Scientific Games eyes less debt, more digital David McKee, CDC Gaming Reports · September 14, 2021 at 10:48 am Management is staying the course at Scientific Games, according to a JP Morgan investor note penned by analyst Joseph Greff, who met with top executives yesterday. Scientific’s leadership was described as “in the late innings” of divesting both its internet lottery and online sports betting divisions, although no prospective buyers were mentioned. Once the divestitures are completed, the proceeds will be reinvested in enlarging Scientific’s presence in the digital gaming space and reducing the company’s leverage. Scientific Games is down from 10 times to seven times equity in its leverage and management hopes to reduce that figure even further. CEO Barry Cottle and CFO Mike Eklund’s stated goal is to be down to five times equity by sometime (unspecified) in 2022, liberating revenue for free cash flow rather than debt servicing. As for Scientific’s bread and butter, slot machines, Greff wrote, “Management feels that it has a nice balance between new cabinet launches and reopening units/games … as the recovery continues to gain steam.” This optimism extends into the quarters yet to come. According to Cottle and Eklund, gaming’s recovery in North America is outrunning the international segment, with demand closely tracking the relaxation of COVID restrictions on casinos. All of Scientific’s deployed machines in the U.S. were active by the end of March, whereas in the United Kingdom, they were only at 95 percent by late June. Unit prices have had “no material impact” on buyers’ demand. With regard to social gaming and the digital-casino market, Cottle and Eklund reported that their SciPlay subsidiary is, in Greff’s words, “a bigger and faster-growing segment that provides ample runway for growth.” Dissemination of new games has been made easier by the acquisition of game developer Koukoi, which SciPlay expects will also enable it to capture larger market share. Cottle and Eklund also anticipate considerable growth in their total addressable market, as internet gambling (aside from sports betting) is still legal in only five U.S. states.