Obbligazione Science Games Global 10% ( US80874YAU47 ) in USD

Emittente Science Games Global
Prezzo di mercato 100 USD  ▼ 
Paese  Stati Uniti
Codice isin  US80874YAU47 ( in USD )
Tasso d'interesse 10% per anno ( pagato 2 volte l'anno)
Scadenza 30/11/2022 - Obbligazione è scaduto



Prospetto opuscolo dell'obbligazione Scientific Games International US80874YAU47 in USD 10%, scaduta


Importo minimo 2 000 USD
Importo totale 2 197 500 000 USD
Cusip 80874YAU4
Standard & Poor's ( S&P ) rating N/A
Moody's rating N/A
Descrizione dettagliata Scientific Games International è una società multinazionale che fornisce tecnologia, prodotti e servizi per l'industria del gioco d'azzardo globale, inclusi lotterie, giochi da casinò e piattaforme di gioco online.

The Obbligazione issued by Science Games Global ( United States ) , in USD, with the ISIN code US80874YAU47, pays a coupon of 10% per year.
The coupons are paid 2 times per year and the Obbligazione maturity is 30/11/2022







424B3 1 a2224314z424b3.htm 424B3
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TABLE OF CONTENTS
Table of Contents
As Filed Pursuant to Rule 424(b)(3)
Registration No.# 333-203360
PROSPECTUS
SCIENTIFIC GAMES INTERNATIONAL, INC.
(as Issuer)
SCIENTIFIC GAMES CORPORATION
(as Guarantor)
Exchange Offer for
$350,000,000 6.625% Senior Subordinated Notes due 2021
$2,200,000,000 10.000% Senior Unsecured Notes due 2022
The Exchange Offer:
·
Scientific Games International, Inc., referred to as the "Issuer," issued $350,000,000 in aggregate principal amount of its 6.625% senior
subordinated notes due 2021 on June 4, 2014 and will exchange all $350,000,000 of the outstanding 6.625% senior subordinated notes
due 2021, referred to as the "2021 old notes," that are validly tendered and not validly withdrawn for an equal principal amount of
6.625% senior subordinated notes due 2021, referred to as the "2021 new notes," that are, subject to specified conditions, freely
transferable. The Issuer will issue the 2021 new notes under the same indenture under which the 2021 old notes were issued, referred to
as the "2021 notes indenture."
·
On November 21, 2014, SGMS Escrow Corp., a wholly owned subsidiary of the Issuer, issued $2,200,000,000 in aggregate principal
amount of its 10.000% senior unsecured notes due 2022, referred to as the "2022 old notes" and, collectively with the 2021 old notes, as
the "old notes." Promptly following Scientific Games Corporation's acquisition of Bally Technologies, Inc. ("Bally"), on November 21,
2014, SGMS Escrow Corp. merged with and into the Issuer, with the Issuer continuing as the surviving corporation, and the Issuer
assumed the obligations of SGMS Escrow Corp. under the 2022 old notes (and the related indenture). The Issuer will exchange all
$2,200,000,000 of the 2022 old notes that are validly tendered and not validly withdrawn for an equal principal amount of 10.000%
senior unsecured notes due 2022, referred to as the "2022 new notes" and, collectively with the 2021 new notes, as the "new notes," that
are, subject to specified conditions, freely transferable. The Issuer will issue the 2022 new notes under the same indenture under which
the 2022 old notes were issued, referred to as the "2022 notes indenture." The old notes and the new notes are collectively referred to
herein as the "notes." The 2021 notes indenture and the 2022 notes indenture are collectively referred to herein as the "indentures."
·
The exchange offer expires at 11:59 p.m., New York City time, on May 15, 2015 unless extended. We do not currently intend to extend
the expiration date.
·
You may withdraw tenders of old notes at any time prior to the expiration date of the exchange offer.
·
Neither Scientific Games Corporation nor the Issuer will receive any cash proceeds from the exchange offer.
The New Notes:
·
We are offering new notes to satisfy certain obligations under the registration rights agreements entered into in connection with the
private offerings of the old notes.
·
The terms of each series of new notes are substantially identical to the applicable series of old notes, except that the new notes, subject to
specified conditions, will be freely transferable.
·
The 2021 new notes will be guaranteed on a senior subordinated unsecured basis by Scientific Games Corporation and all of its wholly
owned domestic subsidiaries (other than the Issuer), which are referred to as the "guarantors."
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·
The 2022 new notes will be guaranteed on a senior unsecured basis by the guarantors.
·
We do not plan to list the new notes on a national securities exchange or automated quotation system.
Please see "Risk Factors" beginning on page 20 of this prospectus for a discussion of certain factors that you should consider before
participating in this exchange offer.
Each broker-dealer that receives new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus
in connection with any resale of such new notes as required by applicable securities laws and regulations. The letter of transmittal states that, by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes
received in exchange for old notes where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading
activities. We have agreed that, for a period of up to 180 days after the expiration of the exchange offer, we will make this prospectus available to any
broker-dealer for use in connection with any such resale.
None of the Securities and Exchange Commission, any state securities commission, the Nevada Gaming Commission, the Nevada State
Gaming Control Board, the Mississippi Gaming Commission, the Louisiana Gaming Control Board, the Indiana Gaming Commission, the New
Jersey Casino Control Commission or any other gaming authority or other regulatory agency has approved or disapproved of these securities
or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is April 20, 2015.
Table of Contents
TABLE OF CONTENTS
INDUSTRY AND MARKET DATA

ii
BASIS OF PRESENTATION

ii
WHERE YOU CAN FIND MORE INFORMATION

ii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

ii
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

iii
SUMMARY

1
RATIO OF EARNINGS TO FIXED CHARGES

19
RISK FACTORS

20
USE OF PROCEEDS

29
CAPITALIZATION

30
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

31
THE EXCHANGE OFFER

40
SELECTED FINANCIAL DATA

50
DESCRIPTION OF OTHER INDEBTEDNESS

52
DESCRIPTION OF 2021 NEW NOTES

59
DESCRIPTION OF 2022 NEW NOTES
113
BOOK-ENTRY SETTLEMENT AND CLEARANCE
170
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE EXCHANGE

OF 2021 OLD NOTES FOR 2021 NEW NOTES
173
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE EXCHANGE

OF 2022 OLD NOTES FOR 2022 NEW NOTES AND THE OWNERSHIP AND DISPOSITION OF THE
2022 NEW NOTES
175
PLAN OF DISTRIBUTION AND SELLING RESTRICTIONS
183
LEGAL MATTERS
184
EXPERTS
185
We have not authorized any dealer, salesperson or other person to give any information or represent anything to you other than the
information contained in this prospectus. You must not rely on unauthorized information or representations.
This prospectus does not offer to sell nor ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the
person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. The information in this
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prospectus is current only as of the date on its cover and may change after that date.
This prospectus incorporates important business and financial information about us that is not included in or delivered with this
document. You may obtain information incorporated by reference, at no cost, by writing or telephoning us at the following address:
Scientific Games Corporation
Attention: Investor Relations
6650 S. El Camino
Las Vegas, Nevada 89118
(702) 897-7150
To obtain timely delivery, you must request the information no later than five (5) business days prior to the expiration of the exchange
offer, or May 8, 2015. See "Where You Can Find More Information" and "Incorporation of Certain Documents by Reference" beginning on
page ii.
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INDUSTRY AND MARKET DATA
Certain market data and other statistical information included in this prospectus (including the documents incorporated by reference in this
prospectus) are based on independent industry publications, government publications, reports by market research firms or other published independent
sources. Some data is also based on our good faith estimates, which are derived from our review of internal surveys, as well as the independent sources
listed above. Although we believe these sources are reliable, we have not independently verified the information and cannot guarantee its accuracy and
completeness.
BASIS OF PRESENTATION
Unless the context indicates otherwise, references in this prospectus to "Scientific Games International, Inc." and the "Issuer" refer to Scientific
Games International, Inc., a Delaware corporation and the issuer of the new notes, and references to the "guarantors" refer to Scientific Games
Corporation and its wholly owned domestic subsidiaries (other than the Issuer) that will guarantee the new notes. Unless the context indicates otherwise,
references to "Scientific Games," "the Company," "we," "our," "ours" and "us" refer to Scientific Games Corporation and its consolidated subsidiaries,
including the Issuer. In the discussion relating to our lottery business, "United States ("U.S.") jurisdictions" refer to the 50 states in the U.S. plus the
District of Columbia and Puerto Rico.
WHERE YOU CAN FIND MORE INFORMATION
The Issuer is not subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), pursuant to
Rule 12h-5 under the Exchange Act. Scientific Games Corporation, however, is subject to the informational requirements of the Exchange Act and,
accordingly, files annual, quarterly and current reports, proxy statements and other information with the United States Securities and Exchange
Commission (the "SEC"). You may read and copy any document we file with the SEC at the SEC's public reference room at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room and its copy charges. Our SEC
filings are also available to the public on the SEC's website at www.sec.gov.
We have filed with the SEC a registration statement on Form S-4 under the Securities Act with respect to the exchange offer. This prospectus does
not contain all of the information contained in the registration statement and the exhibits to the registration statement. Copies of our SEC filings,
including the exhibits to the registration statement, are available through us or from the SEC through the SEC's website or at its facilities described
above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In this prospectus, we "incorporate by reference" certain information we file with the SEC (other than, in each case, documents or information
deemed to have been furnished and not filed in accordance with the SEC rules), which means that we can disclose important information to you by
referring to that information. The information incorporated by reference is considered to be an important part of this prospectus. We incorporate by
reference in this prospectus the following documents filed with the SEC pursuant to the Exchange Act:
·
Scientific Games Corporation's Annual Report on Form 10-K for the year ended December 31, 2014, filed on March 17, 2015;
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·
Scientific Games Corporation's Current Report on Form 8-K/A filed on February 2, 2015 and Current Reports on Form 8-K filed on
February 17, 2015, March 11, 2015, March 13, 2015 and April 10, 2015;
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·
Audited consolidated balance sheets of WMS Industries Inc. ("WMS") as of June 30, 2013 and 2012, and the related consolidated
statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended
June 30, 2013, including the notes thereto, and Schedule II (incorporated by reference to pages F-1 through F-51 of WMS' Annual
Report on Form 10-K for the year ended June 30, 2013 filed with the SEC on August 29, 2013); and
·
Unaudited consolidated statements of income, comprehensive income and cash flows of WMS for the three months ended September 30,
2013, including the notes thereto, included as Exhibit 99.2 to Scientific Games Corporation's Current Report on Form 8-K filed on
May 20, 2014.
We also incorporate by reference any future filings made by us with the SEC (other than information furnished pursuant to Item 2.02 or Item 7.01
of Form 8-K or as otherwise permitted by the SEC's rules) under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act on or after the date of this
prospectus and prior to the termination of the offering, and any reoffering, of the securities offered hereby. Any statement in a document incorporated by
reference in this prospectus will be deemed to be modified or superseded to the extent a statement contained in this prospectus or any other subsequently
filed document that is incorporated by reference in this prospectus modifies or supersedes such statement. In addition, information contained in this
prospectus shall be modified or superseded by information in any such subsequently filed documents that are incorporated by reference in this
prospectus.
References in this prospectus to this prospectus will be deemed to include the documents incorporated by reference, which are an integral part of
this prospectus. You should obtain and review carefully copies of the documents incorporated by reference. Information that we file later with the SEC
will automatically update the information incorporated by reference and the information in this prospectus. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
You may request a copy of these filings, at no cost, by writing or telephoning us at the address on page i of this prospectus. Exhibits to the filings
will not be sent, however, unless those exhibits have been specifically incorporated by reference in this prospectus.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained or incorporated by reference in this prospectus constitute "forward-looking statements." 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," "should," "could," "potential," "opportunity," "goal" or similar terminology.
These statements are based upon management's current expectations, assumptions and estimates and are not guarantees of timing, future results or
performance. 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:
·
competition;
·
U.S. and international economic and industry conditions, including declines in or slow growth of lottery retail sales or gross gaming
revenues, reductions in or constraints on capital spending by gaming or lottery operators and bankruptcies of, or credit risk relating to,
customers;
·
limited growth from new gaming jurisdictions, slow addition of casinos in existing jurisdictions and declines in the replacement cycle of
existing gaming machines;
·
ownership changes and consolidation in the casino industry;
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·
opposition to legalized gaming or the expansion thereof;
·
inability to adapt to, and offer products that keep pace with, evolving technology;
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·
inability to develop successful gaming concepts and content;
·
laws and government regulations, including those relating to gaming licenses and environmental laws;
·
inability to identify and capitalize on trends and changes in the gaming and lottery industries, including the expansion of interactive
gaming;
·
dependence upon key providers in our social gaming business;
·
inability to retain or renew, or unfavorable revisions of, existing contracts, and the inability to enter into new contracts;
·
protection of intellectual property, inability to license third party intellectual property and the intellectual property rights of others;
·
security and integrity of software and systems and reliance on or failures in information technology systems;
·
natural events that disrupt our operations or those of our customers, suppliers or regulators;
·
inability to benefit from, and risks associated with, strategic equity investments and relationships, including (1) the inability of our joint
venture to meet the net income targets or otherwise to realize the anticipated benefits under its private management agreement with the
Illinois lottery (or in connection with any termination thereof), (2) the inability of our joint venture to meet the net income targets or
other requirements under its agreement to provide marketing and sales services to the New Jersey lottery or otherwise to realize the
anticipated benefits under such agreement (including as a result of a protest) and (3) the failure to realize the anticipated benefits related
to the award to our consortium of an instant lottery game concession in Greece;
·
failure to achieve the intended benefits of the Bally acquisition, the WMS acquisition or our other recent acquisitions, including due to
the inability to successfully integrate such acquisitions or realize synergies in the anticipated amounts or within the contemplated
timeframes or cost expectations, or at all;
·
disruption of current plans and operations in connection with our recent acquisitions (including in connection with the integration of
Bally and WMS), including departure of key personnel or inability to recruit additional qualified personnel or maintain relationships
with customers, suppliers or other third parties;
·
costs, charges and expenses relating to the Bally acquisition and the WMS acquisition;
·
inability to complete or successfully integrate any future acquisitions;
·
operating results, cash flows or financial condition following the acquisition of Bally that differ materially from the pro forma financial
information contained herein;
·
incurrence of employee termination or restructuring costs and impairment charges, and implementation of complex revenue recognition
standards;
·
fluctuations in our results due to seasonality and other factors;
·
dependence on suppliers and manufacturers;
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·
risks relating to foreign operations, including fluctuations in foreign currency exchange rates, restrictions on the payment of dividends
from earnings and restrictions on the import of products;
·
dependence on employees;
·
litigation and other liabilities relating to our business, including litigation and liabilities relating to our contracts and licenses, our
products and systems, our employees, intellectual property and our strategic relationships;
·
influence of certain stockholders;
·
stock price volatility;
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·
level of our indebtedness, higher interest rates, availability or adequacy of cash flows and liquidity to satisfy obligations or future needs,
and restrictions and covenants in debt agreements; and
·
other risks, uncertainties and factors relating to indebtedness generally and the notes in particular, as discussed further under "Risk
Factors--Risk Factors Relating to the Notes" and "Risk Factors--Risk Factors Relating to the Exchange Offer."
For a discussion of these and other factors that may affect our business, you should also read carefully the factors described in the "Risk Factors"
section of this prospectus. 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. 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 obligation to publicly
update any forward-looking statements whether as a result of new information, future events or otherwise.
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SUMMARY
This is only a summary of the prospectus. You should read carefully the entire prospectus, including "Risk Factors," and our consolidated financial
statements and related notes as well as the documents incorporated by reference in this prospectus, before making an investment decision.
Our Company
We are a leading developer of technology based products and services and associated content for the worldwide gaming and lottery industries. Our
portfolio includes gaming machines and game content, instant and draw based lottery games, server based gaming and lottery systems, casino
management systems, table game products and services, sports betting technology, loyalty and rewards programs, and interactive gaming and lottery
content and services. We also gain access to technologies and pursue global expansion through strategic acquisitions and equity investments. We report
our operations in three business segments--Gaming, Lottery and Interactive.
On November 21, 2014, the Company acquired Bally for $5.1 billion (including the refinancing of approximately $1.9 billion of existing Bally
indebtedness), creating one of the largest and most diversified global gaming suppliers. See "--The Transactions."
Gaming segment
The gaming industry is a large and dynamic worldwide marketplace characterized by the rapid development of new technologies, products and
game content. Gaming products and services are used by a diverse group of gaming operators, including commercial and tribal casinos, riverboat
casinos, horse and greyhound racetracks, bars, Jai Alai facilities, truck stops, night clubs, bingo and arcade halls, licensed betting offices, or LBOs, and
similar venues. In addition, U.S. and international lotteries may offer video lottery terminals, or VLTs, and other forms of gaming, such as bingo and
sports wagering.
Our products are installed in all of the major regulated gaming jurisdictions in the U.S., as well as in approximately 146 international gaming
jurisdictions. We believe the total installed base of gaming machines in North America is approximately 940,000 units and has been relatively stable in
recent years. Growth of gaming in land-based venues is driven by the opening of new casinos in both new and existing jurisdictions and the expansion
of existing casinos. In addition, the land-based gaming supply business is significantly impacted by the rate at which casinos and other gaming operators
replace their gaming machines, which is dependent upon a number of factors, including their capital budgets. Virtually all sectors of the gaming industry
are impacted by changes in economic conditions that impact players' disposable incomes.
We completed our acquisition of Bally on November 21, 2014. We believe that the acquisition complements our existing gaming business by
expanding our product offerings, extends our customer base, allows us to leverage the best technologies from both companies and provides operating
scale. We believe that the acquisition enhances our leadership positions in our existing gaming machine and interactive gaming businesses, and elevates
us to leadership positions in sectors of the gaming industry in which we have not historically had a presence, such as casino-management systems and a
variety of table game products.

1
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Table of Contents
The following table summarizes the primary business activities and investments included in our Gaming business segment.
Gaming segment
Primary business activities

Equity investments
· Supplying gaming machines, conversion kits,

· RCN--29.4% equity interest in a provider of
automatic card shufflers, roulette chip sorters and spare
communications services to racing and non-racing
parts for all of our products to commercial, tribal and
customers
governmental gaming
operators

· ITL--50% equity interest in an entity from which we
· Leasing or otherwise providing gaming machines,
lease gaming machines and provide them to our
automatic card shufflers, roulette chip sorters, server-
customers
based gaming systems and content and licensing
proprietary table game content to commercial, tribal
· Sportech--20% equity interest in an operator and
and governmental gaming operators
supplier of sports pools and tote systems (equity
interest sold on January 9, 2014)
· Selling casino-management technology solutions and
systems to commercial, tribal and governmental
gaming operators
· Providing video lottery central monitoring and control
systems and networks for gaming regulators
Product sales
Our product sales include the sale of gaming machines, table products and casino-management technology solutions and systems to commercial,
tribal and government casino operators and wide-area gaming operators, as well as sales of VLTs, conversion kits (including game, hardware or
operating system conversions), spare parts and game content.
·
Gaming machines: The majority of our product sales are derived from sales of gaming machines that include our WMS Bluebird® and
BladeTM branded series of gaming cabinets that combine advanced graphics, digital music and sound effects and secondary bonus games,
our Bally Pro Series branded cabinets that are currently available in upright, slant, spinning-reel, curve and other models, including the
recently released Pro Wave cabinet with a unique 40-inch curved touchscreen monitor, the Pro Series Jumbo V55 cabinet measuring
over nine feet tall and featuring a 55-inch widescreen vertical monitor and our SHFL entertainment, Inc. ("SHFL") Equinox branded
cabinets featuring dual 22-inch widescreen LCDs, illuminated button panels and ear-level speakers. We also sell electronic table
systems ("ETS") to either suit the needs of particular locations where live tables are not allowed or as productivity-enhancing solutions
for other jurisdictions. Our ETS suite of products provide numerous efficiencies and benefits to casinos including reduced downtime,
virtual elimination of errors, mispays and cheating and automated reporting such as wagering statistics and player tracking. Some of our
ETS products enable us to offer table game content where live table games are not permitted, such as racinos (establishments that offer
casino gaming in addition to betting on racing) and locations that provide VLTs.
·
Casino-management technology solutions and systems: We offer core slot, casino and table-management systems (collectively,
"casino-management systems") that help our customers improve communication with players, add excitement to the gaming floor and
enhance operating efficiencies through greater automation, reporting and business intelligence. Our comprehensive

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suite of technology solutions provides gaming operations of every size with a wide range of marketing, data management and analysis,
accounting, player tracking, security and other applications and tools to more effectively manage their operations. We also provide
technologies for deployment of networked, server-based gaming environments, with centralized management and control.
·
Table products: Our table products sales are generated primarily from the sale of products designed to enhance table game speed,
productivity, profitability and security. Our product offerings include various models of automatic card shufflers to suit specific games,
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as well as deck checkers and roulette chip sorters (which we sometimes refer to collectively as "utility" products). Our card-reading
shoes gather data and enable casinos to track table-game play and our baccarat viewer displays current game results and trends. Our
roulette chip sorters efficiently count and organize chips for roulette table games. Our utility products are intended to cost-effectively
provide increased game speed and data on table-game play for security and marketing purposes, which in turn allows our customers to
increase their profitability. Less frequently, we will sell a lifetime license to one of our proprietary table games for use on a casino floor.
·
Parts sales, conversion kits, used gaming machines and game content: We sell replacement parts, used gaming machines and hardware,
operating systems and content conversion kits for our gaming machines. Sales of used gaming machines are an immaterial part of our
revenue and profit and we expect to substantially limit the sales of used gaming machines starting in 2015.
Services
Our Gaming services revenue includes revenue earned from participation games, other gaming machine services and table product leasing and
licensing. Participation games are gaming machines provided to customers through service or leasing arrangements in which our revenues are calculated
based on: (1) a percentage of net win (i.e., the amount wagered, or coin-in, less payouts); (2) fixed daily fees; (3) a percentage of the coin-in; or (4) a
combination of a fixed daily fee and a percentage of the coin-in. We categorize our participation gaming machines as (1) WAP, premium and daily fee
participation games and (2) other leased and participation games.
WAP, premium and daily fee participation games
·
WAP participation games: Wide-area progressive, or WAP, participation games are electronically linked gaming machines that are
located across multiple casinos within a single gaming jurisdiction or across Native American gaming jurisdictions. Players across linked
gaming machines contribute to and compete for large, system-wide progressive jackpots that are designed to increase gaming machine
play for participating casinos by giving the players the opportunity to win a larger jackpot than on a non-WAP gaming machine. We are
responsible for funding WAP jackpots. We create WAP games using our proprietary brands and also using licensed brands. Our licensed
brands include, among others; MONOPOLYTM, THE WIZARD OF OZTM, SPIDER-MANTM, THE LORD OF THE RINGSTM JAMES
CAMERON'S TITANICTM, MICHAEL JACKSON KING OF POPTM, MICHAEL JACKSON WANNA BE STARTIN' SOMETHIN'TM, THE
MAGIC OF DAVID COPPERFIELDTM, BETTY BOOPTM FORTUNE TELLER, GREASE®, GREASE PINK LADIESTM and WILLY
WONKA AND THE CHOCOLATE FACTORYTM. We operate our WAP systems in Arizona, Colorado, Louisiana, Mississippi, Missouri,
Nevada and New Jersey, as well as in certain Native American casinos.
·
Premium and daily fee participation games: We offer two types of non-WAP premium and daily fee participation games: local-area
progressive, or LAP, and standalone. LAP games are gaming machines that are located within a single casino and are electronically
linked to a progressive

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jackpot for that specific casino. Our LAP gaming machines feature games including those offered as WAP as well as our proprietary
brands such as Jackpot Party Progressive®, Life of Luxury® Progressive and ZZ TOP LIVE FROM TEXASTM. Our LAP products
leverage both exclusive brand names and game play intellectual property, and typically offer players the chance to win multiple
progressive jackpots, all of which tend to result in a higher average bet on these games. Net win per gaming machine for LAP games is
generally similar to non-linked standalone gaming machines on a casino floor. We also provide certain standalone participation games
that are not linked to other gaming machines. Our standalone games feature titles, among others, under the licensed MONOPOLY brand
and our proprietary brands, as well as other licensed brands in those jurisdictions where we do not operate a WAP system. Our
standalone participation gaming machines generally feature larger, more elaborate top-boxes and provide game play experiences not
possible on a single screen game or on gaming machines that we sell.
Other leased and participation games
·
Server-based gaming: We provide wide-area gaming operators, such as LBOs, bingo halls and arcades, a comprehensive package of
server-based products and services under long-term contracts that typically include gaming machines, remote management of game
content and management information, central computer systems, secure data communication and field support services. We are typically
paid a fee based on the net win generated by these gaming machines (subject to certain adjustments as may be specified in a particular
contract, including adjustments for taxes and other fees). Our business in this category is primarily based in the U.K.
·
VLTs: Certain customers lease our multi-game and single-game VLTs, which include video gaming machines, mechanical reel gaming
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machines and video poker games. Our VLTs may be operated as standalone units or may interface with central monitoring systems
operated by government agencies. Our VLTs are typically located in places where casino-style gaming is not the only attraction, such as
racetracks, bars and restaurants.
·
Class II and centrally determined systems: We offer video and mechanical-reel gaming machines and VLTs for Class II and certain
VLT jurisdictions where the game outcome is determined by a central server system that we provide. These Class II systems primarily
operate in Native American casinos in Washington, Florida, Alabama and Oklahoma, as well as casinos in Mexico. We receive either a
fixed daily fee or a percentage of the net win generated by the gaming machines or VLTs connected to the central determination system
and a small daily fee for the central determination system.
Other gaming machine services
·
Customer-owned daily fee games: This category consists of gaming machines for which the customer purchases the base gaming
machine and leases the top-box and game theme from us at a lower fixed daily lease payment than if they were to lease the entire gaming
machine. Customer-owned daily fee games typically feature a second LCD screen in the top-box that provides additional bonus
experiences for the player.
·
Licensing: We derive revenue from licensing our games and intellectual property to third parties. Methods for determining our license
or royalty revenue vary, but are generally based on a fixed amount for each licensed game or product using the intellectual property
purchased, placed or shipped in a period, a fixed daily royalty amount or a percentage of the revenue generated by the placement of the
licensed game or product using the intellectual property.

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Table product leasing and licensing
·
Utility product leasing: We offer utility products under month-to-month lease arrangements that contain participation rates or fixed
monthly lease rates. These arrangements include service of the product with back-up and replacement products available at the
customer's request.
·
Proprietary table games licensing: We license our proprietary table game, or PTG, content to commercial, tribal and governmental
casino operators typically under month to month lease arrangements based on fixed monthly rates. PTGs, which are designed to enhance
operators' table-game operations, include our internally developed and acquired PTGs, side bets, add-ons and progressive features. Our
proprietary content and features are also added to public domain games such as poker, baccarat, pai gow poker, craps and blackjack table
games and to electronic platforms.
Lottery segment
Lotteries are operated by U.S. and international governmental authorities and their licensees in approximately 180 jurisdictions throughout the
world. Governments typically authorize lotteries as a means of generating revenues without imposing additional taxes. Net lottery proceeds are generally
set aside for public purposes, such as education, aid to the elderly, conservation, transportation and economic development. Many jurisdictions have
come to rely on the proceeds from lottery game sales as a significant source of funding for these programs. Although there are many types of lottery
games worldwide, the two principal categories of products offered are draw lottery games and instant lottery games. Currently, 44 U.S. jurisdictions
offer instant game lotteries and 46 U. S. jurisdictions offer draw lotteries.
An instant lottery game is typically played by removing a scratch-off protective coating from a preprinted ticket to reveal if it is a winner. Draw
lottery games, such as POWERBALL® and MEGA MILLIONS®, are based on a random selection of a series of numbers, and prizes are generally based
on the number of winners who share the prize pool, although set prizes are also offered. Draw lottery games are generally provided through a lottery
system in which lottery terminals in retail outlets are continuously connected to a central computer system for the activation, sale and validation of
lottery games and related functions. A lottery system may also be used to validate instant lottery games to confirm that a ticket is a winner and prevent
duplicate payments. In some jurisdictions, separate instant game validation systems may be installed.
Lotteries may offer a range of other games. In the U.S., some lotteries offer high frequency games such as keno, which is typically played every
four to five minutes in restricted social settings, such as bars, and is usually offered as an extension of the lottery system.
Based on third party data, U.S. instant lottery game retail sales and draw lottery retail sales (which we define as retail sales of draw games, keno
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and instant games validated by the relevant system) totaled approximately $39 billion and approximately $49 billion, respectively, for the year ended
December 31, 2014. Based on available published industry information, we estimate that worldwide instant lottery game retail sales and worldwide
draw lottery retail sales totaled approximately $76 billion and approximately $199 billion, respectively, during fiscal year 2012.

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The following table summarizes the primary business activities and equity investments included in the Lottery business segment.
Lottery segment
Primary business activities

Equity investments
· Designing, printing and selling instant lottery games

· LNS--20% equity interest in Lotterie Nazionali S.r.l.,
the operator of the Gratta e Vinci instant ticket lottery
· Providing instant game-related services, such as game
in Italy
design, sales and marketing support and inventory
management
· Northstar Illinois--20% equity interest in Northstar
Lottery Group, LLC, the private manager of the Illinois
· Sublicensing brands for lottery products and providing
lottery
lottery-related promotional products
· Northstar New Jersey--17.69% equity interest in
· Supplying player loyalty programs, merchandising
Northstar New Jersey Lottery Group, LLC, an entity
services and interactive marketing campaigns
that provides marketing and sales services to the New
Jersey lottery
· Providing lottery systems, including equipment,
software, data communication services and support
· Hellenic Lotteries--16.5% equity interest in Hellenic
Lotteries S.A., the operator of the Greek state lotteries
· Providing instant game validation systems
· CSG--49% equity interest in Beijing CITIC Scientific
· Providing software, hardware and related services for
Games Technology Co., Ltd., the instant game supplier
sports wagering and keno systems
to the China Sports Lottery
· Printing and selling phone cards
· GLB--50% equity interest in Beijing Guard Libang
Technology Co., Ltd, a provider of lottery systems and
services for the China Welfare Lottery
We believe we are the leading designer, manufacturer and distributor of instant lottery games in the world. We market instant lottery games and
related services to U.S. and international lotteries and commercial customers. We supply instant lottery games to 39 of the 44 U.S. jurisdictions that sell
instant lottery games and have sold instant lottery games to customers in approximately 50 countries. Our U.S. instant lottery game contracts typically
have an initial term of three to five years and frequently include multiple renewal options for additional periods ranging from one to five years, which
our customers have generally exercised in the past. We typically sell our instant lottery games on a price-per-unit or participation basis. Certain of our
international customers purchase instant lottery games as needed rather than under multi-game supply contracts.
Some of our contracts bundle the design and manufacturing of instant lottery games, instant game management systems and marketing and other
services, such as the design and installation of game management software, inventory and distribution, sales, accounting, training and advisory services,
market research and retailer training and recruitment. We are typically paid based on a percentage of retail sales under these contracts.
We provide lotteries with access to some of the world's most popular entertainment brands on lottery products, which we believe helps increase our
customers' instant game sales. Our licensed entertainment brands include AMC®--THE WALKING DEAD®, HARLEY-DAVIDSON®, LOTERIA®,
MAJOR LEAGUE BASEBALL®, MARGARITAVILLE®, MONOPOLY, NATIONAL BASKETBALL ASSOCIATION®, THE PRICE IS RIGHT® and
SLINGO®. We also provide branded merchandise, advertising, promotional support, drawing management services and prize fulfillment programs. In
addition, we offer lotteries interactive marketing services through our Properties Plus® program, which

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