scientific games corporation form 10-q securities and

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

For the quarterly period ended June 30, 2021OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

For the transition period from to Commission file number: 001-11693

SCIENTIFIC GAMES CORPORATION(Exact name of registrant as specified in its charter)

Nevada 81-0422894(State or other jurisdiction of (I.R.S. Employer Identification No.)incorporation or organization)

6601 Bermuda Road, Las Vegas, Nevada 89119

(Address of principal executive offices)(Zip Code)

(702) 897-7150(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registeredCommon Stock, $.001 par value SGMS The NASDAQ Stock MarketPreferred Stock Purchase Rights The NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding

12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange

Act.

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant has the following number of shares outstanding of each of the registrant’s classes of common stock as of August 4, 2021:Common Stock: 96,369,658

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIESINDEX TO FINANCIAL AND OTHER INFORMATION

THREE AND SIX MONTHS ENDED JUNE 30, 2021

PagePART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited) 6

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020 6

Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2021 and 2020 7

Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020 8

Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2021 and 2020 9

Notes to Condensed Consolidated Financial Statements 10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28

Item 3. Quantitative and Qualitative Disclosures About Market Risk 41

Item 4. Controls and Procedures 42

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 42

Item 1A. Risk Factors 42

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 44

Item 3. Defaults Upon Senior Securities 44

Item 4. Mine Safety Disclosures 44

Item 5. Other Information 44

Item 6. Exhibits 45

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Glossary of TermsThe following terms or acronyms used in this Quarterly Report on Form 10-Q are defined below:

Term or Acronym Definition2020 10-K 2020 Annual Report on Form 10-K filed with the SEC on March 1, 20212025 Secured Notes 5.000% senior secured notes due 2025 issued by SGI2026 Secured Euro Notes 3.375% senior secured notes due 2026 issued by SGI2026 Unsecured Euro Notes 5.500% senior unsecured notes due 2026 issued by SGI2025 Unsecured Notes 8.625% senior unsecured notes due 2025 issued by SGI2026 Unsecured Notes 8.250% senior unsecured notes due 2026 issued by SGI2028 Unsecured Notes 7.000% senior unsecured notes due 2028 issued by SGI2029 Unsecured Notes 7.250% senior unsecured notes due 2029 issued by SGIAEBITDA Adjusted EBITDA, our performance measure of profit or loss for our business segmentsASC Accounting Standards CodificationASU Accounting Standards Update

COVID-19 Coronavirus disease first identified in 2019 (declared a pandemic by the World Health Organization on March 11,2020)

D&A depreciation, amortization and impairments (excluding goodwill)Exchange Act Securities Exchange Act of 1934, as amendedFASB Financial Accounting Standards BoardFOBT Fixed odds betting terminalKPIs Key Performance IndicatorsLBO licensed betting officeLIBOR London Interbank Offered Rate

Note a note in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, unlessotherwise indicated

POS percentage of retail sales

Participation

with respect to our Gaming business, refers to gaming machines provided to customers through service or leasingarrangements in which we earn revenues and are paid based on: (1) a percentage of the amount wagered less payouts;(2) fixed daily-fees; (3) a percentage of the amount wagered; or (4) a combination of (2) and (3), and with respect toour Lottery business, refers to a contract or arrangement in which we earn revenues and are paid based on apercentage of retail sales

R&D research and developmentRMG real-money gamingRSU restricted stock unitSEC Securities and Exchange CommissionSecured Notes refers to the 2025 Secured Notes and 2026 Secured Euro Notes, collectivelySenior Notes the Secured Notes and the Unsecured Notes

SciPlay Revolver $150 million revolving credit facility agreement entered into by SciPlay Holding Company, LLC, a subsidiary ofSciPlay Corporation, that matures in May 2024

SG&A selling, general and administrativeSGC Scientific Games CorporationSGI Scientific Games International, Inc., a wholly-owned subsidiary of SGCShufflers various models of automatic card shufflers, deck checkers and roulette chip sortersSportCast SportCast Pty, Limited

Unsecured Notes refers to the 2026 Unsecured Euro Notes, 2026 Unsecured Notes, 2028 Unsecured Notes and 2029 Unsecured Notes,collectively

U.S. GAAP accounting principles generally accepted in the U.S.U.S. jurisdictions the 50 states in the U.S. plus the District of Columbia, U.S. Virgin Islands and Puerto RicoFOBT recovery recovery from customers of U.K. value-added tax charged on FOBTsVGT video gaming terminalVLT video lottery terminal

Intellectual Property Rights

All ® notices signify marks registered in the United States. © 2021 Scientific Games Corporation. All Rights Reserved.

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FORWARD-LOOKING STATEMENTS

Throughout this Quarterly Report on Form 10-Q, we make “forward-looking statements” within the meaning of the U.S. Private SecuritiesLitigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the useof terminology such as “may,” “will,” “estimate,” “intend,” “plan,” “continue,” “believe,” “expect,” “anticipate,” “target,” “should,” “could,” “potential,”“opportunity,” “goal,” or similar terminology. The forward-looking statements contained in this Quarterly Report on Form 10-Q are generally located in thematerial set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” but may be found in otherlocations as well. These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of timing, futureresults or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differmaterially from those contemplated in these statements due to a variety of risks and uncertainties and other factors, including, among other things:

• the impact of the COVID-19 pandemic and any resulting unfavorable social, political, economic and financial conditions, including the temporary andpotentially recurring closure of casinos and lottery operations on a jurisdiction-by-jurisdiction basis;

• risks relating to our continuing strategic review and proposed acquisition of public SciPlay equity, including lack of assurance that the review willresult in the consummation of any transaction, on any particular timetable or at all, that the review will yield additional value or that the review will notadversely impact our business, financial results, results of operations, cash flows or stock price;

• slow growth of new gaming jurisdictions, slow addition of casinos in existing jurisdictions and declines in the replacement cycle of gaming machines;• risks relating to foreign operations, including anti-corruption laws, fluctuations in currency rates, restrictions on the payment of dividends from

earnings, restrictions on the import of products and financial instability, including the potential impact to our business resulting from the continuinguncertainty following the U.K.’s withdrawal from the European Union;

• difficulty predicting what impact, if any, new tariffs imposed by and other trade actions taken by the U.S. and foreign jurisdictions could have on ourbusiness;

• U.S. and international economic and industry conditions;• level of our indebtedness, higher interest rates, availability or adequacy of cash flows and liquidity to satisfy indebtedness, other obligations or future

cash needs;• the discontinuation or replacement of LIBOR, which may adversely affect interest rates;• inability to reduce or refinance our indebtedness;• restrictions and covenants in debt agreements, including those that could result in acceleration of the maturity of our indebtedness;• competition;• inability to win, retain or renew, or unfavorable revisions of, existing contracts, and the inability to enter into new contracts;• the impact of U.K. legislation approving the reduction of fixed-odds betting terminals maximum stakes limit on LBO operators, including the related

closure of certain LBO shops;• inability to adapt to, and offer products that keep pace with, evolving technology, including any failure of our investment of significant resources in our

R&D efforts;• changes in demand for our products and services;• inability to benefit from, and risks associated with, strategic equity investments and relationships;• inability to achieve some or all of the anticipated benefits of SciPlay being a standalone public company;• dependence on suppliers and manufacturers;• SciPlay’s dependence on certain key providers;• ownership changes and consolidation in the gaming industry;• fluctuations in our results due to seasonality and other factors;• security and integrity of our products and systems, including the impact of any security breaches or cyber-attacks;• protection of our intellectual property, inability to license third-party intellectual property and the intellectual property rights of others;• reliance on or failures in information technology and other systems;

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• litigation and other liabilities relating to our business, including litigation and liabilities relating to our contracts and licenses, our products andsystems, our employees (including labor disputes), intellectual property, environmental laws and our strategic relationships;

• reliance on technological blocking systems;• challenges or disruptions relating to the completion of the domestic migration to our enterprise resource planning system;• laws and government regulations, both foreign and domestic, including those relating to gaming, data privacy and security, including with respect to

the collection, storage, use, transmission and protection of personal information and other consumer data, and environmental laws, and those laws andregulations that affect companies conducting business on the internet, including online gambling;

• legislative interpretation and enforcement, regulatory perception and regulatory risks with respect to gaming, especially internet wagering, socialgaming and sports wagering;

• changes in tax laws or tax rulings, or the examination of our tax positions;• opposition to legalized gaming or the expansion thereof and potential restrictions on internet wagering;• significant opposition in some jurisdictions to interactive social gaming, including social casino gaming and how such opposition could lead these

jurisdictions to adopt legislation or impose a regulatory framework to govern interactive social gaming or social casino gaming specifically, and howthis could result in a prohibition on interactive social gaming or social casino gaming altogether, restrict our ability to advertise our games, orsubstantially increase our costs to comply with these regulations;

• expectations of shift to regulated online gaming or sports wagering;• inability to develop successful products and services and capitalize on trends and changes in our industries, including the expansion of internet and

other forms of interactive gaming;• the continuing evolution of the scope of data privacy and security regulations, and our belief that the adoption of increasingly restrictive regulations in

this area is likely within the U.S. and other jurisdictions;• incurrence of restructuring costs;• goodwill impairment charges including changes in estimates or judgments related to our impairment analysis of goodwill or other intangible assets;• stock price volatility;• failure to maintain adequate internal control over financial reporting;• dependence on key executives;• natural events that disrupt our operations, or those of our customers, suppliers or regulators;• possibility that the 2018 renewal of the Lotterie Nazionali S.r.l. concession to operate the Italian instant games lottery is not final (pending appeal

against existing court rulings relating to third-party protest against the renewal of the concession); and• expectations of growth in total consumer spending on social casino gaming.

Additional information regarding risks and uncertainties and other factors that could cause actual results to differ materially from thosecontemplated in forward-looking statements is included from time to time in our filings with the SEC, including under “Risk Factors” in Part II, Item 1A ofthis Quarterly Report on Form 10-Q and Part I, Item 1A in our 2020 10-K. Forward-looking statements speak only as of the date they are made and, exceptfor our ongoing obligations under the U.S. federal securities laws, we undertake no and expressly disclaim any obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

You should also note that this Quarterly Report on Form 10-Q may contain references to industry market data and certain industry forecasts.Industry market data and industry forecasts are obtained from publicly available information and industry publications. Industry publications generally statethat the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of that information isnot guaranteed. Although we believe industry information to be accurate, it is not independently verified by us and we do not make any representation as tothe accuracy of that information. In general, we believe there is less publicly available information concerning the international gaming, lottery, social anddigital gaming industries than the same industries in the U.S.

Due to rounding, certain numbers presented herein may not precisely agree or add up on a cumulative basis to the totals previously reported.

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PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share amounts)

Three Months Ended June 30, Six Months Ended June 30,2021 2020 2021 2020

Revenue:Services $ 551 $ 322 $ 1,014 $ 744 Product sales 155 84 259 252 Instant products 174 133 336 268

Total revenue 880 539 1,609 1,264 Operating expenses:

Cost of services 151 126 290 256 Cost of product sales 75 69 125 160 Cost of instant products 77 62 154 135 Selling, general and administrative 205 151 391 349 Research and development 54 31 106 82 Depreciation, amortization and impairments 123 140 246 278 Goodwill impairment — — — 54 Restructuring and other 32 16 53 38

Operating income (loss) 163 (56) 244 (88)Other (expense) income:

Interest expense (119) (124) (240) (248)Earnings (loss) from equity investments 14 (3) 23 (5)(Loss) gain on remeasurement of debt (7) (12) 18 (2)Other income (expense), net 70 (1) 70 (4)

Total other expense, net (42) (140) (129) (259)Net income (loss) before income taxes 121 (196) 115 (347)

Income tax expense (8) (2) (11) (6)Net income (loss) 113 (198) 104 (353)

Less: Net income attributable to noncontrolling interest 4 5 10 9 Net income (loss) attributable to SGC $ 109 $ (203) $ 94 $ (362)

Basic and diluted net income (loss) attributable to SGC per share: Basic $ 1.13 $ (2.15) $ 0.98 $ (3.85)Diluted $ 1.10 $ (2.15) $ 0.97 $ (3.85)

Weighted average number of shares used in per share calculations: Basic shares 96 95 96 94 Diluted shares 99 95 97 94

(1) Excludes D&A.(2) Includes $63 million gain for the three and six months ended June 30, 2021, related to the SportCast acquisition transaction.

See accompanying notes to condensed consolidated financial statements.

(1)

(1)

(1)

(2)

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in millions)


Net income (loss) $ 113 $ (198) $ 104 $ (353)Other comprehensive gain (loss):

Foreign currency translation gain (loss), net of tax 7 61 11 (22)Pension and post-retirement (loss) gain, net of tax — (1) (1) 1 Derivative financial instruments unrealized gain (loss), net oftax 4 2 9 (14)

Total other comprehensive gain (loss) 11 62 19 (35)Total comprehensive gain (loss) 124 (136) 123 (388)

Less: comprehensive income attributable to noncontrollinginterest 4 5 10 9

Comprehensive income (loss) attributable to SGC $ 120 $ (141) $ 113 $ (397)


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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited, in millions, except par value)

As ofJune 30, 2021 December 31, 2020

ASSETSCurrent assets:

Cash and cash equivalents $ 932 $ 1,016 Restricted cash 51 117 Receivables, net of allowance for credit losses $67 and $81, respectively 636 616 Inventories 184 191 Prepaid expenses, deposits and other current assets 214 241

Total current assets 2,017 2,181 Non-current assets:

Restricted cash 10 10 Receivables, net of allowance for credit losses $2 and $5, respectively 20 20 Property and equipment, net 391 415 Operating lease right-of-use assets 92 94 Goodwill 3,356 3,292 Intangible assets, net 1,217 1,299 Software, net 215 227 Equity investments 252 262 Other assets 192 184

Total assets $ 7,762 $ 7,984

LIABILITIES AND STOCKHOLDERS’ DEFICITCurrent liabilities:

Current portion of long-term debt $ 44 $ 44 Accounts payable 178 203 Accrued liabilities 558 586

Total current liabilities 780 833 Deferred income taxes 88 79 Operating lease liabilities 73 77 Other long-term liabilities 216 260 Long-term debt, excluding current portion 8,975 9,259

Total liabilities 10,132 10,508 Commitments and contingencies (Note 16)Stockholders’ deficit:

Common stock, par value $0.001 per share: 199 shares authorized; 113 shares issued and 96 and 95shares outstanding, respectively 1 1 Additional paid-in capital 1,299 1,268 Accumulated loss (3,435) (3,529)Treasury stock, at cost, 17 shares (175) (175)Accumulated other comprehensive loss (199) (218)

Total SGC stockholders’ deficit (2,509) (2,653)Noncontrolling interest 139 129

Total stockholders’ deficit (2,370) (2,524)Total liabilities and stockholders’ deficit $ 7,762 $ 7,984


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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)

Six Months Ended June 30,2021 2020

Cash flows from operating activities:Net income (loss) $ 104 $ (353)Adjustments to reconcile net income (loss) to cash provided by operating activities 234 460 Changes in working capital accounts, net of effect of acquisitions (71) 57 Changes in deferred income taxes and other 5 8

Net cash provided by operating activities 272 172 Cash flows from investing activities:

Capital expenditures (103) (92)Acquisitions of businesses, net of cash acquired (9) (13)Distributions from equity method investments, net of additions 7 (1)Proceeds from sale of assets and other 7 22

Net cash used in investing activities (98) (84)Cash flows from financing activities:

Borrowings under SGI revolving credit facility — 530 Repayments under SGI revolving credit facility (250) (90)Payments on long-term debt (21) (20)Payments of debt issuance and deferred financing costs — (1)Payments on license obligations (29) (15)Taxes paid related to net share settlement of equity awards and other (24) (2)

Net cash (used in) provided by financing activities (324) 402 Effect of exchange rate changes on cash, cash equivalents and restricted cash — (1)(Decrease) increase in cash, cash equivalents and restricted cash (150) 489 Cash, cash equivalents and restricted cash, beginning of period 1,143 375 Cash, cash equivalents and restricted cash, end of period $ 993 $ 864

Supplemental cash flow information:Cash paid for interest $ 229 $ 224 Income taxes paid 13 7 Distributed earnings from equity investments 15 13

Supplemental non-cash transactions:Non-cash interest expense $ 12 $ 11


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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited, amounts in USD, table amounts in millions, except per share amounts)

(1) Description of the Business and Summary of Significant Accounting Policies

Description of the Business

We are a leading developer of technology-based products and services and associated content for the worldwide gaming, lottery, social and digitalgaming industries. Our portfolio of revenue-generating activities primarily includes supplying gaming machines and game content, casino-managementsystems and table game products and services to licensed gaming entities; providing instant and draw-based lottery products, lottery systems and lotterycontent and services to lottery operators; providing social casino and other mobile games to retail customers; and providing a comprehensive suite of digitalRMG and sports wagering solutions, distribution platforms, content, products and services. We also gain access to technologies and pursue globalexpansion through strategic acquisitions and equity investments. We report our results of operations in four business segments—Gaming, Lottery, SciPlayand Digital—representing our different products and services.

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The accompanyingcondensed consolidated financial statements include the accounts of SGC, its wholly owned subsidiaries, and those subsidiaries in which we have acontrolling financial interest. Investments in other entities in which we do not have a controlling financial interest but we exert significant influence areaccounted for in our consolidated financial statements using the equity method of accounting. All intercompany balances and transactions have beeneliminated in consolidation.

In the opinion of SGC and its management, we have made all adjustments necessary to present fairly our consolidated financial position, results ofoperations, comprehensive loss and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. These unaudited condensedconsolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2020 10-K.Interim results of operations are not necessarily indicative of results of operations to be expected for a full year.

Strategic Review Update

On June 29, 2021, we announced that the Company, with the support of its Board of Directors, completed the strategic review and intends todivest our Lottery and Sports Betting (component of our Digital business segment) operations creating a path to significantly de-lever and position theCompany for enhanced growth. We are currently evaluating strategic alternatives to execute the divestitures for each business, respectively, including aninitial public offering (“IPO”) or a combination with a special purpose acquisition company (“SPAC”), or a sale or a strategic combination with anotherbusiness.

On July 15, 2021, we submitted a proposal to SciPlay’s board of directors to acquire all the outstanding equity interest in SciPlay not alreadyowned by us (approximately 19%) in alignment with the strategy developed as part of the strategic review described above. Our offer to all SciPlayshareholders (other than SGMS and our subsidiaries) is that they will receive 0.250 shares of our common stock for each share of SciPlay Class A commonstock they own. The transaction is subject to the negotiation and execution of a mutually acceptable merger agreement.

There can be no assurances that our evaluation of strategic alternatives for our Lottery and Sports Betting businesses or for the acquisition of theremaining equity interest in SciPlay will result in any transactions or other actions and execution of these transactions is subject to significant market,operational and other uncertainties. As such, the Lottery and Sports Betting portions of the Company do not meet held-for sale criteria set forth under ASC360 and ASC 205 as of June 30, 2021.

Impact of COVID-19

As more fully described in the “Description of the Business and Summary of Significant Accounting Policies - Impact of COVID-19” in Note 1 ofour 2020 10-K, COVID-19 disruptions continue to impact our results of operations and particularly our Gaming business segment operations. Althoughmost gaming establishments have reopened globally and while some have begun operating at full capacity, many gaming operations have yet to return topre-COVID levels. The current state reflects continued fluctuations in infection rates and regulations for various regions along with ongoing domestic andinternational travel restrictions or warnings, social distancing measures, reduced operating capacity and an overall economic and general uncertaintyregarding the magnitude and length of time that these disruptions will continue. These circumstances may change in the future and such changes could bematerial. We continue to assess the situation jurisdiction by jurisdiction, actively managing our cash flows and continuing to evaluate additional measuresthat may reduce operating costs and conserve cash to preserve liquidity as we execute on our strategic initiatives.

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As of June 30, 2021, our total available liquidity (excluding our SciPlay business segment) was $984 million, which included $353 million ofundrawn availability under SGI’s revolving credit facility. In July 2021, we made a voluntary payment of $150 million on SGI’s revolving credit facility.

Significant Accounting Policies

There have been no changes to our significant accounting policies described within the Notes of our 2020 10-K.

Computation of Basic and Diluted Net Income (Loss) Per Share

Basic and diluted net income per share for the three and six months ended June 30, 2021 were computed by dividing net income attributable toSGC by the weighted average number of shares outstanding, and the weighted average number of shares outstanding adjusted to give effect to allpotentially dilutive securities using the treasury stock method, respectively.

Basic and diluted net loss per share were the same for the three and six months ended June 30, 2020 as all common stock equivalents during thoseperiods would be anti-dilutive. We excluded 1 million and 4 million of stock options and RSUs from the diluted weighted-average common sharesoutstanding for the three and six months ended June 30, 2020, respectively.

SportCast Acquisition

In August of 2020, we obtained a one-year option agreement to acquire SportCast Pty, Limited (the “SportCast Option”), a privately held sportsbetting content and player engagement technology and platform supplier. We accounted for the SportCast Option by electing a measurement alternative tomeasure this equity investment at cost, less impairment given lack of readily determinable fair value in accordance with ASC Topic 321. In May 2021, weexercised the SportCast Option and completed an acquisition of SportCast (the “SportCast Acquisition”), which expanded our portfolio of sports bettingtechnology, services and content of our Digital business segment.

We accounted for this acquisition using the acquisition method of accounting allocating the total consideration transferred to acquired tangible andintangible assets and assumed liabilities based on estimated fair values. The fair value determination of the SportCast Option, the acquired assets andassumed liabilities requires significant judgments and estimates. The estimated fair values of the SportCast Option, acquired assets, assumed liabilities andresulting goodwill are subject to adjustment as we finalize our purchase price accounting.

The total consideration transferred was $81 million primarily consisting of $7 million in cash and $63 million in fair value of the SportCastOption. This resulted in a $63 million gain recorded in the Other income (expense), net line item in our consolidated statements of operations for the threeand six-months ended June 30, 2021 due to the increase in fair value of the SportCast Option. The fair value of the Sportscast Option has beenpreliminarily determined using an income approach method and level 3 inputs in the hierarchy as established by ASC 820. The discount rate used in thevaluation analysis was 15%.

The preliminary allocation of the purchase price (expected to be finalized by the end of 2021) resulted in $26 million allocated to intangible assetsprimarily consisting of technology and customer relationship and $61 million allocated to goodwill. The factors contributing to the recognition ofacquisition goodwill are based on customer offering diversification, expected synergies, assembled workforce and other strategic benefits. None of theresultant goodwill is expected to be deductible for income tax purposes.

Subsequent Period Acquisitions

On July 2, 2021, SciPlay acquired privately held Koukoi Oy (“Koukoi”), a developer and operator of casual mobile games for approximately$5 million in cash consideration. The acquisition allows SciPlay to expand its casual games portfolio.

In August of 2021, we acquired privately held Lightning Box Games (Lightning Box), iGaming content studio for approximately $40 million incash consideration and up to an additional $30 million in contingent consideration. The acquisition allows our Digital business segment to expand ouriGaming content portfolio.

We are in the process of completing the preliminary purchase price accounting for these acquisitions and expect that a substantial portion of thepurchase price will be allocated to acquired intellectual property, customer relationship and goodwill.

The revenue and earnings associated with all of the above acquisitions are not significant to our consolidated financial statements.

New Accounting Guidance - Not Yet Adopted

The FASB issued ASU No. 2020-04 and subsequently ASU No. 2021-01, Reference Rate Reform (Topic 848) in March 2020 and January 2021,respectively. The new guidance provides optional expedients and exceptions for applying U.S.

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GAAP to contract modifications and hedging relationships, including derivative instruments impacted by changes in the interest rates used for discountingcash flows for computing variable margin settlements, subject to meeting certain criteria, that reference LIBOR or other reference rates expected to bediscontinued, in 2022 or potentially 2023 (pending possible extension). The ASUs establish certain contract modification principles that entities can applyin other areas that may be affected by reference rate reform and certain elective hedge accounting expedients and exceptions. The ASUs may be appliedprospectively. Based on our preliminary assessment completed to date, we do not expect the adoption of this guidance to have a significant impact on ourconsolidated financial statements.

We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements.

(2) Revenue Recognition

The following table disaggregates revenues by type within each of our business segments:


GamingGaming operations $ 181 $ 16 $ 294 $ 135 Gaming machine sales 100 53 155 145 Gaming systems 52 17 94 72 Table products 34 5 68 57

Total $ 367 $ 91 $ 611 $ 409

LotteryInstant products $ 175 $ 133 $ 337 $ 269 Lottery systems 91 76 177 152

Total $ 266 $ 209 $ 514 $ 421

SciPlayMobile $ 136 $ 144 $ 269 $ 245 Web and other 18 22 36 39

Total $ 154 $ 166 $ 305 $ 284

DigitalSports and platform $ 38 $ 26 $ 71 $ 64 Gaming and other 55 47 108 86

Total $ 93 $ 73 $ 179 $ 150 (1) Gaming operations revenue for the three and six months ended June 30, 2021 benefited from $38 million and $44 million U.K. FOBT recovery received from certain U.K. customers relatedto a 2020 U.K. court ruling associated with overcharging of value-added tax for gaming operators that consequently reduced our net gaming revenues related to these customers andarrangements.

The amount of rental income revenue that is outside the scope of ASC 606 was $119 million and $182 million for the three and six months ended

June 30, 2021, respectively, and $12 million and $86 million for the three and six months ended June 30, 2020, respectively.

Contract Liabilities and Other Disclosures

The following table summarizes the activity in our contract liabilities for the reporting period:

(1)

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Six Months Ended June 30,2021

Contract liability balance, beginning of period $ 89 Liabilities recognized during the period 47 Amounts recognized in revenue from beginning balance (43)Contract liability balance, end of period $ 93 (1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our consolidated balance sheets.

The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and customer

advances and deposits (contract liabilities) on our consolidated balance sheets. Other than contracts with customers with financing arrangements exceeding12 months, revenue recognition is generally proximal to conversion to cash, except for Lottery instant products sold under percentage of retail salescontracts. Revenue is recognized for such contracts upon delivery to our customers, while conversion to cash is based on the retail sale of the underlyingtickets to end consumers. As a result, revenue recognition under ASC 606 does not approximate conversion to cash for such contracts in any periodspresented. Total revenue recognized under such contracts for the three and six months ended June 30, 2021 was $31 million and $50 million, respectively,and $21 million and $40 million for the three and six months ended June 30, 2020, respectively. The following table summarizes our balances in theseaccounts for the periods indicated (other than contract liabilities disclosed above):

Receivables Contract AssetsBeginning of period balance $ 636 $ 127 End of period balance, June 30, 2021 656 113 (1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our consolidated balance sheets.

As of June 30, 2021, we did not have material unsatisfied performance obligations for contracts expected to be long-term or contracts for whichwe recognize revenue at an amount other than for which we have the right to invoice for goods or services delivered or performed.

(3) Business Segments

We report our operations in four business segments—Gaming, Lottery, SciPlay and Digital—representing our different products and services. Adetailed discussion regarding the products and services from which each reportable business segment derives its revenue is included in Notes 2 and 3 in our2020 10-K.

In evaluating financial performance, our Chief Operating Decision Maker focuses on AEBITDA as management’s segment measure of profit orloss, which is described in Note 2 in our 2020 10-K. The accounting policies of our business segments are the same as those described within the Notes inour 2020 10-K. The following tables present our segment information:

(1)

(1)

(1)

13

Three Months Ended June 30, 2021

Gaming Lottery SciPlay Digital

Unallocated andReconciling

Items TotalTotal revenue $ 367 $ 266 $ 154 $ 93 $ — $ 880 AEBITDA 196 138 48 31 (30) $ 383 Reconciling items to consolidated net income before income taxes:D&A (72) (14) (4) (26) (7) (123)Restructuring and other (3) (1) (1) — (27) (32)EBITDA from equity investments (24) (24)Earnings from equity investments 14 14 Interest expense (119) (119)Loss on remeasurement of debt (7) (7)Other income, net 70 70 Stock-based compensation (41) (41)Net income before income taxes $ 121 (1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net income beforeincome taxes.

Three Months Ended June 30, 2020



Items TotalTotal revenue $ 91 $ 209 $ 166 $ 73 $ — $ 539 AEBITDA (31) 97 60 20 (25) $ 121 Reconciling items to consolidated net loss before income taxes:D&A (86) (18) (2) (23) (11) (140)Restructuring and other (7) (3) (1) (1) (4) (16)EBITDA from equity investments (7) (7)Loss from equity investments (3) (3)Interest expense (124) (124)Loss on remeasurement of debt (12) (12)Other expense, net (1) (1)Stock-based compensation (14) (14)Net loss before income taxes $ (196)(1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net loss before incometaxes.

(1)

(1)

14

Six Months Ended June 30, 2021



Items TotalTotal revenue $ 611 $ 514 $ 305 $ 179 $ — $ 1,609 AEBITDA 304 257 94 60 (62) $ 653 Reconciling items to consolidated net income before income taxes:D&A (147) (28) (7) (50) (14) (246)Restructuring and other (6) (1) (1) (1) (44) (53)EBITDA from equity investments (44) (44)Earnings from equity investments 23 23 Interest expense (240) (240)Gain on remeasurement of debt 18 18 Other income, net 68 68 Stock-based compensation (64) (64)Net income before income taxes $ 115 (1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net income beforeincome taxes.




Items TotalTotal revenue $ 409 $ 421 $ 284 $ 150 $ — $ 1,264 AEBITDA 65 175 94 43 (56) $ 321 Reconciling items to consolidated net loss before income taxes:D&A (175) (32) (4) (44) (23) (278)Goodwill impairment (54) — — — — (54)Restructuring and other (19) (8) (2) (2) (7) (38)EBITDA from equity investments (14) (14)Loss from equity investments (5) (5)Interest expense (248) (248)Loss on remeasurement of debt (2) (2)Other expense, net (5) (5)Stock-based compensation (24) (24)Net loss before income taxes $ (347)(1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net loss before incometaxes.

(4) Restructuring and other

Restructuring and other includes charges or expenses attributable to: (i) employee severance; (ii) management restructuring and related costs; (iii)restructuring and integration; (iv) cost savings initiatives; (v) major litigation; and (vi) acquisition and disposition related costs and other unusual items.The following table summarizes pre-tax restructuring and other costs for the periods presented:

(1)

(1)

15


Employee severance and related $ 1 $ 12 $ 2 $ 30 Restructuring, integration and other 31 4 51 8

Total $ 32 $ 16 $ 53 $ 38 (1) The three and six months ended June 30, 2020 includes $10 million and $24 million, respectively, in severance and other benefits granted to employees as a result of COVID-19 relatedausterity measures.

(2) The three and six months ended June 30, 2021 largely includes cost associated with strategic and business optimization initiatives (see the Strategic Review section in Note 1).

(5) Receivables, Allowance for Credit Losses and Credit Quality of Receivables

Receivables

The following table summarizes the components of current and long-term receivables, net:


Current:Receivables $ 703 $ 697 Allowance for credit losses (67) (81)

Current receivables, net 636 616 Long-term:

Receivables 22 25 Allowance for credit losses (2) (5)

Long-term receivables, net 20 20 Total receivables, net $ 656 $ 636

Allowance for Credit Losses

We manage our receivable portfolios using both geography and delinquency as key credit quality indicators. The following summarizesgeographical delinquencies of total receivables, net:

As of

June 30, 2021Balances over 90 days

past due December 31, 2020Balances over 90 days

past dueReceivables:

U.S. and Canada $ 478 $ 81 $ 443 $ 88 International 247 60 279 52

Total receivables 725 141 722 140

Receivables allowance:U.S. and Canada (26) (11) (43) (26)International (43) (24) (43) (24)

Total receivables allowance (69) (35) (86) (50)Receivables, net $ 656 $ 106 $ 636 $ 90

Account balances are charged against the allowances after all internal and external collection efforts have been exhausted and the potential forrecovery is considered remote.

The activity in our allowance for receivable credit losses for each of the three and six months ended June 30, 2021 and 2020 is as follows:

(1)

(2)

16

2021 2020Total U.S. and Canada International Total

Beginning allowance for credit losses $ (86) $ (43) $ (43) $ (42)Provision — — — (28)Charge-offs and recoveries 2 1 1 — Allowance for credit losses as of March 31 (84) (42) (42) (70)Provision (2) (1) (1) (12)Charge-offs 17 17 — — Allowance for credit losses as of June 30 $ (69) $ (26) $ (43) $ (82)(1) Reflects $6 million related to implementation of ASC 326 for the 2020 beginning balance.

At June 30, 2021, 16% of our total receivables, net, were past due by over 90 days compared to 14% at December 31, 2020.

Credit Quality of Receivables

We have certain concentrations of outstanding receivables in international locations that impact our assessment of the credit quality of ourreceivables. We monitor the macroeconomic and political environment in each of these locations in our assessment of the credit quality of our receivables.The international customers with significant concentrations (generally deemed to be exceeding 10%) of our receivables with terms longer than one year arein the Latin America region (“LATAM”) and are primarily comprised of Mexico, Peru and Argentina. The following table summarizes our LATAMreceivables:

As of June 30, 2021Total Current or Not Yet Due Balances Over 90 days Past Due

Receivables 119 $ 45 $ 74 Allowance for credit losses (52) (19) (33)Receivables, net $ 67 $ 26 $ 41

We increased our allowance for credit losses by $12 million and $40 million for the three and six months ended June 30, 2020, respectively. Theseincreases were primarily related to Gaming customers in LATAM (which transact with both domestic and international subsidiaries) as those customerswere particularly affected by COVID-19 closures of gaming operations establishments with COVID-related closures lasting longer than in other geographicregions. We did not have material credit losses during the first half of 2021. We continuously review receivables and as information concerning creditquality arise, reassess our expectations of future losses and record an incremental reserve if warranted at that time. Our current allowance for credit lossesrepresents our current expectation of credit losses; however future expectations could change as the ultimate impact of the COVID-19 disruption remainsuncertain, particularly as to the financial stability of our customers during and after the COVID-19 disruption period.

The fair value of receivables is estimated by discounting expected future cash flows using current interest rates at which similar loans would bemade to borrowers with similar credit ratings and remaining maturities. As of June 30, 2021 and December 31, 2020, the fair value of receivables, net,approximated the carrying value due to contractual terms of receivables generally being less than 24 months.

(6) Inventories

Inventories consisted of the following:


Parts and work-in-process $ 102 $ 122 Finished goods 82 69 Total inventories $ 184 $ 191

(1)

17

Parts and work-in-process include parts for gaming machines, lottery terminals and instant lottery ticket materials, as well as labor and overheadcosts for work-in-process associated with the manufacturing of instant lottery games and lottery terminals. Our finished goods inventory primarily consistsof gaming machines for sale, instant products primarily for our Participation arrangements and our licensed branded merchandise.

During the three and six months ended June 30, 2020, we recorded $21 million and $30 million, respectively, in inventory valuation chargesrelated to inventory in our Gaming business segment. The charges were a result of: (1) leadership’s strategic plan to condense the amount of legacyplatforms we will continue to service and support as we roll out new products and (2) the rapid demand reduction largely as a result of the COVID-19disruptions and continued closures in the LATAM region. For additional information regarding our inventory valuation charges, see Note 7 in our 2020 10-K.

(7) Property and Equipment, net

Property and equipment, net consisted of the following:


Land $ 15 $ 15 Buildings and leasehold improvements 131 132 Gaming and lottery machinery and equipment 1,035 1,026 Furniture and fixtures 31 32 Construction in progress 56 43 Other property and equipment 281 277 Less: accumulated depreciation (1,158) (1,110)Total property and equipment, net $ 391 $ 415

Depreciation expense is excluded from Cost of services, Cost of product sales, Cost of instant products and Other operating expenses and isseparately presented within D&A.


Depreciation expense $ 39 $ 46 $ 79 $ 90

(8) Intangible Assets, net and Goodwill

Intangible Assets, net

The following tables present certain information regarding our intangible assets as of June 30, 2021 and December 31, 2020:

18


Gross CarryingValue

AccumulatedAmortization Net Balance

Gross CarryingValue

AccumulatedAmortization Net Balance

Amortizable intangible assets:Customer relationships $ 1,117 $ (525) $ 592 $ 1,108 $ (478) $ 630 Intellectual property 977 (679) 298 958 (648) 310 Licenses 557 (424) 133 558 (405) 153 Brand names 127 (92) 35 128 (86) 42 Trade names 118 (48) 70 117 (42) 75 Patents and other 22 (14) 8 24 (16) 8

2,918 (1,782) 1,136 2,893 (1,675) 1,218 Non-amortizable intangible assets:

Trade names 83 (2) 81 83 (2) 81 Total intangible assets $ 3,001 $ (1,784) $ 1,217 $ 2,976 $ (1,677) $ 1,299

The following reflects intangible amortization expense included within D&A:


Amortization expense $ 57 $ 63 $ 113 $ 128

The table below reconciles the change in the carrying value of goodwill by business segment for the period from December 31, 2020 to June 30,2021.

Gaming Lottery SciPlay Digital TotalsBalance as of December 31, 2020 $ 2,425 $ 353 $ 124 $ 390 $ 3,292

Acquired goodwill — — — 61 61 Foreign currency adjustments — — — 3 3

Balance as of June 30, 2021 $ 2,425 $ 353 $ 124 $ 454 $ 3,356 (1) Accumulated goodwill impairment charges for the Gaming segment as of June 30, 2021 were $989 million.(2) Accumulated goodwill impairment charges for the Lottery segment as of June 30, 2021 were $137 million.

(9) Software, net

Software, net consisted of the following:


Software $ 1,221 $ 1,197 Accumulated amortization (1,006) (970)Software, net $ 215 $ 227

The following reflects amortization of software included within D&A:Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020Amortization expense $ 27 $ 31 $ 54 $ 60

(10) Equity Investments

(1) (2)

19

Equity investments totaled $252 million and $262 million as of June 30, 2021 and December 31, 2020, respectively. We received distributions anddividends totaling $33 million and $13 million during the six months ended June 30, 2021 and 2020, respectively.

(11) Long-Term and Other Debt

Outstanding Debt and Finance Leases

The following table reflects our outstanding debt (in order of priority and maturity):

As of

June 30, 2021December 31,

2020

FinalMaturity Rate(s) Face value

Unamortized debtdiscount/premium

and deferredfinancing costs,

net Book value Book valueSenior Secured Credit Facilities:

SGI Revolver 2024 variable $ 285 $ — $ 285 $ 535 SGI Term Loan B-5 2024 variable 4,039 (42) 3,997 4,012 SciPlay Revolver 2024 variable — — — —

SGI Senior Notes:2025 Secured Notes 2025 5.000% 1,250 (12) 1,238 1,237 2026 Secured Euro Notes 2026 3.375% 386 (4) 382 395 2025 Unsecured Notes 2025 8.625% 550 (7) 543 542 2026 Unsecured Euro Notes 2026 5.500% 297 (3) 294 303 2026 Unsecured Notes 2026 8.250% 1,100 (11) 1,089 1,088 2028 Unsecured Notes 2028 7.000% 700 (9) 691 691 2029 Unsecured Notes 2029 7.250% 500 (6) 494 493

Finance lease obligations as of June 30, 2021payable monthly through 2023 and other

2023 4.217% 6 — 6 7

Total long-term debt outstanding $ 9,113 $ (94) $ 9,019 $ 9,303 Less: current portion of long-term debt (44) (44)

Long-term debt, excluding current portion $ 8,975 $ 9,259 Fair value of debt $ 9,399 (1) In connection with the February 2018 Refinancing (see Note 15 in our 2020 10-K), we entered into certain cross-currency interest rate swap agreements to achieve more attractive interestrates by effectively converting $460 million of the fixed-rate, U.S. Dollar-denominated 2025 Secured Notes, including the semi-annual interest payments through October 2023, to a fixed-rateEuro-denominated debt, with a fixed annual weighted average interest rate of approximately 2.946%. These cross-currency swaps have been designated as a hedge of our net investment incertain subsidiaries.(2) We designated a portion of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certain of our international subsidiaries that use the Euro as theirfunctional currency in order to reduce the volatility in our operating results caused by the change in foreign currency exchange rates of the Euro relative to the U.S. Dollar (see Note 12 foradditional information). The total change in the face value of the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes due to changes in foreign currency exchange rates since the issuancewas a reduction of $29 million, of which a $7 million loss and a $18 million gain were recognized on remeasurement of debt in the Consolidated Statements of Operations for the three and sixmonths ended June 30, 2021, respectively.(3) Includes $6 million related to certain revenue transactions presented as debt in accordance with ASC 470.(4) Fair value of our fixed rate and variable interest rate debt is classified within Level 2 in the fair value hierarchy and has been calculated based on the quoted market prices of our securities.

We were in compliance with the financial covenants under all debt agreements as of June 30, 2021 (for information regarding our financialcovenants of all debt agreements, see Notes 1 and 15 in our 2020 10-K).

Subsequent to June 30, 2021, we amended our Credit Agreement to provide for additional flexibility on executing the recently announced strategictransactions, including among other items: (a) extended the time period for conversion of securities into cash for purposes of satisfying the 75% minimumcash proceeds requirement from 180- to 365 days for proceeds received from the intended disposition of our Sports Betting business (“the DispositionTransaction”), (b) amend the basket for

(1)

(2)

(2)

(3)

(4)

20

non-cash consideration received in connection with a permitted disposition, (c) permit any capital stock received as consideration in the DispositionTransactions and (d) require that at least 25% of the net cash proceeds received from the Disposition Transactions will be used to prepay outstanding termloans within ten business days of the Disposition Transactions.

For additional information regarding the terms of our credit facilities, Secured Notes and Unsecured Notes, see Note 15 in our 2020 10-K.

(12) Fair Value Measurements

The fair value of our financial assets and liabilities is determined by reference to market data and other valuation techniques as appropriate. Webelieve the fair value of our financial instruments, which are principally cash and cash equivalents, restricted cash, receivables, other current assets,accounts payable and accrued liabilities, approximates their recorded values. Our assets and liabilities measured at fair value on a recurring basis aredescribed below.

Derivative Financial Instruments

As of June 30, 2021, we held the following derivative instruments that were accounted for pursuant to ASC 815:

Interest Rate Swap Contracts

We currently use interest rate swap contracts as described below to mitigate gains or losses associated with the change in expected cash flows dueto fluctuations in interest rates on our variable rate debt.

In February 2018, we entered into interest rate swap contracts to hedge a portion of our interest expense associated with our variable rate debt toeffectively fix the interest rate that we pay. These interest rate swap contracts are designated as cash flow hedges under ASC 815. We pay interest at aweighted-average fixed rate of 2.4418% and receive interest at a variable rate equal to one-month LIBOR. The total notional amount of interest rate swapsoutstanding was $800 million as of June 30, 2021. These hedges mature in February 2022.

These hedges are highly effective in offsetting changes in our future expected cash flows due to the fluctuation in the one-month LIBOR rateassociated with our variable rate debt. We qualitatively monitor the effectiveness of these hedges on a quarterly basis. As a result of the effective matchingof the critical terms on our variable rate interest expense being hedged to the hedging instruments being used, we expect these hedges to remain highlyeffective.

All gains and losses from these hedges are recorded in Other comprehensive loss until the future underlying payment transactions occur. Anyrealized gains or losses resulting from the hedges are recognized (together with the hedged transaction) as Interest expense. We estimate the fair value ofour interest rate swap contracts by discounting the future cash flows of both the fixed rate and variable rate interest payments based on market yield curves.The inputs used to measure the fair value of our interest rate swap contracts are categorized as Level 2 in the fair value hierarchy as established by ASC820.

The following table shows the Gain (loss) and Interest expense recognized on our interest rate swap contracts:


Gain (loss) recorded in accumulated other comprehensive loss, net of tax $ 4 $ 2 $ 9 $ (14)Interest expense recorded related to interest rate swap contracts 4 4 9 6

We do not expect to reclassify material amounts from Accumulated other comprehensive loss to interest expense in the next twelve months.

The following table shows the effect of interest rate swap contracts designated as cash flow hedges on the consolidated statements of operations:

21


Interest expense Interest expenseTotal interest expense which reflects the effects of cash flow hedges $ (119) $ (124) $ (240) $ (248)Hedged item (4) (5) (9) (10)Derivative designated as hedging instrument — 1 — 4

Cross-Currency Interest Rate Swaps

In connection with the February 2018 Refinancing described in Note 15 of our 2020 10-K, we entered into certain cross-currency interest rateswap agreements to achieve more beneficial interest rates by effectively converting $460 million of our fixed-rate U.S. Dollar-denominated 2025 SecuredNotes, including the semi-annual interest payments through October 2023, to fixed-rate Euro-denominated debt, with a fixed annual weighted averageinterest rate of approximately 2.946%. We have designated these cross-currency interest rate swap agreements as a net investment hedge of our investmentsin certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused bythe changes in foreign currency exchange rates of the Euro relative to the U.S. Dollar.

We use the spot method to measure the effectiveness of our net investment hedge. Under this method, for each reporting period, the change in thefair value of the $460 million cross-currency interest rate swaps is reported in Foreign currency translation gain (loss) in Accumulated other comprehensiveloss. The cross-currency basis spread (along with other components of the cross-currency swap’s fair value excluded from the spot method effectivenessassessment) are amortized and recorded to Interest expense. We evaluate the effectiveness of our net investment hedge at the beginning of each quarter.

The following table shows the fair value of our hedges:

As ofBalance Sheet Line Item June 30, 2021 December 31, 2020

Interest rate swaps Accrued liabilities/Other liabilities $ 13 $ 22 Cross-currency interest rate swaps Other assets 27 14 (1) Gains of $4 million and $9 million for the three and six months ended June 30, 2021, respectively, are reflected in Derivative financial instrument unrealized gain (loss) in Othercomprehensive gain (loss).(2) A loss of $8 million and a gain of $13 million for the three and six months ended June 30, 2021, respectively, are reflected in Foreign currency translation gain (loss) in Other comprehensivegain (loss).(3) The inputs used to measure the fair value of our interest rate swap contracts are categorized as Level 2 in the fair value hierarchy.

Net Investment Non-derivative Hedge — 2026 Secured Euro Notes

For the second quarter of 2021, we designated $117 million of our 2026 Secured Euro Notes as a net investment non-derivative hedge of ourinvestments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our results caused bythe changes in foreign currency exchange rates of the Euro relative to the U.S. Dollar.

We use the spot method to measure the effectiveness of our net investment non-derivative hedge. Under this method, for each reporting period, thechange in the hedged portion of the carrying value of the 2026 Secured Euro Notes due to remeasurement is reported in Foreign currency translation gain(loss) in Other comprehensive loss, and the remaining remeasurement change is recognized in (Loss) gain on remeasurement of debt in our consolidatedstatements of operations. We evaluate the effectiveness of our net investment non-derivative hedge at the beginning of each quarter, and the inputs used tomeasure the fair value of this non-derivative hedge are categorized as Level 2 in the fair value hierarchy.

Contingent Acquisition Consideration Liabilities

In connection with our acquisitions, we have recorded certain contingent consideration liabilities, of which the values are primarily based onreaching certain earnings-based metrics. The related liabilities were recorded at fair value on the acquisition date as part of the consideration transferredand are remeasured each reporting period. The inputs used to measure the fair value of our liabilities are categorized as Level 3 in the fair value hierarchy.

Contingent acquisition consideration liabilities as of June 30, 2021 are $16 million, of which $15 million is included in Accrued liabilities with theremainder included in Other long-term liabilities. Contingent acquisition consideration liabilities as

(1)(3)

(2)(3)

22

of December 31, 2020 were $13 million, of which $11 million was included in Accrued liabilities with the remaining balance included in Other long-termliabilities.

(13) Stockholders’ Deficit

Changes in Stockholders’ Deficit

The following tables present certain information regarding our stockholders’ deficit as of June 30, 2021 and June 30, 2020:


Common Stock

AdditionalPaid inCapital

AccumulatedLoss

TreasuryStock

Accumulated OtherComprehensive

LossNoncontrolling

Interest TotalJanuary 1, 2021 $ 1 $ 1,268 $ (3,529) $ (175) $ (218) $ 129 $ (2,524)

Vesting of RSUs, net of taxwithholdings and other — (13) — — — — (13)

Stock-based compensation — 17 — — — — 17 Net loss — — (15) — — 6 (9)Other comprehensive gain — — — — 8 — 8

March 31, 2021 $ 1 $ 1,272 $ (3,544) $ (175) $ (210) $ 135 $ (2,521)Vesting of RSUs, net of taxwithholdings and other — (4) — — — — (4)

Stock-based compensation — 31 — — — — 31 Net income — — 109 — — 4 113 Other comprehensive gain — — — — 11 — 11

June 30, 2021 $ 1 $ 1,299 $ (3,435) $ (175) $ (199) $ 139 $ (2,370)


Common

Stock

AdditionalPaid inCapital

AccumulatedLoss

TreasuryStock

Accumulated OtherComprehensive

LossNoncontrolling

Interest TotalJanuary 1, 2020 $ 1 $ 1,208 $ (2,954) $ (175) $ (292) $ 104 $ (2,108)

Vesting of RSUs, net of taxwithholdings and other — (1) — — — — (1)

Stock-based compensation — 9 — — — — 9 Net loss — — (159) — — 4 (155)Other comprehensive loss — — — — (97) — (97)Impact of ASC 326 adoption — — (6) — — — $ (6)

March 31, 2020 $ 1 $ 1,216 $ (3,119) $ (175) $ (389) $ 108 $ (2,358)Vesting of RSUs, net of taxwithholdings and other — 1 — — — — 1

Stock-based compensation — 13 — — — 1 14 Net loss — — (203) — — 5 (198)Other comprehensive loss — — — — 62 — 62

June 30, 2020 $ 1 $ 1,230 $ (3,322) $ (175) $ (327) $ 114 $ (2,479)

Stock Based Compensation

The following reflects total stock-based compensation expense recognized under all programs:

23


Related to SGC stock options $ 15 $ 1 $ 21 $ 2 Related to SGC RSUs 23 8 38 17 Related to SciPlay RSUs 3 5 5 5

Total $ 41 $ 14 $ 64 $ 24 (1) The increase in SGC stock based compensation expense for both periods is related to the acceleration of the expense as a result of attainment of certain targets for some of our directorscoupled with the new equity awards issued at a higher fair value given the increase in our stock price compared to the prior period.

Restricted Stock Units

A summary of the changes in RSUs outstanding under our equity-based compensation plans during the six months ended June 30, 2021 ispresented below:

Numberof

RestrictedStockUnits

WeightedAverage

Grant DateFair Value

Unvested RSUs as of December 31, 2020 3.3 $ 19.07 Granted 1.0 $ 52.62 Vested (1.3) $ 23.13 Cancelled (0.1) $ 17.08 Unvested RSUs as of June 30, 2021 2.9 $ 28.92

The weighted-average grant date fair value of RSUs granted during the six months ended June 30, 2021 and 2020 was $52.62 and $10.44,respectively. The fair value of each RSU grant is based on the market value of our common stock at the time of grant. At June 30, 2021, we had $70 millionof unrecognized stock-based compensation expense relating to unvested RSUs that will be amortized over a weighted-average period of approximately twoyears. The fair value at vesting date of RSUs vested during the six months ended June 30, 2021 and 2020 was $62.1 million and $7.8 million, respectively.

(14) Income Taxes

We consider new evidence (both positive and negative) at each reporting date that could affect our view of the future realization of deferred taxassets. Based upon the evaluation of all available evidence, and considering the projected U.S. pre-tax losses for 2021, we maintain a valuation allowancefor certain of our U.S. operations as of June 30, 2021. We also maintain other valuation allowances for certain non-U.S. jurisdictions with cumulativelosses.

Our effective income tax rates were 7% and 10% for the three and six months ended June 30, 2021, respectively, and (2)% for both of the threeand six months ended June 30, 2020, and were determined using an estimated annual effective tax rate after considering any discrete items for such periods.Our effective tax rate differs from the U.S. statutory rate of 21% primarily due to the aforementioned valuation allowance against certain of our U.S. andforeign net deferred tax assets. We recorded an overall tax expense in all periods due to pre-tax earnings in jurisdictions without valuation allowances,including our 19% noncontrolling interest in SciPlay. Additionally, our rate is impacted by an unfavorable adjustment for the legacy U.K. Gaming reportingunit goodwill impairment of $54 million recorded in the first quarter of 2020, which was not deductible for tax purposes.

As discussed in Note 1, the COVID-19 disruptions significantly impacted certain segments of our business during 2020 and through the first halfof 2021. We considered the COVID-19 disruptions in our ability to realize deferred tax assets in the future and determined that such conditions did notchange our overall valuation allowance positions. Additionally, we continue to monitor and evaluate the tax implications resulting from any existing andforthcoming legislation passed in response to COVID-19 in the federal, state, and foreign jurisdictions where we have an income tax presence.

(15) Leases

Our total operating lease expense for the three and six months ended June 30, 2021 and 2020 were $8 million and $16 million, respectively. Thetotal amount of variable and short-term lease payments was immaterial for all periods presented.

Supplemental balance sheet and cash flow information related to operating leases is as follows:

(1)

24


Operating lease right-of-use assets $ 92 $ 94 Accrued liabilities 27 26 Operating lease liabilities 73 77

Total operating lease liabilities $ 100 $ 103 Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases for the six-month periods ended June 30, 2021and 2020, respectively

$ 16 $ 15

Weighted average remaining lease term, units in years 5 5Weighted average discount rate 5 % 5 %

Lease liability maturities:

Remainder of2021 2022 2023 2024 2025 Thereafter

Less ImputedInterest Total

Operating leases $ 16 $ 27 $ 23 $ 19 $ 12 $ 15 $ (12) $ 100

As of June 30, 2021, we did not have material additional operating leases that have not yet commenced.

(16) Litigation

We are involved in various legal proceedings, which are described in Note 21 within our 2020 10-K. There have been no material changes to thesematters since the 2020 10-K was filed with the SEC on March 1, 2021, except as described below.

We record an accrual for legal contingencies when it is both probable that a liability has been incurred and the amount or range of the loss can bereasonably estimated (although, as discussed below, there may be an exposure to loss in excess of the accrued liability). We evaluate our accruals for legalcontingencies at least quarterly and, as appropriate, establish new accruals or adjust existing accruals to reflect (1) the facts and circumstances known to usat the time, including information regarding negotiations, settlements, rulings and other relevant events and developments, (2) the advice and analyses ofcounsel and (3) the assumptions and judgment of management. Legal costs associated with our legal proceedings are expensed as incurred. We had accruedliabilities of $11 million and $3 million for all of our legal matters that were contingencies as of June 30, 2021 and December 31, 2020, respectively.

Substantially all of our legal contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or themeasurement of any loss involves a series of complex judgments about future events. Consequently, the ultimate outcomes of our legal contingencies couldresult in losses in excess of amounts we have accrued. We may be unable to estimate a range of possible losses for some matters pending against us or oursubsidiaries, even when the amount of damages claimed against us or our subsidiaries is stated because, among other things: (1) the claimed amount maybe exaggerated or unsupported; (2) the claim may be based on a novel legal theory or involve a large number of parties; (3) there may be uncertainty as tothe likelihood of a class being certified or the ultimate size of the class; (4) there may be uncertainty as to the outcome of pending appeals or motions; (5)the matter may not have progressed sufficiently through discovery or there may be significant factual or legal issues to be resolved or developed; and/or (6)there may be uncertainty as to the enforceability of legal judgments and outcomes in certain jurisdictions. Other matters have progressed sufficiently thatwe are able to estimate a range of possible loss. For those legal contingencies disclosed in Note 21 in our 2020 10-K and this Note 16 as well as thoserelated to the previously disclosed settlement agreement entered into in February 2015 with SNAI S.p.a., as to which a loss is reasonably possible, whetherin excess of a related accrued liability or where there is no accrued liability, and for which we are able to estimate a range of possible loss, the currentestimated range is up to approximately $14 million in excess of the accrued liabilities (if any) related to those legal contingencies. This aggregate rangerepresents management’s estimate of additional possible loss in excess of the accrued liabilities (if any) with respect to these matters based on currentlyavailable information, including any damages claimed by the plaintiffs, and is subject to significant judgment and a variety of assumptions and inherentuncertainties. For example, at the time of making an estimate, management may have only preliminary, incomplete, or inaccurate information about thefacts underlying a claim; its assumptions about the future rulings of the court or other tribunal on significant issues, or the behavior and incentives ofadverse parties, regulators, indemnitors or co-defendants, may prove to be wrong; and the outcomes it is attempting to predict are often not amenable to theuse of statistical or other quantitative analytical tools. In addition, from time to time an outcome may occur that management had not

(1)

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accounted for in its estimate because it had considered that outcome to be remote. Furthermore, as noted above, the aggregate range does not include anymatters for which we are not able to estimate a range of possible loss. Accordingly, the estimated aggregate range of possible loss does not represent ourmaximum loss exposure. Any such losses could have a material adverse impact on our results of operations, cash flows or financial condition. The legalproceedings underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate.

Washington State Matter

On April 17, 2018, a plaintiff, Sheryl Fife, filed a putative class action complaint, Fife v. Scientific Games Corporation, against SGC in the UnitedStates District Court for the Western District of Washington. The plaintiff seeks to represent a putative class of all persons in the State of Washington whopurchased and allegedly lost virtual coins playing SGC’s online social casino games, including but not limited to Jackpot Party® Casino and Gold Fish®Casino. The complaint asserts claims for alleged violations of Washington’s Recovery of Money Lost at Gambling Act, Washington’s consumer protectionstatute, and for unjust enrichment, and seeks unspecified money damages (including treble damages as appropriate), the award of reasonable attorneys’ feesand costs, pre- and post-judgment interest, and injunctive and/or declaratory relief. On July 2, 2018, SGC filed a motion to dismiss the plaintiff’s complaintwith prejudice, which the trial court denied on December 18, 2018. SGC filed its answer to the putative class action complaint on January 18, 2019. OnAugust 24, 2020, the trial court granted plaintiff’s motion for leave to amend her complaint and to substitute a new plaintiff, Donna Reed, for the initialplaintiff, and re-captioned the matter Reed v. Scientific Games Corporation. On August 25, 2020, the plaintiff filed a first amended complaint against SGC,asserting the same claims, and seeking the same relief, as the complaint filed by Sheryl Fife. On September 8, 2020, SGC filed a motion to compelarbitration of plaintiff’s claims and to dismiss the action, or, in the alternative, to transfer the action to the United States District Court for the District ofNevada. On April 9, 2021, the plaintiff filed a motion to certify the putative class and for a preliminary injunction. On April 26, 2021, the district courtstayed the lawsuit, pending its ruling on SGC’s motion to compel arbitration of plaintiff’s claims and to dismiss the action, or, in the alternative, to transferthe action to the United States District Court for the District of Nevada. On June 17, 2021, the district court denied that motion, and on June 23, 2021, SGCfiled a notice of appeal from the district court’s denial of that motion, and also filed a motion to stay all district court proceedings, pending the appealscourt’s ruling on the Company’s arbitration appeal. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonablypossible loss.

Casino Queen Matter

On April 2, 2021, Casino Queen, Inc. and Casino Queen Marquette, Inc. filed a putative class action complaint in the United States District Courtfor the Northern District of Illinois against SGC, Bally Technologies, Inc. and SG Gaming, f/k/a Bally Gaming, Inc. In the complaint, the plaintiffs assertfederal antitrust claims arising from the defendants’ procurement of particular U.S. patents. The plaintiffs allege that the defendants used those patents tocreate an allegedly illegal monopoly in the market for automatic card shufflers sold or leased in the United States. The plaintiffs seek to represent a putativeclass of all persons and entities that directly purchased or leased automatic card shufflers within the United States from the defendants, or any predecessor,subsidiary, or affiliate thereof, at any time between April 1, 2009, and the present. The complaint seeks unspecified money damages, which the complaintasks the court to treble, the award of plaintiffs’ costs of suit, including attorneys’ fees, and the award of pre-judgment and post-judgment interest. On June11, 2021, the defendants filed a motion to dismiss plaintiffs’ complaint. We are currently unable to determine the likelihood of an outcome or estimate arange of reasonably possible losses, if any. We believe that the claims in the lawsuit are without merit, and intend to vigorously defend against them.

Colombia litigation

Our subsidiary, SGI, owned a minority interest in Wintech de Colombia S.A., or Wintech (now liquidated), which formerly operated theColombian national lottery under a contract with Empresa Colombiana de Recursos para la Salud, S.A. (together with its successors, “Ecosalud”), anagency of the Colombian government. The contract provided for a penalty against Wintech, SGI and the other shareholders of Wintech of up to$5.0 million if certain levels of lottery sales were not achieved. In addition, SGI delivered to Ecosalud a $4.0 million surety bond as a further guarantee ofperformance under the contract. Wintech started the instant lottery in Colombia but, due to difficulties beyond its control, including, among other factors,social and political unrest in Colombia, frequently interrupted telephone service and power outages, and competition from another lottery being operated ina province of Colombia that we believe was in violation of Wintech’s exclusive license from Ecosalud, the projected sales level was not met for the yearended June 30, 1993.

In 1993, Ecosalud issued a resolution declaring that the contract was in default. In 1994, Ecosalud issued a liquidation resolution asserting claimsfor compensation and damages against Wintech, SGI and other shareholders of Wintech for, among other things, realization of the full amount of thepenalty, plus interest, and the amount of the bond. SGI filed separate actions opposing each resolution with the Tribunal Contencioso of Cundinamarca inColombia (the “Tribunal”), which upheld both resolutions. SGI appealed each decision to the Council of State. In May 2012, the Council of State upheldthe contract default

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resolution, which decision was notified to us in August 2012. In October 2013, the Council of State upheld the liquidation resolution, which decision wasnotified to us in December 2013.

In July 1996, Ecosalud filed a lawsuit against SGI in the U.S. District Court for the Northern District of Georgia asserting many of the sameclaims asserted in the Colombia proceedings, including breach of contract, and seeking damages. In March 1997, the District Court dismissed Ecosalud’sclaims. Ecosalud appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit. The Court of Appeals affirmed the District Court’s decision in1998.

In June 1999, Ecosalud filed a collection proceeding against SGI to enforce the liquidation resolution and recover the claimed damages. In May2013, the Tribunal denied SGI’s merit defenses to the collection proceeding and issued an order of payment of approximately 90 billion Colombian pesos,or approximately $30.2 million, plus default interest (potentially accrued since 1994 at a 12% statutory interest rate). SGI filed an appeal to the Council ofState, and on December 10, 2020, the Council of State issued a ruling affirming the Tribunal’s decision. On December 16, 2020, SGI filed a motion forclarification of the Council of State’s ruling, which the Council of State denied on April 15, 2021. On April 22, 2021, SGI filed a motion forreconsideration relating to that decision.

SGI believes it has various defenses, including on the merits, against Ecosalud’s claims. Although we believe these claims will not result in amaterial adverse effect on our consolidated results of operations, cash flows or financial position, it is not feasible to predict the final outcome, and wecannot assure that these claims will not ultimately be resolved adversely to us or result in material liability.

SciPlay IPO Matter (New York)

On or about October 14, 2019, the Police Retirement System of St. Louis filed a putative class action complaint in New York state court againstSciPlay, certain of its executives and directors, and SciPlay’s underwriters with respect to its IPO (the “PRS Action”). The complaint was amended onNovember 18, 2019. The plaintiff seeks to represent a class of all persons or entities who acquired Class A common stock of SciPlay pursuant and/ortraceable to the Registration Statement filed and issued in connection with the SciPlay IPO, which commenced on or about May 3, 2019. The complaintasserts claims for alleged violations of Sections 11 and 15 of the Securities Act, 15 U.S.C. § 77, and seeks certification of the putative class; compensatorydamages of at least $146 million, and the award of the plaintiff’s and the class’s reasonable costs and expenses incurred in the action. On or aboutDecember 9, 2019, Hongwei Li filed a putative class action complaint in New York state court asserting substantively similar causes of action under theSecurities Act of 1933 and substantially similar factual allegations as those alleged in the PRS Action (the “Li Action”). On December 18, 2019, the NewYork state court entered a stipulated order consolidating the PRS Action and the Li Action into a single lawsuit. On December 23, 2019, the defendantsmoved to dismiss the consolidated action. On August 28, 2020, the court issued an oral ruling granting in part and denying in part the defendants’ motion todismiss. On December 14, 2020, plaintiffs in the consolidated action filed a motion to certify the putative class. On May 12, 2021, the parties in theconsolidated action reached an agreement in principle to settle the consolidated action and so informed the New York court, which stayed non-settlementrelated proceedings in the consolidated action, pending finalization of the settlement in principle.

SciPlay IPO Matter (Nevada)

On or about November 4, 2019, plaintiff John Good filed a putative class action complaint in Nevada state court against SciPlay, certain of itsexecutives and directors, SGC, and SciPlay’s underwriters with respect to the SciPlay IPO. The plaintiff seeks to represent a class of all persons whopurchased Class A common stock of SciPlay in or traceable to the SciPlay IPO that it completed on or about May 7, 2019. The complaint asserts claims foralleged violations of Sections 11 and 15 of the Securities Act, 15 U.S.C. § 77, and seeks certification of the putative class; compensatory damages, and theaward of the plaintiff’s and the class’s reasonable costs and expenses incurred in the action. On February 27, 2020, the trial court entered a stipulated orderthat, among other things, stayed the lawsuit pending entry of an order resolving the motion to dismiss that was pending in the SciPlay IPO matter in NewYork state court. On September 29, 2020, the trial court entered a stipulated order that extended the stay pending a ruling on class certification in theSciPlay IPO matter in New York state court. On May 12, 2021, the parties in the Nevada lawsuit reached an agreement in principle to settle the lawsuit andso informed the Nevada court, which stayed non-settlement related proceedings in the lawsuit, pending finalization of the settlement in principle.

Based on our assessment under ASC 410 and ASC 450 and consideration of the SciPlay IPO matters pending in New York and Nevada describedabove, we determined that both loss and insurance proceeds loss recovery, which we believe is recoverable under our insurance policy, are deemedprobable and reasonably estimable. As a result, we recorded approximately $8 million in Accrued liabilities and Prepaid expenses and other current assetsas of June 30, 2021, with no material impact on our statement of operations income for the three and six-month periods ended June 30, 2021.

For additional information regarding our pending litigation matters, see Note 21 in our 2020 10-K.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to enhance the reader’s understanding of our operations and current business environment frommanagement’s perspective and should be read in conjunction with the description of our business included under Part I, Item 1 “Condensed ConsolidatedFinancial Statements” and Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q and under Part I, Item 1 “Business,” Item 1A “RiskFactors” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2020 10-K.

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) contains forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of 1995 and should be read in conjunction with the disclosures and informationcontained and referenced under “Forward-Looking Statements” and “Risk Factors” included in this Quarterly Report on Form 10-Q and “Risk Factors”included in our 2020 10-K. As used in this MD&A, the terms “we,” “us,” “our” and the “Company” mean SGC together with its consolidated subsidiaries.

BUSINESS OVERVIEW

We are a leading developer of technology-based products and services and associated content for the worldwide gaming, lottery, social and digitalgaming industries. Our portfolio of revenue-generating activities primarily includes supplying gaming machines and game content, casino-managementsystems and table game products and services to licensed gaming entities; providing instant and draw-based lottery products, lottery systems and lotterycontent and services to lottery operators; providing social casino and other mobile games to retail customers; and providing a comprehensive suite of digitalRMG and sports wagering solutions, distribution platforms, content, products and services. We also gain access to technologies and pursue globalexpansion through strategic acquisitions and equity investments. We report our results of operations in four business segments—Gaming, Lottery, SciPlayand Digital—representing our different products and services.

Recent Events

Strategic Review Update

On June 29, 2021, we announced that the Company with the support of its Board of Directors completed the strategic review, which (1) reaffirmedthe strategy to become a content-led growth company with a particular focus on digital markets; and (2) intends to divest our Lottery and Sports Betting(component of our Digital business segment) operations (“referred herein as businesses”) creating the path to significantly de-lever and position theCompany for enhanced growth. We are currently evaluating strategic alternatives to execute the divestitures for each business, respectively, including IPOor a combination with SPAC, or a sale or a strategic combination with another business.

Additionally, as described in Note 1, on July 15, 2021, we submitted a proposal to SciPlay’s board of directors to acquire the remaining 19%equity interest in SciPlay that we do not currently own in an all-stock transaction, following which SciPlay would become a wholly-owned subsidiary ofScientific Games. This proposed transaction is part of our strategic review described above and a step forward on the recently announced strategy tobecome a content-led growth company with a particular focus on digital markets that we believe will unlock the value of our products and technologies.

There can be no assurances that our evaluation of strategic alternatives for our Lottery and Sports Betting businesses or for the acquisition of theremaining equity interest in SciPlay will result in any transactions or other actions and execution of these transactions is subject to market, operational andother uncertainties.

Impacts of COVID-19

As more fully described in the “Description of the Business and Summary of Significant Accounting Policies - Impact of COVID-19” in Note 1 ofour 2020 10-K, COVID-19 disruptions continue to impact our results of operations and particularly our Gaming business segment operations. Althoughmost gaming establishments have reopened globally and some have begun operating at full capacity, many gaming operations have yet to return to pre-COVID levels. The current state reflects continued fluctuations in infection rates and regulations for various regions along with ongoing domestic andinternational travel restrictions or warnings, social distancing measures, reduced operating capacity and an overall economic and general uncertaintyregarding the magnitude and length of time that these disruptions will continue. These circumstances may change in the future and such changes could bematerial. We continue to assess the situation jurisdiction by jurisdiction, actively managing our cash flows and continuing to evaluate additional measuresthat may reduce operating costs and conserve cash to preserve liquidity as we execute on our strategic initiatives.

Impact on Business Operations and Financial Results

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Throughout 2020 and the first half of 2021, the Gaming business segment was especially impacted by the COVID-19 disruptions due to thewidespread closures of gaming operation establishments and restricted reopening of a substantial number of gaming operation establishments coupled withglobal economic uncertainty. Many of these closures and restrictions have been lifted with some gaming operation establishments removing all restrictions,thereby allowing full capacity operations along with other businesses which have begun to see more activity given the expansion of capacity limits,increased travel, and distribution of vaccines during the second quarter of 2021. Additionally, we noted that the U.S. and U.K. markets have reboundedwhich has had a notable impact on our Gaming operations primarily due to the lifting of restrictions and further elevated by consumer pent up demand fromprior periods resulting in higher gross gaming revenues. Additionally, Gaming operations revenue for the three and six months ended June 30, 2021benefited from the FOBT recovery as described in the Consolidated Results section below. However, the future impact of the COVID-19 pandemic remainsuncertain. We continue to monitor the global supply chain constraints along with the labor shortages on a macro level caused by COVID-19, which havenegatively impacted the hospitality and leisure industries, including gaming.

For more information on the effects that COVID-19 has had on each of our business segments, refer to “Item 7. Management’s Discussion andAnalysis of Financial Condition and Results of Operations - Impact on Business Operations and Financial Results” and Note 1 of our 2020 10-K.

Impact on Liquidity

Our only financial maintenance covenant (excluding SciPlay’s Revolver) is contained in SGI’s credit agreement. For information regarding theimpact on liquidity and other requirements, please refer to the “Description of the Business and Summary of Significant Accounting Policies” in Note 1and “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the “Business Overview” along with the“Liquidity, Capital Resources and Working Capital” sections of our 2020 10-K. In July 2021, we made a voluntary payment of $150 million on SGI’srevolving credit facility.

Subsequent to June 30, 2021, we amended our Credit Agreement to provide for additional flexibility on executing the recently announced strategictransactions, more fully described in Note 11.

Segments

We report our operations in four business segments - Gaming, Lottery, SciPlay and Digital - representing our different products and services. See“- Business Segments Results” below and Note 3 for additional business segment information.

Foreign Exchange

Our results are impacted by changes in foreign currency exchange rates used in the translation of foreign functional currencies into USD and theremeasurement of foreign currency transactions or balances. The impact of foreign currency exchange rate fluctuations represents the difference betweencurrent rates and prior-period rates applied to current activity. Our exposure to foreign currency volatility on revenue is as follows:


($ in millions) Revenue% Consolidated

Revenue Revenue% Consolidated



RevenueForeign Currency:British Pound Sterling $ 121 14 % $ 60 11 % $ 192 12 % $ 145 11 %Euro 57 6 % 46 9 % 109 7 % 109 9 %

We also have foreign currency exposure related to certain of our equity investments, cross-currency interest rate swaps, and Euro-denominated

debt. See Part I, Item 1A in our 2020 10-K, “Consolidated Results — Other Factors Affecting 2020 and 2019 Net Loss Attributable to SGC Comparability”under Item 7 in our 2020 10-K and Item 3 “Quantitative and Qualitative Disclosures about Market Risk” in this Quarterly Report on Form 10-Q.

CONSOLIDATED RESULTS

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Three Months Ended June30, Variance

Six Months Ended June30, Variance

($ in millions) 2021 2020 2021 vs. 2020 2021 2020 2021 vs. 2020Total revenue $ 880 $ 539 $ 341 63 % $ 1,609 $ 1,264 $ 345 27 %Total operating expenses 717 595 122 21 % 1,365 1,352 13 1 %Operating income (loss) 163 (56) 219 391 % 244 (88) 332 377 %Net income (loss) before income taxes 121 (196) 317 162 % 115 (347) 462 133 %Net income (loss) 113 (198) 311 157 % 104 (353) 457 129 %Net income (loss) attributable to SGC $ 109 $ (203) $ 312 154 % $ 94 $ (362) $ 456 126 %

Revenue

Consolidated Revenue by Business Segment

(in millions)

Three Months Ended June 30, 2021 and 2020 Six Months Ended June 30, 2021 and 2020

As described in the “Recent Events – Impact of COVID-19” section above, our total revenue, primarily revenues for the Gaming business segment,were significantly impacted in both of the prior year periods. Although these business disruptions continued to adversely impact our Gaming revenue in thefirst half of 2021, the re-opening of venues, lifting of restrictions, increased travel, and distribution of vaccines along with pent up consumer demand havecaused businesses to see more activity and thereby have helped drive the three and six-month improvement during the second quarter of 2021.

Lottery revenue increased above pre-COVID operation levels in 2021 for both periods, primarily due to the rebound of lottery operations globally,coupled with the positive impact of two mega jackpots in the first half of 2021.

Digital Gaming revenues increased for both periods primarily due to growth in iGaming and Sports offerings in the U.S. market as iGaming is livein three U.S. states with a 25% market share and 26 Sportsbooks are live with 20 new deployments planned before the end of the year.

SciPlay revenue decreased for the three-month period as a result of declining paying player engagement largely due to the easing of stay-at-homemeasures compared to the height of COVID-19 prevention measures in the prior year. Revenues increased for the six-month period due to elevated playerengagement from continued COVID-19 prevention measures during the first quarter of 2021 compared to limited COVID-19 prevention measures for mostof the first quarter of 2020 in addition to the introduction of new content and features resulting in increased paying player interaction.

Given the impact of the COVID-19 pandemic on the prior year period, we also present below certain sequential comparisons to the quarter endedMarch 31, 2021, in order to provide additional context for our results of operations. During the three months ended June 30, 2021, total revenue, comparedto the three months ended March 31, 2021, increased from $729 million to $880 million, representing a 21% increase, primarily driven by higher Gamingbusiness segment revenue and particularly higher Gaming operations revenue as a result of the market rebound for land based gaming establishments due tothe re-opening of venues and lifting of restrictions, as described above. Additionally, Gaming operations revenue for the three and six months ended June30, 2021 benefited from $38 million and $44 million, respectively, due to the U.K. FOBT recovery received from certain U.K. customers. The FOBTrecovery is related to a 2020 U.K. court ruling, associated with overcharging

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of value-added tax for previous services rendered to gaming operators and consequently reduced our net gaming revenue related to these customers andarrangements.

Operating Expenses

Three Months EndedJune 30, Variance


($ in millions) 2021 2020 2021 vs. 2020 2021 2020 2021 vs. 2020Operating expenses:

Cost of services $ 151 $ 126 $ 25 20 % $ 290 $ 256 $ 34 13 %Cost of product sales 75 69 6 9 % 125 160 (35) (22)%Cost of instant products 77 62 15 24 % 154 135 19 14 %SG&A 205 151 54 36 % 391 349 42 12 %R&D 54 31 23 74 % 106 82 24 29 %D&A 123 140 (17) (12)% 246 278 (32) (12)%Goodwill impairment — — — — — 54 (54) 100%Restructuring and other 32 16 16 100 % 53 38 15 39 %

Total operating expenses $ 717 $ 595 $ 122 21 % $ 1,365 $ 1,352 $ 13 1 %

Cost of Revenue

Total cost of revenue for both periods increased as a direct result of higher revenue due to the global economy beginning to recover as easing ofrestrictions continues. The increases in total cost of revenue for the three and six-month periods were partially offset by the prior year periods including$15 million and $24 million, respectively, in higher Gaming cost of product inventory valuation charges for excess and obsolete inventory.

SG&A

SG&A increased in both periods primarily due to (1) higher stock-based compensation expenses of $27 million and $40 million, respectively,primarily driven by the acceleration of the expense as a result of attainment of certain targets for some of our directors coupled with the new equity awardsissued at a higher fair value given the increase in our stock price compared to the prior period and (2) prior year comparable periods reflecting loweroperating costs as a result of the temporary austerity measures implemented to reduce costs during the COVID-19 disruptions. The increases in SG&Awere partially offset by the prior year three and six-month periods including $10 million and $38 million, respectively, in higher Gaming business segmentallowance for credit loss charges that reflected credit deterioration and credit weakness specifically in our Latin America receivables portfolio due to theCOVID-19 disruptions.

R&D

R&D increased in both periods primarily due to higher salaries and benefits compared to the prior year periods reflecting lower operating costs asa result of the temporary austerity measures implemented to reduce costs during the COVID-19 disruptions.

D&A

The decrease in D&A for both periods is primarily due to certain gaming equipment, intangible assets and software primarily associated withhistorical acquisitions becoming fully depreciated and amortized in the prior year period.

Goodwill Impairment

Goodwill impairment recorded during the prior year six-month period was related to our legacy U.K. Gaming reporting unit.

Restructuring and Other

The increase in restructuring and other in both periods is primarily due to charges related to announced strategic initiatives in the current yearassociated with our intent to monetize our Lottery and Sports betting businesses and to a lesser extent business optimization initiatives implementationcosts primarily associated with efficiency programs, partially offset by higher COVID-19 business disruption charges in the prior year periods.

Other Factors Affecting Net Income (Loss) Attributable to SGC

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Three Months Ended June30, Six Months Ended June 30, Factor Affecting Net Income (Loss) Attributable to SGC

(in millions) 2021 2020 2021 2020 2021 vs. 2020Earnings (loss) fromequity investments

$ 14 $ (3) $ 23 $ (5) Higher earnings from equity investments in the current yearperiods are primarily due to pent up demand from consumers andimproved performance of our equity investments as lockdowns andrestrictions were lifted.

(Loss) gain onremeasurement of debt

$ (7) $ (12) $ 18 $ (2) Losses and gains are attributable to remeasurement of the 2026Secured Euro Notes and 2026 Unsecured Euro Notes and reflectchanges in the Euro vs. the U.S. Dollar foreign exchange ratesbetween the periods. 83% of our Euro Notes were not treated as anet investment hedge in the second quarter of 2021 compared to82% in the second quarter of 2020.

Other income (expense),net

$ 70 $ (1) $ 70 $ (4) 2021 periods include $63 million gain associated with theSportCast Acquisition through the exercise of the SportCast Option(see Note 1).

See “Business Segments Results” below for a more detailed explanation of the significant changes in our components of revenue within theindividual segment results of operations.

BUSINESS SEGMENTS RESULTS (for the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020)

GAMING

Our Gaming business segment designs, develops, manufactures, markets and distributes a comprehensive portfolio of gaming products andservices. We provide our Gaming portfolio of products and services to commercial casinos, Native American casinos, wide-area gaming operators such asLBOs, arcade and bingo operators in the U.K. and continental Europe, and government agencies and their affiliated operators. Our equity investment inRoberts Communications Network, LLC is included in our Gaming business segment.

We generate Gaming revenue from both services and product sales. Our services revenue includes revenue earned from Participation gamingmachines, other leased gaming machines (including VLTs and electronic table games), supplied table products and services (including Shufflers), casinomanagement technology solutions and systems, and other services revenues. Our product sales revenue includes the sale of new and used gamingmachines, electronic table games, VLTs and VGTs, casino-management technology solutions and systems, table products, proprietary table game licensing,conversion kits (including game, hardware or operating system conversions) and spare parts.

For additional information, refer to the Gaming primary business activities summary included within “Business Segment Results” under Item 7 ofour 2020 10-K.

Current Year Update

See the “Business Overview – Recent Events – Impact of COVID-19” section above for a description of the COVID-19 impact on our Gamingbusiness segment, which continued to have an overall adverse effect on our results of operations and cash flows in the first half of 2021, and is expected tocontinue into the third quarter of 2021 and potentially beyond as social distancing measures, which are slowly being rolled back, continue to be enforced incertain jurisdictions. In the near term, we expect to see an increase in the demand for our Gaming products as the easing of restrictions continues andgaming operators slowly return to pre-COVID levels. See also “Description of the Business and Summary of Significant Accounting Policies - Impact ofCOVID-19” in Note 1 of our 2020 10-K.

Results of Operations and KPIsThree and Six Months Ended June 30, 2021 and 2020

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Revenue



($ in millions) 2021 2020 2021 vs. 2020 2021 2020 2021 vs. 2020Revenue:

Gaming operations $ 181 $ 16 $ 165 1,031 % $ 294 $ 135 $ 159 118 %Machine sales 100 53 47 89 % 155 145 10 7 %Systems 52 17 35 206 % 94 72 22 31 %Table products 34 5 29 580 % 68 57 11 19 %

Total revenue $ 367 $ 91 $ 276 303 % $ 611 $ 409 $ 202 49 %

F/X impact on revenue $ 10 $ (1) $ 11 (1,100)% $ 12 $ (2) $ 14 (700)%

Gaming KPIs:U.S. and Canada units:

Installed base at period end 29,965 30,324 (359) (1)% 29,965 30,324 (359) (1)%Average daily revenue per unit $ 44.58 $ 4.45 $ 40.13 902 % $ 40.50 $ 18.17 $ 22.33 123 %

International units :Installed base at period end 31,412 34,333 (2,921) (9)% 31,412 34,333 (2,921) (9)%Average daily revenue per unit $ 8.44 $ 0.83 $ 7.61 917 % $ 5.76 $ 4.53 $ 1.23 27 %

Gaming machine unit sales:U.S. and Canada new unit shipments 3,221 1,431 1,790 125 % 5,164 4,321 843 20 %International new unit shipments 1,751 2,917 (1,166) (40)% 2,407 4,920 (2,513) (51)%

Total new unit shipments 4,972 4,348 624 14 % 7,571 9,241 (1,670) (18)%Average sales price per new unit $ 17,048 $ 11,137 $ 5,911 53 % $ 16,902 $ 13,644 $ 3,258 24 %

(1) Excludes the impact of game content licensing revenue.

(1)

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While we continue to see increased demand, Gaming revenue continues to be impacted by the COVID-19 disruptions, as described above, as thecontinuation of social distancing requirements (including reduced floor capacities, table play customer limitations and reduction of slot machines availablefor play) implemented in the first half of 2020 are still being enforced in certain jurisdictions. Although the restrictions are being eased, the mitigationmeasures are expected to continue for an indeterminate amount of time, which will continue to affect consumer behavior, and thus, we expect to continue tosee the impact on our gaming segment in the third quarter of 2021 and potentially beyond.

During the three months ended June 30, 2021, Gaming revenues, compared to the three months ended March 31, 2021, increased from$244 million to $367 million representing a 50% increase, primarily driven by increased Gaming operations and Machine sales. Gaming operationsrevenue for the three months ended June 30, 2021 also benefited from FOBT recovery of $38 million in the U.K. as described in the Consolidated Results –Revenue section above, and machine sales increased due to higher domestic new unit shipments.

Gaming Operations

Gaming operations revenue increased for both periods primarily due to the significant impact of COVID-19 disruptions on the prior year periodsand the current year three-month period including FOBT recovery of $38 million as described in the Consolidated Results – Revenue section above. Duringthe three and six-month periods Gaming operations had 359-unit and 2,921-unit decreases in the U.S. and Canada and International ending installed base,respectively, which were offset by increases in average daily revenue per unit for the three and six-month periods of $40.13 and $22.33 for the U.S. andCanada units and $7.61 and $1.23 for the International units, respectively, which were all primarily caused by the COVID-19 disruptions in the prior yearand current year recovery.

Gaming Machine Sales

Gaming machine sales revenue increased primarily due to higher sales of replacement units in the U.S and Canada along with a higher averagesales price per new unit. Additionally, the impact of COVID-19 on the prior year periods as described above, resulted in lower unit shipments in the prioryear periods. The following table summarizes Gaming machine sales changes:



2021 2020 2021 vs. 2020 2021 2020 2021 vs. 2020U.S. and Canada unit shipments:

Replacement units 2,541 640 1,901 297 % 4,164 2,384 1,780 75 %Casino opening and expansion units 680 791 (111) (14)% 1,000 1,937 (937) (48)%

Total unit shipments 3,221 1,431 1,790 125 % 5,164 4,321 843 20 %

International unit shipments:Replacement units — 2,532 (2,532) (100)% 656 4,359 (3,703) (85)%Casino opening and expansion units 1,751 385 1,366 355 % 1,751 561 1,190 212 %

Total unit shipments 1,751 2,917 (1,166) (40)% 2,407 4,920 (2,513) (51)%

Operating Expenses and AEBITDA

Operating expenses increased in the three-month period by $34 million primarily due to a $16 million increase in cost of services associated withthe increase in revenue as described above coupled with $13 million in higher SG&A costs related to Salaries and Benefits due to the austerity measuresimplemented in the prior year in response to the COVID-19 disruptions.

Operating expenses decreased in the six-month period by $128 million, primarily due to a number of charges in the prior year period, which didnot recur in 2021. The prior year period included: (1) a $54 million goodwill impairment charge related to our U.K. Gaming unit, which was recordedduring the first quarter of 2020; (2) $38 million in higher allowance for credit loss charges; (3) $24 million in inventory valuation charges to cost ofproducts; and (4) $12 million in higher restructuring and other charges.

AEBITDA as a percentage of revenue (“AEBITDA margin”) for the three and six-month periods increased by 87 and 34 percentage points to 53%and 50%, respectively, which is primarily related to increased revenues coupled with the lower allowance for credit loss and inventory valuation charges inthe current year periods as described above coupled with the three

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and six-month periods ended June 30, 2021 benefiting from the FOBT recovery in the U.K. of $38 million and $44 million, respectively.

AEBITDA for the three-month period ended June 30, 2021 compared to the three-month period ended March 31, 2021, increased from$108 million to $196 million primarily due to increased revenues as a result of the ongoing easing of restrictions coupled with the FOBT recovery of$38 million.

LOTTERY

Our Lottery segment is primarily comprised of our instant products business, systems-based services and product sales business. Our systems-based services and product sales business provide customized enterprise systems computer software, software support, equipment and data communicationservices, game content, and related products for retail and digital lottery draw and instant games, sports and virtual sports, and keno to lotteries. In the U.S.,we typically provide the necessary POS terminals and equipment, internet and mobile solutions, software and maintenance services on a Participation basisunder contracts that typically have an initial term of up to ten years. Internationally, we typically sell POS terminals and mobile lottery wagering platforms,related computer software and products, and technical operations services to lottery authorities and may provide ongoing fee-based systems maintenanceand software support services.

Our instant products business generates revenue from the manufacture and sale of instant products, and the provision of value-added services suchas game design, sales and marketing support, specialty games and promotions, inventory management, warehousing, fulfillment services and full instantproduct category management administered through our SGEP program. In addition, we provide licensed games, promotional entertainment and internet-based marketing services to the lottery industry. These revenues are presented as Instant products revenue. For further details on our Lottery segment’sprimary business activities refer to the “Business Segment Results” under Item 7 of our 2020 10-K.

Current Year Update

We believe we will continue to face intense price-based competition in our Lottery business through the remainder of 2021 and potentiallybeyond. In the near term, we also expect to see an increase in the number of jurisdictions that seek to privatize or outsource lottery operations and to facestrong competition from both traditional and new competitors with respect to these opportunities. We anticipate that lottery requests for proposals,specifically those for private management agreements and certain of our international customers, could increasingly include terms that expose us toincreased risk, such as requiring the guarantee of specific income thresholds or significant upfront payments.

Results of Operations and KPIs

Three and Six Months Ended June 30, 2021 and 2020

Revenue

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Three Months Ended June30, Variance Six Months Ended June 30, Variance


Instant products $ 175 $ 133 $ 42 32 % $ 337 $ 269 $ 68 25 %Lottery systems 91 76 15 20 % 177 152 25 16 %

Total revenue $ 266 $ 209 $ 57 27 % $ 514 $ 421 $ 93 22 %

F/X impact on revenue $ 5 $ (2) $ 7 350 % $ 8 $ (3) $ 11 (367)%

The increase in instant products and systems revenue for both periods is primarily due to the impact of COVID-19 on the prior year resultscoupled with the large lottery jackpots in the first half of 2021 driving both instant products sales and system increases.


The increase in operating expenses for both periods is primarily due to increased cost of revenues of $28 million and $32 million, respectively,associated with higher revenues as described above coupled with $7 million and $13 million, respectively, in higher SG&A costs as the prior year periodwas impacted by the Company-wide austerity measures in response to the COVID-19 disruptions. The increase in AEBITDA is directly correlated withincreased revenues as described above coupled with higher EBITDA from equity investments.

AEBITDA margin for the three and six-month periods increased by 6 and 8 percentage points to 52% and 50%, respectively, which is primarilydriven by the higher revenue as described above, coupled with higher EBITDA from equity investments reflective of continuing recovery from COVID-19disruptions.

SCIPLAY

Our SciPlay business segment is a leading developer and publisher of social games on mobile and web platforms. SciPlay currently offers sevencore games, including social casino games Jackpot Party Casino, Gold Fish Casino, Hot Shot Casino and Quick Hit Slots, and casual gamesMONOPOLY Slots, Bingo Showdown and 88 Fortunes Slots and recently added a solitaire social game as a part of the Come2Play acquisition. SciPlay’ssocial casino games typically include slots-style game play and occasionally include table games-style game play, while SciPlay’s casual games blend slots-style or bingo game play with adventure game features. All of SciPlay’s games are offered and played on multiple platforms, including Apple, Google,Facebook, Amazon, and the Microsoft platform. In addition to SciPlay’s internally created games, SciPlay’s content library includes recognizable, real-world slot and table games content from SGC. This content allows players who like playing land-based slot machines to enjoy some of those same titles inSciPlay’s free-to-play games. SciPlay has access to SGC’s library of more than 1,500 iconic casino titles, including titles and content from third-partylicensed brands such as MONOPOLY, JAMES BOND™, THE FLINTSTONES™, MICHAEL JACKSON™, and PLAYBOY™.

We generate substantially all of our revenue from the sale of coins, chips and cards which players can use to play our games. Players who installour games receive free coins, chips and cards upon the initial launch of the game and additional free coins, chips and cards at specific time intervals.Players may exhaust the coins, chips and cards that they receive for free and may choose to purchase additional coins, chips and cards in order to extendtheir time of game play. Once obtained, coins, chips and cards (either free or purchased) cannot be redeemed for cash nor exchanged for anything otherthan game play within our apps. We distribute our games through various global social web and mobile platforms such as Facebook, Apple, Google,Amazon, Microsoft, and other web and mobile platforms. The games are primarily our WMS , Bally , Barcrest , and SHFL branded games. We offerboth third-party branded games and original content.

Current Year Update

In March 2020, the World Health Organization declared the rapidly spreading COVID-19 outbreak a pandemic. In response to the COVID-19pandemic, governments across the world have implemented measures to prevent its spread, including the temporary closure of all non-essential businessesand travel restrictions. Many of our current and potential players may have significantly more free time to play our games, however they may alsoexperience sustained consumer unease and have lower discretionary income. While the increased player engagement we experienced during the first half of2020 as a result of the stay-at-home measures across the U.S. has begun to recede, we are still seeing an increase in paying player engagement as comparedto the pre-COVID time period in the six-months ended June 30, 2021. We are not able to predict and quantify the ultimate impact of further COVID-19developments on our results of operations in future periods.

® ®

® ®

® ® ® ®

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On July 2, 2021, SciPlay acquired privately held Koukoi, a developer and operator of casual mobile games (see Note 1), which enables SciPlay toexpand its casual games portfolio.



Revenue

Three Months Ended June 30, Variance Six Months Ended June 30, Variance($ in millions) 2021 2020 2021 vs. 2020 2021 2020 2021 vs. 2020Revenue:

Mobile $ 136 $ 144 $ (8) (6)% $ 269 $ 245 $ 24 10 %Web and other 18 22 (4) (18)% 36 39 (3) (8)%

Total revenue $ 154 $ 166 $ (12) (7)% $ 305 $ 284 $ 21 7 %

SciPlay KPIs:Mobile Penetration 88 % 87 % 1pp nm 88 % 86 % 2pp nmAverage MAU 6.3 8.1 (1.8) (22)% 6.5 7.8 (1.3) (17)%Average DAU 2.3 2.7 (0.4) (15)% 2.4 2.7 (0.3) (11)%ARPDAU $ 0.72 $ 0.67 $ 0.05 7 % $ 0.70 $ 0.58 $ 0.12 21 %

nm = not meaningful.pp = percentage points.(1) Mobile penetration is defined as the percentage of business to consumer SciPlay revenue generated from mobile platforms.(2) MAU = Monthly Active Users is a count of visitors to our sites during a month. An individual who plays multiple games or from multiple devices may, in certain circumstances, be countedmore than once. However, we use third-party data to limit the occurrence of multiple counting.(3) DAU = Daily Active Users is a count of visitors to our sites during a day. An individual who plays multiple games or from multiple devices may, in certain circumstances, be counted morethan once. However, we use third-party data to limit the occurrence of multiple counting.(4) ARPDAU = Average revenue per DAU is calculated by dividing revenue for a period by the DAU for the period by the number of days for the period.

For the three-month period, revenues decreased as a result of declining paying player engagement largely due to the easing of stay-at-homemeasures compared to the height of COVID-19 prevention measures in the prior year.

For the six-month period, revenues increased due to elevated player engagement from continued COVID-19 prevention measures during the firstquarter of 2021 compared to limited COVID-19 prevention measures for most of the first quarter of 2020 in addition to the introduction of new content andfeatures resulting in increased paying player interaction.

The increase in mobile penetration percentage primarily reflects a continued trend of players migrating from web to mobile platforms to play ourgames.

(1)

(2)

(3)

(4)

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Average MAU and average DAU decreased due to the turnover in users due to more efficient marketing towards potential paying players.ARPDAU increased as a function of lower average DAU for periods presented.


The increase in operating expenses for the six-month period is due to increases in SG&A and R&D associated with an increase in salary andbenefits costs as a result of higher headcount along with higher sales and marketing expenses driven by incremental paying customers and higher D&Afrom additional long-term license agreements with third parties.

AEBITDA for the three-month period decreased primarily due to the decrease in revenue as described above.

AEBITDA margin for the three-month period decreased by 5 percentage points to 31%, primarily due to the decrease in revenue as describedabove. AEBITDA margin for the six-month period decreased by 2 percentage points to 31% due to the increase in operating expenses driven by SG&A asdescribed above, partially offset by the higher revenue.

DIGITAL

Our Digital segment provides a comprehensive suite of digital iGaming, iLottery and sports betting solutions and services, including digital RMGand sports wagering solutions, distribution platforms, content, products and services. A portion of our Digital revenue consists of professional servicesrelated to highly customized software design, development, licensing, maintenance and support services, which are derived from a comprehensive suite oftechnology solutions. These technology solutions allow our customers to operate sports books, which can offer sport (or non-sport) events and bettingmarkets across both fixed-odds and pari-mutuel betting styles. We also provide the Open Platform System which offers a wide range of reporting andadministrative functions and tools providing operators full control over all areas of digital gaming operations. Additionally, we derive revenue from ourcontent aggregation platforms, including Open Gaming System (OGS), remote gaming servers, and various other platforms, which can deliver a widespectrum of internally developed and branded casino-style games and popular third-party provider casino-style games to gaming operators. Generally, wehost the play of our game content on our centrally-located servers that are integrated with the online casino operators’ websites.

Current Year Update

Our Digital segment revenues increased for both periods, with the six-month period being partially offset by a decrease in Sports and platformrevenue primarily due to a cancellation fee of $7 million associated with certain legacy agreements that were modified in the first quarter of 2020. Wecontinue to expand our customer base and capitalize on iGaming and sports opportunities and growth in the U.S. by leveraging our industry leadingplatforms, content and solutions. Currently, iGaming is live in three U.S. states with a 25% market share and 26 Sportsbooks are live with 20 newdeployments planned before the end of the year. While we believe that we are well positioned and continue to successfully expand our customer base andcapitalize on U.S. sports-betting markets, we expect to see increased levels of intense competition.

In May of 2021, we acquired SportCast (see Note 1), which expanded our portfolio of sports betting technology, services and content. In Augustof 2021, we acquired Lightning Box, which expanded our iGaming content portfolio.



Revenue

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Sports and platform $ 38 $ 26 $ 12 46 % $ 71 $ 64 $ 7 11 %Gaming and other 55 47 8 17 % 108 86 22 26 %

Total revenue $ 93 $ 73 $ 20 27 % $ 179 $ 150 $ 29 19 %

F/X impact on revenue $ 6 $ (2) $ 8 (400)% $ 10 $ (2) $ 12 (600)%

Gaming KPI:Wagers processed through OGS (inbillions)

$ 18.0 $ 14.0 $ 4.0 29 % $ 35.0 $ 23.9 $ 11.1 46 %

The increase in revenues and AEBITDA for both periods is primarily due to increased free time and stay at home measures as a result of COVID-19 disruptions coupled with higher iGaming and Sports revenue driven by continued growth and expansion in the U.S. market, which was partially offsetby the cancellation fee that was recognized in the first quarter of 2020, as described above.

AEBITDA margin for the three and six-month periods increased by 6 and 5 percentage points to 33% and 34%, respectively.

RECENTLY ISSUED ACCOUNTING GUIDANCE

We do not expect that any recently issued accounting guidance will have a significant effect on our consolidated financial statements.

CRITICAL ACCOUNTING ESTIMATES

For a description of our policies regarding our critical accounting estimates, see “Critical Accounting Estimates” in “Item 7. Management’sDiscussion and Analysis of Financial Condition and Results of Operations” included in our 2020 10-K.

There have been no significant changes in our critical accounting estimate policies or the application of those policies to our condensedconsolidated financial statements from those presented in “Item 7. Management's Discussion and Analysis of Financial Condition and Results ofOperations” included in our 2020 10-K.

LIQUIDITY, CAPITAL RESOURCES AND WORKING CAPITAL

Cash and Available Liquidity

As of June 30, 2021, our principal sources of liquidity, other than cash flows provided by operating activities, were cash and cash equivalents,including SciPlay cash and cash equivalents (for our SciPlay business segment), and amounts available under the SciPlay Revolver (for our SciPlaybusiness segment).

Cash and Available Revolver Capacity

(in millions)Cash and cash

equivalents Revolver capacity

Revolver capacitydrawn or committed to

letters of credit TotalSGC (excluding SciPlay) $ 631 $ 650 $ (297) $ 984 SciPlay 301 150 — 451 Total as of June 30, 2021 $ 932 $ 800 $ (297) $ 1,435

SGC (excluding SciPlay) $ 747 $ 650 $ (547) $ 850 SciPlay 269 150 — 419 Total as of December 31, 2020 $ 1,016 $ 800 $ (547) $ 1,269

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Total cash held by our foreign subsidiaries was $168 million and $173 million as of June 30, 2021 and December 31, 2020, respectively. Webelieve that substantially all cash held outside the U.S. is free from legal encumbrances or similar restrictions that would prevent it from being available tomeet our global liquidity needs.

Our Gaming operations and Lottery systems businesses generally require significant upfront capital expenditures, and we may need to incuradditional capital expenditures in order to retain or win new contracts. Our ability to make payments on and to refinance our indebtedness and otherobligations depends on our ability to generate cash in the future. We may also, from time to time, repurchase or otherwise retire or refinance our debt,through our subsidiaries or otherwise. In the event we pursue significant acquisitions or other expansion opportunities, we may need to raise additionalcapital. If we do not have adequate liquidity to support these activities, we may be unable to obtain financing for these cash needs on favorable terms or atall. For additional information regarding our cash needs and related risks, see “Risk Factors” under Part I, Item 1A in our 2020 10-K.

In addition, Lottery customers in the U.S. generally require service providers to provide performance bonds in connection with the relevantcontract. As of June 30, 2021 our outstanding performance bonds totaled $265 million. Our ability to obtain performance bonds on commerciallyreasonable terms is subject to our financial condition and to prevailing market conditions, which may be impacted by economic and political events.Although we have not experienced difficulty in obtaining such bonds to date, we cannot assure that we will continue to be able to obtain performancebonds on commercially reasonable terms, or at all. For additional information regarding our surety or performance bonds in connection with our contracts,see “Risk Factors” under Part I, Item 1A in our 2020 10-K.

In July 2021, we made a voluntary payment of $150 million on SGI’s revolving credit facility. Refer to Recent Events Strategic Review Updatesection above, which if executed would create the path to significantly reduce our long-term debt.

Subsequent to June 30, 2021, we amended our Credit Agreement to provide for additional flexibility on executing the recently announced strategictransactions, more fully described in Note 11.

Cash Flow Summary

Six Months Ended June 30, Variance($ in millions) 2021 2020 2021 vs. 2020Net cash provided by operating activities $ 272 $ 172 $ 100 Net cash used in investing activities (98) (84) (14)Net cash (used in) provided by financing activities (324) 402 (726)Effect of exchange rate changes on cash, cash equivalents and restricted cash — (1) 1 (Decrease) increase in cash, cash equivalents and restricted cash $ (150) $ 489 $ (639)

Cash Flows from Operating Activities

Six Months Ended June 30, Variance($ in millions) 2021 2020 2021 vs. 2020Net income (loss) $ 104 (353) $ 457 Adjustments to reconcile net income (loss) to cash provided by operating activities 234 460 (226)Changes in working capital accounts, net of effect of acquisitions (71) 57 (128)Changes in deferred income taxes and other 5 8 (3)

Net cash provided by operating activities increased primarily due to a $231 million increase in earnings (after adjustments to reconcile net income(loss) to cash flows from operations) as certain restrictions due to COVID-19 have been lifted, which was partially offset by a $131 million unfavorablechange in working capital accounts and other. The current year improvement includes $44 million in FOBT recovery as described in the ConsolidatedResults – Revenue section above, which based on its nature is not expected to recur in future periods. Changes in working capital accounts for the sixmonths ended June 30, 2021 were primarily driven by higher billings as recovery from the COVID-19 pandemic continues to gain momentum with easedrestrictions and a beginning of the return to pre-COVID levels of business, coupled with cash management and timing of expenditures.

Cash Flows from Investing Activities

Net cash used in investing activities increased primarily due to higher capital expenditures. Capital expenditures are composed of investments insystems, equipment and other assets related to contracts, property and equipment, intangible assets and software.

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Cash Flows from Financing Activities

Net cash used in financing activities increased primarily due to repayments of $250 million under SGI’s revolving credit facility compared to theprior year period $440 million net draw on SGI’s revolving credit facility.

As of August 9, 2021, we have repaid a cumulative $500 million since the fourth quarter of 2020, which includes a $150 million payment that wasmade subsequent to June 30, 2021.

Credit Agreement and Other Debt

For additional information regarding our credit agreement and other debt, interest rate risk and interest rate hedging instruments, see Notes 15 and16 and Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our 2020 10-K and Item 3 below.

Off-Balance Sheet Arrangements

As of June 30, 2021, we did not have any significant off-balance sheet arrangements.

Contractual Obligations

There have been no material changes to our contractual obligations disclosed under Item 7 “Management’s Discussion and Analysis of FinancialCondition and Results of Operations — Liquidity, Capital Resources and Working Capital — Contractual Obligations” in our 2020 10-K, other than thoserelated to the acquisitions completed subsequent to June 30, 2021, described in Note 1.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign exchange rates andcommodity prices. The following are our primary exposures to market risks:

Interest Rate Risk

As of June 30, 2021, the face value of long-term debt was $9,113 million, including $4,324 million of variable-rate obligations. Assuming aconstant outstanding balance for our variable-rate long term debt, a hypothetical 1% change in interest rates would decrease/increase interest expense byapproximately $43 million. All of our interest rate sensitive financial instruments are held for other than trading purposes.

We currently use interest rate swap contracts to mitigate interest rate risk associated with a portion of our variable rate debt instruments. Theobjective of our interest rate swap contracts, which are designated as cash flow hedges of the future interest payments, is to eliminate the variability of cashflows attributable to the LIBOR component of interest expense to be paid on a portion of our variable rate debt.

Cross-Currency Interest Rate Swaps

In connection with the February 2018 Refinancing (see Note 15 in our 2020 10-K), we entered into certain cross-currency interest rate swapagreements to achieve more attractive interest rates by effectively converting $460 million of our fixed-rate U.S. Dollar-denominated 2025 Secured Notes,including the semi-annual interest payments through October 2023, to a fixed-rate Euro-denominated debt, with a fixed annual weighted average interestrate of approximately 2.946%. We have designated these cross-currency interest rate swap agreements as a net investment hedge of our investments incertain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by thechanges in foreign currency exchange rates of the Euro with respect to the U.S. Dollar.

As of June 30, 2021, if these cross-currency interest rate swap agreements were ineffective, the fluctuations in the exchange rates between theEuro and the U.S. Dollar would impact the amount of U.S. Dollars that we would require to settle the Euro-denominated debt at maturity of theseagreements. A hypothetical 10% change in the U.S. Dollar in comparison to the Euro exchange rate upon inception of the cross-currency interest rate swapwould have increased/decreased our obligation to cash settle the exchanged principal portion in U.S. Dollars by approximately $46 million.

Net Investment Non-Derivative Hedge - 2026 Secured Euro Notes

In February 2018, we designated a portion of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certainof our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the changesin foreign currency exchange rates of the Euro with respect to the U.S. Dollar.

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Fluctuations in the exchange rates between the Euro and the U.S. Dollar will impact the amount of U.S. Dollars that we will require to settle the2026 Secured Euro Notes and 2026 Unsecured Euro Notes at maturity. A hypothetical 10% change in U.S. Dollar in comparison to the Euro as of June 30,2021, would have increased/decreased our obligation to cash settle the principal portion of the 2026 Secured and Unsecured Euro Notes in U.S. Dollars byapproximately $68 million.

For additional information regarding interest rate swap contracts, cross-currency interest rate swaps and net investment non-derivative hedges, seeNote 12.

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we haveevaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 3a-15(b) as of the end of the period covered by thisreport. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures areeffective as of June 30, 2021.

There were no changes in our internal control over financial reporting during the three months ended June 30, 2021 that have materially affected,or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a description of our legal proceedings, see Note 16 in this Quarterly Report on Form 10-Q and Note 21 in our 2020 10-K.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed under Item 1A “Risk Factors” included in our 2020 10-K, except asnoted below.

We are reviewing strategic alternatives for our Lottery and Sports Betting businesses and have submitted a proposal to acquire the public shares of ourSciPlay business (the “Proposed SciPlay Acquisition”), but there can be no assurance that we will be successful in identifying or consummating anystrategic alternatives or the Proposed SciPlay Acquisition, that strategic alternatives or the Proposed SciPlay Acquisition will yield additional value forour stockholders or that the evaluation of strategic alternatives or the Proposed SciPlay Acquisition will not adversely impact our business, financialresults, results of operations, cash flows or stock price.

On June 29, 2021, we announced our intention to divest our Lottery and Sports Betting businesses. We are evaluating strategic alternatives toexecute the divestitures of the Lottery and Sports Betting businesses, as applicable, including an initial public offering, a combination with a specialpurpose acquisition company, a sale or a strategic combination with another business. On July 15, 2021, we submitted a proposal to the board of directorsof SciPlay Corporation to acquire the remaining 19% equity interest in SciPlay Corporation that we do not currently own in an all-stock transaction,following which SciPlay would become a wholly-owned subsidiary of Scientific Games. Evaluation of proposed transactions is ongoing and may not resultin the consummation of any transaction, on any particular timetable or at all. Speculation regarding any developments related to the review of strategicalternatives for our Lottery and Sports Betting businesses or the Proposed SciPlay Acquisition and perceived uncertainties related to the future of suchbusinesses or Scientific Games could cause our stock price to fluctuate significantly.

Our evaluation of strategic alternatives for our Lottery and Sports Betting businesses and the Proposed SciPlay Acquisition exposes us to anumber of risks and uncertainties, including continued diversion of management’s time to the processes; the incurrence of significant expenses associatedwith the review and pursuit of any transaction; increased difficulties in attracting, retaining or motivating key management personnel; the potential loss ofkey customers, suppliers, vendors and other key business partners; the inability to obtain necessary regulatory approvals or otherwise satisfy conditionsrequired in order to consummate any such transactions; the need to provide transition services, which may result in additional costs and the diversion ofresources and focus; and exposure to potential litigation. Any of these factors could disrupt our business and could have a material adverse effect on ourbusiness, financial condition, results of operations, cash flows or stock price.

Additionally, we may not be able to realize the anticipated operational, strategic or financial benefits from a potential transaction or other strategicalternative involving our Lottery, Sports Betting and SciPlay businesses. There can be no assurance that any of the potential transactions or other strategicalternative, if identified, evaluated and consummated, will provide greater value to our stockholders than that reflected in our current stock price. Further,our board of directors may determine to suspend or terminate the evaluation of strategic alternatives for our Lottery and Sports Betting businesses or theProposed SciPlay Acquisition at any time. Any potential transaction or other outcome of this review process is also dependent

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upon a number of factors that may be beyond our control, including among other factors, market conditions (including the impact of the COVID-19pandemic), industry trends, regulatory developments, litigation and the interest of third parties in these businesses.

We depend on our suppliers and contract manufacturers, and any failure of these parties to meet our performance and quality standards orrequirements could cause us to incur additional costs or lose customers.

Our production of instant lottery products, in particular, depends upon a continuous supply of raw materials, supplies, power and natural resources.Our operating results could be adversely affected by an interruption or cessation in the supply of these items or a serious quality assurance lapse, includingas a result of the insolvency of any of our key suppliers.

Similarly, the operation of our instant ticket printing presses and the manufacture and maintenance of our gaming machines and gaming andlottery systems are dependent upon a regular and continuous supply of raw materials and components, many of which are manufactured or producedoutside of the U.S. Certain of the components we use are customized for our products. The assembly of certain of our products and other hardware isperformed by third parties. Any interruption or cessation in the supply of these items or services or any material quality assurance lapse with respect theretocould materially adversely affect our ability to fulfill customer orders, results of operations, cash flows and financial condition. We may be unable to findadequate replacements for our suppliers within a reasonable time frame, on favorable commercial terms or at all. The impact of the foregoing may bemagnified as we continue to seek to streamline our gaming supply chain by reducing the number of our suppliers. Further, manufacturing costs mayunexpectedly increase and we may not be able to successfully recover any or all of such cost increases. Additionally, in the three-month period ended onJune 30, 2021, we experienced pressures on the supply chain related to parts sourcing, which contributed to approximately $5 million of inventoryobsolescence charge. Because of the use of certain shared parts in some of our gaming machines in both old and new cabinets, supply chain pressures onavailability of these parts may require us to re-allocate shared parts, rendering further units obsolete if such conditions sustain for an extended period oftime.

In our Lottery systems business, we transmit certain wagering data using cellular technology and satellite transponders, generally pursuant to long-term contracts. The technical failure of any of these cellular or satellite services would require us to obtain other communication services, including othercellular or satellite access. In some cases, we employ backup systems to limit our exposure in the event of such a failure. While these networks areinherently highly redundant, we cannot assure access to such other cellular services or satellites or, if available, the ability to obtain the use of such othercellular services or satellites on favorable terms or in a timely manner. While cellular and satellite failures are infrequent, the operation of each is outside ofour control.

In addition, in all of our businesses, we rely upon a number of significant third-party suppliers and vendors delivering parts, equipment andservices on schedule in order for us to meet our contractual commitments. Furthermore, we outsource the manufacturing of certain of our sub-assemblies tothird parties in the U.S., Europe, Central America and Asia. The willingness of such third parties to provide their services to us may be affected by variousfactors. Changes in law or regulation in any jurisdiction in which we operate may make the provision of key services to us unlawful in such jurisdictions.To the extent that third parties are unwilling or unable to provide services to us, this may have an adverse impact on our operations, financial performanceand prospects. Failure of these third parties to meet their delivery commitments could result in us being in breach of, and subsequently losing, the affectedcustomer orders, which loss could have a material adverse effect on our results of operations, cash flows and financial condition. We rely on network and/ortelecommunications services for certain of our products. For instance, any disruption to our network or telecommunications could impact our linked ornetworked games, which could reduce our revenue.

In our Digital sports business, we rely on providers of third party sports data feeds. During the prior year, the outbreak of COVID-19 resulted inthe suspension or cancellation of the majority of sporting events, which have mostly re-commenced during the current year, however potential futurecancellations could negatively impact the financial condition of our sportsbook customers, their ability to purchase development and other services, theirrisk of payment default, or their spending levels as they seek to reduce costs, each of which could negatively impact our Digital business revenue.

In our Lottery, SciPlay and Digital businesses, we often rely on third-party data center providers to, among other things, host our remote gameservers. Our Lottery, SciPlay and Digital businesses could be adversely impacted by breaches of or disruptions to these third-party data centers, includingthrough disruptions in our RMG and lottery businesses, potential service level penalties with respect to our customers, reputational harm, the disclosure ofproprietary information or the information of our customers or the theft of our or our customers assets, and to the extent any such data center provider wasunable or unwilling to continue to provide services to us.

In certain regions, we enter into agreements with local distributors for the distribution of our land-based gaming products to one or morecustomers. Changes to these distributor relationships, including modification or termination of our

43

agreements or difficulties with any such distributor could prevent us from delivering products or services to our customers on a timely basis, or at all, andcould negatively impact our business. Additionally, the outbreak of COVID-19 and any resulting unfavorable social, political and economic conditionshave negatively impacted our suppliers and contract manufacturers in varied ways in different communities, which could lead to interruption or cessation ofservices provided to us. For more information on the impact of the outbreak of COVID-19, see the risk factor captioned “The recent COVID-19 pandemicand similar health epidemics, contagious disease outbreaks and public perception thereof, significantly disrupted our operations and adversely affected andcontinue to adversely affect our business, results of operations, cash flows and financial condition.”

The provisions of our bylaws requiring exclusive forum in the Eighth Judicial District Court of Clark County, Nevada for certain types of lawsuits mayhave the effect of discouraging lawsuits against our directors and officers.

Our bylaws provide that, to the fullest extent permitted by law, and unless we consent in writing to the selection of an alternative forum, the EighthJudicial District Court of Clark County, Nevada, will be the sole and exclusive forum for any actions, suits or proceedings, whether civil, administrative orinvestigative or that assert any claim or counterclaim (i) brought in our name or right or on our behalf, (ii) asserting a claim for breach of any fiduciary dutyowed by any of our directors, officers, employees or agents to us or our stockholders, (iii) arising or asserting a claim arising pursuant to any provision ofNevada Revised Statutes (“NRS”), Chapters 78 or 92A or any provision of our articles of incorporation or our bylaws or (iv) asserting a claim governed bythe internal affairs doctrine. Our bylaws further provide that, in the event that the Eighth Judicial District Court of Clark County, Nevada does not havejurisdiction over any such action, suit or proceeding, then any other state district court located in the State of Nevada will be the sole and exclusive forumtherefor and in the event that no state district court in the State of Nevada has jurisdiction over any such action, suit or proceeding, then a federal courtlocated within the State of Nevada will be the sole and exclusive forum therefor. Application of the choice of forum provisions may be limited in someinstances by law. Section 27 of the Exchange Act establishes exclusive federal jurisdiction over all suits brought to enforce any duty or liability created bythe Exchange Act or the rules and regulations thereunder. In addition, Section 22 of the Securities Act provides that federal and state courts have concurrentjurisdiction over lawsuits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. To the extent ourbylaws restrict the courts in which claims arising under the federal securities laws may be brought, there is uncertainty as to whether a court would enforcesuch a provision and we note that our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules andregulations thereunder.

Although we believe these provisions benefit us by providing increased consistency in the application of Nevada law in the types of lawsuits towhich they apply, these provisions may have the effect of increasing the costs to bring a claim, and limiting a stockholder’s ability to bring a claim in ajudicial forum that it finds favorable for disputes with us or our directors and officers. This may discourage lawsuits against us or our directors and officers.The enforceability of similar choice of forum provisions in other companies’ articles of incorporation and bylaws has been challenged in legal proceedings,and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in ourbylaws to be inapplicable or unenforceable in such action. If a court were to find the choice of forum provisions contained in our bylaws to be inapplicableor unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect ourbusiness, financial condition, or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There was no stock repurchase activity during the three months ended June 30, 2021.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

44

Item 6. Exhibits ExhibitNumber Description

3.1(a) Articles of Merger filed with the Secretary of State of the State of Nevada on January 10, 2018 (incorporated by reference to Exhibit 3.3 toScientific Games Corporation’s Current Report on Form 8-K filed on January 10, 2018).

3.1(b) Certificate of Merger filed with the Secretary of State of the State of Delaware on January 10, 2018 (incorporated by reference to Exhibit3.4 to Scientific Games Corporation's Current Report on Form 8-K filed on January 10, 2018).

3.1(c) Amended and Restated Articles of Incorporation of Scientific Games Corporation, filed with the Secretary of State of the State of Nevadaon January 10, 2018 (incorporated by reference to Exhibit 3.1 to Scientific Games Corporation’s Current Report on Form 8-K filed onJanuary 10, 2018).

3.2 Amended and Restated Bylaws of Scientific Games Corporation, effective as of January 10, 2018 (incorporated by reference to Exhibit 3.2to Scientific Games Corporation’s Current Report on Form 8-K filed on January 10, 2018).

10.1 Amended and Restated Employment Agreement, dated as of February 5, 2021 (effective as of June 1, 2021), by and between ScientificGames Corporation and Barry Cottle (incorporated by reference to Exhibit 10.52 to Scientific Games Corporation’s Annual Report on Form10-K for the year ended December 31, 2020).*

10.2 Amendment to Employment Agreement, dated as of April 27, 2021, by and between Scientific Games Corporation and MichaelWinterscheidt.*(†)

10.3 Employment Agreement, dated as of August 2, 2021 (effective as of September 1, 2021), by and between Scientific Games Corporation andJames Sottile.*(†)

10.4 Scientific Games Corporation Amended and Restated 2003 Incentive Compensation Plan (Amended and Restated as of June 9, 2021)(incorporated by reference to Exhibit 10.1 to Scientific Games Corporations Current Report on Form 8-K filed on June 11, 2021)*

10.5 Scientific Games Corporation Amended and Restated 2016 Employee Stock Purchase Plan (Amended and Restated as of June 9, 2021)(incorporated by reference to Exhibit 10.2 to Scientific Games Corporation’s Current Report on Form 8-K filed on June 11, 2021)*

10.6 Amendment No. 8, dated as of July 28, 2021, among Scientific Games International, Inc., as the borrower, Scientific Games Corporation, asa guarantor, the several banks and other financial institutions or entities from time to time party thereto and Bank of America, N.A., asadministrative agent, collateral agent, issuing lender and swingline lender, which amended and restated the Credit Agreement, dated as ofOctober 18, 2013 (as amended, supplemented, amended and restated or otherwise modified from time to time, including without limitation,by that certain Amendment No. 1, dated as of October 1, 2014, Amendment No. 2, dated as of February 14, 2017, Amendment No. 3, datedas of August 14, 2017, Amendment No. 4, dated as of February 14, 2018, Amendment No. 5, dated as of November 20, 2019, AmendmentNo. 6, dated as of May 8, 2020, and Amendment No. 7, dated as of October 8, 2020) (incorporated by reference to Exhibit 10.1 to ScientificGames Corporation's Current Report on Form 8-K filed on July 28, 2021).

31.1 Certification of the Chief Executive Officer of Scientific Games Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302of the Sarbanes-Oxley Act of 2002. (†)

31.2 Certification of the Chief Financial Officer of Scientific Games Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302of the Sarbanes-Oxley Act of 2002. (†)

32.1 Certification of the Chief Executive Officer of Scientific Games Corporation pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

32.2 Certification of the Chief Financial Officer of Scientific Games Corporation pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embeddedwithin the Inline XBRL document.

101.SCH Inline XBRL Taxonomy Extension Schema Document

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(†) Filed herewith.** Furnished herewith.*Management contracts and compensation plans and arrangements.

46

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

SCIENTIFIC GAMES CORPORATION(Registrant)

By: /s/ Michael C. EklundName: Michael C. EklundTitle: Executive Vice President, Chief Financial Officer, Treasurer and Corporate

Secretary

By: /s/ Michael F. WinterscheidtName: Michael F. WinterscheidtTitle: Senior Vice President and Chief Accounting Officer

Dated: August 9, 2021

47

Exhibit 10.2

Amendment to Employment Agreement

This Amendment to Employment Agreement (this “Amendment”) is made as of April 27, 2021, by and between Scientific GamesCorporation, a Nevada corporation, (the “Company”) and Michael Winterscheidt (“Executive”).

WHEREAS, the Company and Executive entered into an Amended and Restated Employment Agreement dated as of February 27,2017, which was then amended as of February 25, 2019, as of March 27, 2020, as of May 18, 2020, as of June 30, 2020, and as of February23, 2021 (with amendments, the “Agreement”);

NOW THEREFORE, in consideration of the premises and the mutual benefits to be derived herefrom and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Eligibility for Annual Equity Awards. The Agreement is hereby amended by adding the following sentences to the end ofSection 3(c) of the Agreement:

“If Executive is an employee of the Company on November 30, 2021, then, within 10 business days after November 30,2021, all equity awards with respect to the Company’s common stock that were granted to Executive before March 20, 2021,to the extent unvested as of November 30, 2021, shall vest, less applicable withholdings. This acceleration of the foregoingequity awards shall be in addition to, and not in lieu of, other compensation for which Executive is eligible pursuant toSection 3 of this Agreement.

2. Except as set forth in this Amendment, all terms and conditions of the Agreement shall remain unchanged and in full forceand effect in accordance with their terms. All references to the “Agreement” in the Agreement shall refer to the Agreement as amended bythis Amendment. Any defined terms used in this Amendment and not defined herein shall have the meaning as set forth in the Agreement.

3. This Amendment may be executed in counterparts, each of which shall for all purposes be deemed to be an original and allof which shall constitute the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by electronictransmission shall be effective as delivery of a manually executed counterpart of this Amendment.

IN WITNESS WHEREOF, each of the parties hereto has duly executed this Amendment as of April 27, 2021.

SCIENTIFIC GAMES CORPORATION

By: _/s/ James Sottile_______________Name: James Sottile Title: Executive Vice President and Chief Legal Officer

_/s/ Michael Winterscheidt___________Michael Winterscheidt

1

Exhibit 10.3

Employment Agreement

This Employment Agreement (this “Agreement”) is made as of August 2, 2021, by and between Scientific Games Corporation, aNevada corporation (the “Company”), and James Sottile (“Executive”).

WHEREAS, Executive is currently employed by the Company pursuant to the Prior Employment Agreement (as defined below); and

WHEREAS, the Company and Executive wish to enter into this Agreement and to supersede the terms of the Prior EmploymentAgreement.

NOW, THEREFORE, in consideration of the premises and mutual benefits to be derived herefrom and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged by the Company and Executive, the parties agree as follows.

1. Employment; Term. The Prior Employment Agreement expires on August 31, 2021 and, for the avoidance of doubt, will notautomatically extend. The Company hereby agrees to employ Executive following August 31, 2021, and Executive hereby acceptsemployment with the Company, in accordance with and subject to the terms and conditions set forth in this Agreement. This term ofemployment of Executive under this Agreement (the “Term”) shall be the period commencing on September 1, 2021 (the “Effective Date”)and ending on August 31, 2024, as may be extended in accordance with this Section 1 and subject to earlier termination in accordance withSection 4. The Term shall be extended automatically without further action by either party by one (1) additional year (added to the end of theTerm), and then on each succeeding annual anniversary thereafter, unless either party shall have given written notice to the other party priorto the date which is sixty (60) days prior to the date upon which such extension would otherwise have become effective electing not tofurther extend the Term, in which case Executive’s employment shall terminate on the date upon which such extension would otherwise havebecome effective, unless earlier terminated in accordance with Section 4. A notice of non-renewal of the Term by the Company pursuant tothis Section 1 shall be deemed to be a termination without Cause by the Company for purposes of this Agreement as of the end of the Term.

2. Position and Duties. During the Term, Executive will serve as Executive Vice President and Chief Legal Officer of theCompany and as an officer or director of any subsidiary or affiliate of the Company if elected to any such position by the stockholders or bythe board of directors of any such subsidiary or affiliate, as the case may be. In such capacities, Executive shall perform such duties and shallhave such responsibilities as are normally associated with such positions, and as otherwise may be assigned to Executive from time to timeby the Company’s President and Chief Executive Officer or upon the authority of the board of directors of the Company (the “Board”).Subject to Section 4(e), Executive’s functions, duties and responsibilities are subject to reasonable changes as the Company may in goodfaith determine from time to time. Executive hereby agrees to accept such employment and to serve the Company and its subsidiaries andaffiliates to the best of Executive’s ability in such capacities, devoting all of Executive’s business time to such employment.

3. Compensation.

(a) Base Salary. During the Term, Executive will receive a base salary of seven hundred thousand U.S. dollars(US$700,000) per annum (pro-rated for any partial year), payable in accordance with the Company’s regular payroll practices and subject tosuch deductions or amounts to be withheld as required by applicable law and regulations or as may be agreed to by Executive. In the eventthat the Company, in its sole discretion, from time to time determines to increase Executive’s base salary

as an annual merit increase or otherwise, such increased amount shall, from and after the effective date of such increase, constitute the “basesalary” of Executive for purposes of this Agreement.

(b) Incentive Compensation. Executive shall have the opportunity annually to earn incentive compensation (“IncentiveCompensation”) in amounts determined by the Compensation Committee of the Board (the “Compensation Committee”) in its sole discretionin accordance with the applicable incentive compensation plan of the Company as in effect from time to time (the “Incentive CompensationPlan”). Under such Incentive Compensation Plan, Executive shall have the opportunity annually to earn up to 75% of Executive’s base salaryas Incentive Compensation at “target opportunity” (“Target Bonus”) on the terms and subject to the conditions of such IncentiveCompensation Plan (any such Incentive Compensation to be subject to such deductions or amounts to be withheld as required by applicablelaw and regulations or as may be agreed to by Executive).

(c) Equity Awards.

(i) The Company will grant to Executive a special equity award for 2021 consisting of 10,000 time-vestingRSUs (the “2021 Special Equity Award”). The 2021 Special Equity Award shall vest as follows: 3,334 RSUs on August 31,2022, 3,333 RSUs on August 31, 2023 and 3,333 RSUs on August 31, 2024. The 2021 Special Equity Award will be grantedpursuant to the Incentive Compensation Plan. The 2021 Special Equity Award will be evidenced by the execution of theCompany’s standard form of award agreement under the Incentive Compensation Plan. The grant of the 2021 Special EquityAward will be made within ten (10) days after the Effective Date if the Company is not in a blackout period on the EffectiveDate. If the Company is in a blackout period on the Effective Date, the 2021 Special Equity Award will be made within three(3) trading days after the Company’s next trading window opens.

(ii) During the Term, Executive shall be eligible to receive an annual grant of stock options, restricted stockunits or other equity awards with a grant date fair value equal to approximately 125% of Executive’s base salary, as measuredin accordance with the Company’s standard practices of measuring equity value, and in accordance with the applicable plansand programs of the Company for senior executives of the Company and subject to the Company’s right to at any time amendor terminate any such plan or program, so long as any such change does not adversely affect any accrued or vested interest ofExecutive under any such plan or program.

(iii) All equity awards granted pursuant to this Agreement shall be subject to the terms of the Company’sstandard form of award agreement under the Incentive Compensation Plan modified to provide that, if Executive remainsemployed by the Company through the date when he becomes 65 years of age and retires at any time thereafter, any unvestedequity held by Executive as of that retirement date shall vest ten days after such retirement, subject to the achievement of anyapplicable performance criteria; provided that, settlement of any such awards shall be in accordance with Section 4(f).

(d) Expense Reimbursement. Subject to Section 3(f), the Company shall reimburse Executive for all reasonable andnecessary travel and other business expenses incurred by Executive in connection with the performance of Executive’s duties under thisAgreement, on a timely basis upon

timely submission by Executive of vouchers therefor in accordance with the Company’s standard policies and procedures.

(e) Employee Benefits. During the Term, Executive shall be entitled to participate, without discrimination or duplication,in any and all medical insurance, group health, disability, life insurance, accidental death and dismemberment insurance, 401(k) or otherretirement, deferred compensation, stock ownership and such other plans and programs which are made generally available by the Companyto similarly situated executives of the Company in accordance with the terms of such plans and programs and subject to the right of theCompany (or its applicable affiliate) to at any time amend or terminate any such plan or program. Executive shall be entitled to paid time off,holidays and any other time off in accordance with the Company’s policies in effect from time to time.

(f) Taxes and Internal Revenue Code 409A. Payment of all compensation and benefits to Executive under thisAgreement shall be subject to all legally required and customary withholdings. The Company makes no representations or warranties andshall have no responsibility regarding the tax implications of the compensation and benefits to be paid to Executive under this Agreement,including under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and applicable administrative guidance andregulations (“Section 409A”). Section 409A governs plans and arrangements that provide “nonqualified deferred compensation” (as definedunder the Code) which may include, among others, nonqualified retirement plans, bonus plans, stock option plans, employment agreementsand severance agreements. The Company reserves the right to pay compensation and provide benefits under this Agreement (including underSection 3 and Section 4) in amounts, at times and in a manner that minimizes taxes, interest or penalties as a result of Section 409A. Inaddition, in the event any benefits or amounts paid to Executive hereunder are deemed to be subject to Section 409A, Executive consents tothe Company adopting such conforming amendments as the Company deems necessary, in its reasonable discretion, to comply with Section409A (including delaying payment until six (6) months following termination of employment). To the extent any payments of money or otherbenefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A, such payments orother benefits may be deferred if deferral will make such payment or other benefits compliant under Section 409A, or otherwise suchpayments or other benefits shall be restructured, to the extent permissible under Section 409A, in a manner determined by the Company thatdoes not cause such an accelerated or additional tax. To the extent any reimbursements or in-kind benefits due to Executive under thisAgreement constitute deferred compensation under Section 409A, any such reimbursements or in-kind benefits shall be paid to Executive ina manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv). Any tax gross-up payment provided under this Agreement will be made nolater than the end of the calendar year immediately following the calendar year in which Executive remits the related taxes. Each paymentmade under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A.

4. Termination of Employment. Executive’s employment may be terminated at any time prior to the end of the Term under theterms described in this Section 4, and the Term shall automatically terminate upon any termination of Executive’s employment. For purposesof clarification, except as provided in Section 5.6, all stock options, restricted stock units and other equity-based awards will be governed bythe terms of the plans, grant agreements and programs under which such options, restricted stock units or other awards were granted on anytermination of the Term and Executive’s employment with the Company.

(a) Termination by Executive for Other than Good Reason. Executive may terminate Executive’s employment hereunderfor any reason or no reason upon 60 days’ prior written

notice to the Company referring to this Section 4(a); provided, however, that a termination by Executive for “Good Reason” (as definedbelow) shall not constitute a termination by Executive for other than Good Reason pursuant to this Section 4(a). In the event Executiveterminates Executive’s employment for other than Good Reason, Executive shall be entitled only to the following compensation and benefits(the payments set forth in Sections 4(a)(i) through 4(a)(iii), collectively, the “Standard Termination Payments”):

(i) any accrued but unpaid base salary for services rendered by Executive to the date of such termination,payable in accordance with the Company’s regular payroll practices and subject to such deductions or amounts to be withheldas required by applicable law and regulations or as may be agreed to by Executive;

(ii) any vested non-forfeitable amounts owing or accrued at the date of such termination under benefit plans,programs and arrangements set forth or referred to in Section 3(e) in which Executive participated during the Term (whichwill be paid under the terms and conditions of such plans, programs, and arrangements (and agreements and documentsthereunder)) and, excluding, for the avoidance of doubt, any termination for Cause, any vesting to which Executive is entitleddue to retirement; and

(iii) reasonable business expenses and disbursements incurred by Executive prior to such termination will bereimbursed in accordance with Section 3(d).

(b) Termination By Reason of Death. If Executive dies during the Term, the last beneficiary designated by Executive bywritten notice to the Company (or, in the absence of such designation, Executive’s estate) shall be entitled only to the Standard TerminationPayments, including any benefits that may be payable under any life insurance benefit of Executive for which the Company pays premiums,in accordance with the terms of any such benefit and subject to the right of the Company (or its applicable affiliate) to at any time amend orterminate any such benefit, and, as currently provided by the Company’s equity incentive plan, all equity awards held by Executive shall vestin full.

(c) Termination By Reason of Total Disability. The Company may terminate Executive’s employment in the event ofExecutive’s “Total Disability.” For purposes of this Agreement, “Total Disability” shall mean Executive’s (1) becoming eligible to receivebenefits under any long-term disability insurance program of the Company or (2) failure to perform the duties and responsibilitiescontemplated under this Agreement for a period of more than 180 days during any consecutive 12-month period due to physical or mentalincapacity or impairment. In the event that Executive’s employment is terminated by the Company by reason of Total Disability, Executiveshall be entitled only to the Standard Termination Payments and any amounts due under any Company disability policy, and, as currentlyprovided by the Company’s equity incentive plan, all equity awards held by Executive shall vest in full.

(d) Termination by the Company for Cause. The Company may terminate the employment of Executive at any time for“Cause.” For purposes of this Agreement, “Cause” shall mean: (i) gross neglect by Executive of Executive’s duties hereunder; (ii)Executive’s indictment for or conviction of a felony, or any non-felony crime or offense involving the property of the Company or any of itssubsidiaries or affiliates or evidencing moral turpitude; (iii) willful misconduct by Executive in connection with the performance ofExecutive’s duties hereunder; (iv) intentional breach by Executive of any material provision of this Agreement; (v) material violation byExecutive of a material provision of the Company’s Code of Business Conduct; (vi) Executive’s failure to qualify (or failure to remainqualified) under any suitability or licensing requirements to which Executive may be subject by reason of

Executive’s position with the Company; (vii) Executive’s failure to cooperate with or respond to any regulatory requests for information inconnection with such licensing requirements; (viii) Executive’s failure to timely file required license applications; (ix) the denial of anylicense application submitted by Executive or (x) any other willful or grossly negligent conduct of Executive that would make the continuedemployment of Executive by the Company materially prejudicial to the best interests of the Company. In the event Executive’s employmentis terminated for “Cause,” Executive shall not be entitled to receive any compensation or benefits under this Agreement except for theStandard Termination Payments.

(e) Termination by the Company without Cause or by Executive for Good Reason. The Company may terminateExecutive’s employment at any time without Cause, for any reason or no reason, and Executive may terminate Executive’s employment for“Good Reason.” For purposes of this Agreement “Good Reason” shall mean that, without Executive’s prior written consent, any of thefollowing shall have occurred: (A) a material adverse change to Executive’s positions, titles, offices, or duties following the Effective Datefrom those set forth in Section 2, except, in such case, in connection with the termination of Executive’s employment for Cause or due toTotal Disability, death or expiration of the Term; (B) a material decrease in base salary or material decrease in Executive’s IncentiveCompensation opportunity provided under this Agreement; or (C) any other material failure by the Company to perform any materialobligation under, or material breach by the Company of any material provision of, this Agreement; provided, however, that a termination byExecutive for Good Reason under any of clauses (A) through (C) of this Section 4(e) shall not be considered effective unless Executive shallhave provided the Company with written notice of the specific reasons for such termination within thirty (30) days after he has knowledge ofthe event or circumstance constituting Good Reason and the Company shall have failed to cure the event or condition allegedly constitutingGood Reason within thirty (30) days after such notice has been given to the Company and Executive actually terminates his employmentwithin one (1) year following the initial occurrence of the event giving rise to Good Reason. In the event that Executive’s employment isterminated by the Company without Cause or by Executive for Good Reason (and not, for the avoidance of doubt, in the event of atermination pursuant to Section 4(a), (b), (c) or (d) or due to a notice of non- renewal of the Term by the Executive pursuant to Section 1), theCompany shall pay the following amounts, and make the following other benefits available, to Executive.

(i) Standard Termination Payments;

(ii) an amount equal to the sum of (A) Executive’s base salary then in effect and (B) an amount equal to thehighest annual Incentive Compensation paid to Executive (if any) in respect of the two (2) most recent fiscal years of theCompany but not more than Executive’s Target Bonus for the-then current fiscal year (such amount under this sub-clause (B),the “Severance Bonus Amount”), such amount under this clause (ii) payable in substantially equal installments over a periodof twelve (12) months after such termination in accordance with Section 4(f); provided that, to the extent paying any portionof such amount in accordance with the foregoing schedule would constitute an impermissible deferral of compensation underSection 409A, then such portion shall be payable at a time that would not result in a deferral of compensation and that is asnear as possible to the payment timing contemplated by the foregoing;

(iii) in lieu of any Incentive Compensation for the year in which such termination occurs, payment of an amountequal to (A) the Incentive Compensation (if any) which would have been payable to Executive had Executive remained inemployment

with the Company during the entire year in which such termination occurred, multiplied by (B) a fraction the numerator ofwhich is the number of days Executive was employed in the year in which such termination occurs and the denominator ofwhich is the total number of days in the year in which such termination occurs, payable when bonuses are paid to otherexecutives of the Company, but no later than March 15 following the end of the year in which such termination occurs.

(iv) if Executive timely elects to continue medical coverage under the Company’s group health plan inaccordance with COBRA, the full monthly premiums for such coverage on a monthly basis until the earlier of: (A) a period oftwelve (12) months has elapsed; or (B) Executive is eligible for medical coverage under a plan provided by a new employer;and

(v) all outstanding equity awards held by Executive shall continue to vest during the term of this Agreement andthrough the end of the Covered Time (as defined in Section 5.1(f)) with any equity awards that remain unvested on the dayfollowing the last day of the Covered Time being forfeited; provided that if any such awards that were granted prior toSeptember 1, 2021 would constitute deferred compensation subject to Section 409A as a result of the foregoing, the portion ofsuch award that would have vested during the Covered Time shall vest upon the earlier of (A) the regularly scheduled vestingdate and (B) March 15 of the year following the year in which such termination occurs (or, if such March 15 is not a tradingday, the immediately preceding trading day) and the remainder shall be forfeited. For the avoidance of doubt, if suchtermination occurs on or after Executive becomes 65 years of age, the retirement provisions described in Section 4(c)(ii) shallprevail. Settlement of equity awards shall be subject to Section 4(f) and shall in all events be in accordance with Section409A. Other than as set forth in this Agreement, equity awards shall be governed by the terms of the applicable awardagreement pursuant to which such equity awards were granted.

(f) Timing of Certain Payments under Section 4. For purposes of Section 409A, references herein to the Executive’s“termination of employment” shall refer to Executive’s separation from service with the Company within the meaning of Treas. Reg. Section1.409A-1(h). If at the time of Executive’s separation from service with the Company other than as a result of Executive’s death, (i) Executiveis a “specified employee” (as defined in Section 409A(a)(2)(B)(i) of the Code), (ii) one or more of the payments or benefits received or to bereceived by Executive pursuant to this Agreement would constitute deferred compensation subject to Section 409A, and (iii) the deferral ofthe commencement of any such payments or benefits otherwise payable hereunder as a result of such separation of service is necessary inorder to prevent any accelerated or additional tax under Section 409A, such payments shall be made as follows: (x) no payments for a six-month period following the date of Executive’s separation from service with the Company; (y) an amount equal to the aggregate sum thatwould have been otherwise payable during the initial six-month period paid in a lump sum on the first payroll date following six (6) monthsfollowing the date of Executive’s separation of service with the Company (subject to such deductions or amounts to be withheld as requiredby applicable law and regulations); and (z) during the period beginning six (6) months following Executive’s separation from service withthe Company through the remainder of the applicable period, payment of the remaining amount due in equal installments in accordance withthe Company’s standard payroll practices (subject to such deductions or amounts to be withheld as required by applicable law andregulations).

(g) Mitigation. In the event the Executive’s employment is terminated in accordance with Section 4(e) and Executive isemployed by or otherwise engaged to provide services to another person or entity at any time prior to the end of any period of payments to oron behalf of Executive contemplated by this Section 4, (i) Executive shall immediately advise the Company of such employment orengagement and any health insurance benefits to which he is entitled in connection therewith, and (ii) the Company’s obligation to makecontinued health insurance payments to or on behalf of Executive shall be reduced by any health insurance coverage obtained by Executiveduring the applicable period through such other employment or engagement (without regard to when such coverage is paid).

(h) Set-Off. To the fullest extent permitted by law and provided an acceleration of income or the imposition of anadditional tax under Section 409A would not result, any amounts otherwise due to Executive hereunder (including any payments pursuant tothis Section 4) shall be subject to set-off with respect to any amounts Executive otherwise owes the Company or any subsidiary or affiliatethereof.

(i) No Other Benefits or Compensation. Except as may be specifically provided under this Agreement, under any othereffective written agreement between Executive and the Company that expressly survives execution of this Agreement, or under the terms ofany plan or policy applicable to Executive, Executive shall have no right to receive any other compensation from the Company or anysubsidiary or affiliate thereof, or to participate in any other plan, arrangement or benefit provided by the Company or any subsidiary oraffiliate thereof, with respect to any future period after such termination or resignation. Executive acknowledges and agrees that he is entitledto no compensation or benefits from the Company or any of its subsidiaries or affiliates of any kind or nature whatsoever in respect ofperiods prior to the date of this Agreement.

(j) Release of Employment Claims; Compliance with Section 5. Executive agrees, as a condition to receipt of anytermination payments and benefits provided for in this Section 4 (other than the Standard Termination Payments), that Executive will executea general release agreement, in a form reasonably satisfactory to the Company, releasing any and all claims arising out of Executive’semployment and the termination of such employment. The Company shall provide Executive with the proposed form of general releaseagreement referred to in the immediately preceding sentence no later than seven (7) days following the date of termination. Executive shallthereupon have 21 days or, if required by the Older Workers Benefit Protection Act, 45 days, to consider such general release agreement and,if he executes such general release agreement, shall have seven (7) days after execution of such general release agreement to revoke suchgeneral release agreement. Absent such revocation, such general release agreement shall become binding on Executive. If Executive does notrevoke such general release agreement, payments contingent on such general release agreement that constitute deferred compensation underSection 409A (if any) shall be paid on the later of the 60th day after the date of termination or the date such payments are otherwisescheduled to be paid pursuant to this Agreement. The Company’s obligation to make any termination payments and benefits provided for inthis Section 4 (other than the Standard Termination Payments) shall immediately cease if Executive willfully or materially breaches Section5.1, 5.2, 5.3, 5.4, or 5.8.

(k) Section 280G. If the aggregate of all amounts and benefits due to Executive under this Agreement or any other plan,program, agreement or arrangement of the Company or any of its affiliates, which, if received by Executive in full, would constitute“parachute payments,” as such term is defined in and under Section 280G of the Code (collectively, “Change in Control Benefits”), reducedby all Federal, state and local taxes applicable thereto, including the excise tax imposed pursuant to Section 4999 of the Code, is less than theamount Executive would receive, after all such applicable taxes, if

Executive received aggregate Change in Control Benefits equal to an amount which is $1.00 less than three (3) times Executive's “baseamount,” as defined in and determined under Section 280G of the Code, then such Change in Control Benefits shall be reduced or eliminatedto the extent necessary so that the Change in Control Benefits received by Executive will not constitute parachute payments. If a reduction inthe Change in Control Benefits is necessary, reduction shall occur in the following order unless the Executive elects in writing a differentorder, subject to the Company's consent (which shall not be unreasonably withheld or delayed): (i) severance payment based on multiple ofbase salary and/or Target Bonus; (ii) other cash payments; (iii) any pro-rated bonus paid as severance; (iv) acceleration of vesting of stockoptions with an exercise price that exceeds the then fair market value of stock subject to the option, provided such options are not permittedto be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (v) any equity awards accelerated or otherwise valued at full value,provided such equity awards are not permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vi) acceleration ofvesting of stock options with an exercise price that exceeds the then fair market value of stock subject to the option, provided such optionsare permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vii) acceleration of vesting of all other stock optionsand equity awards; and (viii) within any category, reductions shall be from the last due payment to the first.

It is possible that after the determinations and selections made pursuant to the preceding paragraph that the Executive willreceive Change in Control Benefits that are, in the aggregate, either more or less than the amounts contemplated by the preceding paragraph(hereafter referred to as an “Excess Payment” or “Underpayment,” respectively). If there is an Excess Payment, the Executive shall promptlyrepay the Company an amount consistent with this paragraph. If there is an Underpayment, the Company shall pay the Executive an amountconsistent with this paragraph.

5. Noncompetition; Non-solicitation; Nondisclosure; etc.

5.1 Noncompetition; Non-solicitation.

(a) Executive acknowledges the highly competitive nature of the Company’s business and that access to the Company’sconfidential records and proprietary information renders Executive special and unique within the Company’s industries. In addition to theprotection of confidential records and proprietary information covered in Section 5.2, the provisions set forth in this Section 5.1 are necessaryin order to protect the goodwill of the Company and the relationships developed by the Company with employees, customers and suppliers.In consideration of the amounts that may hereafter be paid to Executive pursuant to this Agreement (including Sections 3 and 4), Executiveagrees that during the Term (including any extensions thereof) and during the Covered Time, Executive, alone or with others, will not,directly or indirectly, engage (as owner, investor, partner, stockholder, employer, employee, consultant, advisor, director or otherwise) in anyCompeting Business. For purposes of this Section 5, “Competing Business” shall mean any business or operations: (i)(A) involving thedesign, development, manufacture, production, sale, lease, license, provision, operation or management (as the case may be) of (1) instantlottery tickets or games or any related marketing, warehouse, distribution, category management or other services or programs; (2) lottery-related terminals or vending machines (whether clerk-operated, self-service or otherwise), (3) gaming machines, terminals or devices(including video or reel spinning slot machines, video poker machines, video lottery terminals and fixed odds betting terminals), (4) lottery,video gaming (including server-based gaming), sports betting or other wagering or gaming systems, regardless of whether such systems areland-based, internet-based or mobile (including control and monitoring systems, local or wide-area progressive systems and redemptionsystems); (5) lottery, real money gaming or social gaming-related proprietary or licensed content (including themes, entertainment andbrands), platforms, websites and loyalty and customer relationship management

programs regardless of whether any of the foregoing are land-based, internet-based or mobile-based; (6) social casino games or websites ormobile phone or tablet applications (or similar known, or hereafter existing, technologies) featuring social casino games or any relatedmarketing, distribution, or other services or programs; (7) interactive casino gaming products or services, including interactive casino-gamethemed games and platforms for websites or mobile phone or tablet applications (or similar known, or hereafter existing, technologies); (8)gaming utility products (including shufflers, card-reading shoes, deck checkers and roulette chip sorters), table games (including live,simulated, online, social gaming, interactive and electronic) and related products and services; (9) slot accounting, casino management,casino marketing, player tracking, lottery, video lottery, bingo or similar gaming- or casino-related systems and related peripheral hardware,software and services; (10) prepaid cellular or other phone cards; or (11) ancillary products (including equipment, hardware, software,marketing materials, chairs and signage) or services (including field service, maintenance and support) related to any of the foregoing undersub-clauses (1) through (10) above; or (B) in which the Company is then or was within the previous 12 months engaged, or in which theCompany, to Executive’s knowledge, contemplates to engage in during the Term or the Covered Time; (ii) in which Executive was engagedor involved (whether in an executive or supervisory capacity or otherwise) on behalf of the Company or with respect to which Executive hasobtained proprietary or confidential information; and (iii) which were conducted anywhere in the United States or in any other geographicarea in which such business was conducted or contemplated to be conducted by the Company. Notwithstanding anything to the contrary inthe foregoing, the holding of up to one percent (1%) of the outstanding equity in a publicly traded entity for passive investment purposesshall not, in and of itself, be construed as engaging in a Competing Business.

(b) In further consideration of the amounts that may hereafter be paid to Executive pursuant to this Agreement(including Sections 3 and 4), Executive agrees that, during the Term (including any extensions thereof) and during the Covered Time,Executive shall not, directly or indirectly: (i) solicit or attempt to induce any of the employees, agents, consultants or representatives of theCompany to terminate his, her, or its relationship with the Company; (ii) solicit or attempt to induce any of the employees, agents,consultants or representatives of the Company to become employees, agents, consultants or representatives of any other person or entity; (iii)solicit or attempt to induce any customer, vendor or distributor of the Company to curtail or cancel any business with the Company; or (iv)hire any person who, to Executive’s actual knowledge, is, or was within 180 days prior to such hiring, an employee of the Company.

(c) In further consideration of the amounts that may hereafter be paid to Executive pursuant to this Agreement(including Sections 3 and 4), Executive agrees that, during the Covered Time, he will, at the request of the Company, provide consultingservices to the Company for up to twenty (20)% of the time he devoted to business employment during the Term. For the avoidance of doubt,Executive’s compensation for the provision of such consulting services are the amounts that may be hereafter paid to Executive pursuant tothis Agreement, and Executive shall not be entitled to any additional compensation for such consulting services.

(d) During the Term (including any extensions thereof) and during the Covered Time, Executive agrees that upon theearlier of Executive’s (i) negotiating with any Competitor (as defined below) concerning the possible employment of Executive by theCompetitor, (ii) responding to (other than for the purpose of declining) an offer of employment from a Competitor, or (iii) becomingemployed by a Competitor, (A) Executive will provide copies of Section 5 of this Agreement to the Competitor, and (B) in the case of anycircumstance described in (iii) above occurring during the Covered Time, and in the case of any circumstance described in (i) or (ii) aboveoccurring during the Term or during the Covered Time, Executive will promptly provide notice to the Company of such circumstances.

Executive further agrees that the Company may provide notice to a Competitor of Executive’s obligations under this Agreement. Forpurposes of this Agreement, “Competitor” shall mean any person or entity (other than the Company, its subsidiaries or affiliates) thatengages, directly or indirectly, in the United States or any other geographic area in any Competing Business.

(e) Executive understands that the restrictions in this Section 5.1 may limit Executive’s ability to earn a livelihood in abusiness similar to the business of the Company but nevertheless agrees and acknowledges that the consideration provided under thisAgreement (including Sections 3 and 4) is sufficient to justify such restrictions. In consideration thereof and in light of Executive’seducation, skills and abilities, Executive agrees that Executive will not assert in any forum that such restrictions prevent Executive fromearning a living or otherwise should be held void or unenforceable.

(f) For purposes of this Agreement, “Covered Time” shall mean the period beginning on the date of termination ofExecutive’s employment (the “Date of Termination”) and ending twelve (12) months after the Date of Termination.

(g) In the event that a court of competent jurisdiction or arbitrator(s), as the case may be, determines that the provisionsof Section 5.1 are unenforceable for any reason, the parties acknowledge and agree that the court or arbitrator(s) is expressly empowered toreform any provision of this Section so as to make them enforceable as described in Section 10 below.

5.2 Proprietary Information; Inventions.

(a) Executive acknowledges that, during the course of Executive’s employment with the Company, Executivenecessarily will have (and during any employment by, or affiliation with, the Company prior to Effective Date has had) access to and madeuse of proprietary information and confidential records of the Company. Executive covenants that Executive shall not, during the Term or atany time thereafter, directly or indirectly, use for Executive’s own purpose or for the benefit of any person or entity other than the Company,nor otherwise disclose to any person or entity, any such proprietary information, unless and to the extent such disclosure has been authorizedin writing by the Company or is otherwise required by law. The term “proprietary information” means: (i) the software products, programs,applications, and processes utilized by the Company; (ii) the name and/or address of any customer or vendor of the Company or anyinformation concerning the transactions or relations of any customer or vendor of the Company with the Company; (iii) any informationconcerning any product, technology, or procedure employed by the Company but not generally known to its customers or vendors orcompetitors, or under development by or being tested by the Company but not at the time offered generally to customers or vendors; (iv) anyinformation relating to the Company’s computer software, computer systems, pricing or marketing methods, sales margins, cost of goods,cost of material, capital structure, operating results, borrowing arrangements or business plans; (v) any information identified as confidentialor proprietary in any line of business engaged in by the Company; (vi) any information that, to Executive’s actual knowledge, the Companyordinarily maintains as confidential or proprietary; (vii) any business plans, budgets, advertising or marketing plans; (viii) any informationcontained in any of the Company’s written or oral policies and procedures or manuals; (ix) any information belonging to customers, vendorsor any other person or entity which the Company, to Executive’s actual knowledge, has agreed to hold in confidence; and (x) all written,graphic, electronic data and other material containing any of the foregoing. Executive acknowledges that information that is not novel orcopyrighted or patented may nonetheless be proprietary information. The term “proprietary information” shall not include informationgenerally known or available to the public, information that becomes

available to Executive on an unrestricted, non-confidential basis from a source other than the Company or any of its directors, officers,employees, agents or other representatives (without breach of any obligation of confidentiality of which Executive has knowledge, afterreasonable inquiry, at the time of the relevant disclosure to Executive), or general gaming industry information to the extent not particularlyrelated or proprietary to the Company that was already known to Executive at the time Executive commenced his employment with theCompany that is not subject to nondisclosure by virtue of Executive’s prior employment or otherwise. Notwithstanding the foregoing andSection 5.3, Executive may disclose or use proprietary information or confidential records solely to the extent (A) such disclosure or use maybe required or appropriate in the performance of his duties as a director or employee of the Company, (B) required to do so by a court of law,by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body(including a committee thereof) with apparent jurisdiction to order him to divulge, disclose or make accessible such information (providedthat in such case Executive shall first give the Company prompt written notice of any such legal requirement, disclose no more informationthan is so required and cooperate fully with all efforts by the Company to obtain a protective order or similar confidentiality treatment forsuch information), (C) such information or records becomes generally known to the public without his violation of this Agreement, or (D)disclosed to Executive’s spouse, attorney and/or his personal tax and financial advisors to the extent reasonably necessary to advanceExecutive’s tax, financial and other personal planning (each an “Exempt Person”); provided, however, that any disclosure or use of anyproprietary information or confidential records by an Exempt Person shall be deemed to be a breach of this Section 5.2 or Section 5.3 byExecutive.

(b) Executive agrees that all processes, technologies and inventions (collectively, “Inventions”), including newcontributions, improvements, ideas and discoveries, whether patentable or not, conceived, developed, invented or made by Executive duringthe Term (and during any employment by, or affiliation with, the Company prior to the Effective Date) shall belong to the Company,provided that such Inventions grew out of Executive’s work with the Company or any of its subsidiaries or affiliates, are related in anymanner to the business (commercial or experimental) of the Company or any of its subsidiaries or affiliates or are conceived or made on theCompany’s time or with the use of the Company’s facilities or materials. Executive shall further: (i) promptly disclose such Inventions to theCompany; (ii) assign to the Company, without additional compensation, all patent and other rights to such Inventions for the United Statesand foreign countries; (iii) sign all papers necessary to carry out the foregoing; and (iv) give testimony in support of Executive’sinventorship. If any Invention is described in a patent application or is disclosed to third parties, directly or indirectly, by Executive withintwo (2) years after the termination of Executive’s employment with the Company, it is to be presumed that the Invention was conceived ormade during the Term. Executive agrees that Executive will not assert any rights to any Invention as having been made or acquired byExecutive prior to the date of this Agreement, except for Inventions, if any, disclosed in Exhibit C to this Agreement.

5.3 Confidentiality and Surrender of Records.

(a) Executive shall not, during the Term or at any time thereafter (irrespective of the circumstances under whichExecutive’s employment by the Company terminates), except to the extent required by law, directly or indirectly publish, make known or inany fashion disclose any confidential records to, or permit any inspection or copying of confidential records by, any person or entity otherthan in the course of such person’s or entity’s employment or retention by the Company, nor shall Executive retain, and will deliver promptlyto the Company, any of the same following termination of Executive’s employment hereunder for any reason or upon request by theCompany. For purposes hereof, “confidential records” means those portions of correspondence, memoranda, files, manuals, books, lists,

financial, operating or marketing records, magnetic tape, or electronic or other media or equipment of any kind in Executive’s possession orunder Executive’s control or accessible to Executive which contain any proprietary information. All confidential records shall be and remainthe sole property of the Company during the Term and thereafter.

(b) Notwithstanding anything herein to the contrary, nothing in this Agreement shall (i) prohibit Executive from makingreports of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rulespromulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or of any otherwhistleblower protection provisions of state or federal law or regulation, or (ii) require notification or prior approval by the Company of anyreporting described in clause (i). Executive understands that activities protected by Sections 5.2 and 5.3 may include disclosure of tradesecret or confidential information within the limitations permitted by the Defend Trade Secrets Act (“DTSA”). And, in this regard, Executiveacknowledges notification that under the DTSA no individual will be held criminally or civilly liable under Federal or State trade secret lawfor disclosure of a trade secret (as defined in the Economic Espionage Act) that is: (A) made in confidence to a Federal, State, or localgovernment official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspectedviolation of law; or, (B) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so thatit is not made public. An individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law maydisclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual filesany document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

5.4 Non-disparagement. Executive shall not, during the Term and thereafter, disparage in any material respect theCompany, any affiliate of the Company, any of their respective businesses, any of their respective officers, directors or employees, or thereputation of any of the foregoing persons or entities. Notwithstanding the foregoing, nothing in this Agreement shall preclude Executive orany other person from making truthful statements that are required by applicable law, regulation or legal process.

5.5 No Other Obligations. Executive represents that Executive is not precluded or limited in Executive’s ability toundertake or perform the duties described herein by any contract, agreement or restrictive covenant. Executive covenants that Executive shallnot employ the trade secrets or proprietary information of any other person in connection with Executive’s employment by the Companywithout such person’s authorization.

5.6 Forfeiture of Outstanding Equity Awards; “Clawback” Policies. The provisions of Section 4 notwithstanding, ifExecutive willfully and materially fails to comply with Section 5.1, 5.2, 5.3, 5.4, or 5.8, all options to purchase common stock, restrictedstock units and other equity-based awards granted by the Company or any of its affiliates (whether prior to, contemporaneous with, orsubsequent to the date hereof) and held by Executive or a transferee of Executive shall be immediately forfeited and cancelled. Executiveacknowledges and agrees that, notwithstanding anything contained in this Agreement or any other agreement, plan or program, anyincentive-based compensation or benefits contemplated under this Agreement (including Incentive Compensation and equity-based awards)shall be subject to recovery by the Company under any compensation recovery or “clawback” policy, generally applicable to seniorexecutives of the Company, that the Company may adopt from time to time, including any policy which the Company may be required toadopt under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations of the Securitiesand

Exchange Commission thereunder or the requirements of any national securities exchange on which the Company’s common stock may belisted.

5.7 Enforcement. Executive acknowledges and agrees that, by virtue of Executive’s position, services and access to anduse of confidential records and proprietary information, any violation by Executive of any of the undertakings contained in this Section 5would cause the Company immediate, substantial and irreparable injury for which it has no adequate remedy at law. Accordingly, Executiveagrees and consents to the entry of an injunction or other equitable relief by a court of competent jurisdiction restraining any violation orthreatened violation of any undertaking contained in this Section 5. Executive waives posting of any bond otherwise necessary to secure suchinjunction or other equitable relief. Rights and remedies provided for in this Section 5 are cumulative and shall be in addition to rights andremedies otherwise available to the parties hereunder or under any other agreement or applicable law.

5.8 Cooperation with Regard to Litigation. Executive agrees to cooperate reasonably with the Company, during theTerm and thereafter (including following Executive’s termination of employment for any reason), by providing information to the Companyregarding matters related to his term of employment and by being available to testify on behalf of the Company in any action, suit, orproceeding, whether civil, criminal, administrative, or investigative. In addition, except to the extent that Executive has or intends to assert ingood faith an interest or position adverse to or inconsistent with the interest or position of the Company, Executive agrees to cooperatereasonably with the Company, during the Term and thereafter (including following Executive’s termination of employment for any reason),to assist the Company in any such action, suit, or proceeding by providing information and meeting and consulting with the Board or itsrepresentatives or counsel, or representatives or counsel to the Company, in each case, as reasonably requested by the Company. TheCompany agrees to pay (or reimburse, if already paid by Executive) all reasonable travel and communication expenses actually incurred inconnection with Executive’s cooperation and assistance.

5.9 Survival. The provisions of this Section 5 shall survive the termination of the Term and any termination or expirationof this Agreement.

5.10 Company. For purposes of this Section 5, references to the “Company” shall include the Company and eachsubsidiary and/or affiliate of the Company (and each of their respective joint ventures and equity method investees).

6. Code of Conduct. Executive acknowledges that he has read the Company’s Code of Business Conduct and agrees to abide bysuch Code of Business Conduct, as amended or supplemented from time to time, and other policies applicable to employees and executivesof the Company.

7. Indemnification. The Company shall indemnify Executive to the full extent permitted under the Company’s Certificate ofIncorporation or By-Laws and pursuant to any other agreements or policies in effect from time to time in connection with any action, suit orproceeding to which Executive may be made a party by reason of Executive being an officer, director or employee of the Company or of anysubsidiary or affiliate of the Company. This provision shall survive termination of employment.

8. Assignability; Binding Effect. Neither this Agreement nor the rights or obligations hereunder of the parties shall betransferable or assignable by Executive, except in accordance with the laws of descent and distribution and as specified below. The Companymay assign this Agreement and the Company’s rights and obligations hereunder to any affiliate of the Company, provided that upon any suchassignment the Company shall remain liable for the obligations to Executive hereunder. This

Agreement shall be binding upon and inure to the benefit of Executive, Executive’s heirs, executors, administrators, and beneficiaries, andshall be binding upon and inure to the benefit of the Company and its successors and assigns.

9. Complete Understanding; Amendment; Waiver. This Agreement constitutes the complete understanding between the partieswith respect to the employment of Executive from and after the Effective Date and supersedes all other prior agreements and understandings,both written and oral, between the parties with respect to the subject matter hereof, including that certain Employment Agreement, dated asof September 4, 2018 between the Company and Executive, as amended (the “Prior Employment Agreement”), and no statement,representation, warranty or covenant has been made by either party with respect thereto except as expressly set forth herein; provided,however, nothing contained in this Agreement shall limit, impair or supersede any agreement between the Company and Executive relatingto grants of stock options, restricted stock units or other equity-based awards granted to Executive prior to the Effective Date, which shallremain in full force and effect in accordance with the terms of such agreements and the plan pursuant to which such awards were granted.Executive acknowledges and agrees that the termination of the Prior Employment Agreement and the execution of this Agreement does notconstitute a termination of Executive’s employment under the Prior Employment Agreement for any purpose. Except as contemplated bySection 3(f), this Agreement shall not be modified, amended or terminated except by a written instrument signed by each of the parties. Anywaiver of any term or provision hereof, or of the application of any such term or provision to any circumstances, shall be in writing signed bythe party charged with giving such waiver. Waiver by either party of any breach hereunder by the other party shall not operate as a waiver ofany other breach, whether similar to or different from the breach waived. No delay by either party in the exercise of any rights or remediesshall operate as a waiver thereof, and no single or partial exercise by either party of any such right or remedy shall preclude other or furtherexercise thereof.

10. Severability. If any provision of this Agreement or the application of any such provision to any person or circumstances shallbe determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or theapplication of such provision to such person or circumstances other than those to which it is so determined to be invalid or unenforceable,shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by law. If any provision of thisAgreement, or any part thereof, is held to be invalid or unenforceable because of the scope or duration of or the area covered by suchprovision, the parties agree that the court making such determination shall reduce the scope, duration and/or area of such provision (and shallsubstitute appropriate provisions for any such invalid or unenforceable provisions) in order to make such provision enforceable to the fullestextent permitted by law and/or shall delete specific words and phrases, and such modified provision shall then be enforceable and shall beenforced. The parties recognize that if, in any judicial proceeding, a court shall refuse to enforce any of the separate covenants contained inthis Agreement, then that invalid or unenforceable covenant contained in this Agreement shall be deemed eliminated from these provisions tothe extent necessary to permit the remaining separate covenants to be enforced. In the event that any court determines that the time period orthe area, or both, are unreasonable and that any of the covenants is to that extent invalid or unenforceable, the parties agree that suchcovenants will remain in full force and effect, first, for the greatest time period, and second, in the greatest geographical area that would notrender them unenforceable.

11. Survivability. The provisions of this Agreement which by their terms call for performance subsequent to termination ofExecutive’s employment hereunder, or of this Agreement, shall so survive such termination, whether or not such provisions expressly statethat they shall so survive.

12. Governing Law; Arbitration.

(a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State ofNevada applicable to agreements made and to be wholly performed within that State, without regard to its conflict of laws provisions.

(b) Arbitration.

(i) Executive and the Company agree that, except for claims for workers’ compensation, unemploymentcompensation, and any other claim that is non-arbitrable under applicable law, final and binding arbitration shall be theexclusive forum for any dispute or controversy between them, including, without limitation, disputes arising under or inconnection with this Agreement, Executive’s employment, and/or termination of employment, with the Company; provided,however, that the Company shall be entitled to commence an action in any court of competent jurisdiction for injunctive reliefin connection with any alleged actual or threatened violation of any provision of Section 5. Judgment may be entered on thearbitrators’ award in any court having jurisdiction. For purposes of entering such judgment or seeking injunctive relief withregard to Section 5, the Company and Executive hereby consent to the jurisdiction of any state or federal court of competentjurisdiction located in Las Vegas, Nevada; provided that damages for any alleged violation of Section 5, as well as any claim,counterclaim or cross-claim brought by Executive or any third-party in response to, or in connection with, any court actioncommenced by the Company seeking said injunctive relief shall remain exclusively subject to final and binding arbitration asprovided for herein. The Company and Executive hereby waive, to the fullest extent permitted by applicable law, anyobjection which either may now or hereafter have to such jurisdiction, venue and any defense of inconvenient forum. Thus,except for the claims carved out above, this Agreement includes all common-law and statutory claims (whether arising underfederal state or local law), including any claim for breach of contract, fraud, fraud in the inducement, unpaid wages, wrongfultermination, and gender, age, national origin, sexual orientation, marital status, disability, or any other protected status.

(ii) Any arbitration under this Agreement shall be filed exclusively with, and administered by, the AmericanArbitration Association in Las Vegas, Nevada before three arbitrators, in accordance with the National Rules for theResolution of Employment Disputes of the American Arbitration Association in effect at the time of submission to arbitration.The Company and Executive hereby agree that a judgment upon an award rendered by the arbitrators may be enforced inother jurisdictions by suit on the judgment or in any other manner provided by law. The Company shall pay all costs uniquelyattributable to arbitration, including the administrative fees and costs of the arbitrators. Each party shall pay that party’s owncosts and attorney fees, if any, unless the arbitrators rule otherwise. Executive understands that he is giving up no substantiverights, and this Agreement simply governs forum. The arbitrators shall apply the same standards a court would apply to awardany damages, attorney fees or costs. Executive shall not be required to pay any fee or cost that he would not otherwise berequired to pay in a court action, unless so ordered by the arbitrators.

EXECUTIVE INITIALS: [JS] COMPANY INITIALS: [BC]

(c) WAIVER OF JURY TRIAL. BY SIGNING THIS AGREEMENT, EXECUTIVE AND THE COMPANYACKNOWLEDGE THAT THE RIGHT TO A COURT TRIAL AND TRIAL BY JURY IS OF VALUE, AND KNOWINGLY ANDVOLUNTARILY WAIVE THAT RIGHT FOR ANY DISPUTE SUBJECT TO THE TERMS OF THIS ARBITRATIONPROVISION.

13. Titles and Captions. All paragraph titles or captions in this Agreement are for convenience only and in no way define, limit,extend or describe the scope or intent of any provision hereof.

14. Joint Drafting. In recognition of the fact that the parties had an equal opportunity to negotiate the language of, and draft, thisAgreement, the parties acknowledge and agree that there is no single drafter of this Agreement and, therefore, the general rule thatambiguities are to be construed against the drafter is, and shall be, inapplicable. If any language in this Agreement is found or claimed to beambiguous, each party shall have the same opportunity to present evidence as to the actual intent of the parties with respect to any suchambiguous language without any inference or presumption being drawn against any party.

15. Notices. All notices and other communications to be given or to otherwise be made to any party to this Agreement shall bedeemed to be sufficient if contained in a written instrument delivered in person or duly sent by certified mail or by a recognized nationalcourier service, postage or charges prepaid, (a) to Scientific Games Corporation, Attn: to Scientific Games Corporation, Attn: LegalDepartment, 6601 Bermuda Road, Las Vegas, Nevada 89119, (b) to Executive, at the last address shown in the Company’s records, or (c) tosuch other replacement address as may be designated in writing by the addressee to the addressor.

16. Interpretation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of thisAgreement unless otherwise indicated. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall bedeemed to be followed by the words “without limitation,” unless the context otherwise indicates. When a reference in this Agreement ismade to a “party” or “parties,” such reference shall be to a party or parties to this Agreement unless otherwise indicated or the contextrequires otherwise. Unless the context requires otherwise, (a) the terms “hereof,” “herein,” “hereby,” “hereto”, “hereunder” and derivative orsimilar words in this Agreement refer to this entire Agreement, (b) the word “or” is disjunctive but not exclusive and (c) words in thisAgreement using the singular or plural number also include the plural or singular number, respectively, and the use of any gender herein shallbe deemed to include the other genders. References in this Agreement to “dollars” or “$” are to U.S. dollars. When a reference is made inthis Agreement to a law, statute or legislation, such reference shall be to such law, statute or legislation as it may be amended, modified,extended or re-enacted from time to time (including any successor law, statute or legislation) and shall include any regulations promulgatedthereunder from time to time. The headings used herein are for reference only and shall not affect the construction of this Agreement.

IN WITNESS WHEREOF, each of the parties has duly executed this Agreement as of the date above written.

SCIENTIFIC GAMES CORPORATION

By: /s/ Barry CottleName: Barry CottleTitle: President and Chief Executive Officer

EXECUTIVE

/s/ James SottileJames Sottile

Exhibit 31.1

Certification by Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Barry L. Cottle, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Scientific Games Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal control over financial reporting.

Date: August 9, 2021

/s/ Barry L. CottleBarry L. CottleChief Executive Officer

Exhibit 31.2

Certification by Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael C. Eklund, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Scientific Games Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal control over financial reporting.

Date: August 9, 2021

/s/ Michael C. EklundMichael C. EklundChief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Scientific Games Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2021 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Barry L. Cottle, Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company andfurnished to the Securities and Exchange Commission or its staff upon request.

/s/ Barry L. CottleBarry L. CottleChief Executive OfficerAugust 9, 2021

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Scientific Games Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2021 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael C. Eklund, Chief Financial Officer of the Company, certify,pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company andfurnished to the Securities and Exchange Commission or its staff upon request.

/s/ Michael C. EklundMichael C. EklundChief Financial OfficerAugust 9, 2021

scientific games corporation form 10-q securities and

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