S c i e n t i f i c G a m e S c o r p o r a t i o n 2 0 1 2 A N N U A L R E P O R T Delivering Results, Driving Transformation SCIENTIFIC GAMES CORPORATION 750 Lexington Avenue ANNUAL New York, NY 10022 2012 REPORT www.scientificgames.com Corporate Information MANAGEMENT BOARDOFDIRECTORS A.LorneWeil A.LorneWeil 4 chief executive officer and chairman of the Board chairman and chief executive officer of Scientific Games MichaelR.Chambrello MichaelR.Chambrello chief executive officer — asia-pacific region chief executive officer — asia-pacific region of Scientific Games JeffreyS.Lipkin PeterA.Cohen 2+4+ Senior Vice president and chief financial officer Vice chairman of Scientific Games and chairman and chief executive officer of cowen Group, inc. JamesC.Kennedy president of printed products and chief marketing officer GeraldJ.Ford 35+ chairman of Hilltop Holdings, inc. WilliamJ.Huntley executive Vice president and chief executive officer, Systems DavidL.Kennedy 4 Vice chairman of Scientific Games, Senior executive Vice StephenG.Frater president of macandrews & forbes Holdings inc. and executive chairman — SG Gaming Vice chairman of revlon, inc. StevenM.Saferin PaulM.Meister 12 president of properties Group and chief creative officer chairman and chief executive officer of inVentiv Health, inc. SteveW.Beason and chief executive officer of Liberty Lane partners, LLc enterprise chief technology officer RonaldO.Perelman 4 JackB.Sarno chairman and chief executive officer of macandrews & Vice president — Worldwide Legal affairs and forbes Holdings inc. corporate Secretary MichaelJ.Regan 1+5 LarryA.Potts former Vice chairman and chief administrative officer of Vice president, chief compliance officer and KpmG LLp Director of Security BarryF.Schwartz 23+ JeffreyB.Johnson executive Vice chairman and chief administrative officer of Vice president finance, chief accounting officer and macandrews & forbes Holdings inc. corporate controller FrancesF.Townsend 135 MichaelP.Conforti Senior Vice president of Worldwide Government, Legal and Senior Vice president, international Business Development Business affairs of macandrews & forbes Holdings inc. Committees: 1audit 2compensation 3compliance 4executive and finance 5nominating and corporate Governance + following committee Designation indicates chair of committee NOTICEOFANNUALMEETING INDEPENDENTACCOUNTANTS The Annual Meeting of Shareholders will be held on Deloitte & Touche LLP June 4, 2013 at 10:30 a.m. EDT at the Company’s Atlanta, Georgia headquarters located at 750 Lexington Avenue, 19th Floor, CONTACTINFORMATION New York, NY 10022 Investor Relations TRANSFERAGENT Scientific Games Corporation American Stock Transfer & Trust Company 750 Lexington Avenue 6201 15th Avenue New York, NY 10022 Brooklyn, NY 11219 Tel: 212-754-2233 Tel: 800-937-5449 Fax: 212-754-2372 Website: www.amstock.com Website: www.scientificgames.com E-mail: investorrelations@scientificgames.com STOCKSYMBOL NASDAQ: SGMS LEttEr tO ShArEhOLdErS 2012 was a successful year for Scientific Games. We focused on delivering results and driving the transformation of our Company for the future. We strategically invested in our products, technology and people in key areas of the business, with a focus on increasing our return on invested capital†. We continued to secure a number of key contracts and grow revenue across each of our three business segments. In 2012, our revenue increased 7%, Attributable EBITDA† increased 5% and wholly-owned EBITDA† increased 9%, in each case versus the prior fiscal year. Our return on invested capital has improved by 270 basis points since 2010†. We delivered on a number of key growth initiatives in 2012 and continued to lay the groundwork for opportunities in 2013 and beyond. A. Lorne Weil Chairman and CEO $940.6 Scientific Games Revenue Excluding $878.7 Racing Business†† ($ in millions) product management, prize payout increases, lottery $798.7 private management and sales of higher price-point tickets. These results support our belief that where lotteries outsource to us and/or we have a larger role in the business, lottery performance is notably improved. 2010 2011 2012 $505.2 $502.9 Printed Products DELIVERING RESULTS Revenue ($ in millions) Our 2012 results reflect both solid fundamentals in the $474.3 majority of our core lottery and gaming businesses and the execution of the strategic plan that we outlined at the beginning of 2011, shortly after I returned as CEO. We saw strong U.S. lottery sales in 2012. Our customers’ 2010 2011 2012 instant game retail sales increased over 9%, which we credit to product innovation, enhanced instant ticket 2012 Annual report 1 Our customers’ draw game retail sales approached 10% $163.8 Gaming Revenue Excluding Racing growth in 2012, primarily driven by the two largest $133.5 Business†† jackpots in U.S. history. In addition to strong retail sales, ($ in millions) our lottery systems business benefited from increased product sales, both domestically and internationally. $88.3 $271.7 Lottery Systems 2010 2011 2012 Revenue ($ in millions) $242.3 Our U.K. gaming business continued to demonstrate $236.0 significant value-add to customers. In 2012, our gross win per terminal per day in the U.K. increased 5% versus the prior fiscal year. After Global Draw completed its largest 2010 2011 2012 ever single supplier server-based gaming machine deployment for Ladbrokes, the numbers speak Our Northstar Illinois joint venture completed its first full for themselves. Ladbrokes’ gross year of providing private management services to the win per terminal per week Illinois Lottery, with instant ticket retail sales increasing increased by 10% year over year 27% and total revenue growing nearly 18% for the in 2012. Also during the year, we lottery’s fiscal year ended June 30, 2012. entered into an agreement with Gala Coral to continue as its sole provider of server-based gaming $1,615.0 Illinois Lottery terminals through 2017. Instant Ticket Retail Sales In 2012 we completed the $1,275.3 ($ in millions) successful integration of Barcrest into our gaming business. We also began to monetize our content through interactive distribution channels in Europe. FY 2011 FY 2012 Capitalizing on the success of our Instant ticket retail sales in Italy and China decreased U.K. gaming business, we began selling our ULTRA™ multi-game in 2012. Despite this decline, we continue to believe t8 is our latest multi- consumer demand for lottery products remains strong video gaming terminal in North game terminal for in both countries and we are focused on new initiatives America. While the ULTRA has arcades and bingo clubs in the U.K., offering been in the field for just a short for growth. players enhanced time, we are excited about the functionality, security and playability. Our Properties Plus® offering, which provides internet- prospects of this innovative based player loyalty and rewards programs to lotteries, product that builds on the many years of experience that gained further traction with the launch of the Missouri, we have gained in our lottery and gaming businesses. North Carolina and Kentucky programs in 2012, with the Maryland Lottery contracted to launch Properties Plus in 2013. 2 Scientific Games Corporation thai Flower is part of our our innovation in instant, interactive and draw game Mega-Games Packs for products and to further market and sell our integrated our ULtrA™ multi-game machine. ULtrA is lottery solutions that have proven successful in maximizing Scientific Games’ first lottery performance in many jurisdictions globally. entry into the North American machine business and We are seeing heightened interest from lotteries in private leverages our management and other outsourcing models, as they seek successful U.K.-based content development. to increase revenue and reduce budget deficits by outsourcing more responsibility for the lottery value chain In addition to delivering results, we repurchased a total of to experienced operators such as Scientific Games. 9.2 million shares in 2012, which we believe underscores our Board of Directors’ and management’s continued Our consortium in Greece, in which we own a 16.5% support of and confidence in the Company’s strategic equity interest, was provisionally awarded a 12-year plan and long-term growth prospects. concession for the exclusive rights to the production, operation and management of instant lotteries in Greece, where we expect to serve as the exclusive instant ticket DRIVING supplier to re-launch instant tickets in the country. TRANSFORMATION The New Jersey Lottery recently announced its intent to We continue to make good progress on achieving the award the Northstar New Jersey joint venture, in which we strategic objectives that we outlined at the beginning own an approximate 18% equity interest, a contract to of 2011. provide marketing and sales services to the lottery for a period of 15 years. Lottery Development/Outsourcing We believe that there are additional opportunities A number of other U.S. states and international to implement our industry-leading instant game jurisdictions are showing interest or actively pursuing management and optimization programs, to continue some form of outsourcing or privatization. We expect to see further lottery development activity in this area in 2013. Pursue new delivery methods — iLottery Lotteries are increasingly seeking to offer electronic instant games and draw games (iLottery), including subscription programs, to their players. In 2012 we began PlayCentral™ is our solution for large retailers to see U.S. lotteries launch internet lottery sales channels, that integrates the sale of while many other states introduced iLottery legislation to instant and draw-based lottery products, prize make the launch of such products possible in the future. validation and payment, accounting procedures, As a leader in internet-based programs for U.S. lotteries, and security standards into a single, one-stop with eight states contracted for our internet-based player shopping experience for loyalty and rewards program, we believe we are uniquely the customer. positioned to help lotteries transition to offering pay-for- play internet products to their customers.