Acquisitions

12 Months Ended

Dec. 31, 2021

We account for business combinations in accordance with ASC 805, which requires us to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard prescribe, among other things, the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration) and the exclusion of transaction and acquisition related restructuring costs from acquisition accounting.

2021 Acquisitions

Acquisitions Related to Continuing Operations

In July of 2021, SciPlay acquired privately held Koukoi Games Oy (“Koukoi”), a developer and operator of casual mobile games. Koukoi has been included in our SciPlay business segment and was accounted for as an asset acquisition.

In August of 2021, we acquired privately held Lightning Box Games (“Lightning Box”), an iGaming content studio. Lightning Box has been included in our iGaming business segment.

In October of 2021, we signed a definitive agreement to acquire Automated Cashless Systems, Inc.’s (“ACS”) table game solution PlayOn™ (“PlayOn™”), a cashless product line that provides players with a debit solution at live table games. PlayOn™ was re-named to “Access To On Demand Money” (“AToM™”) and is included in our Gaming business segment.

In November of 2021, we acquired Authentic Gaming, a premium provider of live casino solutions, which has been included in our iGaming business segment.

In December of 2021, we acquired ELK Studios, a leading European games developer, which has been included in our iGaming business segment.

Acquisitions Related to Discontinued Operations

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

In September of 2021, we acquired Sideplay Entertainment (“Sideplay”), a digital “e-instant” content studio. Sideplay has been included in the Lottery business.

The following table summarizes an aggregate disclosure related to business acquisitions completed during the year ended December 31, 2021:


	Total Consideration		Cash paid, net of cash acquired		Contingent Consideration(1)		Allocation of purchase price to Intangible assets, net(2)		Weighted average useful life of acquired intangible assets		Excess purchase price allocated to Goodwill(3)
Acquisitions related to continuing operations(4)	$	252	$	186	$	45	$	52	6.4	Years	$	191
Acquisitions related to discontinued operations(5)	106		18		25		35		6	Years	77
Aggregate total	$	358	$	204	$	70	$	87			$	268

(1) Contingent acquisition consideration values are primarily based on reaching certain earnings-based metrics, with a cumulative maximum payout of up to $109 million as of December 31, 2021 and were determined by fair value and included in the consideration transferred. The fair value was primarily determined using an income approach method and level 3 inputs in the hierarchy as established by ASC 820. The maximum contingent acquisition consideration liability related to continuing operations was $86 million as of December 31, 2021. The maximum contingent acquisition consideration liability related to discontinued operations was $23 million as of December 31, 2021.
(2) Intangible assets primarily consist of technology-based and customer relationship intangible assets. The fair value of these intangible assets was determined using an income approach method and level 3 inputs in the hierarchy as established by ASC 820. The discount rates and royalty rates used in the valuation analyses ranged between 15% and 29% and 1% and 52%, respectively.
(3) The factors contributing to the recognition of acquisition goodwill are based on customer offering diversification, expected synergies, assembled workforce and other strategic benefits. None of the resultant goodwill is expected to be deductible for income tax purposes.
(4) Authentic Gaming and Elk Studios (included within this line) are based on the preliminary allocations of the purchase price expected to be finalized during the first half of 2022, pending completion of the valuation analyses for the acquired intangible assets.
(5) The SportCast acquisition’s total consideration transferred included $63 million in fair value of the SportCast Option, which resulted in a $63 million gain recorded in the Net income from discontinued operations, net of tax, line item in our consolidated statements of operations for the year ended December 31, 2021 due to the increase in fair value of the SportCast Option. The fair value of the Sportscast Option has been determined using an income approach method and level 3 inputs in the hierarchy as established by ASC 820. The discount rate used in the valuation analyses was 15%.

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

2020 Acquisitions

On June 22, 2020, SciPlay completed the acquisition of all of the issued and outstanding capital stock of privately held mobile and social game company Come2Play, Ltd. (“Come2Play”), which expands SciPlay’s existing portfolio of social games. Come2Play offers a solitaire social game targeted towards casual game players on the same platform in which SciPlay currently offers its existing games. The total purchase consideration was $18 million, which includes our estimate of contingent acquisition consideration. Our allocation of the purchase price resulted in $13 million intangible assets primarily allocated to customer relationships and acquired technology and $7 million in excess purchase price allocated to goodwill.

Alictus Acquisition

On March 1, 2022, SciPlay acquired 80% of all issued and outstanding share capital of privately held Alictus Yazilim Anonim Şirketi (“Alictus”), a Turkey-based hyper-casual game studio for approximately $102 million cash consideration, net of cash acquired. The remaining 20% will be acquired ratably for potential additional consideration payable annually based upon the achievement of specified revenue and EBITDA targets by Alictus during each of the five years following the acquisition date. Any future payments associated with the acquisition of the remaining 20% will represent a contingent consideration obligation, with a minimum payout of $— million and a maximum payout of $200 million. The Alictus acquisition expands SciPlay’s business in the casual gaming market, growing their game pipeline and diversifying their revenue streams as they advance their strategy to be a diversified global game developer.

We are in the process of completing the preliminary purchase price accounting and expect that a substantial amount of the purchase price will be allocated to goodwill and intangible assets. The revenue, earnings and assets associated with the Alictus acquisition are not significant to our historical consolidated financial statements.