NASDAQ-listed gaming giant Scientific Games may spin off its social casino assets into a separate business as part of a drive to maximise growth for its interactive division.
The supplier's wholly-owned social gaming subsidiaries, including Dragonplay Ltd and Phantom EFX LLC, have been designated as unrestricted subsidiaries under its debt agreements.
This means that the company will be able to profit from the division without using its earnings to pay down debt, with the business set to make debt reduction and fiscal discipline key goals under the leadership of newly-appointed CEO Kevin Sheehan.
It will consider a range of options as it looks to consolidate its leading position in this rapidly growing segment, such as new joint ventures, additional acquisitions and an initial public offering, among other moves.
The interactive division is Scientific Games’ fastest-growing business unit, with revenue from social and real-money gaming up 62 per cent to USD$83.4m in the second quarter of 2016. The vast majority of this revenue is derived from social, which saw revenue increase 68 per cent year-on-year to $74.9m in Q2, or 80 per cent of the total.
"Our industry leading investment in innovation is paying off,” Scientific Games president and chief executive Kevin Sheehan said. “Following our company's third consecutive quarter of revenue growth, we see this as a perfect time to accelerate momentum and explore additional opportunities to deliver greater value from this strong and rapidly growing segment of our business.”
Despite the unrestricted designation, the social gaming assets remain wholly owned by Scientific Games, under the leadership of Interactive CEO Barry Cottle and president Jordan Levin.
Shares in Scientific Games Corporation (Co.Data) (NASDAQ:SGMS) jumped 13.65 per cent on the news in New York Wednesday to $9.99 per share.