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Scientific Games Corporation (SG) announced today that it is acquiring Sideplay Entertainment in order to bolster its iLottery offerings. Sideplay is known for eInstant games, a cornerstone of modern online lotteries, and is the primary supplier of such to the UK National Lottery.
The timing is unusual, as SG is considering selling off the lottery component of its business entirely. It announced those plans in June, and is looking at divesting itself of its sports betting operations as well. However, it cautioned that there was no guarantee of what form that would take, or whether it happens at all.
The intent of that potential divestment is to focus more heavily on digital channels. The Sideplay acquisition may signal that it intends to exit only the retail lottery sector, while continuing to provide online lottery services. It could also simply be trying to make its lottery business more appealing. That could fetch a higher price in an acquisition, or strengthen a potential spinoff IPO.
In today’s announcement, SG said:
“Through this acquisition, Scientific Games Lottery Group expects to expand its share in digital lottery markets while bringing Sideplay’s library of innovative content to iLottery programs around the globe. The addition of digital game server content distribution technology to Scientific Games’ existing digital tech stack will also allow for increased speed-to-market.”
Even though “instant and draw-based lottery games” are No. 1 on SG’s own list of its core business verticals, that listed portfolio continues with “electronic gaming machines and game content; server-based lottery and gaming systems; sports betting technology; loyalty and rewards programs; and social, mobile and interactive content and services.”
Notably, in today’s announcement, it rearranged those priorities. Its corporate bio put “casino” up front, and relegated “lottery” to second place when listing its activities.
Legal Sports Report has pointed out which partners of SG will be affected by this plan:
The mathematics of Sideplay’s games work along the same lines as any instant lottery. In presentation, however, they are about much more than the matching of symbols. It has, for instance, a Mouse Trap themed game, in which the outcome is presented as a series of die rolls moving a mouse around a game board track.
The greater flexibility of eInstants is one thing driving the more rapid growth of online lotteries compared to paper tickets.
In Michigan, for instance, instant games helped keep lottery revenue in the black despite decreased sales of draw game tickets during the pandemic lockdowns. In September 2020, the Michigan Lottery reported Mega Millions ticket sales plummeted 40% vs. September 2019. However, instant ticket sales increased 23% and overall iLottery purchases skyrocketed 88%. Taking all channels together, lottery ticket sales actually rose 8%.
Sideplay’s 270 instant games could boost SG’s stature in the space, as the company says they’ve been played more than 100 million times since 2003.
SG claims to have debuted the first US digital instant game in 2014. It also describes itself as:
The leading provider of lottery interactive games, mobile apps, player loyalty programs and other interactive products and services in the U.S. lottery industry.