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Scientific Games (SGMS) Extends Alliance with William Hill

Zacks Equity Research
·3 min read

Scientific Games Corp. SGMS recently extended its partnership with William Hill for four additional years through 2024.

Scientific Games will continue to provide its OpenSports solutions, which includes sportsbook and iGaming, to William Hill in the U.K. and Europe.

The new agreement also states that William Hill will use the OpenSports solution on a modular basis, which will enable the company to operate with more speed and flexibility. Moreover, William Hill will gain the capability to deploy proprietary products across multiple European jurisdictions.

Partnerships to Expand Global Footprint

Although shares of Scientific Games have returned 12.2% in the past year, underperforming the industry’s rally of 18.3%, its expanding partner base could help it to bounce back in the near term.


 

The partnership extension with William Hill is part of Scientific Games’ strategy to create next level experiences for players across sports and iGaming and expand its global reach.

Most recently, the company partnered with Betfred to provide full retail and digital sports betting solutions in Pennsylvania. It also partnered with FireKeepers Casino Hotel in Battle Creek to provide sports betting and iGaming to players in Michigan.

Moreover, Scientific Games, through its subsidiary Global Draw Ltd., entered into an agreement with Norsk Tipping to supply Video Lottery Terminals across multiple locations throughout Norway.

These partnerships have allowed the company to gain a solid foothold in both local and international markets and are expected to drive top-line growth.

Notably, Scientific Games witnessed 4% year-over-year revenue growth in third-quarter 2019, driven by partnerships with the likes of Turkey National Lottery and Sisal in Italy.

Competition to Hurt Growth

The company faces intense competition from the likes of Golden Entertainment, Bet365 and Tatts Group, among others, in most of its operating markets.

The presence of a large number of competitors in its core market will significantly reduce its ability to demand higher renewal rates, thereby hurting its profitability.

Moreover, governments of both U.S. and international jurisdictions are considering outsourcing day-to-day management of their lotteries to private service providers such as Scientific Games. Although this represents a significant future growth opportunity, cutthroat competition will be a major obstacle for the company in winning these contracts.

Zacks Rank & Other Stocks to Consider

Currently, Scientific Games sports a Zacks Rank #1 (Strong Buy).

CEVA, Inc. CEVA, Alteryx, Inc. AYX and Applied Materials, Inc. AMAT are some other top-ranked stocks in the same industry. All the three stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for CEVA, Alteryx and Applied Materials is currently pegged at 20%, 39.9% and 8.2% respectively.

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