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Two 'Lottery Tickets' That Just Might Pay Off

NEW YORK ( TheStreet) -- In Oregon, the state where I reside, if it weren't for the state-sponsored lotteries, there wouldn't be enough funds to take care of the services that the state provides. Every time someone participates in the Oregon State Lottery, the state government is a winner. That's because a healthy percentage of the money goes to create jobs, schools, parks and watersheds.

Perhaps most importantly of all, the money doesn't go anywhere else. It stays in, and is used for, the citizens of Oregon. More than half a billion dollars in profits moves through Oregon's economy every year, supporting projects big and small. So when people participate, they at least feel they're contributing to the well-being of the state in which they live their lives.

The business of supplementing state government income through lotteries has grown so large that there's even a non-profit organization, The Multi-State Lottery Association, that administers the games submitted by each member state. This is just a small part of the business of lottery games and electronic online gaming. There are billions of dollars to be made selling everything from lottery systems to online gaming to the casino gaming industry.

One of the publicly traded companies that is fully immersed as a global leader in providing customized, end-to-end gaming solutions to lottery and gaming organizations is Scientific Games (SGMS - Get Report). SGMS' integrated array of products and services are like a menu of almost everything that any lottery, online gaming business and casino on the planet would need and want to buy. This "menu" includes instant lottery games, lottery gaming systems, terminals and services, and Internet applications, as well as server-based interactive gaming machines and associated gaming control systems.

The gaming and casino industry has been soft in the U.S., but it's booming in places like China (Macau) and many of the Asian nation's that allow gambling.

Year-over-year revenue grew by 19% at Scientific Games last quarter. Yet the company has a large debt load and its profit margin slipped into the negative, although their operating margin (trailing 12 months) is a positive 12%. Evidently the situation at SGMS may soon be improving.

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