Scientific Games' Joint Venture Signs Services Agreement with New Jersey Lottery
NEW YORK, June 21, 2013 /PRNewswire/ -- Scientific Games Corporation (Nasdaq: SGMS) today announced that Northstar New Jersey Lottery Group, LLC ("Northstar NJ") has signed a long-term agreement to provide marketing, sales and other services to the New Jersey Lottery. Services under the agreement are expected to begin on October 1, 2013 following a transition period and end on June 30, 2029. Northstar NJ is a joint venture comprised of Scientific Games New Jersey LLC, a subsidiary of Scientific Games Corporation, GTECH Corporation, a subsidiary of GTECH S.p.A. ("GTECH"), and OSI LTT NJ Grantor Trust ("OSI"), an affiliated entity of OMERS Administration Corporation, the administrator of the Ontario Municipal Employees Retirement System pension funds (OMERS). Scientific Games New Jersey, LLC owns approximately 18% of Northstar NJ. An entity comprised of GTECH and OSI owns approximately 82% of Northstar NJ.
Northstar NJ will provide a wide range of specialized services to the Lottery that will focus on strengthening its marketing and sales functions and will include support for lottery game development, marketing and advertising, as well as the procurement of related goods and services. All of these activities will be subject to control and oversight by the Lottery.
Under the terms of the agreement, Northstar NJ will be entitled to receive annual incentive compensation to the extent the Lottery's net income for the applicable year exceeds specified target levels, subject to a cap of 5% of such net income. Northstar NJ will be responsible for payments to the State to the extent the Lottery net income targets set forth in Northstar NJ's successful bid are not achieved, subject to a cap of 2% of the applicable year's net income and a $20 million shortfall payment credit. Upon execution of this agreement, Northstar NJ made a $120 million payment to the State, and Northstar NJ has committed to ensuring that at least 30% of annual lottery ticket revenues will be transferred to State institutions and State aid for education.
Under separate supply agreements, Scientific Games and GTECH will provide Northstar NJ with instant lottery games, lottery systems and equipment, and related services. Scientific Games is expected to have a 30 percent economic interest (and be responsible for 30 percent of the capital requirements) associated with these supply arrangements.
"We look forward to working with the New Jersey Lottery, with whom we have a good working relationship, to responsibly grow lottery revenue for the State," stated A. Lorne Weil, Chairman and Chief Executive Officer of Scientific Games. "We applaud the Lottery for its innovative business model, which will bring in significant resources in terms of capital, talent and entertaining products, to help establish the New Jersey Lottery as an industry leader in terms of both performance and innovation."
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 includes instant lottery games, lottery gaming systems, terminals and services, and internet applications, as well as server-based interactive gaming terminals and associated gaming control systems. For more information, please visit our website 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," "should," "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 contemplated 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; 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, strategic equity investments and relationships; failure of our Northstar Illinois joint venture to meet the net income targets or otherwise to realize the anticipated benefits under its private management agreement with the Illinois Lottery; failure of our Northstar New Jersey 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); the seasonality of our business; failure to complete the pending acquisition of WMS Industries Inc. ("WMS") on a timely basis or at all, including due to the inability to obtain the gaming regulatory approvals required to complete the acquisition; disruption of our current plans and operations in connection with the WMS acquisition; failure to achieve the intended benefits of the WMS acquisition, including due to the inability to realize synergies in the anticipated amounts or within the contemplated time-frames or cost expectations, or at all; inability to identify and capitalize on trends and changes in the lottery and gaming industries, including the potential expansion of regulated gaming via the internet; 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 international operations; influence of certain stockholders; dependence on key personnel; failure to perform under our 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 ("SEC"), including under the heading "Risk Factors" in the Company's Annual Report on Form 10-K filed with the SEC on March 12, 2013 and in its subsequent 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