a liability has been incurred and the amount or range of the loss can be reasonably estimated (although, as discussed below, there may be an exposure to loss in excess of the accrued liability). We evaluate our accruals for legal contingencies at least quarterly and, as appropriate, establish new accruals or adjust existing accruals to reflect (1) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments, (2) the advice and analyses of counsel and (3) the assumptions and judgment of management. Legal costs associated with our legal proceedings are expensed as incurred. We had accrued liabilities of $11 million and $3 million for all of our legal matters that were contingencies as of September 30, 2021 and December 31, 2020, respectively.
Substantially all of our legal contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss involves a series of complex judgments about future events. Consequently, the ultimate outcomes of our legal contingencies could result in losses in excess of amounts we have accrued. We may be unable to estimate a range of possible losses for some matters pending against us or our subsidiaries, even when the amount of damages claimed against us or our subsidiaries is stated because, among other things: (1) the claimed amount may be exaggerated or unsupported; (2) the claim may be based on a novel legal theory or involve a large number of parties; (3) there may be uncertainty as to the likelihood of a class being certified or the ultimate size of the class; (4) there may be uncertainty as to the outcome of pending appeals or motions; (5) the matter may not have progressed sufficiently through discovery or there may be significant factual or legal issues to be resolved or developed; and/or (6) there may be uncertainty as to the enforceability of legal judgments and outcomes in certain jurisdictions. Other matters have progressed sufficiently that we are able to estimate a range of possible loss. For those legal contingencies disclosed in Note 21 in our 2020 10-K and this Note 16 as well as those related to the previously disclosed settlement agreement entered into in February 2015 with SNAI S.p.a., as to which a loss is reasonably possible, whether in excess of a related accrued liability or where there is no accrued liability, and for which we are able to estimate a range of possible loss, the current estimated range is up to approximately $14 million in excess of the accrued liabilities (if any) related to those legal contingencies. This aggregate range represents management’s estimate of additional possible loss in excess of the accrued liabilities (if any) with respect to these matters based on currently available information, including any damages claimed by the plaintiffs, and is subject to significant judgment and a variety of assumptions and inherent uncertainties. For example, at the time of making an estimate, management may have only preliminary, incomplete, or inaccurate information about the facts underlying a claim; its assumptions about the future rulings of the court or other tribunal on significant issues, or the behavior and incentives of adverse parties, regulators, indemnitors or co-defendants, may prove to be wrong; and the outcomes it is attempting to predict are often not amenable to the use of statistical or other quantitative analytical tools. In addition, from time to time an outcome may occur that management had not

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accounted for in its estimate because it had considered that outcome to be remote. Furthermore, as noted above, the aggregate range does not include any matters for which we are not able to estimate a range of possible loss. Accordingly, the estimated aggregate range of possible loss does not represent our maximum loss exposure. Any such losses could have a material adverse impact on our results of operations, cash flows or financial condition. The legal proceedings underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate.
Washington State Matter
On April 17, 2018, a plaintiff, Sheryl Fife, filed a putative class action complaint, Fife v. Scientific Games Corporation, against SGC in the United States District Court for the Western District of Washington. The plaintiff seeks to represent a putative class of all persons in the State of Washington who purchased and allegedly lost virtual coins playing SGC’s online social casino games, including but not limited to Jackpot Party® Casino and Gold Fish® Casino. The complaint asserts claims for alleged violations of Washington’s Recovery of Money Lost at Gambling Act, Washington’s consumer protection statute, and for unjust enrichment, and seeks unspecified money damages (including treble damages as appropriate), the award of reasonable attorneys’ fees and costs, pre- and post-judgment interest, and injunctive and/or declaratory relief. On July 2, 2018, SGC filed a motion to dismiss the plaintiff’s complaint with prejudice, which the trial court denied on December 18, 2018. SGC filed its answer to the putative class action complaint on January 18, 2019. On August 24, 2020, the trial court granted plaintiff’s motion for leave to amend her complaint and to substitute a new plaintiff, Donna Reed, for the initial plaintiff, and re-captioned the matter Reed v. Scientific Games Corporation. On August 25, 2020, the plaintiff filed a first amended complaint against SGC, asserting the same claims, and seeking the same relief, as the complaint filed by Sheryl Fife. On September 8, 2020, SGC filed a motion to compel arbitration of plaintiff’s claims and to dismiss the action, or, in the alternative, to transfer the action to the United States District Court for the District of Nevada. On April 9, 2021, the plaintiff filed a motion to certify the putative class and for a preliminary injunction. On April 26, 2021, the district court stayed the lawsuit, pending its ruling on SGC’s motion to compel arbitration of plaintiff’s claims and to dismiss the action, or, in the alternative, to transfer the action to the United States District Court for the District of Nevada. On June 17, 2021, the district court denied that motion, and on June 23, 2021, SGC filed a notice of appeal from the district court’s denial of that motion, and also filed a motion to stay all district court proceedings, pending the appeals court’s ruling on the Company’s arbitration appeal. We believe it is reasonably possible that a conclusion of this matter may result in an unfavorable outcome with no current estimated range of possible loss.
TCS John Huxley Matter
On March 15, 2019, TCS John Huxley America, Inc., TCS John Huxley Europe Ltd., TCS John Huxley Asia Ltd., and Taiwan Fulgent Enterprise Co., Ltd. brought a civil action in the United States District Court for the Northern District of Illinois against SGC, Bally Technologies, Inc. and SG Gaming. In the complaint, the plaintiffs assert federal antitrust claims arising from the defendants’ procurement of particular U.S. and South African patents. The plaintiffs allege that the defendants used those patents to create an allegedly illegal monopoly in the market for automatic card shufflers sold to regulated casinos in the United States. On April 10, 2019, the defendants filed a motion to dismiss the plaintiffs’ complaint with prejudice. On April 25, 2019, the district court denied the defendants’ motion to dismiss without prejudice pursuant to the court’s local rules, after the plaintiffs advised that they intended to file an amended complaint. The plaintiffs filed their amended complaint on May 3, 2019, and on May 22, 2019, the defendants filed a motion to dismiss the plaintiffs’ amended complaint with prejudice. On March 20, 2020, the district court denied the defendants’ motion to dismiss the plaintiffs’ amended complaint, and defendants filed an answer to Plaintiffs’ amended complaint on June 19, 2020. On June 3, 2020, the trial court granted the defendants’ request to bifurcate proceedings in the case, with discovery to occur first into the statute of limitations and release defenses asserted by the defendants in their motion to dismiss, before proceeding into broader discovery. The trial court set a September 18, 2020, deadline for the parties to complete discovery relating to the statute of limitations and release defenses. On October 28, 2020, the court issued an order extending until January 15, 2021 the deadline for the parties to complete discovery relating to the statute of limitations defense. On February 9, 2021, the defendants filed a motion for summary judgment on their statute of limitations defense, addressing whether plaintiffs had actual knowledge of their claims prior to the start of the limitations period. The district court denied that motion for summary judgment on September 20, 2021. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any. We believe that the claims in the lawsuit are without merit and intend to vigorously defend against them.
Tonkawa Tribe Matter
On September 3, 2020, the Tonkawa Tribe of Indians of Oklahoma d/b/a Tonkawa Enterprises filed a putative class action complaint in the United States District Court for the District of Nevada against SGC, Bally Technologies, Inc. and SG Gaming, f/k/a Bally Gaming, Inc. On October 5, 2020, the plaintiff filed a first amended complaint to add Cow Creek Band of Umpqua Tribe of Indians and the Umpqua Indian Development Corp., d/b/a Seven Feathers Casino as a plaintiff. On October 26, 2020, the plaintiffs filed a second amended complaint. In the complaint, the plaintiffs assert federal antitrust claims arising

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from the defendants’ procurement of particular U.S. patents. The plaintiffs allege that the defendants used those patents to create an allegedly illegal monopoly in the market for card shufflers sold or leased to regulated casinos in the United States. The plaintiffs seek to represent a putative class of all regulated United States casinos directly leasing or purchasing card shufflers from the defendants on or after April 1, 2009. The complaint seeks unspecified money damages, the award of plaintiff’s costs of suit, including reasonable attorneys’ fees and expert fees, and the award of pre-judgment and post-judgment interest. On November 19, 2020, the defendants filed a motion to dismiss plaintiffs’ second amended complaint. On November 20, 2020, Plaintiffs filed a motion for partial summary judgment, seeking a finding that defendants are collaterally estopped from re-litigating issues litigated in the 2018 litigation versus Shuffle Tech International Corp., Aces Up Gaming, and Poydras-Talrick Holdings. On August 27, 2021, the Nevada district court entered an order transferring the lawsuit to the United States District Court for the Northern District of Illinois. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any. We believe that the claims in the lawsuit are without merit and intend to vigorously defend against them.
Casino Queen Matter
On April 2, 2021, Casino Queen, Inc. and Casino Queen Marquette, Inc. filed a putative class action complaint in the United States District Court for the Northern District of Illinois against SGC, Bally Technologies, Inc. and SG Gaming, f/k/a Bally Gaming, Inc. In the complaint, the plaintiffs assert federal antitrust claims arising from the defendants’ procurement of particular U.S. patents. The plaintiffs allege that the defendants used those patents to create an allegedly illegal monopoly in the market for automatic card shufflers sold or leased in the United States. The plaintiffs seek to represent a putative class of all persons and entities that directly purchased or leased automatic card shufflers within the United States from the defendants, or any predecessor, subsidiary, or affiliate thereof, at any time between April 1, 2009, and the present. The complaint seeks unspecified money damages, which the complaint asks the court to treble, the award of plaintiffs’ costs of suit, including attorneys’ fees, and the award of pre-judgment and post-judgment interest. On June 11, 2021, the defendants filed a motion to dismiss plaintiffs’ complaint. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any. We believe that the claims in the lawsuit are without merit and intend to vigorously defend against them.
Colombia litigation
Our subsidiary, SGI, owned a minority interest in Wintech de Colombia S.A., or Wintech (now liquidated), which formerly operated the Colombian national lottery under a contract with Empresa Colombiana de Recursos para la Salud, S.A. (together with its successors, “Ecosalud”), an agency of the Colombian government. The contract provided for a penalty against Wintech, SGI and the other shareholders of Wintech of up to $5.0 million if certain levels of lottery sales were not achieved. In addition, SGI delivered to Ecosalud a $4.0 million surety bond as a further guarantee of performance under the contract. Wintech started the instant lottery in Colombia but, due to difficulties beyond its control, including, among other factors, social and political unrest in Colombia, frequently interrupted telephone service and power outages, and competition from another lottery being operated in a province of Colombia that we believe was in violation of Wintech’s exclusive license from Ecosalud, the projected sales level was not met for the year ended June 30, 1993.
In 1993, Ecosalud issued a resolution declaring that the contract was in default. In 1994, Ecosalud issued a liquidation resolution asserting claims for compensation and damages against Wintech, SGI and other shareholders of Wintech for, among other things, realization of the full amount of the penalty, plus interest, and the amount of the bond. SGI filed separate actions opposing each resolution with the Tribunal Contencioso of Cundinamarca in Colombia (the “Tribunal”), which upheld both resolutions. SGI appealed each decision to the Council of State. In May 2012, the Council of State upheld the contract default resolution, which decision was notified to us in August 2012. In October 2013, the Council of State upheld the liquidation resolution, which decision was notified to us in December 2013.
In July 1996, Ecosalud filed a lawsuit against SGI in the U.S. District Court for the Northern District of Georgia asserting many of the same claims asserted in the Colombia proceedings, including breach of contract, and seeking damages. In March 1997, the District Court dismissed Ecosalud’s claims. Ecosalud appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit. The Court of Appeals affirmed the District Court’s decision in 1998.
In June 1999, Ecosalud filed a collection proceeding against SGI to enforce the liquidation resolution and recover the claimed damages. In May 2013, the Tribunal denied SGI’s merit defenses to the collection proceeding and issued an order of payment of approximately 90 billion Colombian pesos, or approximately $30.2 million, plus default interest (potentially accrued since 1994 at a 12% statutory interest rate). SGI filed an appeal to the Council of State, and on December 10, 2020, the Council of State issued a ruling affirming the Tribunal’s decision. On December 16, 2020, SGI filed a motion for clarification of the Council of State’s ruling, which the Council of State denied on April 15, 2021. On April 22, 2021, SGI filed a motion for reconsideration relating to that decision.

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SGI believes it has various defenses, including on the merits, against Ecosalud’s claims. Although we believe these claims will not result in a material adverse effect on our consolidated results of operations, cash flows or financial position, it is not feasible to predict the final outcome, and we cannot assure that these claims will not ultimately be resolved adversely to us or result in material liability. SGI is not part of the Lottery Business for purposes of any divestiture of the Lottery Business that may occur, and the Colombia litigation matter will remain with SGI upon divestiture of the Lottery Business.
SciPlay IPO Matter (New York)
On or about October 14, 2019, the Police Retirement System of St. Louis filed a putative class action complaint in New York state court against SciPlay, certain of its executives and directors, and SciPlay’s underwriters with respect to its IPO (the “PRS Action”). The complaint was amended on November 18, 2019. The plaintiff seeks to represent a class of all persons or entities who acquired Class A common stock of SciPlay pursuant and/or traceable to the Registration Statement filed and issued in connection with the SciPlay IPO, which commenced on or about May 3, 2019. The complaint asserts claims for alleged violations of Sections 11 and 15 of the Securities Act, 15 U.S.C. § 77, and seeks certification of the putative class; compensatory damages of at least $146 million, and the award of the plaintiff’s and the class’s reasonable costs and expenses incurred in the action. On or about December 9, 2019, Hongwei Li filed a putative class action complaint in New York state court asserting substantively similar causes of action under the Securities Act of 1933 and substantially similar factual allegations as those alleged in the PRS Action (the “Li Action”). On December 18, 2019, the New York state court entered a stipulated order consolidating the PRS Action and the Li Action into a single lawsuit. On December 23, 2019, the defendants moved to dismiss the consolidated action. On August 28, 2020, the court issued an oral ruling granting in part and denying in part the defendants’ motion to dismiss. On December 14, 2020, plaintiffs in the consolidated action filed a motion to certify the putative class. On May 12, 2021, the parties in the consolidated action reached an agreement in principle to settle the consolidated action. On July 27, 2021, the parties in the consolidated action entered into a settlement agreement to settle the consolidated action. On August 11, 2021, the New York court granted preliminary approval to the parties’ proposed settlement, stayed non-settlement related proceedings in the consolidated action pending final approval of the settlement and scheduled a hearing for final approval of the settlement on November 15, 2021.
SciPlay IPO Matter (Nevada)
On or about November 4, 2019, plaintiff John Good filed a putative class action complaint in Nevada state court against SciPlay, certain of its executives and directors, SGC, and SciPlay’s underwriters with respect to the SciPlay IPO. The plaintiff seeks to represent a class of all persons who purchased Class A common stock of SciPlay in or traceable to the SciPlay IPO that it completed on or about May 7, 2019. The complaint asserts claims for alleged violations of Sections 11 and 15 of the Securities Act, 15 U.S.C. § 77, and seeks certification of the putative class; compensatory damages, and the award of the plaintiff’s and the class’s reasonable costs and expenses incurred in the action. On February 27, 2020, the trial court entered a stipulated order that, among other things, stayed the lawsuit pending entry of an order resolving the motion to dismiss that was pending in the SciPlay IPO matter in New York state court. On September 29, 2020, the trial court entered a stipulated order that extended the stay pending a ruling on class certification in the SciPlay IPO matter in New York state court. On May 12, 2021, the parties in the Nevada lawsuit reached an agreement in principle to settle the lawsuit and so informed the Nevada court, which vacated non-settlement related proceedings in the lawsuit, pending final approval of the settlement agreement by the New York court.
Based on our assessment under ASC 410 and ASC 450 and consideration of the SciPlay IPO matters pending in New York and Nevada described above, we determined that both loss and insurance proceeds loss recovery, which we believe is recoverable under our insurance policy, are deemed probable and reasonably estimable. As a result, we recorded approximately $8 million in Accrued liabilities and Prepaid expenses and other current assets as of September 30, 2021, with no material impact on our statement of operations income for the three and nine-month periods ended September 30, 2021.
For additional information regarding our pending litigation matters, see Note 21 in our 2020 10-K.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to enhance the reader’s understanding of our operations and current business environment from management’s perspective and should be read in conjunction with the description of our business included under Part I, Item 1 “Condensed Consolidated Financial Statements” and Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q and under Part I, Item 1 “Business,” Item 1A “Risk Factors” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2020 10-K.
This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and should be read in conjunction with the disclosures and information contained and referenced under “Forward-Looking Statements” and “Risk Factors” included in this Quarterly Report on Form 10-Q and “Risk Factors” included in our 2020 10-K. As used in this MD&A, the terms “we,” “us,” “our” and the “Company” mean SGC together with its consolidated subsidiaries.

BUSINESS OVERVIEW
We are a leading developer of technology-based products and services and associated content for the worldwide gaming, lottery, social and digital gaming industries. Our portfolio of revenue-generating activities primarily includes supplying gaming machines and game content, casino-management systems and table game products and services to licensed gaming entities; providing instant and draw-based lottery products, lottery systems and lottery content and services to lottery operators; providing social casino and other mobile games to retail customers; and providing a comprehensive suite of digital RMG and sports wagering solutions, distribution platforms, content, products and services. We also gain access to technologies and pursue global expansion through strategic acquisitions and equity investments. As described in Notes 1 and 2, beginning in the third quarter of 2021, we have reflected the Lottery and Sports Betting businesses as discontinued operations. Accordingly, Lottery is no longer a reportable business segment and we renamed our Digital business segment to iGaming business segment and the presentation was recast for all periods to exclude the Sports Betting business. Accordingly, we report our results of continuing operations in three business segments—Gaming, SciPlay and iGaming—representing our different products and services.
Recent Events
Strategic Review Update
On June 29, 2021, we announced that the Company (1) with the support of its Board of Directors, completed the strategic review, which reaffirmed the strategy to become a content-led growth company with a particular focus on digital markets; and (2) intends to divest the Lottery and Sports Betting (component of our former Digital business segment) businesses creating the path to significantly de-lever and position the Company for enhanced growth. On September 27, 2021, we announced that we had entered into a definitive agreement to sell our Sports Betting business to Endeavor Group Holdings, Inc. (“Endeavor”) in a cash and stock transaction. Under the terms of the agreement, we will receive $1 billion in cash, subject to customary purchase price closing adjustments, and approximately 7.6 million shares of Endeavor Class A common stock (valued at approximately $200 million as of the purchase agreement date). On October 27, 2021, we announced that we entered into a definitive agreement to sell our Lottery business to Brookfield for total consideration of $6.05 billion consisting of $5.825 billion in cash and an earn-out of up to $225 million based on the achievement of certain EBITDA targets in 2022 and 2023. We expect to complete these transactions during the first half of 2022. Beginning in the third quarter of 2021, we have reflected these businesses as discontinued operations in our consolidated statements of operations and reflected the assets and liabilities of these businesses as held for sale in our consolidated balance sheets, for all periods presented. These businesses held for sale are included in our covenant compliance requirements until disposed of and all of their related cash flows are available to the Company without restriction. Refer to Note 2 for further information.
Additionally, as described in Note 1, on July 15, 2021, we submitted a proposal to SciPlay’s board of directors to acquire the remaining 19% equity interest in SciPlay that we do not currently own in an all-stock transaction, following which SciPlay would become a wholly-owned subsidiary of Scientific Games. This proposed transaction is part of our recently announced strategy to become a content-led growth company with a particular focus on digital markets that we believe will unlock the value of our products and technologies. This proposed transaction is subject to the approval of an independent special committee of the SciPlay board of directors, as well as the negotiation and execution of a mutually acceptable merger agreement.
Retrospective reclassifications have been made to prior period financial statements and disclosures to present the Lottery and Sports Betting businesses as discontinued operations (see Note 2). Unless otherwise noted, amounts, percentages and discussion for all periods included below reflect the results of operations and financial condition from the Company’s continuing operations.

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Acquisitions
During 2021, we acquired several businesses to expand the portfolio and content for each of our three continuing business segments and businesses held for sale, as noted below (see Note 1 for additional information).
Acquisitions Related to Continuing Operations
•In July of 2021, SciPlay acquired privately-held Koukoi.
•In August of 2021, we acquired privately-held Lightning Box, which has been included in our iGaming business segment.
•In October of 2021, we acquired ACS’s table game solution PlayOn™, subsequently renamed to AToM™, which will be included in our Gaming business segment.
•In November of 2021, we acquired Authentic Gaming, a premium provider of live casino solutions, which will be included in our iGaming business segment.
Acquisitions Related to Discontinued Operations
•In May of 2021, we acquired SportCast, which has been included in the Sports Betting business.
•In September of 2021, we acquired Sideplay, which has been included in the Lottery business.
Impacts of COVID-19 on Business Operations and Financial Results
As also described in the “Description of the Business and Summary of Significant Accounting Policies - Impact of COVID-19” in Note 1 of our 2020 10-K, COVID-19 disruptions continue to impact our results of operations and particularly certain aspects of our Gaming business segment operations due to the widespread closures of gaming operation establishments and restricted reopening of a substantial number of gaming operation establishments coupled with global economic uncertainty. While most gaming establishments have reopened globally and have begun to operate at full capacity, there is a continued risk of future COVID-related developments impacting Gaming business segment results. Additionally, we noted that the U.S. and U.K. markets have rebounded which has had a notable impact on our Gaming operations primarily due to the lifting of restrictions and further elevated by consumer pent up demand from prior periods resulting in higher gross gaming revenues. Gaming operations revenue for the nine months ended September 30, 2021 benefited from the FOBT recovery as described in the Consolidated Results section below.
We continue to see fluctuations in infection rates and regulations for various regions along with ongoing domestic and international travel restrictions or warnings, social distancing measures, reduced operating capacity and an overall economic and general uncertainty regarding the magnitude and length of time that these disruptions will continue. These circumstances may change in the future and such changes could be material. We continue to assess the situation jurisdiction by jurisdiction, actively managing our cash flows and continuing to evaluate additional measures that may reduce operating costs and conserve cash to preserve liquidity as we execute on our strategic initiatives. For more information on the effects that COVID-19 has had on each of our business segments, refer to the individual business segment sections below.
Impact of COVID-19 on Liquidity
Our only financial maintenance covenant (excluding SciPlay’s Revolver) is contained in SGI’s credit agreement. For information regarding the impact of COVID-19 on liquidity and other requirements, please refer to the “Description of the Business and Summary of Significant Accounting Policies” in Note 1 and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the “Business Overview” along with the “Liquidity, Capital Resources and Working Capital” sections of our 2020 10-K. In October 2021, we made a voluntary payment of $135 million on SGI’s revolving credit facility leaving the entire revolving credit facility undrawn and available.
Segments
We report our operations in three business segments—Gaming, SciPlay and iGaming (former Digital business segment excluding Sports betting)—representing our different products and services. See “Business Segments Results” below and Note 4 for additional business segment information. As a result of our strategic changes and pending divestitures of the Lottery and Sports Betting businesses, starting with the third quarter of 2021, we re-assessed how our CODM evaluates the operating results and performance of our Gaming business segment that resulted in an immaterial change to the Gaming business Segment AEBITDA calculation, which is our primary measure of the Gaming business segment performance measure of profit or loss. The Gaming business segment AEBITDA, has been recast for all periods presented herein to exclude EBITDA from equity investments to align with this new view.

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Foreign Exchange
Our results are impacted by changes in foreign currency exchange rates used in the translation of foreign functional currencies into USD and the remeasurement of foreign currency transactions or balances. The impact of foreign currency exchange rate fluctuations represents the difference between current rates and prior-period rates applied to current activity. Our exposure to foreign currency volatility on revenue is as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
2021 2020 2021 2020
($ in millions)
Revenue % Consolidated Revenue Revenue % Consolidated Revenue Revenue % Consolidated Revenue Revenue % Consolidated Revenue
Foreign Currency:
British Pound Sterling $ 40  7  % $ 39  9  % $ 140  9  % $ 99  8  %
Euro 41  8  % 35  8  % 119  8  % 108  9  %
    
We also have foreign currency exposure related to certain of our equity investments, cross-currency interest rate swaps, and Euro-denominated debt. See Part I, Item 1A in our 2020 10-K, “Consolidated Results — Other Factors Affecting 2020 and 2019 Net Loss Attributable to SGC Comparability” under Item 7 in our 2020 10-K and Item 3 “Quantitative and Qualitative Disclosures about Market Risk” in this Quarterly Report on Form 10-Q.
CONSOLIDATED RESULTS
Three Months Ended September 30,
Variance
Nine Months Ended September 30,
Variance
($ in millions) 2021

2020 2021 vs. 2020 2021 2020 2021 vs. 2020
Total revenue
$ 539  $ 432  $ 107  25  % $ 1,572  $ 1,219  $ 353  29  %
Total operating expenses 505  462  43  9  % 1,466  1,454  12  1  %
Operating income (loss) 34  (30) 64  213  % 106  (235) 341  145  %
Net loss from continuing operations before income taxes (72) (184) 112  61  % (202) (649) 447  69  %
Net income (loss) from continuing operations 100  (187) 287  153  % (38) (657) 619  94  %
Net income from discontinued operations, net of tax 87  76  11  14  % 329  193  136  70  %
Net income (loss) attributable to SGC $ 182  $ (117) $ 299  256  % $ 276  $ (479) $ 755  158  %

Revenue
Consolidated Revenue by Business Segment
(in millions)
Three Months Ended September 30, 2021 and 2020
Nine Months Ended September 30, 2021 and 2020
SGMS-20210930_G2.JPG SGMS-20210930_G3.JPG

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As described in the “Recent Events – Impact of COVID-19” section above, our total revenue, primarily revenues for the Gaming business segment, were significantly impacted in the prior year periods. Although these business disruptions continued to adversely impact certain aspects of our Gaming revenue in the first half of 2021, the re-opening of venues, lifting of restrictions, increased travel, and distribution of vaccines along with pent up consumer demand have caused the Gaming business segment to see more activity and thereby have helped drive the three and nine-month improvements for the periods presented. Particularly, our Gaming operations revenue demonstrated strong growth and exceeded third quarter 2019 levels driven by strong product performance and increased market share. Machine and table product revenue continue to be impacted by reduced capital expenditures of casino operators coupled with ongoing COVID-19 restrictions impacting casino operating capacity.
SciPlay revenue decreased for the three-month period as a result of declining paying player engagement due to the easing of stay-at-home measures compared to the height of COVID-19 prevention measures in the prior comparable year and softness in the middle of the quarter at Jackpot Party® Casino since stabilized in October, partially offset by strong monetization metrics and by growth at Gold Fish® Casino. Revenue increased for the nine-month period due to elevated player engagement from continued COVID-19 prevention measures during the first quarter of 2021 compared to limited COVID-19 prevention measures during the first quarter of 2020 in addition to the introduction of new content and features resulting in increased paying player interaction.
iGaming revenues increased for both periods due to continuing growth in the U.S. market as iGaming is live in five U.S. states with a 27% market share.
Gaming operations revenue for the nine months ended September 30, 2021 benefited from $44 million U.K. FOBT recovery received from certain U.K. customers. The FOBT recovery is related to a 2020 U.K. court ruling, associated with overcharging of value-added tax for previous services rendered to gaming operators and consequently reduced our net gaming revenue in those affected prior periods related to these customers and arrangements.
Operating Expenses
Three Months Ended September 30,
Variance
Nine Months Ended September 30,
Variance
($ in millions) 2021

2020 2021 vs. 2020 2021

2020 2021 vs. 2020
Operating expenses:
Cost of services $ 90  $ 86  $ 4  5  % $ 273  $ 250  $ 23  9  %
Cost of product sales 63  66  (3) (5) % 166  197  (31) (16) %
Selling, general and administrative 164  146  18  12  % 502  459  43  9  %
Research and development 47  36  11  31  % 140  110  30  27  %
Depreciation, amortization and impairments 96  111  (15) (14) % 289  336  (47) (14) %
Goodwill impairment —  —  —  —  —  54  (54) nm
Restructuring and other 45  17  28  165  % 96  48  48  100  %
Total operating expenses
$ 505  $ 462  $ 43  9  % $ 1,466  $ 1,454  $ 12  1  %
(1) nm = not meaningful.
Cost of Revenue
Total cost of revenue increased as a direct result of higher revenue due to the global economy beginning to recover as easing of COVID-19 restrictions continues. The increases in total cost of revenue for the three-month period were partially offset by the prior year period including $15 million in Gaming cost of product inventory valuation charges for excess and obsolete inventory. The decrease in total cost of revenue for the nine-month period was primarily due to prior year period including $45 million in Gaming cost of product inventory valuation charges for excess and obsolete inventory.
SG&A
SG&A increased in both periods primarily due to (1) higher stock-based compensation expenses of $10 million and $43 million, respectively, primarily driven by the acceleration of the expense as a result of attainment of certain targets for some of our directors coupled with the new equity awards issued at a higher fair value given the increase in our stock price compared to the prior period and (2) higher salaries, wages and other compensation of $21 million and $53 million, respectively as a result of the prior year experiencing temporary austerity measures implemented to reduce costs during the COVID-19 disruption. The increase in SG&A for the nine-month period was partially offset by the prior year period including $41 million

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in higher Gaming business segment allowance for credit loss charges that reflected credit deterioration and credit weakness specifically in our Latin America receivables portfolio due to the COVID-19 disruptions.
As a result of the pending divestitures of the Lottery and Sports Betting businesses, the Company's compensation committee is in the process of modifying various incentive and equity awards for the key employees of the businesses being sold, which are expected to result in a material increase in stock based compensation expense during the fourth quarter and through the close of these transactions.
R&D
R&D increased in both periods primarily due to higher salaries and benefits compared to the prior year periods reflecting lower operating costs as a result of the temporary austerity measures implemented to reduce costs during the COVID-19 disruptions.
D&A
The decrease in D&A for both periods is primarily due to certain gaming equipment, intangible assets and software primarily associated with historical acquisitions becoming fully depreciated and amortized in the prior year period.
Goodwill Impairment
Goodwill impairment recorded during the prior year nine-month period was related to our legacy U.K. Gaming reporting unit.
Restructuring and Other
The increase in restructuring and other in both periods is primarily due to charges related to the announced sales of the Lottery and Sports Betting businesses and to a lesser extent business optimization initiatives implementation costs primarily associated with efficiency programs, partially offset by higher COVID-19 business disruption charges in the prior year periods.
Other Factors Affecting Net Income (Loss) Attributable to SGC
Three Months Ended September 30, Nine Months Ended September 30, Factor Affecting Net Income (Loss) Attributable to SGC
(in millions) 2021 2020 2021 2020 2021 vs. 2020
Gain (loss) on remeasurement of debt $ 12  $ (24) $ 30  $ (26) Gains and (losses) are attributable to remeasurement of the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes and reflect changes in the Euro vs. the U.S. Dollar foreign exchange rates between the periods. 73% of our Euro Notes were not treated as a net investment hedge in the third quarter of 2021 compared to 82% in the third quarter of 2020.
Other income (expense), net 2  2  22  (8) The increase for the nine month period is primarily due to higher impact of foreign currency exchange rates coupled with a $7 million gain on sale of certain assets included in the current year.
Income tax benefit (expense) 172  (3) 164  (8)
The increase is primarily due to the release of the valuation allowance recorded during the third quarter of 2021 (see Note 14 and below).
As described in Note 14 and as a result of the signed definitive agreement to sell our Sports Betting business, during the third quarter of 2021 we reversed a portion of our valuation allowance on our U.S. federal and state deferred tax assets, which resulted in a $181 million income tax benefit recorded during the third quarter of 2021. Additionally, as a result of the pending sale of the Lottery business (as described in Note 1 and above) we have concluded that there is a reasonable possibility that additional existing U.S. federal and state valuation allowances could be released within the next twelve months. If released, they may have a significant impact on net income in the quarter in which it is deemed appropriate to release the reserve. We continue to maintain other valuation allowances for certain non-U.S. jurisdictions with cumulative losses.
Discontinued Operations
The $19 million or 7% increase in revenue for the three-month period is primarily due to higher Lottery instant products and systems revenue due to the impact of COVID-19 on the prior year results, coupled with higher revenue from the Sports Betting business due to continued growth and expansion in the U.S. sports-betting market. The increase in revenue drove the increase in net income from discontinued operations, net of tax by $11 million or 14%. The increase in operating expenses and operating income associated with discontinued operations is primarily driven by the higher revenues as described above. Refer to Note 2 for further information on our discontinued operations.

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The $117 million or 16% increase in revenue for the nine-month period is primarily due to higher Lottery instant products and systems revenue due to the impact of COVID-19 on the prior year results coupled with the large lottery jackpots in the first half of 2021 driving both instant products sales and system increases, coupled with higher revenue from the Sports Betting business due to continued growth and expansion in the U.S. sports-betting market. These increases in revenue drove the increase in net income from discontinued operations, net of tax by $136 million or 70%. The increase in operating expenses and operating income associated with discontinued operations is primarily driven by the higher revenues as described above.
See “Business Segments Results” below for a more detailed explanation of the significant changes in our components of revenue within the individual segment results of operations.
BUSINESS SEGMENTS RESULTS (for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020)
GAMING
Our Gaming business segment designs, develops, manufactures, markets and distributes a comprehensive portfolio of gaming products and services. We provide our Gaming portfolio of products and services to commercial casinos, Native American casinos, wide-area gaming operators such as LBOs, arcade and bingo operators in the U.K. and continental Europe, and government agencies and their affiliated operators.
We generate Gaming revenue from both services and product sales. Our services revenue includes revenue earned from Participation gaming machines, other leased gaming machines (including VLTs and electronic table games), supplied table products and services (including Shufflers), casino management technology solutions and systems, and other services revenues. Our product sales revenue includes the sale of new and used gaming machines, electronic table games, VLTs and VGTs, casino-management technology solutions and systems, table products, proprietary table game licensing, conversion kits (including game, hardware or operating system conversions) and spare parts.
For additional information, refer to the Gaming primary business activities summary included within “Business Segment Results” under Item 7 of our 2020 10-K.
Current Year Update
See the “Business Overview – Recent Events – Impact of COVID-19” section above for a description of the COVID-19 impact on our Gaming business segment, which had an overall adverse effect on our results of operations and cash flows in 2020 and continuing into the third quarter of 2021, but to a lesser extent. Our results of operations and cash flows are recovering as social distancing measures (including reduced floor capacities, table play customer limitations and reduction of slot machines available for play) have generally been rolled back, however some measures continue to be enforced in certain jurisdictions. We are starting to see an increase in the demand for our Gaming products as the easing of restrictions continues and gaming operators are beginning to return to pre-COVID levels. Particularly, we are seeing strong demand and orders, however we are experiencing some supply chain challenges that could impact our ability to meet demand for our products and delay the timing of fulfillment of these orders and consequently the timing of revenue recognition.
In October of 2021, we acquired ACS’s table game solution PlayOnTM, a cashless product line that provides players with a debit solution at live table games (see Note 1). PlayOnTM was renamed to AToMTM.
See also “Description of the Business and Summary of Significant Accounting Policies - Impact of COVID-19” in Note 1 of our 2020 10-K.
Results of Operations and KPIs
Three and Nine Months Ended September 30, 2021 and 2020

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SGMS-20210930_G4.JPG SGMS-20210930_G5.JPG SGMS-20210930_G6.JPG
Revenue
Three Months Ended September 30,
Variance
Nine Months Ended September 30,
Variance
($ in millions) 2021 2020 2021 vs. 2020 2021 2020 2021 vs. 2020
Revenue:
Gaming operations
$ 151  $ 92  $ 59  64  % $ 445  $ 227  $ 218  96  %
Machine sales
95  71  24  34  % 249  216  33  15  %
Systems
52  43  9  21  % 146  115  31  27  %
Table products
41  25  16  64  % 109  82  27  33  %
Total revenue
$ 339  $ 231  $ 108  47  % $ 949  $ 640  $ 309  48  %
F/X impact on revenue
$ 3  $ 1  $ 2  200  % $ 15  $ (1) $ 16  (1,600) %
Gaming KPIs:
U.S. and Canada units:
Installed base at period end 30,396  30,208  188  1  % 30,396  30,208  188  1  %
Average daily revenue per unit $ 42.66  $ 26.90  $ 15.76  59  % $ 41.13  $ 21.18  $ 19.95  94  %
International units(1):
Installed base at period end 30,644  33,493  (2,849) (9) % 30,644  33,493  (2,849) (9) %
Average daily revenue per unit $ 11.78  $ 5.65  $ 6.13  108  % $ 7.99  $ 4.05  $ 3.94  97  %
Gaming machine unit sales:
U.S. and Canada new unit shipments 3,223  3,114  109  4  % 8,387  7,435  952  13  %
International new unit shipments 1,780  1,887  (107) (6) % 4,187  6,807  (2,620) (38) %
Total new unit shipments 5,003  5,001  2  —  % 12,574  14,242  (1,668) (12) %
Average sales price per new unit $ 16,099  $ 12,881  $ 3,218  25  % $ 16,582  $ 14,436  $ 2,146  15  %
(1) Excludes the impact of game content licensing revenue.

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Gaming revenue was adversely affected in 2020 which continued to a lesser extent into 2021, but is recovering as social distancing measures are being rolled back, although some measures continue to be enforced in certain jurisdictions, as noted above. While the restrictions continue to be eased and removed in some geographies, the mitigation measures are expected to continue for an indeterminate amount of time, which will continue to affect consumer behavior, and thus, we continue to see some impact on our Gaming segment.
Gaming Operations
Gaming operations revenue increased for both periods primarily due to the significant impact of COVID-19 disruptions on the prior year periods as described in the Consolidated Results – Revenue section above. During the three-month period, Gaming operations had a 188-unit increase in the U.S. and Canada installed base along with increases in average daily revenue per unit for the three and nine-month periods of $15.76 and $19.95 for the U.S. and Canada units and $6.13 and $3.94 for the International units, respectively, which were all primarily caused by the COVID-19 disruptions in the prior year and current year recovery. Additionally, International ending installed base units decreased by 2,849-units primarily due to the closure of certain LBOs in the U.K. that haven’t yet recovered from the pandemic along with the reduction of some underperforming units in Latin America. Additionally, Gaming operations revenue for the nine months ended September 30, 2021 benefited from FOBT recovery in the U.K. as described in the Consolidated Results - Revenue section above.
Gaming Machine Sales
Gaming machine sales revenue increased primarily due to higher sales of replacement units in the U.S and Canada along with a higher average sales price per new unit. Additionally, the impact of COVID-19 on the prior year periods as described above, resulted in lower unit shipments in the prior year periods. The following table summarizes Gaming machine sales changes:
Three Months Ended September 30,
Variance
Nine Months Ended September 30,
Variance
2021 2020 2021 vs. 2020 2021 2020 2021 vs. 2020
U.S. and Canada unit shipments:
Replacement units 2,887  1,523  1,364  90  % 7,051  3,907  3,144  80  %
Casino opening and expansion units 336  1,591  (1,255) (79) % 1,336  3,528  (2,192) (62) %
Total unit shipments 3,223  3,114  109  4  % 8,387  7,435  952  13  %
International unit shipments:
Replacement units 1,690  1,887  (197) (10) % 2,346  6,246  (3,900) (62) %
Casino opening and expansion units 90  —  90  nm 1,841  561  1,280  228  %
Total unit shipments 1,780  1,887  (107) (6) % 4,187  6,807  (2,620) (38) %
Operating Expenses and AEBITDA
Operating expenses decreased in the three-month period by $2 million primarily due to $9 million in lower restructuring and other, $12 million in lower D&A primarily driven by fully depreciated assets related to prior acquisitions, which were partially offset by $9 million in higher SG&A costs and $8 million in higher R&D costs, both due to higher Salaries and Benefits caused by the austerity measures implemented in the prior year in response to the COVID-19 disruptions coupled with $3 million in higher cost of revenue associated with the increase in revenue as described above.
Operating expenses decreased in the nine-month period by $130 million, primarily due to a number of charges in the prior year period, which did not recur in 2021. The prior year period included: (1) a $54 million goodwill impairment charge related to our U.K. Gaming unit, which was recorded during the first quarter of 2020; (2) $41 million in higher allowance for credit loss charges; and (3) $45 million in inventory valuation charges to cost of products.
AEBITDA as a percentage of revenue (“AEBITDA margin”) for the three and nine-month periods increased by 18 and 29 percentage points to 51% and 50%, respectively, which is primarily related to increased revenues coupled with the lower allowance for credit loss and inventory valuation charges in the current year periods as described above. The nine-month period ended September 30, 2021 also benefited from the FOBT recovery in the U.K. of $44 million.
SCIPLAY
Our SciPlay business segment is a leading developer and publisher of social games on mobile and web platforms. SciPlay currently offers eight core games, including social casino games Jackpot Party® Casino, Gold Fish® Casino, Quick

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Hit® Slots and Hot Shot Casino®, and casual games 88 Fortunes® Slots, Bingo Showdown®, MONOPOLY® Slots, and Solitaire Pets™ Adventure. SciPlay’s social casino games typically include slots-style game play and occasionally include table games-style game play, while SciPlay’s casual games blend slots-style or bingo game play with adventure game features. All of SciPlay’s games are offered and played on multiple platforms, including Apple, Google, Facebook, Amazon, and the Microsoft platform. In addition to SciPlay’s internally created games, SciPlay’s content library includes recognizable, real-world slot and table games content from SGC. This content allows players who like playing land-based slot machines to enjoy some of those same titles in SciPlay’s free-to-play games. SciPlay has access to SGC’s library of more than 1,500 iconic casino titles, including titles and content from third-party licensed brands such as MONOPOLY™, THE FLINTSTONES™, JAMES BOND™, MICHAEL JACKSON™ and PLAYBOY™.
We generate substantially all of our revenue from the sale of coins, chips and cards which players can use to play our games. Players who install our games receive free coins, chips and cards upon the initial launch of the game and additional free coins, chips and cards at specific time intervals. Players may exhaust the coins, chips and cards that they receive for free and may choose to purchase additional coins, chips and cards in order to extend their time of game play. Once obtained, coins, chips and cards (either free or purchased) cannot be redeemed for cash nor exchanged for anything other than game play within our apps. We distribute our games through various global social web and mobile platforms such as Facebook, Apple, Google, Amazon, Microsoft, and other web and mobile platforms. The games are primarily our WMS®, Bally®, Barcrest®, and SHFL® branded games. We offer both third-party branded games and original content.
Current Year Update
In March 2020, the World Health Organization declared the rapidly spreading COVID-19 outbreak a pandemic. In response to the COVID-19 pandemic, governments across the world implemented measures to prevent its spread, including the temporary closure of all non-essential businesses and travel restrictions. Many of our current and potential players had significantly more free time to play our games during this period. As business closures, stay-at-home measures, and travel restrictions have begun to be lifted during 2021, we have seen player engagement recede in recent quarters as our players’ lives return to normal. However, we are still seeing a higher level of paying player engagement as compared to the pre-COVID time period. We are not able to predict and quantify the ultimate impact of further COVID-19 developments on our results of operations in future periods.
In July of 2021, SciPlay acquired privately held Koukoi, a Finland-based developer and operator of casual mobile games which allows us to expand our casual games portfolio (see Note 1).
Results of Operations and KPIs
Three and Nine Months Ended September 30, 2021 and 2020
SGMS-20210930_G7.JPG SGMS-20210930_G8.JPG SGMS-20210930_G9.JPG
Revenue

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Three Months Ended September 30,
Variance
Nine Months Ended September 30,
Variance
($ in millions) 2021 2020 2021 vs. 2020 2021 2020 2021 vs. 2020
Revenue:
Mobile
$ 131 $ 132 $ (1) (1) % $ 400 $ 377 $ 23 6  %
Web and other
16 19 (3) (16) % 52 58 (6) (10) %
Total revenue
$ 147 $ 151 $ (4) (3) % $ 452 $ 435 $ 17 4  %
SciPlay KPIs:
Mobile Penetration(1)
89  % 87  % 2pp nm 88  % 87  % 1pp nm
Average MAU(2)
6.1 7.3 (1.2) (16) % 6.3 7.6 (1.3) (17) %
Average DAU(3)
2.3 2.6 (0.3) (12) % 2.4 2.7 (0.3) (11) %
ARPDAU(4)
$ 0.69 $ 0.63 $ 0.06  10  % $ 0.70 $ 0.59 $ 0.11 19  %
nm = not meaningful.
pp = percentage points.
(1) Mobile penetration is defined as the percentage of business to consumer SciPlay revenue generated from mobile platforms.
(2) MAU = Monthly Active Users is a count of visitors to our sites during a month. An individual who plays multiple games or from multiple devices may, in certain circumstances, be counted more than once. However, we use third-party data to limit the occurrence of multiple counting.
(3) DAU = Daily Active Users is a count of visitors to our sites during a day. An individual who plays multiple games or from multiple devices may, in certain circumstances, be counted more than once. However, we use third-party data to limit the occurrence of multiple counting.
(4) ARPDAU = Average revenue per DAU is calculated by dividing revenue for a period by the DAU for the period by the number of days for the period.
For the three-month period, revenues decreased as a result of declining paying player engagement due to the easing of stay-at-home measures compared to the height of COVID-19 prevention measures in the prior comparable year and softness in the middle of the quarter in Jackpot Party® Casino which has since stabilized in October, partially offset by strong monetization metrics and by growth at Gold Fish® Casino.
For the nine-month period, revenues increased due to elevated player engagement from continued COVID-19 prevention measures during the first quarter of 2021 compared to limited COVID-19-prevention measures for most of the first quarter of 2020 in addition to the introduction of new content and features resulting in increased paying player interaction.
The increase in mobile penetration percentage for both comparable periods primarily reflects a continued trend of players migrating from web to mobile platforms to play our games.
Average MAU and average DAU for both comparable periods decreased due to the turnover in users. ARPDAU increased as a function of lower average DAU for periods presented.
Operating Expenses and AEBITDA
For the three-month period, operating expenses decreased primarily due to a $10 million decrease in stock-based compensation along with a $2 million decrease in marketing expenses as a result of a decrease in user acquisition spend.
For the nine-month period, operating expenses increased primarily due to a $5 million increase in R&D as a result of higher compensation and benefit costs due to a 7% increase in research and development headcount, coupled with an increase in D&A.
AEBITDA for the three-month period decreased primarily due to the decline in revenue, while AEBITDA for the nine-month period decreased primarily due to an increase in operating expenses, as described above, which was partially offset by an increase in revenue.
AEBITDA margin decreased for the three-month period by 2 percentage points to 31%, primarily due to higher SG&A and R&D expenses. AEBITDA margin for the nine-month period decreased by 2 percentage points to 31% primarily due to the increase in operating expenses driven by R&D expenses, as described above.
iGAMING
Beginning in the third quarter of 2021, we renamed our Digital business segment to iGaming business segment and the presentation was recast for all periods to exclude the Sports Betting business due to the pending sale, as described in Note 1. Our iGaming business segment provides a comprehensive suite of digital online gaming content, including digital RMG, distribution platforms, content, products and services. We derive revenue from our content aggregation platforms, including Open Gaming System, remote gaming servers, and various other platforms, which can deliver a wide spectrum of internally developed and branded casino-style games and popular third-party provider casino-style games to gaming operators. We also

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provide the Open Platform System which offers a wide range of reporting and administrative functions and tools providing operators full control over all areas of digital gaming operations. Generally, we host the play of our game content on our centrally located servers that are integrated with the online casino operators’ websites.
Current Year Update
We continue to expand our customer base and capitalize on growth in the U.S. by leveraging our industry leading platforms, content and solutions. Currently, iGaming is live in five U.S. states with a 27% market share.
In August of 2021, we acquired Lightning Box, which expanded our iGaming content portfolio (see Note 1 for additional information).
In November 2021, we acquired Authentic Gaming, a premium provider of live casino solutions, providing a foothold in a key vertical and the fastest growing part of the iGaming market. The acquisition enhances our premium product offering and is highly synergistic with our leading iGaming platform and our land-based and proprietary table game content.
Results of Operations and KPIs
Three and Nine Months Ended September 30, 2021 and 2020
SGMS-20210930_G10.JPG SGMS-20210930_G11.JPG SGMS-20210930_G12.JPG
The increases in revenue of 6% and 19% and in AEBITDA of 13% and 30% for the three and nine months periods, respectively, are primarily due to iGaming market expansion in the U.S. and higher player activity and turnover. The revenue increase was partially offset by the winding down of our SG Universe® services, which had a $2 million and $10 million impact on the three and nine month periods, respectively, which impacted our three and nine month period revenue by 4% and 9%, respectively.
AEBITDA margin for the three and nine-month periods increased by 2 and 3 percentage points to 34% and 35%, respectively.
RECENTLY ISSUED ACCOUNTING GUIDANCE
We do not expect that any recently issued accounting guidance will have a significant effect on our consolidated financial statements.
CRITICAL ACCOUNTING ESTIMATES
For a description of our policies regarding our critical accounting estimates, see “Critical Accounting Estimates” in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2020 10-K.
There have been no significant changes in our critical accounting estimate policies or the application of those policies to our condensed consolidated financial statements from those presented in Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our 2020 10-K.
LIQUIDITY, CAPITAL RESOURCES AND WORKING CAPITAL
Cash and Available Liquidity

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As of September 30, 2021, our principal sources of liquidity, other than cash flows provided by operating activities, were cash and cash equivalents, including SciPlay cash and cash equivalents (for our SciPlay business segment), cash and cash equivalents of businesses held for sale and amounts available under the SciPlay Revolver (for our SciPlay business segment).
Cash and Available Revolver Capacity
(in millions) Cash and cash equivalents Revolver capacity Revolver capacity drawn or committed to letters of credit Total
SGC (excluding SciPlay and businesses held for sale)
$ 451  $ 650  $ (147) $ 954 
Businesses held for sale 62  —  —  62 
SciPlay 331  150  —  481 
Total as of September 30, 2021
$ 844  $ 800  $ (147) $ 1,497 
SGC (excluding SciPlay and businesses held for sale)
$ 659  $ 650  $ (547) $ 762 
Businesses held for sale 88  —  —  88 
SciPlay 269  150  —  419 
Total as of December 31, 2020
$ 1,016  $ 800  $ (547) $ 1,269 

Total cash held by our foreign subsidiaries (including discontinued operations) was $197 million and $173 million as of September 30, 2021 and December 31, 2020, respectively. We believe that substantially all cash held outside the U.S. is free from legal encumbrances or similar restrictions that would prevent it from being available to meet our global liquidity needs.
Our Gaming operations and Lottery systems businesses (included in our discontinued operations) generally require significant upfront capital expenditures, and we may need to incur additional capital expenditures in order to retain or win new contracts. Our ability to make payments on and to refinance our indebtedness and other obligations depends on our ability to generate cash in the future. We may also, from time to time, repurchase or otherwise retire or refinance our debt, through our subsidiaries or otherwise. In the event we pursue significant acquisitions or other expansion opportunities, we may need to raise additional capital. If we do not have adequate liquidity to support these activities, we may be unable to obtain financing for these cash needs on favorable terms or at all. For additional information regarding our cash needs and related risks, see “Risk Factors” under Part I, Item 1A in our 2020 10-K.
In addition, Lottery (included in our discontinued operations) customers in the U.S. generally require service providers to provide performance bonds in connection with the relevant contract. As of September 30, 2021, our outstanding performance bonds totaled $270 million. Our ability to obtain performance bonds on commercially reasonable terms is subject to our financial condition and to prevailing market conditions, which may be impacted by economic and political events. Although we have not experienced difficulty in obtaining such bonds to date, we cannot assure that we will continue to be able to obtain performance bonds on commercially reasonable terms, or at all. For additional information regarding our surety or performance bonds in connection with our contracts, see “Risk Factors” under Part I, Item 1A in our 2020 10-K.
In October 2021, we made a voluntary payment of $135 million on SGI’s revolving credit facility leaving the entire revolving credit facility undrawn and available.
Cash Flow Summary

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Nine Months Ended September 30,
Variance
($ in millions)
2021 2020 2021 vs. 2020
Net cash provided by operating activities from:
Continuing operations $ 199  $ 2  $ 197 
Discontinued operations 260  310  (50)
Net cash provided by operating activities 459  312  147 
Net cash used in investing activities from:
Continuing operations (148) (91) (57)
Discontinued operations (58) (43) (15)
Net cash used in investing activities (206) (134) (72)
Net cash (used in) provided by financing activities from:
Continuing operations (484) 591  (1,075)
Discontinued operations (8) (4) (4)
Net cash (used in) provided by financing activities (492) 587  (1,079)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (3) 1  (4)
(Decrease) increase in cash, cash equivalents and restricted cash $ (242) $ 766  $ (1,008)
Cash Flows from Operating Activities
Nine Months Ended September 30,
Variance
($ in millions)
2021 2020 2021 vs. 2020
Net income (loss) $ 291  $ (464) $ 755 
Less: income from discontinued operations, net of tax (329) (193) (136)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities from continuing operations 358  560  (202)
Changes in working capital accounts, excluding the effects of acquisitions 51  90  (39)
Changes in deferred income taxes and other (172) 9  (181)
Net cash provided by operating activities from continuing operations
$ 199  $ 2  $ 197 
Net cash provided by operating activities (after adjustments to reconcile net loss from continuing operations to net cash provided by operating activities from continuing operations and changes in deferred income taxes and other) increased primarily due to a $236 million increase in earnings as a result of the lifting of certain COVID-19 related restrictions, which was partially offset by a $39 million unfavorable change in working capital accounts. The current year improvement includes $44 million in FOBT recovery as described in the Consolidated Results – Revenue section above, which based on its nature is not expected to recur in future periods.
Changes in working capital accounts, excluding the effects of acquisitions from continuing operations, for the nine months ended September 30, 2021 were primarily driven by higher billings as recovery from the COVID-19 pandemic continues to gain momentum with eased restrictions and continued progress towards the return to pre-COVID levels of business, coupled with cash management and timing of expenditures.
Net cash provided by operating activities from discontinued operations increased due to higher cash flows from discontinued operations driven by higher Lottery instant products and systems revenue due to the impact of COVID-19 on the prior year results coupled with the large lottery jackpots in the first half of 2021 driving both instant products sales and system increases.
Cash Flows from Investing Activities
Net cash used in investing activities from continuing operations increased primarily due to higher acquisitions of businesses completed during 2021, as described in Note 1, and higher capital expenditures. Capital expenditures are composed of investments in systems, equipment and other assets related to contracts, property and equipment, intangible assets and software.
Net cash used in investing activities from discontinued operations increased primarily due to acquisitions completed during 2021, as described in Note 1, higher additions to equity method investments and capital expenditures.

45

Cash Flows from Financing Activities
Net cash used in financing activities increased primarily due to repayments of $400 million under SGI’s revolving credit facility compared to the prior year period $440 million net draw on SGI’s revolving credit facility and net issuance of senior term loans of $209 million, coupled with $10 million in higher licensing payments during 2021.
Credit Agreement and Other Debt
For additional information regarding our credit agreement and other debt, interest rate risk and interest rate hedging instruments, see Notes 15 and 16 and Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our 2020 10-K and Item 3 below.
We intend to repay, refinance and/or restructure a significant portion of our existing indebtedness to significantly de-lever and position the Company for enhanced growth following the receipt of cash from the pending divestitures (see Note 1), which we would expect to significantly change the terms and outstanding amounts of our debt.
Off-Balance Sheet Arrangements
As of September 30, 2021, we did not have any significant off-balance sheet arrangements.
Contractual Obligations
There have been no material changes to our contractual obligations disclosed under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity, Capital Resources and Working Capital — Contractual Obligations” in our 2020 10-K, other than those related to the acquisitions described in Note 1.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign exchange rates and commodity prices. The following are our primary exposures to market risks:
Interest Rate Risk    
As of September 30, 2021, the face value of long-term debt was $8,935 million, including $4,163 million of variable-rate obligations. Assuming a constant outstanding balance for our variable-rate long term debt, a hypothetical 1% change in interest rates would decrease/increase interest expense by approximately $42 million. All of our interest rate sensitive financial instruments are held for other than trading purposes.
We currently use interest rate swap contracts to mitigate interest rate risk associated with a portion of our variable rate debt instruments. The objective of our interest rate swap contracts, which are designated as cash flow hedges of the future interest payments, is to eliminate the variability of cash flows attributable to the LIBOR component of interest expense to be paid on a portion of our variable rate debt.
Cross-Currency Interest Rate Swaps
In connection with the February 2018 Refinancing (see Note 15 in our 2020 10-K), we entered into certain cross-currency interest rate swap agreements to achieve more attractive interest rates by effectively converting $460 million of our fixed-rate U.S. Dollar-denominated 2025 Secured Notes, including the semi-annual interest payments through October 2023, to a fixed-rate Euro-denominated debt, with a fixed annual weighted average interest rate of approximately 2.946%. We have designated these cross-currency interest rate swap agreements as a net investment hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the changes in foreign currency exchange rates of the Euro with respect to the U.S. Dollar.    
As of September 30, 2021, if these cross-currency interest rate swap agreements were ineffective, the fluctuations in the exchange rates between the Euro and the U.S. Dollar would impact the amount of U.S. Dollars that we would require to settle the Euro-denominated debt at maturity of these agreements. A hypothetical 10% change in the U.S. Dollar in comparison to the Euro exchange rate upon inception of the cross-currency interest rate swap would have increased/decreased our obligation to cash settle the exchanged principal portion in U.S. Dollars by approximately $46 million.
Net Investment Non-Derivative Hedge - 2026 Secured Euro Notes
In February 2018, we designated a portion of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the changes in foreign currency exchange rates of the Euro with respect to the U.S. Dollar.

46


Fluctuations in the exchange rates between the Euro and the U.S. Dollar will impact the amount of U.S. Dollars that we will require to settle the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes at maturity. A hypothetical 10% change in U.S. Dollar in comparison to the Euro as of September 30, 2021, would have increased/decreased our obligation to cash settle the principal portion of the 2026 Secured and Unsecured Euro Notes in U.S. Dollars by approximately $67 million.
The completion of the pending disposition of the discontinued operations is expected to result in a reduction of net investments in our international subsidiaries available for hedging, which could result in increased volatility in our operating results.
For additional information regarding interest rate swap contracts, cross-currency interest rate swaps and net investment non-derivative hedges, see Note 12.
Item 4. Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 3a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of September 30, 2021.
There were no changes in our internal control over financial reporting during the three months ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For a description of our legal proceedings, see Note 16 in this Quarterly Report on Form 10-Q and Note 21 in our 2020 10-K.
Item 1A. Risk Factors
There have been no material changes in our risk factors from those disclosed under Item 1A “Risk Factors” included in our 2020 10-K, except as noted below.
We have signed definitive agreements to sell our Lottery and Sports Betting businesses (the “Pending Divestitures”) and have submitted a proposal to acquire the public shares of our SciPlay business (the “Proposed SciPlay Acquisition”), but there can be no assurance regarding the timing of completion of the Pending Divestitures or Proposed SciPlay Acquisition, that a definitive agreement will be executed for the Proposed SciPlay Acquisition, that the Pending Divestitures or the Proposed SciPlay Acquisition will yield additional value for our stockholders or that the Pending Divestitures or the Proposed SciPlay Acquisition will not adversely impact our business, financial results, results of operations, cash flows or stock price.
On June 29, 2021, we announced our intention to divest our Lottery and Sports Betting businesses. On July 15, 2021, we submitted a proposal to the board of directors of SciPlay Corporation to acquire the remaining 19% equity interest in SciPlay Corporation that we do not currently own in an all-stock transaction, following which SciPlay would become a wholly-owned subsidiary of Scientific Games. On September 27, 2021, we announced that we had entered into a definitive agreement to sell our Sports Betting business to Endeavor in a cash and stock transaction valued at $1.2 billion, subject to certain customary adjustments. On October 27, 2021, we announced that we entered into a definitive agreement to sell our Lottery business to Brookfield for total consideration of $6.05 billion consisting of $5.825 billion in cash and an earn-out of up to $225 million based on the achievement of certain EBITDA targets in 2022 and 2023.
The Proposed SciPlay Acquisition and the Pending Divestitures expose us to a number of risks and uncertainties, including continued diversion of management’s time to the processes; the incurrence of significant expenses associated with the review and pursuit of any transaction; increased difficulties in attracting, retaining or motivating key management personnel; the potential loss of key customers, suppliers, vendors and other key business partners; in the case of the Proposed SciPlay Acquisition, the failure to reach a definitive agreement for the acquisition, the inability to obtain necessary regulatory approvals or otherwise satisfy conditions required in order to consummate such transactions; the need to provide transition services, which may result in additional costs and the diversion of resources and focus; a reduction of net investments in our international subsidiaries available for hedging, which could result in increased volatility in our operating results; and exposure to potential litigation. Any of these factors could disrupt our business and could have a material adverse effect on our business, financial condition, results of operations, cash flows or stock price.
Additionally, we may not be able to realize the anticipated operational, strategic or financial benefits from the Proposed SciPlay Acquisition and the Pending Divestitures including (i) our ability to transform and execute on our strategic

47


vision to become the leading cross-platform global game company and (ii) any repayment, refinancing and/or restructuring of existing indebtedness on terms acceptable to us with net proceeds of the Pending Divestitures. There can be no assurance that any of these transactions and anticipated benefits will provide greater value to our stockholders than that reflected in our current stock price. The proposed transactions and anticipated benefits are dependent upon a number of factors that may be beyond our control, including among other factors, market conditions (including the impact of the COVID-19 pandemic), industry trends, regulatory developments, litigation and the interest of third parties in these businesses.
We depend on our suppliers and contract manufacturers, and any failure of these parties to meet our performance and quality standards or requirements could cause us to incur additional costs or lose customers.
Our production of instant lottery products, in particular, depends upon a continuous supply of raw materials, supplies, power and natural resources. Our operating results could be adversely affected by an interruption or cessation in the supply of these items or a serious quality assurance lapse, including as a result of the insolvency of any of our key suppliers.
Similarly, the operation of our instant ticket printing presses and the manufacture and maintenance of our gaming machines and gaming and lottery systems are dependent upon a regular and continuous supply of raw materials and components, many of which are manufactured or produced outside of the U.S. Certain of the components we use are customized for our products. The assembly of certain of our products and other hardware is performed by third parties. Any interruption or cessation in the supply of these items or services or any material quality assurance lapse with respect thereto could materially adversely affect our ability to fulfill customer orders, results of operations, cash flows and financial condition. We may be unable to find adequate replacements for our suppliers within a reasonable time frame, on favorable commercial terms or at all. The impact of the foregoing may be magnified as we continue to seek to streamline our gaming supply chain by reducing the number of our suppliers. Further, manufacturing costs may unexpectedly increase and we may not be able to successfully recover any or all of such cost increases. Additionally, in the three-month period ended on June 30, 2021, we experienced pressures on the supply chain related to parts sourcing, which contributed to approximately $5 million of inventory obsolescence charge. Because of the use of certain shared parts in some of our gaming machines in both old and new cabinets, supply chain pressures on availability of these parts may require us to re-allocate shared parts, rendering further units obsolete if such conditions sustain for an extended period of time.
In our Lottery systems business, we transmit certain wagering data using cellular technology and satellite transponders, generally pursuant to long-term contracts. The technical failure of any of these cellular or satellite services would require us to obtain other communication services, including other cellular or satellite access. In some cases, we employ backup systems to limit our exposure in the event of such a failure. While these networks are inherently highly redundant, we cannot assure access to such other cellular services or satellites or, if available, the ability to obtain the use of such other cellular services or satellites on favorable terms or in a timely manner. While cellular and satellite failures are infrequent, the operation of each is outside of our control.
In addition, in all of our businesses, we rely upon a number of significant third-party suppliers and vendors delivering parts, equipment and services on schedule in order for us to meet our contractual commitments. Furthermore, we outsource the manufacturing of certain of our sub-assemblies to third parties in the U.S., Europe, Central America and Asia. The willingness of such third parties to provide their services to us may be affected by various factors. Changes in law or regulation in any jurisdiction in which we operate may make the provision of key services to us unlawful in such jurisdictions. To the extent that third parties are unwilling or unable to provide services to us, this may have an adverse impact on our operations, financial performance and prospects. Failure of these third parties to meet their delivery commitments could result in us being in breach of, and subsequently losing, the affected customer orders, which loss could have a material adverse effect on our results of operations, cash flows and financial condition. We rely on network and/or telecommunications services for certain of our products. For instance, any disruption to our network or telecommunications could impact our linked or networked games, which could reduce our revenue.
In our Digital sports business, we rely on providers of third party sports data feeds. During the prior year, the outbreak of COVID-19 resulted in the suspension or cancellation of the majority of sporting events, which have mostly re-commenced during the current year, however potential future cancellations could negatively impact the financial condition of our sportsbook customers, their ability to purchase development and other services, their risk of payment default, or their spending levels as they seek to reduce costs, each of which could negatively impact our Digital business revenue.
In our Lottery, SciPlay and Digital businesses, we often rely on third-party data center providers to, among other things, host our remote game servers. Our Lottery, SciPlay and Digital businesses could be adversely impacted by breaches of or disruptions to these third-party data centers, including through disruptions in our RMG and lottery businesses, potential service level penalties with respect to our customers, reputational harm, the disclosure of proprietary information or the information of our customers or the theft of our or our customers assets, and to the extent any such data center provider was unable or unwilling to continue to provide services to us.

48


In certain regions, we enter into agreements with local distributors for the distribution of our land-based gaming products to one or more customers. Changes to these distributor relationships, including modification or termination of our agreements or difficulties with any such distributor could prevent us from delivering products or services to our customers on a timely basis, or at all, and could negatively impact our business. Additionally, the outbreak of COVID-19 and any resulting unfavorable social, political and economic conditions have negatively impacted our suppliers and contract manufacturers in varied ways in different communities, which could lead to interruption or cessation of services provided to us. For more information on the impact of the outbreak of COVID-19, see the risk factor captioned “The recent COVID-19 pandemic and similar health epidemics, contagious disease outbreaks and public perception thereof, significantly disrupted our operations and adversely affected and continue to adversely affect our business, results of operations, cash flows and financial condition.”
The provisions of our bylaws requiring exclusive forum in the Eighth Judicial District Court of Clark County, Nevada for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.
Our bylaws provide that, to the fullest extent permitted by law, and unless we consent in writing to the selection of an alternative forum, the Eighth Judicial District Court of Clark County, Nevada, will be the sole and exclusive forum for any actions, suits or proceedings, whether civil, administrative or investigative or that assert any claim or counterclaim (i) brought in our name or right or on our behalf, (ii) asserting a claim for breach of any fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) arising or asserting a claim arising pursuant to any provision of Nevada Revised Statutes (“NRS”), Chapters 78 or 92A or any provision of our articles of incorporation or our bylaws or (iv) asserting a claim governed by the internal affairs doctrine. Our bylaws further provide that, in the event that the Eighth Judicial District Court of Clark County, Nevada does not have jurisdiction over any such action, suit or proceeding, then any other state district court located in the State of Nevada will be the sole and exclusive forum therefor and in the event that no state district court in the State of Nevada has jurisdiction over any such action, suit or proceeding, then a federal court located within the State of Nevada will be the sole and exclusive forum therefor. Application of the choice of forum provisions may be limited in some instances by law. Section 27 of the Exchange Act establishes exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. In addition, Section 22 of the Securities Act provides that federal and state courts have concurrent jurisdiction over lawsuits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. To the extent our bylaws restrict the courts in which claims arising under the federal securities laws may be brought, there is uncertainty as to whether a court would enforce such a provision and we note that our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
Although we believe these provisions benefit us by providing increased consistency in the application of Nevada law in the types of lawsuits to which they apply, these provisions may have the effect of increasing the costs to bring a claim, and limiting a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors and officers. This may discourage lawsuits against us or our directors and officers. The enforceability of similar choice of forum provisions in other companies’ articles of incorporation and bylaws has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our bylaws to be inapplicable or unenforceable in such action. If a court were to find the choice of forum provisions contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition, or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There was no stock repurchase activity during the three months ended September 30, 2021.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.

49

Item 6. Exhibits
Exhibit
Number 		Description
2.1
2.2
3.1(a)
3.1(b)
3.1(c)
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7

50

4.8
4.9
4.10
4.11
4.12
4.13
4.14
10.1
10.2
10.3
10.4
Amendment No. 8, dated as of July 28, 2021, among Scientific Games International, Inc., as the borrower, Scientific Games Corporation, as a guarantor, the several banks and other financial institutions or entities from time to time party thereto and Bank of America, N.A., as administrative agent, collateral agent, issuing lender and swingline lender, which amended and restated the Credit Agreement, dated as of October 18, 2013 (as amended, supplemented, amended and restated or otherwise modified from time to time, including without limitation, by that certain Amendment No. 1, dated as of October 1, 2014, Amendment No. 2, dated as of February 14, 2017, Amendment No. 3, dated as of August 14, 2017, Amendment No. 4, dated as of February 14, 2018, Amendment No. 5, dated as of November 20, 2019, Amendment No. 6, dated as of May 8, 2020, and Amendment No. 7, dated as of October 8, 2020) (incorporated by reference to Exhibit 10.1 to Scientific Games Corporation's Current Report on Form 8-K filed on July 28, 2021).

51

31.1
31.2
32.1
32.2
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Label Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
(†) Filed herewith.
** Furnished herewith.
*Management contracts and compensation plans and arrangements.

52


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SCIENTIFIC GAMES CORPORATION
(Registrant)
By:
/s/ Constance P. James
Name:
Constance P. James
Title:
Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary
By:
/s/ Michael F. Winterscheidt
Name:
Michael F. Winterscheidt
Title:
Senior Vice President and Chief Accounting Officer
Dated:
November 9, 2021

53
Exhibit 4.1
SUPPLEMENTAL INDENTURE, dated as of August 19, 2021 (this “Supplemental Indenture”), by and among Scientific Games International, Inc., a Delaware corporation (the “Company”), the Guarantors (as defined in the indenture referred to herein), Scientific Games, Inc., a Delaware corporation (the “Additional Guarantor”), and Deutsche Bank Trust Company Americas, a New York banking corporation, as trustee and collateral agent (the “Trustee”).
WHEREAS, the Company, the original Guarantors and the Trustee executed an Indenture, dated as of October 17, 2017, as amended and supplemented (the “Indenture”), relating to the Company’s 5.000% Senior Secured Notes due 2025;
WHEREAS, under certain circumstances, Section 10.17 of the Indenture requires the Company to cause each of the Company’s Restricted Subsidiaries to execute and deliver to the Trustee a supplemental indenture and thereby become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture;
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture; and
WHEREAS, except as otherwise defined herein in this Supplemental Indenture, capitalized terms used in this Supplemental Indenture have the meanings specified in the Indenture;
NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Securities, as follows:
ARTICLE ONE

AMENDMENT
Section 1.01.  Amendment.  The Additional Guarantor hereby agrees to become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture.
ARTICLE TWO

MISCELLANEOUS PROVISIONS
Section 2.01.  Indenture.  Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all their terms shall remain in full force and effect.
Section 2.02.  Trustee’s Disclaimer.  The Trustee shall not be responsible for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Additional Guarantor.
Section 2.03.  Governing Law.  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.


Section 2.04.  Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but all of them together shall represent the same agreement.
Section 2.05.  Headings.  The Article and Section headings in this Supplemental Indenture are for convenience only and shall not affect the construction of this Supplemental Indenture.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first written above.
Company:
SCIENTIFIC GAMES INTERNATIONAL, INC.
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Additional Guarantor:
SCIENTIFIC GAMES, INC.
By: /s/ Patrick J. McHugh
Name: Patrick J. McHugh
Title: President, Secretary and Treasurer
Existing Guarantors:
SCIENTIFIC GAMES CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
[Signature Page to Supplemental Indenture – 2025 Senior Secured Notes]
SG GAMING, INC.
SCIENTIFIC GAMES PRODUCTS, INC.
SG GAMING NORTH AMERICA, INC.
DON BEST SPORTS CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Treasurer and Secretary
MDI ENTERTAINMENT, LLC
SCIENTIFIC GAMES NEW JERSEY, LLC
By: Scientific Games International, Inc., its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
NYX DIGITAL GAMING (USA), LLC
By: Scientific Games Corporation, its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
[Signature Page to Supplemental Indenture – 2025 Senior Secured Notes]

Trustee:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: /s/ Kathryn Fischer
Print Name: Kathryn Fischer
Its: Authorized Signatory
By:
/s/ Luke Russell
Print Name: Luke Russell
Its: Authorized Signatory
[Signature Page to Supplemental Indenture – 2025 Senior Secured Notes]
Exhibit 4.2
SUPPLEMENTAL INDENTURE, dated as of August 19, 2021 (this “Supplemental Indenture”), by and among Scientific Games International, Inc., a Delaware corporation (the “Company”), the Guarantors (as defined in the indenture referred to herein), Scientific Games, Inc., a Delaware corporation (the “Additional Guarantor”), and Deutsche Bank Trust Company Americas, a New York banking corporation, as trustee (the “Trustee”).
WHEREAS, the Company, the original Guarantors and the Trustee executed an Indenture, dated as of July 1, 2020, as amended and supplemented (the “Indenture”), relating to the Company’s 8.625% Senior Unsecured Notes due 2025;
WHEREAS, under certain circumstances, Section 10.17 of the Indenture requires the Company to cause each of the Company’s Restricted Subsidiaries to execute and deliver to the Trustee a supplemental indenture and thereby become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture;
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture; and
WHEREAS, except as otherwise defined herein in this Supplemental Indenture, capitalized terms used in this Supplemental Indenture have the meanings specified in the Indenture;
NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Securities, as follows:
ARTICLE ONE

AMENDMENT
Section 1.01.  Amendment.  The Additional Guarantor hereby agrees to become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture.
ARTICLE TWO

MISCELLANEOUS PROVISIONS
Section 2.01.  Indenture.  Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all their terms shall remain in full force and effect.
Section 2.02.  Trustee’s Disclaimer.  The Trustee shall not be responsible for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Additional Guarantor.
Section 2.03.  Governing Law.  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.


Section 2.04.  Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but all of them together shall represent the same agreement.
Section 2.05.  Headings.  The Article and Section headings in this Supplemental Indenture are for convenience only and shall not affect the construction of this Supplemental Indenture.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first written above.
Company:
SCIENTIFIC GAMES INTERNATIONAL, INC.
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Additional Guarantor:
SCIENTIFIC GAMES, INC.
By: /s/ Patrick J. McHugh
Name: Patrick J. McHugh
Title: President, Secretary and Treasurer
Existing Guarantors:
SCIENTIFIC GAMES CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
[Signature Page to Supplemental Indenture – 2025 Unsecured Notes]


SG GAMING, INC.
SCIENTIFIC GAMES PRODUCTS, INC.
SG GAMING NORTH AMERICA, INC.
DON BEST SPORTS CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Treasurer and Secretary
MDI ENTERTAINMENT, LLC
SCIENTIFIC GAMES NEW JERSEY, LLC
By: Scientific Games International, Inc., its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
NYX DIGITAL GAMING (USA), LLC
By: Scientific Games Corporation, its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer

[Signature Page to Supplemental Indenture – 2025 Senior Unsecured Notes]


Trustee:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: /s/ Kathryn Fischer
Print Name: Kathryn Fischer
Its: Authorized Signatory
By:
/s/ Luke Russell
Print Name: Luke Russell
Its: Authorized Signatory
[Signature Page to Supplemental Indenture – 2025 Senior Unsecured Notes]

Exhibit 4.3
SUPPLEMENTAL INDENTURE, dated as of August 19, 2021 (this “Supplemental Indenture”), by and among Scientific Games International, Inc., a Delaware corporation (the “Company”), the Guarantors (as defined in the indenture referred to herein), Scientific Games, Inc., a Delaware corporation (the “Additional Guarantor”), and Deutsche Bank Trust Company Americas, a New York banking corporation, as trustee, registrar and transfer agent (the “Trustee”).
WHEREAS, the Company, the original Guarantors, the Trustee and Deutsche Bank AG, London Branch, as paying agent, executed an Indenture, dated as of February 14, 2018, as amended and supplemented (the “Indenture”), relating to the Company’s 5.500% Senior Unsecured Notes due 2026
WHEREAS, under certain circumstances, Section 10.17 of the Indenture requires the Company to cause each of the Company’s Restricted Subsidiaries to execute and deliver to the Trustee a supplemental indenture and thereby become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture;
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture; and
WHEREAS, except as otherwise defined herein in this Supplemental Indenture, capitalized terms used in this Supplemental Indenture have the meanings specified in the Indenture;
NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Securities, as follows:
ARTICLE ONE

AMENDMENT
Section 1.01.  Amendment.  The Additional Guarantor hereby agrees to become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture.
ARTICLE TWO

MISCELLANEOUS PROVISIONS
Section 2.01.  Indenture.  Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all their terms shall remain in full force and effect.
Section 2.02.  Trustee’s Disclaimer.  The Trustee shall not be responsible for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Additional Guarantor.
Section 2.03.  Governing Law.  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.


Section 2.04.  Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but all of them together shall represent the same agreement.
Section 2.05.  Headings.  The Article and Section headings in this Supplemental Indenture are for convenience only and shall not affect the construction of this Supplemental Indenture.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first written above.

Company:
SCIENTIFIC GAMES INTERNATIONAL, INC.
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Additional Guarantor:
SCIENTIFIC GAMES, INC.
By: /s/ Patrick J. McHugh
Name: Patrick J. McHugh
Title: President, Secretary and Treasurer
Existing Guarantors:
SCIENTIFIC GAMES CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
[Signature Page to Supplemental Indenture – 2026 Euro Senior Unsecured Notes]


SG GAMING, INC.
SCIENTIFIC GAMES PRODUCTS, INC.
SG GAMING NORTH AMERICA, INC.
DON BEST SPORTS CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Treasurer and Secretary
MDI ENTERTAINMENT, LLC
SCIENTIFIC GAMES NEW JERSEY, LLC
By: Scientific Games International, Inc., its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
NYX DIGITAL GAMING (USA), LLC
By: Scientific Games Corporation, its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer


[Signature Page to Supplemental Indenture – 2026 Euro Senior Unsecured Notes]


Trustee:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: /s/ Kathryn Fischer
Print Name: Kathryn Fischer
Its: Authorized Signatory
By:
/s/ Luke Russell
Print Name: Luke Russell
Its: Authorized Signatory
[Signature Page to Supplemental Indenture – 2026 Euro Senior Unsecured Notes]

Exhibit 4.4
SUPPLEMENTAL INDENTURE, dated as of August 19, 2021 (this “Supplemental Indenture”), by and among Scientific Games International, Inc., a Delaware corporation (the “Company”), the Guarantors (as defined in the indenture referred to herein), Scientific Games, Inc., a Delaware corporation (the “Additional Guarantor”), and Deutsche Bank Trust Company Americas, a New York banking corporation, as trustee, collateral agent, registrar and transfer agent (the “Trustee”).
WHEREAS, the Company, the original Guarantors, the Trustee and Deutsche Bank AG, London Branch, as paying agent, executed an Indenture, dated as of February 14, 2018, as amended and supplemented (the “Indenture”), relating to the Company’s 3.375% Senior Secured Notes due 2026;
WHEREAS, under certain circumstances, Section 10.17 of the Indenture requires the Company to cause each of the Company’s Restricted Subsidiaries to execute and deliver to the Trustee a supplemental indenture and thereby become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture;
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture; and
WHEREAS, except as otherwise defined herein in this Supplemental Indenture, capitalized terms used in this Supplemental Indenture have the meanings specified in the Indenture;
NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Securities, as follows:
ARTICLE ONE

AMENDMENT
Section 1.01.  Amendment.  The Additional Guarantor hereby agrees to become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture.
ARTICLE TWO

MISCELLANEOUS PROVISIONS
Section 2.01.  Indenture.  Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all their terms shall remain in full force and effect.
Section 2.02.  Trustee’s Disclaimer.  The Trustee shall not be responsible for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Additional Guarantor.
Section 2.03.  Governing Law.  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.


Section 2.04.  Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but all of them together shall represent the same agreement.
Section 2.05.  Headings.  The Article and Section headings in this Supplemental Indenture are for convenience only and shall not affect the construction of this Supplemental Indenture.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first written above.

Company:
SCIENTIFIC GAMES INTERNATIONAL, INC.
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Additional Guarantor:
SCIENTIFIC GAMES, INC.
By: /s/ Patrick J. McHugh
Name: Patrick J. McHugh
Title: President, Secretary and Treasurer
Existing Guarantors:
SCIENTIFIC GAMES CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
[Signature Page to Supplemental Indenture – 2026 Euro Senior Secured Notes]

SG GAMING, INC.
SCIENTIFIC GAMES PRODUCTS, INC.
SG GAMING NORTH AMERICA, INC.
DON BEST SPORTS CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Treasurer and Secretary
MDI ENTERTAINMENT, LLC
SCIENTIFIC GAMES NEW JERSEY, LLC
By: Scientific Games International, Inc., its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
NYX DIGITAL GAMING (USA), LLC
By: Scientific Games Corporation, its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer

[Signature Page to Supplemental Indenture – 2026 Euro Senior Secured Notes]


Trustee:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: /s/ Kathryn Fischer
Print Name: Kathryn Fischer
Its: Authorized Signatory
By:
/s/ Luke Russell
Print Name: Luke Russell
Its: Authorized Signatory
[Signature Page to Supplemental Indenture – 2026 Euro Senior Secured Notes]
Exhibit 4.5
SUPPLEMENTAL INDENTURE, dated as of August 19, 2021 (this “Supplemental Indenture”), by and among Scientific Games International, Inc., a Delaware corporation (the “Company”), the Guarantors (as defined in the indenture referred to herein), Scientific Games, Inc., a Delaware corporation (the “Additional Guarantor”), and Deutsche Bank Trust Company Americas, a New York banking corporation, as trustee (the “Trustee”).
WHEREAS, the Company, the original Guarantors and the Trustee executed an Indenture, dated as of March 19, 2019, as amended and supplemented (the “Indenture”), relating to the Company’s 8.250% Senior Unsecured Notes due 2026;
WHEREAS, under certain circumstances, Section 10.17 of the Indenture requires the Company to cause each of the Company’s Restricted Subsidiaries to execute and deliver to the Trustee a supplemental indenture and thereby become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture;
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture; and
WHEREAS, except as otherwise defined herein in this Supplemental Indenture, capitalized terms used in this Supplemental Indenture have the meanings specified in the Indenture;
NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Securities, as follows:
ARTICLE ONE

AMENDMENT
Section 1.01.  Amendment.  The Additional Guarantor hereby agrees to become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture.
ARTICLE TWO

MISCELLANEOUS PROVISIONS
Section 2.01.  Indenture.  Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all their terms shall remain in full force and effect.
Section 2.02.  Trustee’s Disclaimer.  The Trustee shall not be responsible for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Additional Guarantor.
Section 2.03.  Governing Law.  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.


Section 2.04.  Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but all of them together shall represent the same agreement.
Section 2.05.  Headings.  The Article and Section headings in this Supplemental Indenture are for convenience only and shall not affect the construction of this Supplemental Indenture.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first written above.
Company:
SCIENTIFIC GAMES INTERNATIONAL, INC.
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Additional Guarantor:
SCIENTIFIC GAMES, INC.
By: /s/ Patrick J. McHugh
Name: Patrick J. McHugh
Title: President, Secretary and Treasurer
Existing Guarantors:
SCIENTIFIC GAMES CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
[Signature Page to Supplemental Indenture – 2026 Unsecured Notes]
SG GAMING, INC.
SCIENTIFIC GAMES PRODUCTS, INC.
SG GAMING NORTH AMERICA, INC.
DON BEST SPORTS CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Treasurer and Secretary
MDI ENTERTAINMENT, LLC
SCIENTIFIC GAMES NEW JERSEY, LLC
By: Scientific Games International, Inc., its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
NYX DIGITAL GAMING (USA), LLC
By: Scientific Games Corporation, its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer




[Signature Page to Supplemental Indenture – 2026 Unsecured Notes]

Trustee:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: /s/ Kathryn Fischer
Print Name: Kathryn Fischer
Its: Authorized Signatory
By:
/s/ Luke Russell
Print Name: Luke Russell
Its: Authorized Signatory

[Signature Page to Supplemental Indenture – 2026 Unsecured Notes]
Exhibit 4.6
SUPPLEMENTAL INDENTURE, dated as of August 19, 2021 (this “Supplemental Indenture”), by and among Scientific Games International, Inc., a Delaware corporation (the “Company”), the Guarantors (as defined in the indenture referred to herein), Scientific Games, Inc., a Delaware corporation (the “Additional Guarantor”), and Deutsche Bank Trust Company Americas, a New York banking corporation, as trustee (the “Trustee”).
WHEREAS, the Company, the original Guarantors and the Trustee executed an Indenture, dated as of November 26, 2019, as amended and supplemented (the “Indenture”), relating to the Company’s 7.000% Senior Unsecured Notes due 2028;
WHEREAS, under certain circumstances, Section 10.17 of the Indenture requires the Company to cause each of the Company’s Restricted Subsidiaries to execute and deliver to the Trustee a supplemental indenture and thereby become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture;
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture; and
WHEREAS, except as otherwise defined herein in this Supplemental Indenture, capitalized terms used in this Supplemental Indenture have the meanings specified in the Indenture;
NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Securities, as follows:
ARTICLE ONE

AMENDMENT
Section 1.01.  Amendment.  The Additional Guarantor hereby agrees to become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture.
ARTICLE TWO

MISCELLANEOUS PROVISIONS
Section 2.01.  Indenture.  Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all their terms shall remain in full force and effect.
Section 2.02.  Trustee’s Disclaimer.  The Trustee shall not be responsible for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Additional Guarantor.
Section 2.03.  Governing Law.  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.


Section 2.04.  Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but all of them together shall represent the same agreement.
Section 2.05.  Headings.  The Article and Section headings in this Supplemental Indenture are for convenience only and shall not affect the construction of this Supplemental Indenture.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first written above.
Company:
SCIENTIFIC GAMES INTERNATIONAL, INC.
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Additional Guarantor:
SCIENTIFIC GAMES, INC.
By: /s/ Patrick J. McHugh
Name: Patrick J. McHugh
Title: President, Secretary and Treasurer
Existing Guarantors:
SCIENTIFIC GAMES CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
[Signature Page to Supplemental Indenture – 2028 Notes]

SG GAMING, INC.
SCIENTIFIC GAMES PRODUCTS, INC.
SG GAMING NORTH AMERICA, INC.
DON BEST SPORTS CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Treasurer and Secretary
MDI ENTERTAINMENT, LLC
SCIENTIFIC GAMES NEW JERSEY, LLC
By: Scientific Games International, Inc., its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
NYX DIGITAL GAMING (USA), LLC
By: Scientific Games Corporation, its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer



[Signature Page to Supplemental Indenture – 2028 Notes]

Trustee:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: /s/ Kathryn Fischer
Print Name: Kathryn Fischer
Its: Authorized Signatory
By:
/s/ Luke Russell
Print Name: Luke Russell
Its: Authorized Signatory
[Signature Page to Supplemental Indenture – 2028 Senior Unsecured Notes]
Exhibit 4.7
SUPPLEMENTAL INDENTURE, dated as of August 19, 2021 (this “Supplemental Indenture”), by and among Scientific Games International, Inc., a Delaware corporation (the “Company”), the Guarantors (as defined in the indenture referred to herein), Scientific Games, Inc., a Delaware corporation (the “Additional Guarantor”), and Deutsche Bank Trust Company Americas, a New York banking corporation, as trustee (the “Trustee”).
WHEREAS, the Company, the original Guarantors and the Trustee executed an Indenture, dated as of November 26, 2019, as amended and supplemented (the “Indenture”), relating to the Company’s 7.250% Senior Unsecured Notes due 2029;
WHEREAS, under certain circumstances, Section 10.17 of the Indenture requires the Company to cause each of the Company’s Restricted Subsidiaries to execute and deliver to the Trustee a supplemental indenture and thereby become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture;
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture; and
WHEREAS, except as otherwise defined herein in this Supplemental Indenture, capitalized terms used in this Supplemental Indenture have the meanings specified in the Indenture;
NOW, THEREFORE, in consideration of the above premises, each party agrees, for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Securities, as follows:
ARTICLE ONE

AMENDMENT
Section 1.01.  Amendment.  The Additional Guarantor hereby agrees to become a Guarantor bound by the Guarantee of the Securities on the terms set forth in Article Ten of the Indenture.
ARTICLE TWO

MISCELLANEOUS PROVISIONS
Section 2.01.  Indenture.  Except as amended hereby, the Indenture and the Securities are in all respects ratified and confirmed and all their terms shall remain in full force and effect.
Section 2.02.  Trustee’s Disclaimer.  The Trustee shall not be responsible for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Additional Guarantor.
Section 2.03.  Governing Law.  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.


Section 2.04.  Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but all of them together shall represent the same agreement.
Section 2.05.  Headings.  The Article and Section headings in this Supplemental Indenture are for convenience only and shall not affect the construction of this Supplemental Indenture.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first written above.

Company:
SCIENTIFIC GAMES INTERNATIONAL, INC.
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
Additional Guarantor:
SCIENTIFIC GAMES, INC.
By: /s/ Patrick J. McHugh
Name: Patrick J. McHugh
Title: President, Secretary and Treasurer
Existing Guarantors:
SCIENTIFIC GAMES CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
[Signature Page to Supplemental Indenture – 2029 Unsecured Notes]

SG GAMING, INC.
SCIENTIFIC GAMES PRODUCTS, INC.
SG GAMING NORTH AMERICA, INC.
DON BEST SPORTS CORPORATION
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Treasurer and Secretary
MDI ENTERTAINMENT, LLC
SCIENTIFIC GAMES NEW JERSEY, LLC
By: Scientific Games International, Inc., its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer
NYX DIGITAL GAMING (USA), LLC
By: Scientific Games Corporation, its sole member/manager
By: /s/ Michael C. Eklund
Name: Michael C. Eklund
Title: Executive Vice President, Chief Financial
Officer, Secretary and Treasurer




[Signature Page to Supplemental Indenture – 2029 Senior Unsecured Notes]


Trustee:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: /s/ Kathryn Fischer
Print Name: Kathryn Fischer
Its: Authorized Signatory
By:
/s/ Luke Russell
Print Name: Luke Russell
Its: Authorized Signatory
[Signature Page to Supplemental Indenture – 2029 Senior Unsecured Notes]
Exhibit 10.2

Amendment to Employment Agreement
This Amendment to Employment Agreement (this “Amendment”) is made as of September 15, 2021 by and between Scientific Games Corporation, a Nevada corporation, (the “Company”) and Patrick J. McHugh (“Executive”).
WHEREAS, the Company and Executive entered into an Amended and Restated Employment Agreement dated as of January 1, 2019, which was then amended on February 26, 2020, on March 24, 2020 and on June 30, 2020 (as amended, the “Agreement”);
NOW THEREFORE, in consideration of the premises and the mutual benefits to be derived herefrom and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1.Change in Term of Employment. The parties agree that Section 1 is amended by deleting the second sentence of Section 1 (which defines the term of employment of Executive under the Agreement) and replacing it with the following sentence.
“This term of employment of Executive under this Agreement (“the Term”) shall be the period commencing on the Effective Date and ending on December 31, 2024, as may be extended in accordance with this Section 1 and subject to earlier termination in accordance with Section 4.”
2.Equity Awards. Section 3(c) is amended by deleting “approximately 100% of Executive’s base salary” and replacing it with “approximately 125% of Executive’s base salary.” Section 3(c) is further amended by adding the following sentence to the end of Section 3(c):
“All equity awards granted pursuant to this Agreement shall be subject to the terms of the Company’s standard form of award agreement under the Incentive Compensation Plan modified to provide that, if Executive remains employed by the Company through the date when he becomes 65 years of age and retires at any time thereafter, any unvested equity held by Executive as of that retirement date shall vest ten days after such retirement, subject to the achievement of any applicable performance criteria; provided that, settlement of any such awards shall be in accordance with Section 4(f).”
3.Mitigation. Section 4(h) of the Agreement is hereby deleted and replaced with the following:
“(h)    Mitigation. In the event the Executive’s employment is terminated in accordance with Sections 4(e) or (f) and Executive is employed by or otherwise engaged to provide services to another person or entity at any time prior to the end of any period of payments to or on behalf of Executive contemplated by this Section 4, (i) Executive shall immediately advise the Company of such employment or engagement and any health insurance benefits to which he is entitled in connection therewith, and (ii) the Company’s obligation to make continued health insurance payments to or on behalf of Executive shall be reduced by any health insurance coverage obtained by Executive during the applicable period through such other employment or engagement (without regard to when such coverage is paid).”
1


4.Except as set forth in this Amendment, all terms and conditions of the Agreement shall remain unchanged and in full force and effect in accordance with their terms. All references to the “Agreement” in the Agreement shall refer to the Agreement as amended by this Amendment. Any defined terms used in this Amendment and not defined herein shall have the meaning as set forth in the Agreement.
5.This Amendment may be executed in counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by electronic transmission shall be effective as delivery of a manually executed counterpart of this Amendment.
IN WITNESS WHEREOF, each of the parties hereto has duly executed this Amendment as of September 15, 2021.

SCIENTIFIC GAMES CORPORATION
By: /s/ James Sottile
Name: James Sottile
Title: Executive Vice President and Chief Legal Officer
/s/ Patrick J. McHugh
Patrick J. McHugh
2

Exhibit 10.3
Amended and Restated Employment Agreement
This Amended and Restated Employment Agreement (this “Agreement”) is made as of October 15, 2021 by and between Scientific Games Corporation, a Nevada corporation (the “Company”), and Constance P. James (“Executive”).
WHEREAS, Executive is currently employed by the Company pursuant to an Employment Agreement dated as of September 5, 2019 (together with its amendments, the “Prior Employment Agreement”); and
WHEREAS, the Company and Executive wish to enter into this Agreement as of the Effective Date, which shall supersede and replace the Prior Employment Agreement in all respects;
NOW, THEREFORE, in consideration of the premises and mutual benefits to be derived herefrom and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Company and Executive, the parties agree as follows.
1.Employment; Term. The Company hereby agrees to employ Executive, and Executive hereby accepts employment with the Company, in accordance with and subject to the terms and conditions set forth in this Agreement. This term of employment of Executive under this Agreement (the “Term”) shall be the period commencing on October 15, 2021 (the “Effective Date”) and ending on October 14, 2024, as may be extended in accordance with this Section 1 and subject to earlier termination in accordance with Section 4. The Term shall be extended automatically without further action by either party by one (1) additional year (added to the end of the Term), and then on each succeeding annual anniversary thereafter, unless either party shall have given written notice to the other party prior to the date which is sixty (60) days prior to the date upon which such extension would otherwise have become effective electing not to further extend the Term, in which case Executive’s employment shall terminate on the date upon which such extension would otherwise have become effective, unless earlier terminated in accordance with Section 4.
2.Position and Duties. During the Term, Executive will serve as Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary of the Company and as an officer or director of any subsidiary or affiliate of the Company if elected or appointed to such positions, as applicable, during the Term. In such capacities, Executive shall perform such duties and shall have such responsibilities as are normally associated with such positions, and as otherwise may be assigned to Executive from time to time by the Company’s President and Chief Executive Officer or upon the authority of the board of directors of the Company (the “Board”). The Company directs the Executive not to, and the Executive covenants that Executive shall not, employ the trade secrets or proprietary information of any other person, including but not limited to current and former employers, in connection with Executive's employment by the Company without such person's written authorization. Subject to Section 4(e), Executive’s functions, duties and responsibilities are subject to reasonable changes as the Company may in good faith determine from time to time. Executive hereby agrees to accept such employment and to serve the Company and its subsidiaries and affiliates to the best of Executive’s ability in such capacities, devoting all of Executive’s business time to such employment.

3.Compensation.
(a)Base Salary. During the Term, Executive will receive a base salary of seven hundred fifty thousand U.S. dollars ($750,000) per annum (pro-rated for any partial year), payable in accordance with the Company’s regular payroll practices and subject to such deductions or amounts to be withheld as required by applicable law and regulations or as may be agreed to by Executive. In the event that the Company, in its sole discretion, from time to time determines to increase Executive’s base salary, such increased amount shall, from and after the effective date of such increase, constitute the “base salary” of Executive for purposes of this Agreement.
(b)Incentive Compensation.  Executive shall have the opportunity annually to earn incentive compensation (“Incentive Compensation”) during the Term in amounts determined by the Compensation Committee of the Board (the “Compensation Committee”) in its sole discretion in accordance with the applicable incentive compensation plan of the Company as in effect from time to time (the “Incentive Compensation Plan”). Under such Incentive Compensation Plan, Executive shall have the opportunity annually to earn up to 75% of Executive’s base salary as Incentive Compensation at “target opportunity” (“Target Bonus”) and up to 200% of Executive’s Target Bonus opportunity as Incentive Compensation at “maximum opportunity” on the terms and subject to the conditions of such Incentive Compensation Plan (any such Incentive Compensation to be subject to such deductions or amounts to be withheld as required by applicable law and regulations or as may be agreed to by Executive). For the avoidance of doubt, Executive’s Incentive Compensation for 2021 shall be based on a “blended” rate of, for the period prior to the Effective Date, the Target Bonus and metrics applicable to Executive prior to the Effective Date and, for the period beginning on the Effective Date, the Target Bonus set forth herein and the metrics applicable to the Chief Financial Officer of the Company under the 2021 SGICP.
(c)Equity Awards.
(i)The Company will grant to Executive a special equity award for 2021 consisting of 10,000 time-vesting RSUs (the “2021 Special Equity Award”). The 2021 Special Equity Award shall vest as follows: 3,334 RSUs on October 14, 2022, 3,333 RSUs on October 14, 2023, and 3,333 RSUs on October 14, 2024. The 2021 Special Equity Award will be granted pursuant to the Incentive Compensation Plan. The 2021 Special Equity Award will be evidenced by the execution of the Company’s standard form of award agreement under the Incentive Compensation Plan. The grant of the 2021 Special Equity Award will be made within ten (10) days after the Effective Date if the Company is not in a blackout period on the Effective Date. If the Company is in a blackout period on the Effective Date, them the 2021 Special Equity Award will be made within three (3) trading days after the Company’s next trading window opens.
(ii)Executive shall be eligible to receive an annual grant of stock options, restricted stock units or other equity awards with a grant date fair value equal to approximately 125% of Executive's base salary, as measured in accordance with the Company's standard practices of measuring equity value, and in accordance with the applicable plans and programs of the Company for executives of the Company and subject to the Company's right to at any time amend or terminate any such plan or program, so long as any such change does not adversely affect any accrued or vested interest of Executive under any such plan or program. All equity awards granted pursuant to this
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Agreement shall be subject to the terms of the Company’s standard form of award agreement under this Incentive Compensation Plan, modified to provide that, if Executive remains employed by the Company through the date when she becomes 65 years of age and retires at any time thereafter, any unvested equity held by Executive as of that retirement date shall vest ten days after such retirement, subject to the achievement of any applicable performance criteria; provided that, settlement of any such awards shall be in accordance with Section 4(f).
(d)Expense Reimbursement. Subject to Section 3(f), during the Term the Company shall reimburse Executive for all reasonable and necessary travel and other business expenses incurred by Executive in connection with the performance of Executive’s duties under this Agreement, on a timely basis upon timely submission by Executive of vouchers therefor in accordance with the Company’s standard policies and procedures.
(e)Employee Benefits. During the Term, Executive shall be entitled to participate, without discrimination or duplication, in any and all medical insurance, group health, disability, life insurance, accidental death and dismemberment insurance, 401(k) or other retirement, deferred compensation, stock ownership and such other plans and programs which are made generally available by the Company to similarly situated executives of the Company in accordance with the terms of such plans and programs and subject to the right of the Company (or its applicable affiliate) to at any time amend or terminate any such plan or program. Executive shall be entitled to paid time off, holidays and any other time off in accordance with the Company’s policies in effect from time to time.
(f)Taxes and Internal Revenue Code 409A. Payment of all compensation and benefits to Executive under this Agreement shall be subject to all legally required and customary withholdings. The Company makes no representations or warranties and shall have no responsibility regarding the tax implications of the compensation and benefits to be paid to Executive under this Agreement, including under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and applicable administrative guidance and regulations (“Section 409A”). Section 409A governs plans and arrangements that provide “nonqualified deferred compensation” (as defined under the Code) which may include, among others, nonqualified retirement plans, bonus plans, stock option plans, employment agreements and severance agreements. The Company reserves the right to pay compensation and provide benefits under this Agreement (including under Section 3 and Section 4) in amounts, at times and in a manner that minimizes taxes, interest or penalties as a result of Section 409A. In addition, in the event any benefits or amounts paid to Executive hereunder are deemed to be subject to Section 409A, Executive consents to the Company adopting such conforming amendments as the Company deems necessary, in its reasonable discretion, to comply with Section 409A (including delaying payment until six (6) months following termination of employment). To the extent any payments of money or other benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A, such payments or other benefits may be deferred if deferral will make such payment or other benefits compliant under Section 409A, or otherwise such payments or other benefits shall be restructured, to the extent permissible under Section 409A, in a manner determined by the Company that does not cause such an accelerated or additional tax. To the extent any reimbursements or in-kind benefits due to Executive under this Agreement constitute deferred compensation under Section 409A, any such reimbursements or in-kind benefits shall be paid to Executive in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv). Each payment made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A.
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(g)Relocation. As of the Effective Date, Executive is receiving the Company’s executive-level relocation benefits in connection with Executive’s prior relocation to Las Vegas, Nevada, and Executive shall continue to receive those specified benefits.
4.Termination of Employment. Executive’s employment may be terminated at any time prior to the end of the Term under the terms described in this Section 4, and the Term shall automatically terminate upon any termination of Executive’s employment. For purposes of clarification, except as provided in Section 5.6, all stock options, restricted stock units and other equity-based awards will be governed by the terms of the plans, grant agreements and programs under which such options, restricted stock units or other awards were granted on any termination of the Term and Executive’s employment with the Company.
(a)Termination by Executive for Other than Good Reason. Executive may terminate Executive’s employment hereunder for any reason or no reason upon 60 days’ prior written notice to the Company referring to this Section 4(a); provided, however, that a termination by Executive for “Good Reason” (as defined below) shall not constitute a termination by Executive for other than Good Reason pursuant to this Section 4(a). In the event Executive terminates Executive’s employment for other than Good Reason, Executive shall be entitled only to the following compensation and benefits (the payments set forth in Sections 4(a)(i) – 4(a)(iii), collectively, the “Standard Termination Payments”):
(i)any accrued but unpaid base salary for services rendered by Executive to the date of such termination, payable in accordance with the Company’s regular payroll practices and subject to such deductions or amounts to be withheld as required by applicable law and regulations or as may be agreed to by Executive;
(ii)any vested non-forfeitable amounts owing or accrued at the date of such termination under benefit plans, programs and arrangements set forth or referred to in Section 3(e) in which Executive participated during the Term (which will be paid under the terms and conditions of such plans, programs, and arrangements (and agreements and documents thereunder)); and
(iii)reasonable business expenses and disbursements incurred by Executive prior to such termination will be reimbursed in accordance with Section 3(d).
(b)Termination By Reason of Death. If Executive dies during the Term, the last beneficiary designated by Executive by written notice to the Company (or, in the absence of such designation, Executive’s estate) shall be entitled only to the Standard Termination Payments, including any benefits that may be payable under any life insurance benefit of Executive for which the Company pays premiums, in accordance with the terms of any such benefit and subject to the right of the Company (or its applicable affiliate) to at any time amend or terminate any such benefit.
(c)Termination By Reason of Total Disability. The Company may terminate Executive’s employment in the event of Executive’s “Total Disability.” For purposes of this Agreement, “Total Disability” shall mean Executive’s (1) becoming eligible to receive benefits under any long-term disability insurance program of the Company or (2) failure to perform the duties and responsibilities contemplated under this Agreement for a period of more than 180 days during any consecutive 12-month period due to physical or mental incapacity or impairment. In the event that Executive’s employment is terminated by the Company by reason of Total Disability, Executive shall not be entitled to receive any compensation or benefits under this Agreement except for the Standard Termination Payments; provided,
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however, that the Executive may separately be entitled to disability payments pursuant to a disability plan sponsored or maintained by the Company or any of its affiliates providing benefits to Executive.
(d)Termination by the Company for Cause. The Company may terminate the employment of Executive at any time for “Cause.” For purposes of this Agreement, “Cause” shall mean: (i) gross neglect by Executive of Executive’s duties hereunder; (ii) Executive’s indictment for or conviction of a felony, or any non-felony crime or offense involving the property of the Company or any of its subsidiaries or affiliates or evidencing moral turpitude; (iii) willful misconduct by Executive in connection with the performance of Executive’s duties hereunder; (iv) intentional breach by Executive of any material provision of this Agreement; (v) material violation by Executive of a material provision of the Company’s Code of Business Conduct; (vi) Executive’s failure to qualify (or failure to remain qualified) under any suitability or licensing requirements to which Executive may be subject by reason of Executive’s position with the Company; (vii) Executive’s failure to cooperate with or respond to any regulatory requests for information in connection with such licensing requirements; (viii) Executive’s failure to timely file required license applications; (ix) the denial of any license application submitted by Executive; or (x) any other willful or grossly negligent conduct of Executive that would make the continued employment of Executive by the Company materially prejudicial to the best interests of the Company. In the event Executive’s employment is terminated for “Cause,” Executive shall not be entitled to receive any compensation or benefits under this Agreement except for the Standard Termination Payments.
(e)Termination by the Company without Cause or by Executive for Good Reason. The Company may terminate Executive’s employment at any time without Cause, for any reason or no reason, and Executive may terminate Executive’s employment for “Good Reason.” For purposes of this Agreement “Good Reason” shall mean that, without Executive’s prior written consent, any of the following shall have occurred: (A) a material adverse change to Executive’s positions, titles, offices, or duties following the Effective Date from those set forth in Section 2, except, in such case, in connection with the termination of Executive’s employment for Cause or due to Total Disability, death or expiration of the Term; (B) a material decrease in base salary or material decrease in Executive’s Incentive Compensation opportunity provided under this Agreement; or (C) any other material failure by the Company to perform any material obligation under, or material breach by the Company of any material provision of, this Agreement; provided, however, that a termination by Executive for Good Reason under any of clauses (A) through (C) of this Section 4(e) shall not be considered effective unless Executive shall have provided the Company with written notice of the specific reasons for such termination within thirty (30) days after Executive has knowledge of the event or circumstance constituting Good Reason and the Company shall have failed to cure the event or condition allegedly constituting Good Reason within thirty (30) days after such notice has been given to the Company and Executive actually terminates her employment within one (1) year following the initial occurrence of the event giving rise to Good Reason. In the event that Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason (and not, for the avoidance of doubt, in the event of a termination pursuant to Section 4(a), (b), (c) or (d) or due to or upon the expiration of the Term), the Company shall pay or provide the following amounts to Executive:
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(i)the Standard Termination Payments;
(ii)an amount equal to the sum of (A) Executive’s base salary then in effect and (B) an amount equal to the highest annual Incentive Compensation paid to Executive (if any) in respect of the two (2) most recent fiscal years of the Company but not more than Executive’s Target Bonus for the-then current fiscal year (such amount under this sub-clause (B), the “Severance Bonus Amount”), such amount under this clause (ii) payable in substantially equal installments over a period of twelve (12) months after such termination in accordance with Section 4(f); provided that, to the extent paying any portion of such amount in accordance with the foregoing schedule would constitute an impermissible deferral of compensation under Section 409A, then such portion shall be payable at a time that would not result in a deferral of compensation and that is as near as possible to the payment timing contemplated by the foregoing;
(iii)in lieu of any Incentive Compensation for the year in which such termination occurs, payment of an amount equal to (A) the Incentive Compensation (if any) which would have been payable to Executive had Executive remained in employment with the Company during the entire year in which such termination occurred, multiplied by (B) a fraction the numerator of which is the number of days Executive was employed in the year in which such termination occurs and the denominator of which is the total number of days in the year in which such termination occurs, payable when bonuses are paid to other executives of the Company, but no later than March 15 following the end of the year in which such termination occurs; and
(iv)if Executive elects to continue medical coverage under the Company’s group health plan in accordance with COBRA, the full monthly premiums for such coverage on a monthly basis until the earlier of: (A) a period of twelve (12) months has elapsed; or (B) Executive is eligible for medical coverage under a plan provided by a new employer
(f)Expiration of Term of Agreement. In the event Executive’s employment is terminated by the Company at the end of the Term, the Company shall pay or provide the following amounts to Executive:
(i)the Standard Termination Payments;
(ii)an amount equal to the Executive’s base salary payable in accordance with the Company’s normal payroll practices over a period of 12 months after such termination in accordance with Section 4(g);
(iii)no later than March 15 following the end of the year in which such termination occurs, in lieu of any Incentive Compensation for the year in which such termination occurs, payment of an amount equal to (A) the Incentive Compensation which would have been payable to Executive had Executive remained in employment with the Company during the entire year in which such termination occurred, multiplied by (B) a fraction the numerator of which is the number of days Executive was employed in the year in which such termination occurs and the denominator of which is the total number of days in the year in which such termination occurs; and
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(iv)if Executive elects to continue medical coverage under the Company’s group health plan in accordance with COBRA, the full monthly premiums for such coverage on a monthly basis until the earlier of: (A) a period of twelve (12) months has elapsed; or (B) Executive is eligible for medical coverage under a plan provided by a new employer.
(g)Timing of Certain Payments under Section 4. For purposes of Section 409A, references herein to the Executive’s “termination of employment” shall refer to Executive’s separation of services with the Company within the meaning of Treas. Reg. Section 1.409A-1(h). If at the time of Executive’s separation of service with the Company other than as a result of Executive’s death, (i) Executive is a “specified employee” (as defined in Section 409A(a)(2)(B)(i) of the Code), (ii) one or more of the payments or benefits received or to be received by Executive pursuant to this Agreement would constitute deferred compensation subject to Section 409A, and (iii) the deferral of the commencement of any such payments or benefits otherwise payable hereunder as a result of such separation of service is necessary in order to prevent any accelerated or additional tax under Section 409A, such payments may be made as follows: (i) no payments for a six-month period following the date of Executive’s separation of service with the Company; (ii) an amount equal to the aggregate sum that would have been otherwise payable during the initial six-month period paid in a lump sum on the first payroll date following six (6) months following the date of Executive’s separation of service with the Company (subject to such deductions or amounts to be withheld as required by applicable law and regulations); and (iii) during the period beginning six (6) months following Executive’s separation of service with the Company through the remainder of the applicable period, payment of the remaining amount due in equal installments in accordance with the Company’s standard payroll practices (subject to such deductions or amounts to be withheld as required by applicable law and regulations).
(h)Mitigation. In the event the Executive’s employment is terminated in accordance with Section 4(e) and Executive is employed by or otherwise engaged to provide services to another person or entity at any time prior to the end of any period of payments to or on behalf of Executive contemplated by this Section 4, (i) Executive shall immediately advise the Company of such employment or engagement and any health insurance benefits to which she is entitled in connection therewith, and (ii) the Company’s obligation to make continued health insurance payments to or on behalf of Executive shall be reduced by any health insurance coverage obtained by Executive during the applicable period through such other employment or engagement (without regard to when such coverage is paid)
(i)Set-Off. To the fullest extent permitted by law and provided an acceleration of income or the imposition of an additional tax under Section 409A would not result, any amounts otherwise due to Executive hereunder (including any payments pursuant to this Section 4) shall be subject to set-off with respect to any amounts Executive otherwise owes the Company or any subsidiary or affiliate thereof.
(j)No Other Benefits or Compensation.  Except as may be specifically provided under this Agreement, under any other effective written agreement between Executive and the Company, or under the terms of any plan or policy applicable to Executive, Executive shall have no right to receive any other compensation from the Company or any subsidiary or affiliate thereof, or to participate in any other plan, arrangement or benefit provided by the Company or any subsidiary or affiliate thereof, with respect to any future period after such termination or resignation. Executive acknowledges and agrees that Executive is entitled to no compensation or benefits from the Company or any of its subsidiaries or affiliates of any kind or nature whatsoever in respect of periods prior to the date of this Agreement.
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(k)Release of Employment Claims; Compliance with Section 5. Executive agrees, as a condition to receipt of any termination payments provided for in this Section 4 (other than the Standard Termination Payments), that Executive will execute a general release agreement, in a form reasonably satisfactory to the Company, releasing any and all claims arising out of Executive’s employment and the termination of such employment. The Company shall provide Executive with the proposed form of general release agreement referred to in the immediately preceding sentence no later than five (5) days following the date of termination. Executive shall thereupon have at least 21 days to consider such general release agreement and, if Executive executes such general release agreement, shall have seven (7) days after execution of such general release agreement to revoke such general release agreement. Absent such revocation, such general release agreement shall become binding on Executive. If Executive does not revoke such general release agreement, payments contingent on such general release agreement shall be paid on the later of the 60th day after the date of termination or the date such payments are otherwise scheduled to be paid pursuant to this Agreement (including pursuant to Section 4(g) hereof). The Company’s obligation to make any termination payments and benefits provided for in this Section 4 (other than the Standard Termination Payments) shall immediately cease if Executive willfully or materially breaches Section 5.1, 5.2 , 5.3, 5.4, or 5.8.
(l)Section 280G. If the aggregate of all amounts and benefits due to the Executive under this Agreement or any other plan, program, agreement or arrangement of the Company or any of its affiliates, which, if received by the Executive in full, would constitute “parachute payments,” as such term is defined in and under Section 280G of the Code (collectively, “Change in Control Benefits”), reduced by all Federal, state and local taxes applicable thereto, including the excise tax imposed pursuant to Section 4999 of the Code, is less than the amount the Executive would receive, after all such applicable taxes, if the Executive received aggregate Change in Control Benefits equal to an amount which is $1.00 less than three (3) times the Executive's “base amount,” as defined in and determined under Section 280G of the Code, then such Change in Control Benefits shall be reduced or eliminated to the extent necessary so that the Change in Control Benefits received by the Executive will not constitute parachute payments. If a reduction in the Change in Control Benefits is necessary, reduction shall occur in the following order unless the Executive elects in writing a different order, subject to the Company's consent (which shall not be unreasonably withheld or delayed): (i) severance payment based on multiple of base salary and/or Target Bonus; (ii) other cash payments; (iii) any pro-rated bonus paid as severance; (iv) acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of stock subject to the option, provided such options are not permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (v) any equity awards accelerated or otherwise valued at full value, provided such equity awards are not permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vi) acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of stock subject to the option, provided such options are permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vii) acceleration of vesting of all other stock options and equity awards; and (viii) within any category, reductions shall be from the last due payment to the first.
It is possible that after the determinations and selections made pursuant to the preceding paragraph that the Executive will receive Change in Control Benefits that are, in the aggregate, either more or less than the amounts contemplated by the preceding paragraph (hereafter referred to as an “Excess Payment” or “Underpayment,” respectively). If there is an Excess Payment, the Executive shall promptly repay the Company an amount consistent with this paragraph. If there is an Underpayment, the Company shall pay the Executive an amount consistent with this paragraph.
5.Noncompetition; Non-solicitation; Nondisclosure; etc.
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5.1 Noncompetition; Non-solicitation.
(a)Executive acknowledges the highly competitive nature of the Company’s business and that access to the Company’s confidential records and proprietary information renders Executive special and unique within the Company’s industries. In consideration of the amounts that may hereafter be paid to Executive pursuant to this Agreement (including Sections 3 and 4), Executive agrees that during the Term (including any extensions thereof) and during the Covered Time (as defined in Section 5.1(e)), Executive, alone or with others, will not, directly or indirectly, engage (as owner, investor, partner, stockholder, employer, employee, consultant, advisor, director or otherwise) in any Competing Business. For purposes of this Section 5, “Competing Business” shall mean any business or operations: (i) (A) involving the design, development, manufacture, production, sale, lease, license, provision, operation or management (as the case may be) of (1) instant lottery tickets or games or any related marketing, warehouse, distribution, category management or other services or programs; (2) lottery-related terminals or vending machines (whether clerk-operated, self-service or otherwise), (3) gaming machines, terminals or devices (including video or reel spinning slot machines, video poker machines, video lottery terminals and fixed odds betting terminals), (4) lottery, video gaming (including server-based gaming), sports betting or other wagering or gaming systems, regardless of whether such systems are land-based, internet-based or mobile (including control and monitoring systems, local or wide-area progressive systems and redemption systems); (5) lottery-, real money gaming- or social gaming-related proprietary or licensed content (including themes, entertainment and brands), platforms, websites and loyalty and customer relationship management programs regardless of whether any of the foregoing are land-based, internet-based or mobile-based; (6) social casino games or websites or mobile phone or tablet applications (or similar known, or hereafter existing, technologies) featuring social casino games or any related marketing, distribution, or other services or programs; (7) interactive casino gaming products or services, including interactive casino-game themed games and platforms for websites or mobile phone or tablet applications (or similar known, or hereafter existing, technologies); (8) gaming utility products (including shufflers, card-reading shoes, deck checkers and roulette chip sorters), table games (including live, simulated, online, social gaming, interactive and electronic) and related products and services; (9) slot accounting, casino management, casino marketing, player tracking, lottery, video lottery, bingo or similar gaming- or casino-related systems and related peripheral hardware, software and services; (10) prepaid cellular or other phone cards; or (11) ancillary products (including equipment, hardware, software, marketing materials, chairs and signage) or services (including field service, maintenance and support) related to any of the foregoing under sub-clauses (1) through (10) above; or (B) in which the Company is then or was within the previous 12 months engaged, or in which the Company, to Executive’s knowledge, contemplates to engage in during the Term or the Covered Time; (ii) in which Executive was engaged or involved (whether in an executive or supervisory capacity or otherwise) on behalf of the Company or with respect to which Executive has obtained proprietary or confidential information; and (iii) which were conducted anywhere in the United States or in any other geographic area in which such business was conducted or contemplated to be conducted by the Company. Notwithstanding anything to the contrary in the foregoing, the holding of up to one percent (1%) of the outstanding equity in a publicly traded entity for passive investment purposes shall not, in and of itself, be construed as engaging in a Competing Business.
(b)In further consideration of the amounts that may hereafter be paid to Executive pursuant to this Agreement (including Sections 3 and 4), Executive agrees that, during the Term (including any extensions thereof) and during the Covered Time, Executive shall not, directly or indirectly: (i) solicit or attempt to induce any of the employees, agents, consultants or representatives of the Company to terminate his, her, or its relationship with the Company; (ii) solicit or attempt to induce any of the employees, agents, consultants or representatives of the Company to become employees,
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agents, consultants or representatives of any other person or entity; or (iii) solicit or attempt to induce any customer, vendor or distributor of the Company to curtail or cancel any business with the Company; or (iv) hire any person who, to Executive’s actual knowledge, is, or was within 180 days prior to such hiring, an employee of the Company. Sections (i) and (ii) are limited to employees, agents, consultants and representatives with whom Executive had material contact for the purpose of performing Executive’s job duties or about whom Executive obtained confidential information during Executive’s employment. Section (iii) is limited to customers, vendors and distributors with whom Executive had material contact for the purpose of performing her job duties, or about whom Executive obtained confidential information during her employment.
(c)During the Term (including any extensions thereof) and during the Covered Time, Executive agrees that upon the earlier of Executive’s (i) negotiating with any Competitor (as defined below) concerning the possible employment of Executive by the Competitor, (ii) responding to (other than for the purpose of declining) an offer of employment from a Competitor, or (iii) becoming employed by a Competitor, (A) Executive will provide copies of Section 5 of this Agreement to the Competitor, and (B) in the case of any circumstance described in (iii) above occurring during the Covered Time, and in the case of any circumstance described in (i) or (ii) above occurring during the Term or during the Covered Time, Executive will promptly provide notice to the Company of such circumstances. Executive further agrees that the Company may provide notice to a Competitor of Executive’s obligations under this Agreement. For purposes of this Agreement, “Competitor” shall mean any person or entity (other than the Company, its subsidiaries or affiliates) that engages, directly or indirectly, in the United States or any other geographic area in any Competing Business.
(d)Executive understands that the restrictions in this Section 5.1 may limit Executive’s ability to earn a livelihood in a business similar to the business of the Company but nevertheless agrees and acknowledges that the consideration provided under this Agreement (including Sections 3 and 4) is sufficient to justify such restrictions. In consideration thereof and in light of Executive’s education, skills and abilities, Executive agrees that Executive will not assert in any forum that such restrictions prevent Executive from earning a living or otherwise should be held void or unenforceable.
(e)For purposes of this Section 5.1, “Covered Time” shall mean the period beginning on the date of termination of Executive’s employment and ending twelve (12) months thereafter.
(f)In the event that a court of competent jurisdiction or arbitrator(s), as the case may be, determine that the provisions of this Section 5.1 are unenforceable for any reason, the parties acknowledge and agree that the court or arbitrator(s) is expressly empowered to reform any provision of this Section so as to make them enforceable as described in Section 10 below.
5.2Proprietary Information; Inventions.
(a)Executive acknowledges that, during the course of Executive’s employment with the Company, Executive necessarily will have (and during any employment by, or affiliation with, the Company prior to the Term has had) access to and make use of proprietary information and confidential records of the Company. Executive covenants that Executive shall not during the Term or at any time thereafter, directly or indirectly, use for Executive’s own purpose or for the benefit of any person or entity other than the Company, nor otherwise disclose to any person or entity, any such proprietary information, unless and to the extent such disclosure has been authorized in writing by the Company or is otherwise
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required by law. The term “proprietary information” means: (i) the software products, programs, applications, and processes utilized by the Company; (ii) the name and/or address of any customer or vendor of the Company or any information concerning the transactions or relations of any customer or vendor of the Company with the Company; (iii) any information concerning any product, technology, or procedure employed by the Company but not generally known to its customers or vendors or competitors, or under development by or being tested by the Company but not at the time offered generally to customers or vendors; (iv) any information relating to the Company’s computer software, computer systems, pricing or marketing methods, sales margins, cost of goods, cost of material, capital structure, operating results, borrowing arrangements or business plans; (v) any information identified as confidential or proprietary in any line of business engaged in by the Company; (vi) any information that, to Executive’s actual knowledge, the Company ordinarily maintains as confidential or proprietary; (vii) any business plans, budgets, advertising or marketing plans; (viii) any information contained in any of the Company’s written or oral policies and procedures or manuals; (ix) any information belonging to customers, vendors or any other person or entity which the Company, to Executive’s actual knowledge, has agreed to hold in confidence; and (x) all written, graphic, electronic data and other material containing any of the foregoing. Executive acknowledges that information that is not novel or copyrighted or patented may nonetheless be proprietary information. The term “proprietary information” shall not include information generally known or available to the public, information that becomes available to Executive on an unrestricted, non-confidential basis from a source other than the Company or any of its directors, officers, employees, agents or other representatives (without breach of any obligation of confidentiality of which Executive has knowledge, after reasonable inquiry, at the time of the relevant disclosure by Executive), or general lottery, land-based gaming, interactive gaming or social gaming industry information to the extent not particularly related or proprietary to the Company that was already known to Executive at the time Executive commences her employment by the Company that is not subject to nondisclosure by virtue of Executive’s prior employment or otherwise. Notwithstanding the foregoing and Section 5.3, Executive may disclose or use proprietary information or confidential records solely to the extent (A) such disclosure or use may be required or appropriate in the performance of her duties as a director or employee of the Company, (B) required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order her to divulge, disclose or make accessible such information (provided that in such case Executive shall first give the Company prompt written notice of any such legal requirement, disclose no more information than is so required and cooperate fully with all efforts by the Company to obtain a protective order or similar confidentiality treatment for such information), (C) such information or records becomes generally known to the public without her violation of this Agreement, or (D) disclosed to Executive’s spouse, attorney and/or her personal tax and financial advisors to the extent reasonably necessary to advance Executive’s tax, financial and other personal planning (each an “Exempt Person”); provided, however, that any disclosure or use of any proprietary information or confidential records by an Exempt Person shall be deemed to be a breach of this Section 5.2 or Section 5.3 by Executive.
(b)Executive agrees that all processes, technologies and inventions (collectively, “Inventions”), including new contributions, improvements, ideas and discoveries, whether patentable or not, conceived, developed, invented or made by Executive during the Term (and during any employment by, or affiliation with, the Company prior to the Term) shall belong to the Company, provided that such Inventions grew out of Executive’s work with the Company or any of its subsidiaries or affiliates, are related in any manner to the business (commercial or experimental) of the Company or any of its subsidiaries or affiliates or are conceived or made on the Company’s time or with the use of the Company’s facilities or materials. Executive shall further: (i) promptly disclose such Inventions to the Company; (ii) assign to the Company, without additional compensation, all patent and other rights to such
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Inventions for the United States and foreign countries; (iii) sign all papers necessary to carry out the foregoing; and (iv) give testimony in support of Executive’s inventorship. If any Invention is described in a patent application or is disclosed to third parties, directly or indirectly, by Executive within two (2) years after the termination of Executive’s employment with the Company, it is to be presumed that the Invention was conceived or made during the Term. Executive agrees that Executive will not assert any rights to any Invention as having been made or acquired by Executive prior to the date of this Agreement, except for Inventions, if any, disclosed in Exhibit A to this Agreement.
5.3Confidentiality and Surrender of Records.  Executive shall not, during the Term or at any time thereafter (irrespective of the circumstances under which Executive’s employment by the Company terminates), except to the extent required by law, directly or indirectly publish, make known or in any fashion disclose any confidential records to, or permit any inspection or copying of confidential records by, any person or entity other than in the course of such person’s or entity’s employment or retention by the Company, nor shall Executive retain, and will deliver promptly to the Company, any of the same following termination of Executive’s employment hereunder for any reason or upon request by the Company. For purposes hereof, “confidential records” means those portions of correspondence, memoranda, files, manuals, books, lists, financial, operating or marketing records, magnetic tape, or electronic or other media or equipment of any kind in Executive’s possession or under Executive’s control or accessible to Executive which contain any proprietary information. All confidential records shall be and remain the sole property of the Company during the Term and thereafter.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall (i) prohibit Executive from making reports of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or of any other whistleblower protection provisions of state or federal law or regulation, or (ii) require notification or prior approval by the Company of any reporting described in clause (i). Executive understands that activities protected by Sections 5.2 and 5.3 may include disclosure of trade secret or confidential information within the limitations permitted by the Defend Trade Secrets Act (“DTSA”). And, in this regard, Executive acknowledges notification that under the DTSA no individual will be held criminally or civilly liable under Federal or State trade secret law for disclosure of a trade secret (as defined in the Economic Espionage Act) that is: (A) made in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law; or, (B) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public. And, an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

5.4Non-disparagement. Executive shall not, during the Term and thereafter, disparage in any material respect the Company, any affiliate of the Company, any of their respective businesses, any of their respective officers, directors or employees, or the reputation of any of the foregoing persons or entities. Notwithstanding the foregoing, nothing in this Agreement shall preclude Executive from making truthful statements that are required by applicable law, regulation or legal process.
5.5No Other Obligations. Executive represents that Executive is not precluded or limited in Executive’s ability to undertake or perform the duties described herein by any contract,
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agreement or restrictive covenant. Executive covenants that Executive shall not employ the trade secrets or proprietary information of any other person in connection with Executive’s employment by the Company without such person’s authorization.
5.6Forfeiture of Outstanding Equity Awards; “Clawback” Policies. The other provisions of this Agreement notwithstanding, if Executive willfully and materially fails to comply with Section 5.1, 5.2, 5.3, 5.4, or 5.8, all options to purchase common stock, restricted stock units and other equity-based awards granted by the Company or any of its affiliates (whether prior to, contemporaneous with, or subsequent to the date hereof) and held by Executive or a transferee of Executive shall be immediately forfeited and cancelled. Executive acknowledges and agrees that, notwithstanding anything contained in this Agreement or any other agreement, plan or program, any incentive-based compensation or benefits contemplated under this Agreement (including Incentive Compensation and equity-based awards) shall be subject to recovery by the Company under any compensation recovery or “clawback” policy, generally applicable to executives of the Company, that the Company may adopt from time to time, including any policy which the Company may be required to adopt under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations of the Securities and Exchange Commission thereunder or the requirements of any national securities exchange on which the Company’s common stock may be listed.
5.7Enforcement. Executive acknowledges and agrees that, by virtue of Executive’s position, services and access to and use of confidential records and proprietary information, any violation by Executive of any of the undertakings contained in this Section 5 would cause the Company immediate, substantial and irreparable injury for which it has no adequate remedy at law. Accordingly, Executive agrees and consents to the entry of an injunction or other equitable relief by a court of competent jurisdiction restraining any violation or threatened violation of any undertaking contained in this Section 5. Executive waives posting of any bond otherwise necessary to secure such injunction or other equitable relief. Rights and remedies provided for in this Section 5 are cumulative and shall be in addition to rights and remedies otherwise available to the parties hereunder or under any other agreement or applicable law.
5.8Cooperation with Regard to Litigation. Executive agrees to cooperate reasonably with the Company, during the Term and thereafter (including following Executive’s termination of employment for any reason), by being available to testify on behalf of the Company in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative. In addition, except to the extent that Executive has or intends to assert in good faith an interest or position adverse to or inconsistent with the interest or position of the Company, Executive agrees to cooperate reasonably with the Company, during the Term and thereafter (including following Executive’s termination of employment for any reason), to assist the Company in any such action, suit, or proceeding by providing information and meeting and consulting with the Board or its representatives or counsel, or representatives or counsel to the Company, in each case, as reasonably requested by the Company. The Company agrees to pay (or reimburse, if already paid by Executive) all reasonable travel and communication expenses actually incurred in connection with Executive’s cooperation and assistance.
5.9Survival. The provisions of this Section 5 shall survive the termination of the Term and any termination or expiration of this Agreement.
5.10Company. For purposes of this Section 5, references to the “Company” shall include the Company and each subsidiary and/or affiliate of the Company (and each of their respective joint ventures and equity method investees).
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6.Code of Conduct. Executive acknowledges that Executive has read the Company’s Code of Business Conduct and agrees to abide by such Code of Business Conduct, as amended or supplemented from time to time, and other policies applicable to employees and executives of the Company.
7.Indemnification.  The Company shall indemnify Executive to the full extent permitted under the Company’s Certificate of Incorporation or By-Laws and pursuant to any other agreements or policies in effect from time to time in connection with any action, suit or proceeding to which Executive may be made a party by reason of Executive being an officer, director or employee of the Company or of any subsidiary or affiliate of the Company.
8.Assignability; Binding Effect.  Neither this Agreement nor the rights or obligations hereunder of the parties shall be transferable or assignable by Executive, except in accordance with the laws of descent and distribution and as specified below. The Company may assign this Agreement and the Company’s rights and obligations hereunder to any affiliate of the Company, provided that upon any such assignment the Company shall remain liable for the obligations to Executive hereunder. This Agreement shall be binding upon and inure to the benefit of Executive, Executive’s heirs, executors, administrators, and beneficiaries, and shall be binding upon and inure to the benefit of the Company and its successors and assigns.
9.Complete Understanding; Amendment; Waiver. This Agreement constitutes the complete understanding between the parties with respect to the employment of Executive and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof, including superseding any entitlements to benefits or payments pursuant to any severance plan, policy, practice or arrangement maintained by the Company or any affiliate thereof as of the Effective Date, and no statement, representation, warranty or covenant has been made by either party with respect thereto except as expressly set forth herein. Except as contemplated by Sections 3(f), 5.1(f) and 10, this Agreement shall not be modified, amended or terminated except by a written instrument signed by each of the parties. Any waiver of any term or provision hereof, or of the application of any such term or provision to any circumstances, shall be in writing signed by the party charged with giving such waiver. Waiver by either party of any breach hereunder by the other party shall not operate as a waiver of any other breach, whether similar to or different from the breach waived. No delay by either party in the exercise of any rights or remedies shall operate as a waiver thereof, and no single or partial exercise by either party of any such right or remedy shall preclude other or further exercise thereof.
10.Severability. If any provision of this Agreement or the application of any such provision to any person or circumstances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by law. If any provision of this Agreement, or any part thereof, is held to be invalid or unenforceable because of the scope or duration of or the area covered by such provision, the parties agree that the court making such determination shall reduce the scope, duration and/or area of such provision (and shall substitute appropriate provisions for any such invalid or unenforceable provisions) in order to make such provision enforceable to the fullest extent permitted by law and/or shall delete specific words and phrases, and such modified provision shall then be enforceable and shall be enforced. The parties recognize that if, in any
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judicial proceeding, a court shall refuse to enforce any of the separate covenants contained in this Agreement, then that invalid or unenforceable covenant contained in this Agreement shall be deemed eliminated from these provisions to the extent necessary to permit the remaining separate covenants to be enforced. In the event that any court determines that the time period or the area, or both, are unreasonable and that any of the covenants is to that extent invalid or unenforceable, the parties agree that such covenants will remain in full force and effect, first, for the greatest time period, and second, in the greatest geographical area that would not render them unenforceable.
11.Survivability. The provisions of this Agreement which by their terms call for performance subsequent to termination of Executive’s employment hereunder, or of this Agreement, shall so survive such termination, whether or not such provisions expressly state that they shall so survive.
12.Governing Law; Arbitration.
(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada applicable to agreements made and to be wholly performed within that State, without regard to its conflict of laws provisions.
(b)Arbitration. 
(i)Executive and the Company agree that, except for claims for workers’ compensation, unemployment compensation, and any other claim that is non-arbitrable under applicable law, final and binding arbitration shall be the exclusive forum for any dispute or controversy between them, including disputes arising under or in connection with this Agreement, Executive’s employment, and/or termination of employment, with the Company; provided, however, that the Company shall be entitled to commence an action in any court of competent jurisdiction for injunctive relief in connection with any alleged actual or threatened violation of any provision of Section 5. For purposes of entering judgment on an arbitrators award or seeking injunctive relief with regard to Section 5, the Company and Executive hereby consent to the exclusive personal jurisdiction in the state and federal courts located in Las Vegas, Nevada; provided that damages for any alleged violation of Section 5, as well as any claim, counterclaim or cross-claim brought by Executive or any third-party in response to, or in connection with any court action commenced by the Company seeking said injunctive relief shall remain exclusively subject to final and binding arbitration as provided for herein. The Company and Executive hereby waive, to the fullest extent permitted by applicable law, any objection which either may now or hereafter have to such jurisdiction, venue and any defense of inconvenient forum. Thus, except for the claims carved out above, this Agreement includes all common-law and statutory claims (whether arising under federal state or local law), including any claim for breach of contract, fraud, fraud in the inducement, unpaid wages, wrongful termination, and gender, age, national origin, sexual orientation, marital status, disability, or any other  protected status.
(ii)Any arbitration under this Agreement shall be filed exclusively with, and administered by, the American Arbitration Association in Las Vegas, Nevada before three arbitrators, in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association in effect at the time of submission to arbitration. The Company and Executive hereby agree that a judgment upon an award rendered by the arbitrators may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. The Company shall pay all costs uniquely attributable to arbitration, including the
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administrative fees and costs of the arbitrators.  Each party shall pay that party’s own costs and attorney fees, if any, unless the arbitrators rule otherwise. Executive understands that Executive is giving up no substantive rights, and this Agreement simply governs forum. The arbitrators shall apply the same standards a court would apply to award any damages, attorney fees or costs. Executive shall not be required to pay any fee or cost that Executive would not otherwise be required to pay in a court action, unless so ordered by the arbitrators.
EXECUTIVE INITIALS:_/s/ CJ__         COMPANY INITIALS: _/s/ JS__
(c)WAIVER OF JURY TRIAL. BY SIGNING THIS AGREEMENT, EXECUTIVE AND THE COMPANY ACKNOWLEDGE THAT THE RIGHT TO A COURT TRIAL AND TRIAL BY JURY IS OF VALUE, AND KNOWINGLY AND VOLUNTARILY WAIVE THAT RIGHT FOR ANY DISPUTE SUBJECT TO THE TERMS OF THIS ARBITRATION PROVISION.
13. Titles and Captions.  All paragraph titles or captions in this Agreement are for convenience only and in no way define, limit, extend or describe the scope or intent of any provision hereof.
14.Joint Drafting. In recognition of the fact that the parties had an equal opportunity to negotiate the language of, and draft, this Agreement, the parties acknowledge and agree that there is no single drafter of this Agreement and, therefore, the general rule that ambiguities are to be construed against the drafter is, and shall be, inapplicable.  If any language in this Agreement is found or claimed to be ambiguous, each party shall have the same opportunity to present evidence as to the actual intent of the parties with respect to any such ambiguous language without any inference or presumption being drawn against any party hereto.
15.Notices. All notices and other communications to be given or to otherwise be made to any party to this Agreement shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by certified mail or by a recognized national courier service, postage or charges prepaid, (a) to Scientific Games Corporation, Attn: Legal Department, 6601 Bermuda Rd., Las Vegas, NV 89119, (b) to Executive, at the last address shown in the Company’s records, or (c) to such other replacement address as may be designated in writing by the addressee to the addressor.
16.Licensing Requirements. The Company is subject to the laws, rules and regulations of various governmental bodies that regulate gaming companies. Executive may be required to submit to background, suitability and licensing investigations conducted by multiple gaming regulators. Executive agrees to fully cooperate with both the Company and gaming regulators by furnishing all requested information, including personal information regarding Executive and Executive’s family members, and documentation during the regulatory process. Executive agrees to fully cooperate with and conform to all regulatory requests for information in the required timeframe. Compliance with this requirement is a material provision of this Agreement.
17.Interpretation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” unless the context otherwise indicates. When a reference in this Agreement is made
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to a “party” or “parties,” such reference shall be to a party or parties to this Agreement unless otherwise indicated or the context requires otherwise. Unless the context requires otherwise, the terms “hereof,” “herein,” “hereby,” “hereto”, “hereunder” and derivative or similar words in this Agreement refer to this entire Agreement. Unless the context requires otherwise, words in this Agreement using the singular or plural number also include the plural or singular number, respectively, and the use of any gender herein shall be deemed to include the other genders. References in this Agreement to “dollars” or “$” are to U.S. dollars. When a reference is made in this Agreement to a law, statute or legislation, such reference shall be to such law, statute or legislation as it may be amended, modified, extended or re-enacted from time to time (including any successor law, statute or legislation) and shall include any regulations promulgated thereunder from time to time. The headings used herein are for reference only and shall not affect the construction of this Agreement.
[remainder of page intentionally left blank]

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IN WITNESS WHEREOF, each of the parties has duly executed this Agreement as of the date above written.
SCIENTIFIC GAMES CORPORATION
By: /s/ James Sottile
Name: James Sottile
Title: Executive Vice President and Chief Legal Officer
EXECUTIVE
/s/ Constance P. James
Constance P. James


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Exhibit A
Inventions

19


Exhibit 31.1

Certification by Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Barry L. Cottle, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Scientific Games Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2021
/s/ Barry L. Cottle
Barry L. Cottle
Chief Executive Officer

Exhibit 31.2

Certification by Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Constance P. James, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Scientific Games Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2021
/s/ Constance P. James
Constance P. James
Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the Quarterly Report of Scientific Games Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Barry L. Cottle, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1)                                 The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)                                 The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
    A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
/s/ Barry L. Cottle
Barry L. Cottle
Chief Executive Officer
November 9, 2021

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the Quarterly Report of Scientific Games Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Constance P. James, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that, to my knowledge:
(1)                                 The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)                                 The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
    A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
/s/ Constance P. James
Constance P. James
Chief Financial Officer
November 9, 2021