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Scientific Games' Joint Venture Signs Services Agreement With New Jersey Lottery

NEW YORK, June 21, 2013 /PRNewswire/ -- Scientific Games Corporation (Nasdaq: SGMS) today announced that Northstar New Jersey Lottery Group, LLC ("Northstar NJ") has signed a long-term agreement to provide marketing, sales and other services to the New Jersey Lottery. Services under the agreement are expected to begin on October 1, 2013 following a transition period and end on June 30, 2029.  Northstar NJ is a joint venture comprised of Scientific Games New Jersey LLC, a subsidiary of Scientific Games Corporation, GTECH Corporation, a subsidiary of GTECH S.p.A. ("GTECH"), and OSI LTT NJ Grantor Trust ("OSI"), an affiliated entity of OMERS Administration Corporation, the administrator of the Ontario Municipal Employees Retirement System pension funds (OMERS). Scientific Games New Jersey, LLC owns approximately 18% of Northstar NJ. An entity comprised of GTECH and OSI owns approximately 82% of Northstar NJ.

Northstar NJ will provide a wide range of specialized services to the Lottery that will focus on strengthening its marketing and sales functions and will include support for lottery game development, marketing and advertising, as well as the procurement of related goods and services. All of these activities will be subject to control and oversight by the Lottery.

Under the terms of the agreement, Northstar NJ will be entitled to receive annual incentive compensation to the extent the Lottery's net income for the applicable year exceeds specified target levels, subject to a cap of 5% of such net income.  Northstar NJ will be responsible for payments to the State to the extent the Lottery net income targets set forth in Northstar NJ's successful bid are not achieved, subject to a cap of 2% of the applicable year's net income and a $20 million shortfall payment credit.  Upon execution of this agreement, Northstar NJ made a $120 million payment to the State, and Northstar NJ has committed to ensuring that at least 30% of annual lottery ticket revenues will be transferred to State institutions and State aid for education.

Under separate supply agreements, Scientific Games and GTECH will provide Northstar NJ with instant lottery games, lottery systems and equipment, and related services.  Scientific Games is expected to have a 30 percent economic interest (and be responsible for 30 percent of the capital requirements) associated with these supply arrangements. 

Stock quotes in this article: SGMS 

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