Scientific Games Snaps Up Sideplay Entertainment; Shares Pop 4%

Gambling products and services provider Scientific Games Corporation (SGMS) inked a deal to buy Sideplay Entertainment, the digital “eInstant” content studio, to expand its iLottery offerings and grow its global market footprint. The deal is subject to final regulatory approval. Shares popped 4.3% following the news, closing at $70.37 on August 23.

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SGMS has provided iLottery solutions to over 20 lotteries globally, while Sideplay has launched more than 270 instant win games for leading lottery and gambling operators around the world. Additionally, Sideplay is known to be the sole supplier of digital eInstant games to the U.K. National Lottery.

Furthermore, both companies have already been in a long-standing relationship with SGMS acting as the exclusive distributor of Sideplay’s iLottery program contents in North America, including the Pennsylvania Lottery and Loto-Québec.

A combination of Sideplay’s digital game server content distribution technology with SGMS’s existing digital tech stack will bolster player engagement and also allow for increased speed-to-market. (See Scientific Games stock charts on TipRanks)

Pat McHugh, Lottery Group Chief Executive for Scientific Games, said, “Sideplay’s highly-experienced digital game developers have a proven track record of delivering exceptional iLottery content to market quickly. We have already integrated Sideplay’s digital games into our iLottery platforms, and combining their unique approach to game development for Scientific Games’ more than 20 iLottery customers worldwide will accelerate our iLottery offerings for our customers and their players.”

Scientific Games reported solid second-quarter results on August 9, following which Jefferies analyst David Katz lifted the price target on the stock to $96 (36.4% upside potential) from $95 while maintaining a Buy rating.

Katz noted that management’s overall positive tone on the results implies further upside for the shares, especially with the divestitures of its lotteries and sports betting technology, which should close soon.

Overall, the stock has a Moderate Buy consensus rating based on 4 Buys, 3 Holds, and 1 Sell. The average Scientific Games price target of $75.75 implies 7.7% upside potential to current levels. Shares have exploded almost 251% over the past year.