NEW YORK, Jan. 19, 2011 /PRNewswire/ -- Scientific Games Corporation (Nasdaq: SGMS) today announced that its joint venture, Northstar Lottery Group, LLC ("Northstar"), has signed an agreement to be the private manager for the Illinois Lottery for a ten-year term. Northstar was selected following a competitive procurement process, as the Company previously announced on September 16, 2010.
Northstar is a joint venture between Scientific Games and GTECH Corporation, a subsidiary of Lottomatica Group S.p.A. (LTO.MI), which have more than 50 years of combined experience as vendors in Illinois. Scientific Games will have a 20% equity interest in the joint venture.
As the private manager, Northstar, subject to the Illinois Lottery's oversight, will manage the day-to-day operations of the Lottery and its core functions including, among other things: lottery game development and portfolio management; retailer recruitment and training; call center operations; supply of goods and services; subcontractor and vendor selection and management; advertising; branding; and overall marketing strategy. Northstar's goal is to drive Illinois Lottery sales from $2.2 billion in 2010 to over $4.5 billion in 2016, while maintaining responsible gaming best practices.
Scientific Games will be responsible for the design, development, manufacturing, warehousing and distribution of instant lottery tickets and will be compensated based on a percentage of retail sales. Scientific Games will also be entitled to its pro rata share of Northstar's earnings. Under the terms of the private management agreement, Northstar will receive annual incentive compensation payments to the extent it is successful in increasing the Illinois Lottery's net income above certain target levels, subject to a cap of 5% of the applicable year's net income. Northstar will be responsible for payments to the State of Illinois to the extent such targets are not achieved, subject to a similar cap. Northstar is expected to be reimbursed for most of its operating expenses under the arrangement. For further information about the net income target levels and the Illinois Lottery Private Management Agreement, please visit http://www.illinoislottery.com/subsections/Management.htm
"This award is the first of its kind in the U.S. and, as a member of the Northstar Lottery Group, we are proud to be a part of the Illinois Lottery's progressive efforts," stated Lorne Weil, Chairman and Chief Executive Officer of Scientific Games. "This contract represents a revolutionary new business model and has the potential to transform our industry. We believe there is a tremendous opportunity to responsibly drive long-term sustainable growth and greater returns for good causes in Illinois. We applaud the Illinois Lottery for allowing us the opportunity to prove to policy makers across the country how this strategy can unlock the significant potential of the lottery."
"We look forward to working with Northstar to assist in the management and operation of the Illinois Lottery," said Jodie Winnett, Illinois Lottery Acting Superintendent. "They have laid out a superior business plan that generates the most significant incremental value for the Lottery, and also maintains the highest levels of integrity and responsibility in all operational processes."
About Scientific Games
Scientific Games Corporation is a global leader in providing customized, end-to-end gaming solutions to lottery and gaming organizations worldwide. Scientific Games' integrated array of products and services include instant lottery games, lottery gaming systems, terminals and services, and internet applications, as well as server-based interactive gaming machines and associated gaming control systems. Scientific Games serves customers in approximately 50 countries. For more information, please visit our web site at www.scientificgames.com.
Cindi Buckwalter, Investor Relations
In this press release the Company makes "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," "continue," "believe," "expect," "anticipate," "could," "potential," "opportunity," or similar terminology. These statements are based upon management's current expectations, assumptions and estimates and are not guarantees of future results or performance. Actual results may differ materially from those projected in these statements due to a variety of risks and uncertainties and other factors, including, among other things: competition; material adverse changes in economic and industry conditions; technological change; retention and renewal of existing contracts and entry into new or revised contracts; inability to fully realize, and risks associated with, our deferred tax assets; availability and adequacy of cash flows to satisfy obligations and indebtedness or future needs; protection of intellectual property; security and integrity of software and systems; laws and government regulation, including those relating to gaming licenses, permits and operations; inability to identify, complete and integrate future acquisitions; inability to benefit from, and risks associated with, joint ventures and strategic investments and relationships; failure of the Company's Northstar joint venture to meet the net income targets or otherwise realize the anticipated benefits under its Private Management Agreement with the Illinois Lottery; seasonality; inability to identify and capitalize on trends and changes in the lottery and gaming industries; inability to enhance and develop successful gaming concepts; dependence on suppliers and manufacturers; liability for product defects; fluctuations in foreign currency exchange rates and other factors associated with foreign operations; influence of certain stockholders; dependence on key personnel; failure to perform on contracts; resolution of pending or future litigation; labor matters; and stock price volatility. 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 the Company's filings with the Securities and Exchange Commission, including under the heading "Risk Factors" in our periodic reports. Forward-looking statements speak only as of the date they are made and, except for the Company's ongoing obligations under the U.S. federal securities laws, the Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.
SOURCE Scientific Games Corporation