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Scientific Games acquires interest in Guard Libang

19 Jul 2007

NEW YORK -- (PRESS RELEASE) -- Scientific Games (Nasdaq: SGMS) announced today that it has signed agreements to acquire a 50% interest in the ownership of Guard Libang, a leading provider of instant lottery ticket cooperative services in China. Guard Libang is an indirect subsidiary of REXCAPITAL Financial Holdings Limited (0555.HK). Scientific Games will pay approximately $27 million. The Company expects this acquisition to be neutral to 2007 earnings, and accretive in 2008.

Guard Libang services contracts for the upgrade and construction of the instant ticket management and sales system of the China Welfare Lottery (CWL) in approximately 17 provinces as well as contracts with over 30 of the country's wealthiest cities to distribute CWL instant tickets under a cooperative services approach. These 17 provinces cover a population of approximately 792 million with a network of approximately 48 thousand retailers. This retailer base should grow to approximately 90 thousand retailers over the next two to three years.

Lorne Weil, Chairman and CEO of Scientific Games commented on the deal, "This is a great partnership for both us and REXCAPITAL Financial Holdings Limited (Rex Capital). Guard Libang has done a great job of procuring Chinese instant ticket cooperative service contracts, and this combined entity will seek to execute on these contracts as well as win new deals in other provinces. The Chinese Lottery market is about $11 billion, virtually all online, and we remain confident that instant tickets can meet or exceed that in the coming years."

Victor Chan, director of Rex Capital said, "By creating this partnership with Scientific Games, we have brought together one of the best of worldwide lottery expertise in Scientific Games with Rex Capital's knowledge of the China market, which make a strong combination to benefit the CWL.

Added General Manager Xiangbo Wang of Guard Libang, "Scientific Games is a global leader of the instant ticket business, and we look forward to bringing their successful cooperative service model to the China Welfare Lottery. They have done a great job of growing the US Instant Ticket Market, as well as developing new markets such as Italy. This partnership will sell Chinese instant tickets with the highest level of security and integrity, and return more funds to the charities that the China Welfare Lottery supports."

 
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