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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
o☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g)(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
OR
☒
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year endedDecember 31, 20172023
OR
OR
☐
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
OR
☐
oSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-36906
INTERNATIONAL GAME TECHNOLOGY PLC
(Exact name of Registrant as specified in its charter)
England and Wales
(Jurisdiction of incorporation or organization)
66 Seymour Street, 2nd Floor
London W1H 5BT
United Kingdom
(Address of principal executive offices)
Christopher Spears
Senior Vice President and General Counsel
IGT Center
10 Memorial Boulevard
Providence, RI  02903
Telephone:  (401) 392-1000
Fax:  (401) 392-4812
E-mail:  Christopher.Spears@IGT.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

INTERNATIONAL GAME TECHNOLOGY PLC
(Exact name of Registrant as specified in its charter)

England and Wales
(Jurisdiction of incorporation or organization)

10 Finsbury Square, Third Floor
London EC2A 1AF
United Kingdom
(Address of principal executive offices)

Christopher Spears
Executive Vice President and General Counsel
Telephone: (401) 392-1000 Fax: (401) 392-4812
E-mail: Christopher.Spears@IGT.com
IGT Center, 10 Memorial Boulevard, Providence, RI 02903
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Ordinary Shares, nominal value $0.10IGTNew York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
200,482,249 
203,446,572 ordinary shares, nominal value $0.10 per share.share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 
xYes  oNo
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. 
oYes  xNo
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
xYes  oNo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
xYes  oNo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definitionsdefinition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one):
Large accelerated filer
x
Accelerated filer
Accelerated filero
Non-accelerated filero
o
Emerging growth companyo
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAPx
x
 International Financial Reporting Standards as issued

by the International Accounting Standards Board
o
Other
o
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow:follow.
oItem 17   oroItem 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o☐Yes  xNo
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d)

Table of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.Contents
oYes  oNo


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Item 17.
Financial Statements
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PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION

International Game Technology PLC a public limited company organized under the laws of England and Wales (the “Parent”), has its corporate headquarters in London, England. The Parent is the successor to GTECH S.p.A., a società per azioni incorporated under the laws of Italy (“GTECH”), and the sole stockholder of International Game Technology, a Nevada corporation (“IGT”). The Parent, together with its consolidated subsidiaries, has principal operating facilitiesis a global leader in Providence, Rhode Island; Las Vegas, Nevada; and Rome, Italy.
On April 7, 2015, GTECH acquired IGT through:
the merger of GTECH with and into the Parent (the “Holdco Merger”); and
the merger of Georgia Worldwide Corporation, a Nevada corporation and a wholly owned subsidiary of the Parent with and into IGT (the “Subsidiary Merger” and, together with the Holdco Merger, the “Mergers”).
For additional information on the Mergers, see “Item 4. Information on the Company-A. History and Development of the Company-Acquisition of International Game Technology.”
gaming. In this annual report on Form 20-F, unless otherwise specified or the context otherwise indicates, all references to “IGT”, “IGT PLC”, and the “Company” refer to the business and operations of the Parent and its consolidated subsidiaries or, for periods of or points in time prior to the completion of the Holdco Merger, to GTECH together with its consolidated subsidiaries, as the context may require.
The historical results of operations for the Parent reflect the operations of GTECH prior to the completion of the Holdco Merger.subsidiaries.
This annual report on Form 20-F includes the consolidated financial statementsConsolidated Financial Statements of the Company for the years ended December 31, 2017, 20162023, 2022, and 20152021 (the “Consolidated Financial Statements”) prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) as issued by the Financial Accounting Standards Board (“FASB”).Board.
The financial information is presented in U.S. dollars. All references to “U.S. dollars,” “U.S. dollar,” “U.S. $”$,” “USD,” and “$” refer to the currency of the United States of America (or “U.S.”).America. All references to “euro”“Euro,” “euro,” “EUR,” and “€” refer to the currency introduced at the start of the third stage of the European Economic and Monetary Union pursuant to the Treaty on the Functioning of the European Union, as amended.
Amounts reported in millions are computed based on the amounts in thousands. Certain amounts in columns and rows within tables may not foot due to rounding. Percentages and earnings per share amounts presented are calculated from the underlying unrounded amounts.
The language of this annual report on Form 20-F is English. Certain legislative references and technical terms have been cited in their original language so that the correct technical meaning may be ascribed to them under applicable law. 
Certain totals in the tables included in this annual report on Form 20-F may not add due to rounding.

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Glossary of Certain Terms and Abbreviations (as
The glossary is used in thisto define common terms and abbreviations that appear throughout the annual report on Form 20-F)20-F. Other, less common, terms and phrases are defined in the sections in which they appear, as they may either be Company or industry-specific. Additionally, definitions in “Item 18. Financial Statements” stand alone and are independently defined in that section.

Abbreviation/TermDefinition
ADM
Abbreviation/TermDefinition
ADMthe Agenzia delle Dogane e Dei Monopoli, which regulates gaming in Italy
ASCAdjusted EBITDA or AEBITDAEBITDA adjusted for foreign exchange gain (loss), net, other non-operating expenses, net, impairment losses, restructuring expenses, stock-based compensation, litigation expense (income) and certain other non-recurring items
Adjusted Free cash flowFree Cash Flow excluding the net of tax cash payments in connection with material litigation
ASCAccounting Standards Codification
AWPsASUAmusement with prize machinesAccounting Standards Update
ArticlesB2Bthe Articles of Association of the Parent adopted on April 7, 2015business-to-business
B2BB2CBusiness-to-businessbusiness-to-consumer
B2CBEATBusiness-to-consumerbase-erosion and anti-abuse tax
Boardthe boardBoard of directorsDirectors of the ParentInternational Game Technology PLC
CA 2006BrexitCompanies Act 2006, as amendedthe United Kingdom’s withdrawal from the European Union
CEOChief Executive Officer
CFOChief Financial Officer
CodeCompanyInternal Revenue Code of 1986, as amended
Companythe Parent together with its consolidated subsidiaries
COSOCA 2006Committee of Sponsoring Organizations of the Treadway CommissionCompanies Act 2006, as amended
CTAConstant-currencyItalian Consolidated Tax Actamounts calculated by applying the prior-year/period exchange rates to current financial data expressed in local currency
De AgostiniDe Agostini S.p.A.
DoubleDownEBITDADouble Down Interactive LLC
DTCThe Depository Trust Company
DTRDisclosure and Transparency Rules
EBITDAEarningsearnings before interest, taxes, depreciation and amortization
EPSEMEAEarnings per shareEurope, Middle East and Africa
E.U.ESGEuropean Unionenvironmental, social and governance
Exchange ActE.U.Securities Exchange Act of 1934, as amendedEuropean Union
FASBFMCFinancial Accounting Standards Boardfacilities management contract
FCPAFree cash flowU.S. Foreign Corrupt Practices Act of 1977, as amendedcash flow from operations less capital expenditures and payments on license obligations
FMCsGAAPFacilities Management Contracts
GAAPUnited States Generally Accepted Accounting Principles
GTECHGDPRGTECH S.p.A.E.U. General Data Protection Regulation (“E.U. GDPR”) and the E.U. GDPR as retained as law in England and Wales by the European Union (Withdrawal) Act (“U.K. GDPR”)
HMRCGILTIHer Majesty’s Revenue & Customs of the United Kingdomglobal intangible low-taxed income
Holdco MergeriGamingThe merger of GTECH with and into the Parent
IASInternational accounting standards
IFRSInternational Financial Reporting Standards
iGamingInteractivereal money digital (interactive) gaming
IGTInternational Game Technology, a Nevada corporation, prior to April 7, 2015
IGT PLCthe Parent together with its consolidated subsidiaries
late numberLATAMOne of the 90 numbers of the Lotto game in Italy that has not been drawn for 100 drawingsLatin America
LMAsLMALottery Management Agreementslottery management agreement
LNLoyalty PlanLotterie Nazionali S.r.l.the terms and conditions related to the Special Voting Shares
LottoitaliaLoyalty RegisterLottoitalia s.r.l, a joint venture company among Lottomatica, Italian Gaming Holding a.s., Arianna 2001 and Novomatic Italiathe register of ordinary shares for which holders thereof have validly elected to exercise the related Special Voting Shares
LottomaticaNet debtLottomatica S.p.A.debt minus capitalized debt issuance costs and cash and cash equivalents, including cash and cash equivalents held for sale
LTINYSELong-term incentive compensation
MergersThe Subsidiary Merger together with the Holdco Merger
Moody’sMoody’s Investor Service

NAGINorth America Gaming and Interactive
NYSENew York Stock Exchange
ParentInternational Game Technology PLC
PFICsR&DPassive Foreign Investment Companiesresearch and development
PwC EntitiesSame-store salesPwC US, as well as all ofwagers, at constant currency, recorded in lottery jurisdictions where we are the foreign entities belonging to its networkoperator or facilities management supplier, using the same lottery jurisdictions and perimeter for comparison between periods
PwC USSECPricewaterhouseCoopers LLP
R&DResearch and development
S&PStandard & Poor’s Ratings Services
same store revenueRevenue from existing customers as opposed to new customers
SECUnited States Securities and Exchange Commission
SOGSpecial Voting SharesStock Ownership Guidelinesthe special voting shares in the Parent, worth U.S.$0.000001 each and carrying 0.9995 votes
STIU.K.Short-term incentive compensationUnited Kingdom
Subsidiary MergerU.S.The merger of Georgia Worldwide Corporation, a wholly owned subsidiary of the Parent, with and into IGT
10eLottoA game of chance in Italy
Tax ActThe Tax Cuts and Jobs Act of 2017
TPEThird-party evidence
U.K.United Kingdom
U.S.United States of America
UIGEAWire ActUnlawful Internet Gambling EnforcementU.S. Interstate Wire Act of 2006
VLTsVideo lottery terminals
VSOEVendor specific objective evidence
WAPWide area progressive
WLAWorld Lottery Association1961

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FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F includes forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning the Company and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, transactions, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,” “shall,” “continue,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “outlook,” “possible,” “potential,” “predict,” “project”“project,” or the negative or other variations of them. These forward-looking statements speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company’s control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance, or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to):

Ÿthe possibility that the Parent will be unable to pay future dividends to shareholders or that the amount of such dividends may be less than anticipated;
Ÿ•the possibility that the Company may not achieve its anticipated financial results in one or more future periods;periods and create incremental value for shareholders;
Ÿ    reductions•the possibility that the Parent will be unable to pay dividends to shareholders or that the amount of such dividends may be less than anticipated;
•the Company’s ability to execute on mergers, acquisitions, divestitures, corporate spin offs, and/or strategic alliances, including our ability to integrate and operate such acquisitions or alliances consistent with forecasting to achieve future growth;
•the Company’s ability to execute on key initiatives and deliver on-going improvements;
•the effects of geopolitical or military conflicts, including events concerning Ukraine, Taiwan and Israel, that could affect the Company, its suppliers and/or customers;
•changing economic conditions in the global markets where the Company operates, including economic slowdowns, rising interest rates, inflationary and other economic factors that pressure customer spending;
Ÿ    a slowdown in customer payments andspending, changes in customer demand for products and services asand a result of changingslowdown in customer payments;
economic conditions or otherwise;
Ÿ•unanticipated changes relating to competitive factors in the industries in which the Company operates;
Ÿ•the Company’s ability to hire and retain key personnel;
Ÿ•the Company’s ability to attract new customers and retain existing customers in the manner anticipated;
Ÿ•the impact of supply chain constraints on the Company’s ability to meet demand for its products;
•an increase in costs resulting from supply chain constraints, including, but not limited to, increases in input costs, labor costs and freight costs, among others;
•reliance on and integration of information technology systems;systems, including the ability to prevent, mitigate or timely recover from cybersecurity incidents;
Ÿ•changes in legislation, or governmental regulations, affectingor the Company;
Ÿ    international, national, or local economic, social or political conditionsenforcement thereof that could adversely affect the Company;
•enforcement of an interpretation of the Wire Act in such a manner as to prohibit or limit activities in which the Company orand its customers are engaged;
customers;
Ÿ•conditions in the credit markets;
•risks associated with assumptions the Company makes in connection with its critical
accounting estimates;
Ÿ•the resolution of pending and potential future legal, regulatory, or tax proceedings and investigations; and
Ÿ•the Company’s international operations, which are subject to the risks of currency fluctuations and foreign
exchange controls.

The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the Company’s business, including those described in “Item 3. Key Information—D. Risk Factors”Factors”, “Item 5. Operating and Financial Review and Prospects” and other documents filed by the Parent from time to time with the SEC. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. Nothing in this annual report is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per share of the Parent for the current or any future financial years will necessarily match or exceed the historical published earnings per share of the Parent, as applicable. All forward-looking statements contained in this annual report on Form 20-F are qualified in their entirety by this cautionary statement.

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PART I
 
Item 1.
Item 1.Identity of Directors, Senior Management and Advisers
Identity of Directors, Senior Management and Advisers
Not applicable.
 
Item 2.
Item 2.Offer Statistics and Expected Timetable
Offer Statistics and Expected Timetable
Not applicable.
 
Item 3.
Key Information
Item 3.Key Information
A.
Selected Financial Data
The following tables set forth summary historical consolidated financial
A.        Reserved

B.        Capitalization and other information of the Company for the periods indicated, and have been derived from the Consolidated Financial Statements of the Company for the years ended December 31, 2017, 2016, 2015, 2014 and 2013.Indebtedness
The following information should be read in conjunction with: 
“Presentation of Financial and Certain Other Information;”
“Item 3.D. Risk Factors;”
“Item 5. Operating and Financial Review and Prospects;” and
the Consolidated Financial Statements included in “Item 18. Financial Statements.”
Consolidated Income Statement Data
  For the years ended December 31,
($ thousands, except per share and dividend amounts) 2017 2016 2015 2014 2013
Total revenue 4,938,959
 5,153,896
 4,689,056
 3,812,311
 3,829,634
Operating (loss) income (51,092) 660,436
 539,956
 715,051
 683,976
(Loss) income before provision for income taxes (976,925) 323,413
 (17,031) 340,217
 459,437
Net (loss) income (947,511) 264,207
 (55,927) 99,804
 233,482
Attributable to:  
  
  
    
IGT PLC (1,068,576) 211,337
 (75,574) 86,162
 201,605
Non-controlling interests 55,400
 45,413
 19,647
 13,642
 31,877
Redeemable non-controlling interests 65,665
 7,457
 —
 —
 —
Net (loss) income attributable to IGT PLC per common share - basic (5.26) 1.05
 (0.39) 0.50
 1.16
Net (loss) income attributable to IGT PLC per common share - diluted (5.26) 1.05
 (0.39) 0.49
 1.16
Dividends declared per common share ($) 0.80
 0.80
 0.40
 1.97
 0.95
During the historical periods presented there were no discontinued operations.
Dividends declared in euro in 2014 and 2013 were translated into U.S. dollars at the exchange rates in effect on the dates the dividends were declared.

Consolidated Balance Sheet Data
  December 31,
($ thousands, except share amounts) 2017 2016 2015 2014 2013
Cash and cash equivalents 1,057,418
 294,094
 627,484
 307,422
 578,008
Total assets 15,159,208
 15,060,162
 15,114,692
 8,435,297
 9,616,622
Debt (a) 8,376,559
 7,863,162
 8,334,173
 2,959,471
 3,817,055
Redeemable non-controlling interests 356,917
 223,141
 —
 —
 —
Total equity 2,354,931
 3,425,665
 3,366,142
 2,947,720
 3,367,307
Attributable to IGT PLC 2,004,995
 3,068,699
 3,017,648
 2,569,837
 2,815,381
Attributable to non-controlling interests 349,936
 356,966
 348,494
 377,883
 551,926
Common stock 20,344
 20,228
 20,024
 217,171
 215,836
Common shares issued 203,446,572
 202,285,166
 200,244,239
 174,976,029
 173,992,168

(a) Debt is composed of long-term debt, including current portion and short-term borrowings. 

B.Capitalization and Indebtedness
Not applicable.
C.Reasons for the Offer and Use of Proceeds
C.        Reasons for the Offer and Use of Proceeds
Not applicable.
D.Risk Factors
D.        Risk Factors
The following risks should be considered in conjunction with “Item 5. Operating and Financial Review and Prospects”, the Consolidated Financial Statements, including the notes thereto, included in this annual report, and the other risks described in the Safe Harbor Statement set forth in Item 5.G.Forward-Looking Statements safe harbor under the Private Securities Litigation Reform Act of 1995. These risks may affect the Company's operating results and, individually or in the aggregate, could cause its actual results to differ materially from past and anticipated future results. The following discussion of risks may contain forward-looking statements which are intended to be covered by the Safe Harbor Statement. Except as may be required by law, the Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. The Company invites you to consult any further related disclosures made by the Parent from time to time in materials filed with or furnished to the SEC.
Risks related to the Company's Business and Industry
The global political and economic climate may impact the Company and its results of operations, business, financial conditions, and prospects
The Company is a global business and it is exposed to risks associated with the performance of the global economy. The volatility of the financial markets shows that there can be no assurance that there will not be a recurrence of global financial and economic crises or similar adverse market conditions.
Additionally, poor economic, political and health conditions, riots and unemployment may affect the Company's workforce and supply chain, as well as the general business environment, in specific markets in which the Company operates including tribal jurisdictions. The Company's business is particularly sensitive to reductions in discretionary consumer spending in the markets in which it operates, which may be affected by general economic or political conditions in these markets.

Economic risks of doing business globally include:
Inflation and currency exchange risk;
High interest rates, debt default, or unstable capital markets;
Additional costs of compliance with the laws of international jurisdictions;
Illiquid or restricted foreign exchange markets;
Restrictions on foreign direct investment; and
Exposure to severe weather, wildfires and other natural events that could disrupt operations.
Political risks include:
Political instability or change of leadership in government;
Change of governmental laws, regulations and policies;
New foreign exchange controls regulating the flow of money into or out of a country;
Failure of a government to honor existing contracts;
Governmental corruption; and
Political unrest, war and acts of terrorism.
In particular, the vote by the U.K. to leave the E.U. ("Brexit") has created uncertainty that could impact the Company's operations, business, financial condition, or prospects. On March 29, 2017, the U.K. triggered Article 50, formally beginning the negotiations between the U.K. and the E.U. with respect to the U.K.'s exit from the E.U. The current deadline to formally exit the E.U. is March 29, 2019. Until these negotiations have concluded, the impact of Brexit on the U.K. and the rest of the E.U. is unclear, and further political and economic uncertainty in the U.K. and the E.U. may impact the Company's global operations. The Company’s ability to operate in Italy may be negatively impacted in the event that Brexit does not maintain parity rights for U.K. and E.U. companies and the current Italian regulatory framework is modified as a result of Brexit. In addition, there is uncertainty concerning the impact of Brexit on exchange rates. The post-Brexit fall in the pound and strengthening of the U.S. dollar could significantly impact the Company's operations, business, financial condition or prospects as the Company does business in the U.S., the U.K., and the E.U. Because the Company is organized in England and Wales and maintains significant operations in Italy and the E.U., Brexit could also impact intercompany transactions and certain tax liabilities.
Additionally, in recent years, certain member countries of the E.U. have implemented austerity measures to avoid defaulting on debt repayments. If a country within the euro area were to default on its debt or withdraw from the euro currency, or, in a more extreme circumstance, the euro currency were to be dissolved entirely, the impact on markets around the world, and on the Company’s global business, could be immediate and significant.
Economic contraction, economic uncertainty and the perception of weak or weakening economic conditions globally or in specific markets in which the Company operates may cause a decline in demand for the products and services that the Company offers. In addition, a decline in the relative health of the gaming industry and any difficulty or inability of customers to obtain adequate levels of capital to finance their ongoing operations may reduce their resources available to purchase the Company's products and services or make timely payments to the Company, which may adversely affect the Company's revenues or result in the Company incurring additional provisions for bad debts related to credit concerns on certain receivables, including in connection with customer financing provided by the Company. If the Company experiences a significant unexpected decrease in demand for its products, the Company could also be required to increase its inventory obsolescence reserves.


The Company has a concentrated customer base in certain business segments, and the loss of any of its larger customers (or lower sales from any of these customers) could lead to significantly lower revenuerevenue.
Revenues from the Company’s top 10 customers in its combined North America Lottery and International segments accounted for approximately 17.4% of its total consolidated revenues for the year ended December 31, 2017. If the Company were to lose any of these larger customers, or if these larger customers experience slower lottery ticket sales and consequently reduced lottery revenue, there could be a material adverse effect on the Company’s results of operations, business, financial condition, or prospects.
In addition, aA substantial portion of the Company’s revenues (equal to approximately 31.9% of its total consolidated revenues for the year ended December 31, 2017) is derived from exclusive and non-exclusive concessionslicenses awarded to the Company by Agenzia delle Dogane e Dei Monopoli (“ADM”),the ADM, the governmental authority responsible for regulating and supervising gaming in Italy. In particular, a substantial portionFor the years ended December 31, 2023 and 2022, approximately 10% and 9%, respectively, of the Company’s total consolidated revenues is derived from two exclusive concessions, onewas earned for service provided for the operation of the Italian Gioco del Lotto game (the “Lotto Concession”) and one for instant tickets (equal to approximately 8.5%10% and 6.1%9%, respectively, of its total consolidated revenueswas earned for service provided for the year ended December 31, 2017).operation of the Italian Scratch & Win instant ticket game.

The Company expects that a significant portion of its businessrevenues and profitabilityprofits will continue to depend upon the concessionslicenses awarded to the Company by ADM. ConcessionsLicenses may be terminated prior to their expiration dates upon the occurrence of certain events of default affecting the Company, or if such concessionslicenses are deemed to be against the public interest, or terminated or annulled if successfully challenged by competitors. In addition, the conditions for any new concessionlicense will be established by law and included in the rules of the new concession.license. Any material reduction in the Company’s revenues from these concessions,licenses, including as a result of an annulment, early termination, or non-renewal of these concessionslicenses following their expiration, could have a material adverse effect on the Company’s results of operations, business, financial condition, or prospects.
There may be risks associated with
In addition, recurring revenues from the consortium arrangementCompany’s top 10 customers outside of Italy accounted for approximately 24% of its total consolidated revenues for the Lotto Concessionyear ended December 31, 2023. In 2024, the Company expects to lose one of these customers, Camelot UK Lotteries Limited in the United Kingdom, which represented approximately 1% of consolidated revenue in 2023, and the Company may not be able to replace those revenues. If the Company were to lose any of its other larger customers, or if these larger customers experience lower sales and consequently reduced revenues, which are primarily
In March 2016, the Parent, through its subsidiary Lottomatica S.p.A. (“Lottomatica”), entered into
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service revenues, there could be a consortium with Italian Gaming Holding a.s. (a subsidiary of Czech lottery operator SAZKA a.s.) (“IGH”), Arianna 2001, and Novomatic Italia (the “Consortium”) to bidmaterial adverse effect on the Lotto Concession. On May 16, 2016, the Consortium was awarded managementCompany’s results of the Lotto Concession for a nine-year term, set to expire in 2025. According to the bid procedure and under the terms of the consortium agreement, Lottomatica is the principal operating member fulfilling the requirements of the Lotto Concession through a joint venture company called Lottoitalia s.r.l. (“Lottoitalia”), established with Lottomatica having a 61.5% equity ownership interest and the remainder of the equity ownership shared amongst the other three Consortium members. Lottomatica appointed a majority of the Lottoitalia board and entered into a contract with Lottoitalia to provide technology products and services for the Lotto Concession.operations, business, financial condition, or prospects.
In the event that Lottoitalia is profitable in a given year, Lottomatica as principal operating member will be required to make distributions to the other Consortium members, which will reduce the amount of profits and cash flows the Company receives from the Lotto Concession. Furthermore, in certain cases, IGH may exercise a put option to sell its entire 32.50% interest in Lottoitalia to Lottomatica. In such event, the Parent, through Lottomatica, will take on a greater percentage of the ownership of Lottoitalia and accordingly a greater amount of the investment and risk related to Lottoitalia.
The Company’s operations are dependent upon its continued ability to retain and extend its existing contracts and win new contracts with its customers.

The Company derives a substantial portion of its revenues and cash flow from its portfolio of long-term operating contracts, FMCs, and LMAs in the North AmericaGlobal Lottery and International segments segment (equal to approximately 33.4%53% of its total consolidated revenues for the year ended December 31, 2017)2023), awarded through competitive procurement processes. In addition, theThe Company’s U.S. lottery contracts typically permit a lottery authority to terminate the contract at any time for material,uncured breaches and for other specified reasons out of the Company's control, such as the failure by a state legislature to approve the required budget appropriations, andappropriations. In addition, many of these contracts in the U.S. permit the lottery authority to terminate the contract at will with limited notice and do not specify the compensation to which the Company would be entitled were such termination to occur. If one or more of the Company’s U.S. lottery contracts were terminated, or were not renewed or extended, there is no guarantee that the Company would be able to identify replacement sources of revenue in a timely fashion, or at all. Additionally, the loss of one or more of the Company’s U.S. lottery contracts to a competitor could place the Company at a competitive disadvantage.

In the event that the Company is unable or unwilling to perform under certain lottery contracts, such contracts permit the lottery authority a right to use the Company's system-related equipment and software necessary for the performance of the contract until the expiration or earlier termination of the contract, in some cases without paying the Company any compensation for the right to use such equipment and software.contract.

The termination of or failure to renew or extend one or more of the Company’s lottery contracts, or the renewal or extension of one or more of the Company’s lottery contracts on materially altered terms, or the exercise of a right to use its assets without compensatio

n could have a material adverse effect on the Company’s results of operations, business, financial condition, or prospects.

Adverse changes in discretionary consumer spending and behavior, including as a result of the occurrence or perception of economic slowdown, rising interest rates and/or inflation, may adversely affect the demand for gaming and overall economic trends specific to the gaming industry and the Company's business.

Sociopolitical and economic factors that impact consumer confidence may result in decreased discretionary spending by consumers and have a negative effect on the Company's business. Unfavorable changes in social, political and economic conditions and economic uncertainties, as well as decreased discretionary spending by consumers, may adversely impact customers, suppliers and business partners in a variety of ways.

Consumer discretionary income and its potential effects on gaming activity may directly or indirectly impact the revenues generated by the Company's business. Economic factors resulting in a reduction, or the perception of a reduction, in such discretionary income could result in fewer lottery ticket sales and fewer patrons visiting casinos or engaging in online or digital gaming. A decline in discretionary income over an extended period could cause some of the Company’s customers to close casinos or other gaming operations, which would adversely affect the Company's business. A decline in casino visits may also have an adverse impact on the businesses of our casino customers and their ability to purchase or lease products and services from the Company.

The occurrence or perception of an economic slowdown or recession may also have a negative impact on consumer discretionary spending, particularly when combined with the occurrence or perception of rising interest rates and inflation (or increases in the prices of consumer products, including food and energy). If these conditions persist or worsen, it may result in declines in lottery ticket sales and fewer patrons visiting casinos and engaging in online or digital gaming, which could have a material adverse effect on the Company’s business and results of operations.

The Company is subject to substantial penalties for failure to performperform.

The Company’s Italian concessions,licenses, lottery contracts in the U.S. and in other jurisdictions, and other service contracts often require performance bonds or letters of credit to secure its performance under such contracts and require the Company to pay substantial monetary liquidated damages in the event of non-performance by the Company.

At December 31, 2017,2023, the Company had outstanding performance bonds and letters of credit in an aggregate amount of approximately $1.258$1.0 billion. These instruments present a potential for expense for the Company and could divert financial resources from other uses. Claims on performance bonds, drawings on letters of credit, and payment of liquidated damages could individually or in the aggregate have a material adverse effect on the Company's results of operations, business, financial condition, liquidity, or prospects.
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The Company’s inability to successfully complete and integrate future acquisitions could limitsuccess depends in large part on its future growth or otherwise be disruptive to its ongoing business
From time to time, the Company expects it will pursue acquisitions in support of its strategic goals. There can be no assurance that acquisition opportunities will be available on acceptable terms or at all or that the Company will be able to obtain necessary financing or regulatory approvals to complete potential acquisitions. The Company’s ability to succeed in implementing its strategy will depend to some degree upondevelop and manage frequent introductions of innovative products and the ability of its management to identify, completerespond to technological changes, and successfully integrate commercially viable acquisitions. Acquisition transactions may disrupt the Company’s ongoing business and distract management from other responsibilities. In connection with any such acquisitions, the Company could face significant challenges in managing and integrating its expanded or combined operations, including acquired assets, operations and personnel.
Slowslow growth or declines in the lottery and gaming markets could lead to lower revenues and cash flows for the CompanyCompany.
The Company’s dependence on large jackpot games and, specifically, the decline in aggregate sales at similar jackpot levels (“jackpot fatigue”) can have a negative impact on revenue from this game category. These developments may in part reflect increased competition for consumers’ discretionary spending, including from a proliferation of destination gaming venues and an increased availability of Internet gaming opportunities.
The Company’s future success will depend, in part, on the success of the lottery industry and the gaming industryindustries in attracting and retaining new players in the face of such increased competition in the entertainment and gaming markets, as well as itsthe Company's own success in developing innovative services, products, and distribution methods/systems to achieve this goal. The Company must continually introduce and successfully market new games and technologies to remain competitive and effectively stimulate customer demand. The process of developing new products is inherently complex and uncertain. It requires accurate anticipation of changing customer needs and end-user preferences as well as emerging technological trends. If the Company's competitors develop new game content or innovative products and the Company fails to keep pace, its business could be adversely affected. Additionally, if the Company’s competitors adopt and employ new technologies, such as artificial intelligence, more rapidly than the Company is able to do so, the Company could experience a competitive disadvantage or comparatively higher costs than its competitors.

In addition, there is a risk thatif the Company fails to accurately anticipate customer needs and end-user preferences through the development of new products, services and services may replace existing products and services. The replacement of old products and services with new products and services may offset the overall growth of sales of the Company. A failure bytechnologies, the Company could lose business to achieve these goals could have a material adverse effect on the Company’sits competitors, which would adversely affect its results of operations, business, financial condition, or prospects.
In addition, demand for While the Company intends to continue investing resources in research and development across Global Lottery, Global Gaming, and PlayDigital, which includes new hardware, software, content, services and systems, there is no assurance that its investments in research and development will guarantee successful products. Because the Company’s gamingnewer products is driven by increasesare generally more technologically sophisticated than those it has produced in the number of land-based and/or online gaming jurisdictions, the addition of new casinos or expansion of existing casinos within existing gaming jurisdictions and the replacement of existing gaming machines. The establishment or expansion of gaming in any jurisdiction, whether land-based or online, typically requires a public referendum or legislative action. As a result, gaming continues to be the subject of public debate, and there are numerous active organizations that oppose gaming. Opposition to gaming could result in restrictions on, or even prohibitions of, gaming operations or the expansion of operations in any jurisdiction.
The construction of new casinos or expansion of existing casinos fluctuates with demand, general economic conditions and the availability of financing. Slow growth in the establishment of new gaming jurisdictions, delays in the opening of new or expanded casinos and declines in, or low levels of demand for, machine replacements could reduce the demand for the Company’s products. Because a substantial portion of the Company’s sales come from existing customers, its business could be affected if one or more of its customers consolidates with another entity that utilizes more of the products and services of the Company’s competitors or that reduces spending on the Company's products or causes downward pricing pressures. Such consolidation could lead to order cancellations, a slowing in the rate of gaming machine replacements, or require the Company’s current customers to switch to its competitors’ products, any of which could negatively impact the Company’s results of operations, business, financial condition, or prospects.

Demand for and the level of play of the Company’s products could be adversely affected by changes in player and operator preferences
As a supplier of gaming machines,past, the Company must offercontinually refine its design, development, and delivery capabilities across all channels to ensure product innovation. Newer products also require adequate supply of electronic components and other raw materials, for which the Company relies on third party suppliers. See “The Company depends on its suppliers and faces supply chain risks that appealcould adversely affect its financial results” within “Operational Risks” below.

If the Company cannot efficiently adapt its processes and infrastructure to gaming operators and players. The Company’s revenues are dependent onmeet the earning power and life spanneeds of its games, putting constant pressure on the Company to develop and market new game content and technologically innovative products to maintain its revenue and remain competitive. Ifproduct innovations, or if the Company is unable to anticipate or react in a timely mannersource adequate supplies to any significant changes in player preferences, such as a negative reception to new innovations or jackpot fatigue (i.e., declining play levels on smaller jackpots), the demand for and level of play of the Company’s gamingmanufacture its newer products, could decline. Further, the Company’s products could suffer a loss of floor space to table games or competitors’ products, or operators may reduce revenue sharing arrangements, each of which would harm the Company’s results of operations, business, financial condition, or prospects.
In addition, the popularity and acceptance of gaming is influenced by the prevailing social mores, and changes in social mores could result in reduced acceptance of gaming as a leisure activity. The Company’s future financial success will depend on the appeal of its gaming offerings to its customers and players and the acceptance of gaming generally. If the Company is not able to anticipate and react to changes in consumer preferences and social mores, its competitive and financial position may be adversely affected. Gaming may lose popularity as new leisure activities arise or as other leisure activities become more popular. If the popularity of gaming declines for any reason, the Company’s results of operations, business, financial condition, or prospects maycould be adversely affected.negatively impacted.

If the Company is unable to protect its intellectual property or prevent its unauthorized use by third parties, its ability to compete in the market may be harmedharmed.

At December 31, 2023, the Company held more than 4,600 patents and more than 9,800 trademarks filed and registered worldwide. The Company protects its intellectual property to ensure that its competitors do not use such intellectual property. However, intellectual property laws in the U.S., Italy, and in other jurisdictions may afford differing and limited protection, may not permit the Company to gain or maintain a competitive advantage, and may not prevent its competitors from duplicating its products, designing around its patented products, or gaining access to its proprietary information and technology.
Although the Company takes measures intended to prevent disclosure of its trade secrets and proprietary know-how through non-disclosure and confidentiality agreements and other contractual restrictions, the
The Company may not be able to prevent the unauthorized disclosure or use of its technical knowledge or trade secrets. For example, there can be no assurance that consultants, vendors, partners, former employees, or current employees will not breach their obligations regarding non-disclosure and restrictions on use. In addition, anyone could seek to challenge, invalidate, circumvent, or render unenforceable any of the Company's patents. The Company cannot provide assurance that any pending or future patent applications it holds will result in an issued patent, or that, if patents are issued, they would necessarily provide meaningful protection against competitors and competitive technologies or adequately protect the Company’s then-current technologies. The Company may not be able to detect the unauthorized use of its intellectual property, prevent breaches of its cybersecurity efforts, or take appropriate steps to enforce its intellectual property rights effectively. In addition, certain contractual provisions, including restrictions on use, copying, transfer, and disclosure of licensed programs,software, may be unenforceable under the laws of certain jurisdictions.

The Company’s success may depend in part on its ability to obtain trademark protection for the names or symbols under which it markets its products and to obtain copyright protection and patent protection of its technologies and game innovations. The Company may not be able to build and maintain goodwill in its trademarks or obtain trademark or patent protection, and there can be no assurance that any trademark, copyright, or issued patent will provide competitive advantages for the Company or that the Company’s intellectual property will not be successfully challenged or circumvented by competitors.

The Company maintains various patents, trademarks, copyrights and trade secrets and intends to enforce its intellectual property rights. From time to time, the Company may assert claims against third parties that it believes are infringing its intellectual
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property rights. Litigation initiated or defended to protect and enforce the Company’s intellectual property rights could be costly, time consuming and distracting to management, could fail to obtain the results sought, and could have a material adverse effect on the Company’s results of operations, business, financial condition, or prospects.

If the Company is unable to license intellectual property from third parties, its ability to compete in the market may be harmed.

The Company licenses intellectual property rights from third parties. If such third parties do not properly maintain or enforce the intellectual property rights underlying such licenses, or if such licenses are terminated or expire without being renewed, the Company could lose the right to use the licensed intellectual property, which could adversely affect its competitive position or its ability to commercialize certain of its technologies, products, or services.

In addition, some of the Company’s most popular games and features, such as the Wheel of Fortune® family of premium games, are based on trademarks, copyrights, patents, and other intellectual property licensed from third parties. The Company’s future success may depend upon its ability to obtain, retain and/or expand licenses for popular intellectual property rights with reasonable terms in a competitive market. In the event thatIf the Company cannot renew and/or expand existing licenses, it may be required to discontinue or limit its use of the games or gaming machines that use the licensed technology or bear the licensed marks.
The Company’s success may depend in part on its ability to obtain trademark protection for the names or symbols undermarks, which it markets its products and to obtain copyright protection and patent protection of its proprietary technologies, intellectual property and other game innovations. The Company may not be able to build and maintain goodwill in its trademarks or obtain trademark or patent protection, and there can be no assurance that any trademark, copyright or issued patent will provide competitive advantages for the Company or that the Company’s intellectual property will not be successfully challenged or circumvented by competitors.
The Company intends to enforce its intellectual property rights, and from time to time may initiate claims against third parties that it believes are infringing its intellectual property rights. Litigation brought to protect and enforce the Company’s intellectual property rights could be costly, time-consuming and distr

acting to management and could fail to obtain the results sought and could have a material adverse effect on the Company’s results of operations, business, financial condition, or prospects.

Third party intellectual property infringement claims against the Company could limit its ability to compete effectivelyeffectively.

The Company cannot provide assurance that its products do not infringe the intellectual property rights of third parties. Infringement and other intellectual property claims and proceedings brought against the Company, whether successful or not, are costly, time-consumingtime consuming and distracting to management, and could harm itsthe Company's reputation. In addition, intellectual property claims and proceedings could require the Company to do one or more of the following: (1)(i) cease selling or using any of its products that allegedly incorporate the infringed intellectual property, (2)(ii) pay substantial damages, (3)(iii) obtain a license from the third partythird-party owner, which license may not be available on reasonable terms, if at all, (4)(iv) rebrand or rename its products, and (5)(v) redesign its products to avoid infringing the intellectual property rights of third parties, which may not be possible and, if possible, could be costly, time-consumingtime consuming, or result in a less effective product. A successful claim against the Company could have a material adverse effect on its results of operations, business, financial condition, or prospects.

The Company’s business may be adversely affected by competitionlower cost of entry into the gaming industry.
The lottery
As a result of developments in digital and internet gaming, businesses existthe cost of entry to the gaming market has decreased significantly. This has resulted in a highly competitive environment. Digital and internet gaming have emerged as substantial methods of competition from existing competitors and, increasingly, new competitors as a result of the lower cost of entry. The Company faces significantincreased competition may result in the U.S., Italy, and worldwide inincreased pricing pressures on a number of ways, including:
A proliferation of destination gaming venues, and an increased availability of gaming opportunities including gaming opportunities on the internet;
Aggressive price competition from other lottery and gaming enterprises in an effort to gain market share;
Legal challenges to the awards of contracts to the Company by its competitors, including challenges to the award of the Lotto Concession and other significant contracts;
Consolidation among gaming equipment and technology companies that are better able to compete by increasing their scale and operating efficiencies;
Entry of new competitors into the internet gaming market due to lower costs of entry;
Consolidation among casino operators and cutbacks in capital spending by casino operators; and
Less overall time and discretionary spending by customers increases competition from other forms of entertainment.
If any of these risks are realized, the Company’s competitive positionproducts and therefore itsservices, and may impact the Company’s results and financial position.

Divestitures may materially adversely affect the Company’s financial condition, results of operations business, financial condition, or prospectscash flows.

From time to time, the Company may be materially adversely affected.
The Company’s successpursue divestitures in support of its strategic goals. For example, on May 10, 2021, the lotteryCompany completed the sale of its Italian B2C gaming machine, sports betting, and digital gaming businesses depends in large part(“Italian B2C businesses”) to Gamenet Group S.p.A. and on its ability to develop and manage frequent introductionsSeptember 14, 2022, a wholly-owned subsidiary of innovative products and the ability to respond to technological changes
The gaming industry is characterized by dynamic customer demand and technological advances, both for land-based and online gaming products. As a result, the Company must continually introducecompleted the sale of the Company’s Italian commercial services business to PostePay S.p.A. – Patrimonio Destinato IMEL. On June 8, 2023, the Company also announced a review of potential strategic alternatives for the Global Gaming and successfully marketPlayDigital segments, which included the potential sale of these segments. The Parent subsequently entered into definitive agreements with Everi Holdings Inc., a Delaware corporation (“Everi”), Ignite Rotate LLC, a Delaware limited liability company and a direct wholly owned subsidiary of the Company (“SpinCo”), and Ember Sub LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Everi (“Merger Sub”) on February 28, 2024, pursuant to which the Company will separate its Global Gaming and PlayDigital businesses by way of a taxable spin-off to the Parent’s shareholders and then immediately combine such businesses with Everi (the “Separation & Divestiture”). We refer to the entity resulting from the combination of the Parent’s Global Gaming and PlayDigital businesses with Everi as the “Combined Company” in this annual report on Form 20-F. The Parent will change its name and continue to trade on the NYSE under a new themes and technologies in orderticker symbol. Refer to remain competitive and effectively stimulate customer demand. The process of developing new products and systems is inherently complex and uncertain. It requires accurate anticipation of changing customer needs and end-user preferences“Notes to the Consolidated Financial Statements—26. Subsequent Events” for further information on the Separation & Divestiture as well as emerging technological trends. If“Risks related to the Company's competitors develop new game contentCompany’s Separation & Divestiture of the Global Gaming and technologically innovativePlayDigital Businesses” for risk factor discussions specific to the Separation & Divestiture.
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Divestitures involve risks, including difficulties in the separation of operations, services, products and personnel, the diversion of management's attention from other business concerns, the disruption of business, the potential loss of revenues, increased customer concentration, departures of key employees, the retention of uncertain contingent liabilities related to the divested business, and potential reputational harm resulting from proposed transactions or the failure to consummate a proposed transaction. The Company may not be successful in managing these or any other significant risks that it encounters in any divestiture the Company fails to keep pace, its businessmay undertake, and any such divestiture could bematerially and adversely affected. To remain competitive, the Company invests resources toward its research and development efforts to introduce new and innovative games with dynamic features to attract new customers and retain existing customers. If the Company fails to accurately anticipate customer needs and end-user preferences through the development of new products and technologies, the Company could lose business to its competitors, which would adversely affect its results of operations, business, financial condition, or prospects.
The Company intends to continue investing resources in research and development. There is no assurance that its investments in research and development will guarantee successful products. The Company invests heavily in product development in various disciplines: platform hardware, platform software, online services, content (game) design and casino software systems. Because the Company’s newer products are generally more technologically sophisticated than those it has produced in the past, the Company must continually refine its design, development and delivery capabilities across all channels to ensure product innovation. If the Company cannot efficiently adapt its processes and infrastructure to meet the needs of its product innovations, its results of operations, business, financial condition, or prospects could be negatively impacted.

The Company’s customers will purchase new products only if such products are likely to increase profits more than the Company's competitors’ products. The amount of profits primarily depends on consumer play levels, which are influenced by player demand for the Company’s products. There is no certainty that the Company’s new products will attain this market acceptance or that the Company’s competitors will not more effectively anticipate or respond to changing customer preferences. In addition, any delays by the Company in introducing new products could negatively impact its operating results by providing an opportunity for its competitors to introduce new products and gain market share.
The illegal gaming market could negatively affect the Company’s business,
A significant threat to the gaming industry arises from illegal activities. Such illegal activities may drain significant betting volumes away from the regulated industry. In particular, illegal gaming could take away a portion of the present players that are the focus of the Company’s business. The loss of such players could have a material adverse effect on the Company's financial condition, results of operations business, financial condition, or prospects.
The Company’s lottery and gaming businessescash flows, and may experience losses due to technical problems or fraudulent activities
The Company’s success depends on its ability to avoid, detect, replicatealso result in a diversion of management attention, operational difficulties and correct software and hardware anomalies and fraudulent manipulation of its products. The Company incorporates security features into the design of its products which are designed to prevent its customers and players from being defrauded. The Company also monitors its software and hardware to avoid, detect and correct any technical errors. However,losses. Further, there can be no guaranteeassurance whether any particular planned divestiture will be completed on the originally proposed terms and timeline, or at all, or that the Company’s security features or technical effortsstrategic benefits and expected financial impact of any divestiture will continue to be effective in the future. If the Company’s security systems fail to prevent fraud or if the Company experiences any significant technical difficulties, its operating results could be adversely affected. Additionally, if third parties breach the Company’s security systems and defraud its patrons, or if the Company’s hardware or software experiences any technical anomalies, the public may lose confidence in the Company’s products or it could become subject to legal claims by its customers or to investigation by gaming authorities.achieved.

The Company’s internet offerings are partinability to successfully complete and integrate acquisitions could limit its future growth or otherwise be disruptive to its ongoing business.

From time to time, the Company expects it will pursue acquisitions in support of a new and evolving industry, which presents significant uncertainty and business risks
Gaming on the internet continues to evolve. The success of this industryits strategic goals. There can be no assurance that acquisition opportunities will be affected by future developments in social networks, mobile platforms, legal and regulatory developments (such as the passage of new lawsavailable on acceptable terms or regulationsat all or the extension of existing laws or regulations to social casino-style gaming activities), taxation of gaming activities, data privacy and cybersecurity laws and regulations, and other factors that the Company is unablewill be able to predict,obtain necessary financing or regulatory approvals to complete potential acquisitions. The Company’s ability to succeed in implementing its strategy will depend to some degree upon the ability of its management to identify, complete, arrange financing for, and are beyond its control. This environment can make it difficult to plan strategically and can provide opportunities for competitors to grow revenues atsuccessfully integrate commercially viable acquisitions. Acquisition transactions may disrupt the Company’s expense. Consequently, the Company’s future operating results relating to its internet offerings may be difficult to predictongoing business and distract management from other responsibilities. Further, the Company cannot provide assurance thatmay incur unexpected costs, or fail to realize expected benefits from such acquisitions. In connection with any such acquisitions, the Company could face significant challenges in managing and integrating its internet offerings will grow at the rate it expects,expanded or be successful in the long term.combined operations, including acquired assets, operations, and personnel.

The Company faces reputational risks related to the use of social mediamedia.

The Company frequently uses social media platforms such as Facebook, YouTube and Twitter, as marketing tools. These platforms allowprovide the Company, as well as individuals, with access to a broad audience of consumers and other interested persons. Negative commentary regarding the Company or the products it sells may be posted on social media platforms and similar devices at any time and may be adverse to the Company’s reputation or business. AsFurther, as laws, regulations, and regulationsdifferent platforms’ terms of service rapidly evolve to govern the use of these platforms and mobile devices,social media, the failure by the Company, its employees or third parties acting at itsthe Company's direction to abide by applicable laws and regulations in the use of these platforms and devices could adversely impact the Company’s business, financial condition, and results of operations or subject it to fines or other penalties.

The Company’s results of operations, cash flows and financial condition could be affected by public health issues, geopolitical instability and other potentially disruptive events in the locations where the Company’s customers, suppliers or regulators operate.

The Company may be impacted by public health crises (including the outbreak of communicable diseases such as COVID-19) that could negatively impact the Company’s operations or the operations of the Company’s customers, suppliers, data service providers and regulators.

The Company’s operations could also be impacted by geopolitical instability, including the outbreak and escalation of war (such as the Russia-Ukraine and Israel-Hamas conflicts), terrorism or other acts of violence any of which could adversely affect the Company’s ability to operate and deliver its products and services.

While the Company insures against certain business interruption risks, the Company cannot assure that such insurance will compensate the Company for any losses incurred as a result of natural or other disasters. Any serious disruption to the Company’s operations, or those of the Company’s customers, suppliers, data service providers, or regulators, could have a material adverse effect on the Company’s results of operations, cash flows and financial condition.

Legal and Compliance Risks

The Company faces risks related to the extensive and complex governmental regulation applicable to its operationsoperations.

The Company’s activities are subject to extensive and complex governmental regulation, including restrictions on advertising, increases in or differing interpretations by authorities on taxation, limitations on the use of cash, and anti-money laundering compliance procedures. These regulatory requirements are constantly evolving and may vary from jurisdiction to jurisdiction.
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Any changes in the legal or regulatory framework or other changes, such as increases in theincreased taxation, of gaming or betting, changes in the compensation paid to concessionaires,licensees, or increases in the number of licenses, authorizations, or concessionslicenses awarded to the Company's competitors, could materially affect its profitability.

In addition, in the U.S. and in many international jurisdictions where the Company currently operates or seeks to do business, lotteries, sports betting, and gaming are not permitted unless expressly authorized by law. The successful implementation of the Company’s growth strategy and its business could be materially adversely affected if jurisdictions that do not currently authorize lotteries, sports betting, or gaming do not approve such activities or if those jurisdictions that currently authorize lotteries, sports betting, or gaming do not continue to permit such activities.

Investigations by governmental and licensing entities can result in adverse findings or negative publicity.

From time to time, the Company is also subject to extensive background investigations, and other investigations of various types are conducted by governmental and licensing authorities with respect to applicable gaming regulations. These regulations and investigations vary from time to time and from

jurisdiction to jurisdiction where the Company operates. The Company’s operations may be impacted if the Company is unable to obtain a privileged gaming license or have a privileged gaming license revoked by a regulatory authority. Because the Company’s reputation for integrity is an important factor in its business dealings with lottery and other governmental agencies, a governmental allegation or a finding of improper conduct by or attributable to the Company in any manner, the prolonged investigation of these matters by governmental or regulatory authorities, and/or the adverse publicity resulting therefrom could have a material adverse effect on the Company’s results of operations, business, financial condition, or prospects, including its ability to retain existing contracts or to obtain new or renewed contracts, both in the subject jurisdiction and elsewhere.
With respect
Failure to lottery games, salescomply with data privacy laws, including the GDPR could result in significant penalties.

Our business is subject to the E.U. GDPR and the U.K. GDPR (and together with the E.U. GDPR, the “GDPR”). The GDPR has direct effect where an entity is established in the European Economic Area (the “EEA”) or the U.K. and has extraterritorial effect where an entity established outside the EEA or the U.K. processes personal data in relation to the offering of goods or services to individuals in the EEA and/or the U.K. or the monitoring of their behavior. The GDPR imposes a number of obligations on controllers, including, among others:

•accountability and transparency requirements, which requires controllers to demonstrate and record compliance with the GDPR and to provide more detailed information to data subjects regarding processing;
•requirements to process personal data lawfully, including specific requirements for obtaining valid consent where consent is the lawful basis for processing;
•obligations to consider data privacy as any new products or services are frequently dependent upon decisions made by lottery authorities,developed and designed and to limit the amount of information collected, processed, and stored as well as its accessibility;
•constraints on automated individual decision-making, including profiling data subjects;
•providing data subjects with data protection rights such as matters relating to:(among others) a right to ask for a copy of personal data to be provided to a third party in a usable format on request and erasing or rectifying personal data in certain circumstances;
marketing;•obligations to implement appropriate technical and organizational security measures to safeguard personal data; and
games•obligations to report certain personal data breaches to the relevant supervisory authority without undue delay (and no later than 72 hours where feasible) and affected individuals where the personal data breach is likely to result in a high risk to their rights and freedoms.

In addition, the GDPR prohibits the international transfer of personal data from the EEA/U.K. to countries outside of the EEA/U.K. unless made to a country deemed to have “adequate” data privacy laws by the European Commission or U.K. Government or if a data transfer mechanism has been put in place or a derogation under the GDPR can be relied upon. In July 2020, the Court of Justice of the European Union (“CJEU”) in its Schrems II ruling invalidated the E.U.-U.S. Privacy Shield framework, a self-certification mechanism that facilitated the lawful transfer of personal data from the EEA to the U.S., with immediate effect. The CJEU upheld the validity of standard contractual clauses (“E.U. SCCs”) as a legal mechanism to transfer personal data but companies relying on E.U. SCCs will need to carry out a transfer impact assessment (“TIA”), which among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under E.U. SCCs will need to be implemented to ensure an “essentially equivalent” level of data protection to that afforded in the EEA.

Further, on October 7, 2022, the U.S. President introduced an Executive Order to facilitate a new Trans-Atlantic Data Privacy Framework (“DPF”) and on July 10, 2023, the European Commission adopted its Final Implementing Decision granting the
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U.S. adequacy (“Adequacy Decision”) for E.U.-U.S. transfers of personal data for entities self-certified to the DPF. Entities relying on E.U. SCCs for transfers to the U.S. are made availablealso able to rely on the analysis in the Adequacy Decision as support for play;their TIA regarding the equivalence of U.S. national security safeguards and redress.
amounts
The U.K. Government has also published its own form of E.U. SCCs called an International Data Transfer Agreement and an International Data Transfer Addendum to the new E.U. SCCs. The U.K.’s Information Commissioner’s Office has also published its own version of the TIA and guidance on international transfers, although entities may choose to adopt either the E.U. or U.K. style TIA. Further, on September 21, 2023, the U.K. Secretary of State for Science, Innovation and Technology established a U.K.-U.S. data bridge (i.e., a U.K. equivalent of the Adequacy Decision) and adopted U.K. regulations to implement the U.K.-U.S. data bridge (the “U.K. Adequacy Regulations”). Personal data may now be transferred from the U.K. under the U.K.-U.S. data bridge through the U.K. extension to the DPF to organizations self-certified under the U.K. extension to DPF.

Other jurisdictions in which the Company operates have implemented, or are considering implementing, data privacy laws similar to the GDPR. Several of the Parent’s subsidiaries deal with a significant amount of employee personal data. There is a risk that may be charged by operators;
prizesthe Company's policies and procedures for the players;
compensation paid to concessionaires,compliance with data privacy laws, including the Company;
kinds of points of sale; and
applicable tax regulations.
BecauseGDPR will not be implemented correctly or that individuals within the Company will not be fully compliant with the new procedures. Failure to comply with data privacy laws may have serious financial consequences to the Company. For example, failure to comply with the GDPR may lead to fines of up to the maximum of either €20 million (under the E.U. GDPR) or £17.5 million (under the U.K. GDPR) or 4% of worldwide annual revenue, whichever is typically compensated in whole or in part based on a jurisdiction’s gross lottery sales, lower than anticipated sales due to these factorsgreater, for serious violations of certain of the GDPR’s requirements, and the Company could face significant administrative sanctions and reputational damage that could have a material adverse effect on the Company’s results of operations, business, financial condition, or prospects. There is a risk that we could be impacted by a cybersecurity incident that results in loss or unauthorized disclosure of personal data, potentially resulting in the Company facing harms similar to those described above.

Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with any new data protection rules. In addition, states are constantly adopting new laws or amending existing laws, requiring attention to frequently changing requirements. For example, California enacted the California Consumer Privacy Act (CCPA), which took effect on January 1, 2020, and was the first comprehensive state privacy law in the United States. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used by requiring covered companies to provide new disclosures to California consumers (as that term is broadly defined) and provide such consumers new ways to opt-out of certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches. Further, the California Privacy Rights Act (the CPRA), which further amended the CCPA, went into effect on January 1, 2023. The CCPA, as amended by the CPRA, imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data. It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. Similar laws have been adopted and proposed in other states, and if passed, such laws may have potentially conflicting requirements that would make compliance challenging. For example, the Nevada Privacy of Information Collected on the Internet from Consumers Act went into effect on October 1, 2021, the Virginia Consumer Data Protection Act went into effect on January 1, 2023, the Colorado Privacy Act went into effect on July 1, 2023, the Connecticut Data Privacy Act went into effect July 1, 2023, and the Utah Consumer Privacy Act went into effect December 31, 2023.

The Federal Trade Commission (FTC) and many state attorneys general are interpreting existing federal and state consumer protection laws to impose evolving standards for the collection, use, dissemination and security of personally identifiable information. For instance, the FTC published an advance notice of proposed rulemaking on commercial surveillance and data security in 2022 and may implement new trade regulation rules or other regulatory alternatives concerning the ways in which companies (1) collect, aggregate, protect, use, analyze, and retain consumer data, as well as (2) transfer, share, sell, or otherwise monetize that data in ways that are unfair or deceptive in the coming years. Privacy laws require us to publish statements that describe how we handle personal information and choices individuals may have about the way we handle their personal information. Violating individuals’ privacy rights, publishing false or misleading information about security practices, or failing to take appropriate steps to keep individuals’ personal information secure may constitute unfair or deceptive acts or practices in violation of Section 5 of the FTC Act. Federal regulators, state attorneys general and plaintiffs’ attorneys have been and will likely continue to be active in this space, and if we do not comply with existing or new laws and regulations related to personally identifiable information, we could be subject to criminal or civil sanctions.

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The Company is exposed to significant risks in relation to compliance with anti-corruption laws and regulations and economic sanction programs.

Doing business worldwide requires the Company to comply with the laws and regulations of various jurisdictions. In particular, the Company's operations are subject to anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act of 2010, and other anti-corruption laws that apply in many international jurisdictionscountries where the Company currently operatesoperates. Other laws and regulations applicable to the Company control trade by imposing economic sanctions on countries and persons and creating customs requirements and currency exchange regulations. The Company's continued global expansion, including in countries which lack a developed legal system or seekshave high levels of corruption, increases the risk of actual or alleged violations of such laws.

The Company cannot predict the nature, scope, or effect of future regulatory requirements to do business, lotteries are not permitted unless expressly authorizedwhich its operations might be subject or the manner in which such laws might be administered or interpreted.

There can be no assurance that the policies and procedures the Company has implemented have been or will be followed at all times or will effectively detect and prevent violations of these laws by law. The successful implementationone or more of the Company’s growth strategyCompany's directors, officers, employees, consultants, agents, joint-venture partners or other third-party partners. As a result, the Company could be subject to investigations, criminal and civil penalties, sanctions and/or other remedial measures that in turn could have a material adverse effect on its business, could be materially adversely affected if jurisdictions that do not currently authorize lotteries do not approve new lotteries or if those jurisdictions that currently authorize lotteries do not continue to permit such activities.results of operations and financial condition.

Negative perceptions and publicity surrounding the gaming industry could lead to increased gaming regulationregulation.
From
The popularity and acceptance of gaming is influenced by prevailing social attitudes toward gaming, and changes in social attitudes toward gaming could result in reduced acceptance of gaming as a leisure activity. Further, from time to time, the gaming industry is exposed to negative publicity related to gaming behavior, gaming by minors, the presence of gaming machines in too many locations, risks related to onlinedigital gaming and alleged association with money laundering. Publicity regarding problem gaming and other concerns with the gaming industry, even if not directly connected to the Company, could adversely impact its business, results of operations, and financial condition. For example, if the perception develops that the gaming industry is failing to address such concerns adequately, the resulting political pressure may result in the industry becoming subject to increased regulation and restrictions on operations. Such an increase in regulation could adversely impact the Company's results of operations, business, financial condition, or prospects.
The Company is exposed to significant risks in relation to compliance with anti-corruption laws and regulations and economic sanction programs
Doing business on a worldwide basis requires the Company to comply with the laws and regulations of various jurisdictions. In particular, the Company's operations are subject to anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”), the U.K. Bribery Act of 2010 (the “Bribery Act”) and other anti-corruption laws that apply in countries where the Company operates. Other laws and regulations applicable to the Company control trade by imposing economic sanctions on countries and persons and creating customs requirements and currency exchange regulations. The Company's continued global expansion, including in countries which lack a developed legal system or have high levels of corruption, increases the risk of actual or alleged violations of such laws.
The Company cannot predict the nature, scope or effect of future regulatory requirements to which its operations might be subject or the manner in which such laws might be administered or interpreted.
There can be no assurance that the policies and procedures the Company has implemented have been or will be followed at all times or will effectively detect and prevent violations of these laws by one or more of the Company's directors, officers, employees, consultants, agents, joint-venture partners or other third-party partners.  As a result, the Company could be subject to investigations, criminal and civil penalties, sanctions and/or other remedial measures which in turn could have a material adverse effect on its business, results of operations and financial condition.

Recent and future changesChanges to U.S. and foreign tax laws could adversely affect the CompanyCompany.


The Company is a multinational company subject to tax laws in severalthe U.S. and several foreign tax jurisdictions. Significantjurisdictions and judgment is required in determining the Company'sCompany’s global provision for income taxes, deferred tax assets or liabilities, and in evaluating its tax positions on a worldwide basis.taxes. While the Company believes its tax positions are consistent with the tax laws in the jurisdictions in which it conducts its business, it is possible that these positions may be overturned by tax authorities, which may have a significant impact on the Company'sCompany’s global provision for income taxes.


TaxFurthermore, changes in tax laws or regulations may be proposed or enacted that could significantly affect the Company’s overall tax expense. For example, the Inflation Reduction Act (“IRA”) was recently enacted into law and includes a provision to implement a 15% corporate alternative minimum tax on “adjusted financial statement income” for “applicable corporations” and a 1% excise tax on repurchases of stock. The Company continues to evaluate the provisions of the IRA, but does not currently expect the IRA to have a material impact on our financial position.

In October 2015, the Organisation for Economic Co-operation and Development (“OECD”) published its final recommendations on base erosion and profit shifting (“BEPS”). These BEPS recommendations propose measures to coordinate multilateral action on international tax rules. Several of the areas of tax law on which the BEPS project has focused have led or will lead to changes in the domestic law of individual OECD jurisdictions. The implementation of recommendations arising from the action points comprising BEPS has resulted in significant changes to local tax legislation and international double tax treaties over recent years. For example, BEPS has resulted in jurisdictions implementing laws which (among other things): (i) limit deductibility of interest payments; (ii) expand the scope of permanent establishment (thereby extending the scope of jurisdictions' taxing rights); (iii) counteract hybrid mismatch arrangements; and (iv) strengthen 'Controlled Foreign Company' rules. Legislation introduced in relation to hybrid mismatches came into effect on January 1, 2017, and legislation to restrict tax deductions for interest expenses of large groups was brought into effect from April 1, 2017.

On June 21, 2016, the E.U.’s ministers of Finance and Economic Affairs unanimously approved the Anti-Tax Avoidance Directive to harmonize potential BEPS changes in the E.U. These measures are dynamiclargely directed at counteracting the effects of tax havens and preferential tax regimes in countries around the world. We expect that countries may change their tax laws in
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response to this project, and several countries have already changed or proposed changes to their tax laws. On July 1, 2020, the Anti-Tax Avoidance Directive II (“ATAD II”) entered into force, with provisions on hybrid structures entering into force on January 1, 2021 to apply to income obtained in the tax year starting December 31, 2020. ATAD II is designed to prevent hybrid mismatches giving rise to a double deduction or to a deduction without taxation in different tax jurisdictions. In certain cases, taxpayers may be denied the right to recognize tax deductible costs on payments subject to change as new laws are passed and new interpretations of the tax law are issued or applied.a double deduction. On December 22, 2017,2021, the U.S. enacted significantE.U. published the draft Anti-Tax Avoidance Directive III (“ATAD III”) designed to impose new minimum substance rules to prevent the misuse of shell entities for improper tax reform through the Tax Cutspurposes. ATAD III proposes to introduce reporting requirements for certain E.U. tax resident companies with mobile and/or passive income (such as interest, dividends and Jobs Actroyalty income) that have inadequate economic substance (as prescribed under ATAD III). If an entity fails to meet these substance requirements, it will be denied benefits under double tax treaties and various E.U. directives. ATAD III was originally intended to be implemented by E.U. member states, by June 30, 2023, with a planned effective date of 2017 (the “Tax Act”), and certain provisionsJanuary 1, 2024, but has been delayed further. The details of the new law may adversely affect the Company.these rules are therefore subject to change.


In addition, the OECD is continuing to work on a two-pillar initiative, “BEPS 2.0,” which is aimed at (i) shifting taxing rights to the jurisdiction of the consumer (“Pillar One”); and (ii) ensuring all companies pay a global minimum tax authorities(“Pillar Two”). Pillar One will, broadly, re-allocate taxing rights over 25% of the residual profits of multinational enterprises (“MNEs”) with global turnover in excess of 20 billion euros (excluding extractives and regulated financial services) to the jurisdictions where the customers and users of those MNEs are increasingly scrutinizinglocated. Pillar Two will, broadly, consist of two interlocking domestic rules (together the Global Anti-Base Erosion Rules (the “GloBE Rules”)): (i) an Income Inclusion Rule (“IIR”), which imposes top-up tax on a parent entity in respect of the low-taxed income of a constituent entity; and (ii) an Undertaxed Payment Rule (“UTPR”), which denies deductions or requires an equivalent adjustment to the extent the low-taxed income of a constituent entity is not subject to tax under an IIR. There will also be a treaty-based Subject To Tax Rule that allows source jurisdictions to impose limited source taxation on certain related party payments subject to tax below a minimum rate.

For countries other than the U.S., the OECD recommended model GloBE Rules for Pillar Two in late 2021. The OECD also released further guidance on the model GloBE Rules throughout 2022 and 2023. This includes the release in early February 2023 of technical guidance which comments in particular on the interaction between the model GloBE Rules and current U.S. tax law, and the release in July 2023 of further administrative guidance which contains details of how to calculate tax for the purposes of Pillar Two. Many aspects of Pillar Two have become effective as of January 1, 2024, with other aspects expected to become effective in 2025.

Several aspects of the model GloBE Rules, including whether some or all of the Company’s business and the companies in which the Company invests may fall within the scope of the exclusions therefrom, currently remain unclear or uncertain notwithstanding existing commentary and draft legislation. The U.K. enacted legislation in July 2023 implementing the IIR via a “multinational top-up tax” (“MTT”) (alongside a U.K. domestic top-up tax) that will apply to multinational enterprises for accounting periods beginning on or after December 31, 2023. Finance Act 2024 enacts certain amendments to the IIR which was previously enacted in the MTT legislation. The amendments have restrospective effect for accounting periods beginning on or after December 31, 2023. On November 29, 2023 a Finance Bill proposed new provisions relating to the U.K.’s implementation of a UTPR rule for accounting periods beginning on or after December 31, 2024. The UTPR rule is expected to be introduced by a later Finance Bill, although the effective date will remain the same.

It is likely that other countries or jurisdictions will implement the recommended model GloBE Rules (including either or both the IIR or UTPR) as drafted or in a modified form, although some countries may not introduce such changes. The implications of such implementations for the Company’s business remain uncertain, both at a domestic level and in terms of how domestic implementations may interact with implementing legislation in other relevant jurisdictions.

The timing, scope, and implementation of any of the potential Pillar Two provisions into the domestic law of relevant countries remains subject to significant uncertainty, and the content of existing and future OECD guidance (and its consistency with current international tax principles or with implementing legislation of relevant countries) also remains uncertain. Depending on how the model GloBE Rules are implemented or clarified by additional commentary or guidance in the future, they may result in material additional tax being payable by the Company’s business and the businesses of the companies in which the Company invests. The ultimate implementation of the BEPS project may also increase the complexity and the burden and costs of compliance and advice relating to the Company’s ability to efficiently fund, hold and realize investments, and could necessitate or increase the probability of some restructuring of the Company’s group or business operations. The implementation of the BEPS project may also lead to additional complexity in evaluating the tax positionsimplications of companies. Many countries inongoing investments and restructuring transactions within the E.U., as well as a numberCompany’s business.

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Table of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase the Company's tax obligations in countries where it does business.  Contents
If U.S. or other foreign tax authorities change applicable tax laws, the Company'sCompany’s overall taxes could increase, and its results of operations, business, financial condition, or prospects may be adversely impacted.affected.

Specifically, the Parent owns subsidiaries incorporated and doing business in Italy. Should Italian withholding taxes be imposed on dividends or distributions with respect to the Parent's ordinary shares, whether such withholding taxes are creditable against a tax liability to which a shareholder is otherwise subject depends on the laws of such shareholder’s jurisdiction and such shareholder’s particular circumstances. Shareholders are urged to consult their tax advisors in respect of the consequences of the potential imposition of Italian withholding taxes.

The ongoing effects of the Tax Act and the refinement of provisional estimates could make the Company's results difficult to predict

The Company's effective tax rate may fluctuate in the future as a result of the Tax Act. The Tax Act introduces significant changes to U.S. income tax law that will have a meaningful impact on the Company's provision for income taxes. Accounting for the income tax effects of the Tax Act requires significant judgments and estimates in the interpretation and calculations of the provisions of the Tax Act. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in our financial statements for the year ended December 31, 2017. The U.S. Treasury Department, the Internal Revenue Service (the “IRS”), and other standard-setting bodies may issue guidance on how the provisions of the Tax Act will be applied or otherwise administered that is different from the Company's interpretation. As the Company collects and prepares necessary data, and interprets the Tax Act and any additional guidance issued by the IRS or other standard-setting bodies, it may make adjustments to the provisional amounts that could materially affect the Company's financial position and results of operations as well as its effective tax rate in the period in which the adjustments are made.


The Company may be subject to an unfavorable outcome with respect to pending regulatory, tax, or other legal proceedings, which could result in substantial monetary damages or other harm to the CompanyCompany.

The Company is involved in a number of legal, regulatory, tax, and arbitration proceedings including claims by and against it as well as injunctions by third parties arising out of the ordinary course of its business or its other business activities and is subject to investigations and compliance inquiries related to its ongoing operations. At December 31, 2017, the Company's total provision for litigation risks was $4.7 million. However, itIt is difficult to estimate accurately the outcome of any proceeding. As such, the amounts of the Company’s provision for litigation riskrisks could vary significantly from the amounts the Company may be asked to pay or ultimately pay in any such proceeding. In addition, unfavorable resolution of or significant delay in adjudicating such proceedings could require the Company to pay substantial monetary damages or penalties and/or incur costs whichthat may exceed any provision for litigation risks or, under certain circumstances, cause the termination or revocation of the relevant concession, license or authorization and thereby have a material adverse effect on the Company’s results of operations, business, financial condition, or prospects.

In 2012, the Parent's predecessor entity, GTECH, was audited by the Rome Public Prosecutors’ Office tax agency regarding the structuring of the acquisition of GTECH Holdings Corporation in 2006 and subsequent acquisition debt refinancing, and determining whether GTECH’s income was under-reported in Italy for any tax year from 2006 to 2013. GTECH settled the matter in December 2013. Under Italian law, GTECH's legal representative and signatories of the relevant corporate tax returns areThe Company is subject to investigation. physical risks relating to climate change and transitional risks relating to governmental and societal responses to climate change.

The relevant tax returns were signedCompany, as well as our customers, suppliers, and partners, is subject to physical and transitional risks relating to climate change. Physical risks to our operations, and those of our affiliates, include increasingly severe and frequent weather-related events such as hurricanes, floods, drought, wildfires, and stresses on the water supply. The occurrence of one or more of these events could disrupt our properties, supply chain, and operations, and the Company’s suppliers, partners, and customers could pass along any increased costs to us, experience an interruption in their dealings with us, or experience decreased demand for our products and services. These risks could increase the Company’s operating costs (including the cost of our electricity and energy use) and compliance costs, impacting our ability to produce and market our products and the ultimate demand for our products and services.

Transitional risks arise from regulatory changes and societal shifts by the Company's CEOgovernmental authorities, non-governmental organizations, customers, investors, employees, and Board member (Marco Sala), senior executive (Renato Ascoli), and Board member (Lorenzo Pellicioli). While all the tax assessments, penalty and interest claims

emanatingother stakeholders, who are increasingly sensitive to ESG matters, including climate change. The effects could include, for example, a global transition away from the tax audit have been resolved, under Italian law, the related criminal investigations of Marco Sala, Renato Ascoli, and Lorenzo Pellicioli can only be dismissed by a judge upon a formal petition to the Court. The Request for Dismissal was submitted by the Public Prosecutor to the Criminal Court of Rome in March 2017; the Court’s Order of Dismissal granting such request is still pending.

Failure to maintain adequate internal controls could adversely affect the Company's reputation and business

The Company's management is responsible for establishing and maintaining adequate internal control over financial reportingfossil fuels that provide reasonable assurance of the reliability of the preparation and reporting of the Company's financial statements for external use. Inadequate internal controls may result in increased energy prices; shifting customer preferences; stakeholder pressure to decarbonize assets; or new legal or regulatory requirements that result in new or expanded carbon pricing, taxes, restrictions on greenhouse gas emissions, and increased greenhouse gas disclosure and transparency. Regulatory changes or shifts in consumer preferences could restrict our ability to manufacture certain products or require us to find alternatives for the Company's failuremanufacture of certain products. In addition, governments and the public increasingly expect companies like us to report on our business practices with respect to sustainability and environmental impact, among other ESG-related topics. For example, the E.U. recently adopted the Corporate Sustainability Reporting Directive (CSRD) that will impose disclosure of the risks and opportunities arising from social and environmental issues, and on the impact of companies’ activities on people and the environment. Similarly, the State of California recently passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act that will impose broad climate-related disclosure obligations on companies doing business in California. The SEC has included in its regulatory agenda potential rulemaking on climate change disclosures that, if adopted, could significantly increase compliance burdens and associated regulatory costs and complexity. This focus on ESG matters may lead to new expectations or requirements that could result in increased costs associated with research, development, manufacture, or distribution of our products, and with our and our customers’ operations more generally. Our ability to compete could also be affected by changing customer preferences and requirements, such as growing demand for companies to establish validated sustainability targets or offer more sustainable products. Failure to meet its public reportingevolving regulatory requirements accurately and stakeholder expectations could also result in litigation or regulatory actions, affecting demand for our products, which may have a material adverse impact on a timely basisour financial results and harmlonger-term loss of trust, undermining the Company's reputation. The inherent limitations of internal controls over financial reporting may not prevent or detect all misstatements or fraud, regardlesscredibility of the adequacy of those controls, and the Company therefore cannot predict when the existing material weakness will be remediated or assure that additional material weaknesses will not be identified in the future. Please refer to “Item 15. Controls and Procedures” for additional information.Company.

Operational Risks

The Company depends on its suppliers and faces supply chain risks that could adversely affect its financial results.

The Company purchases most of the parts, components, and subassemblies necessary for its lottery terminals and electronic gaming machines from outside sources. The Company outsources the manufacturing and assembly of certain gaming and lottery terminals to third-party vendors. The Company’s operating results could be adversely affected if one or more of its
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manufacturing and assembly outsourcing vendors fails to meet defined quality standards and production schedules. Disruptions and delays could adversely affect our suppliers’ ability to meet production schedules.

Since 2020, the Company has experienced, and the Company may continue to experience, disruptions throughout its supply chain. In particular, the Company has been adversely impacted by a shortage in the supply of electronic components necessary for the manufacture of gaming machines. These shortages have required the Company to adjust some of its delivery and production schedules, and could cause the Company to be unable to meet demand for its products or to introduce new products on schedule, leading to a reduction in potential sales. The Company cannot provide assurance as to how long it will be impacted by the shortage in electronic components, or whether it will in the future face shortages of other parts, components or subassemblies necessary for the manufacture of any of its finished products. Furthermore, global supply chain constraints have also generally led to an increase in costs, including supply costs (such as the cost of paper and electronic components), freight costs, energy costs and labor costs, among others. The Company may not be able to pass these increased costs on to customers, which may lead to decreased profit margins. As a result, the Company's results of operations, business, financial condition, or prospects could be adversely affected by these supply chain disruptions, or any future supply chain disruptions.

In the Company’s lottery business, the Company transmits data using cellular technology and satellite transponders, generally pursuant to long-term contracts. The technical failure of any of these cellular or satellite services would require the Company to obtain other communication services, including other cellular or satellite access. In some cases, the Company employs backup systems to limit the Company’s exposure in the event of such a failure. Therefore, the Company cannot assure access to such other cellular services or satellites or, if available, the ability to obtain the use of such other cellular services or satellites on favorable terms or in a timely manner. While cellular and satellite failures are infrequent, the operation of each is outside of the Company’s control.

In the Company’s digital gaming business, the Company often relies on third-party data center providers to, among other things, host the Company’s remote game servers and sports betting platforms. The digital gaming business could be adversely impacted by breaches of or disruptions to these third-party data centers, including potential service level penalties with respect to the Company’s customers, reputational harm, the disclosure of proprietary information or the theft of the Company’s assets.

The Company’s management believes that if a supply contract with one of its vendors were to be terminated or breached, it may take time to replace such vendor under some circumstances and any replacement parts, components, or subassemblies may be more expensive, which could reduce the Company’s operating margins. Depending on a number of factors, including the Company’s available inventory of replacement parts, components or subassemblies, the time it takes to replace a vendor may result in a delay for a customer. Further, supply chain constraints and shortages could cause the Company’s existing vendors to be unable to meet supply commitments, which may cause delays in the Company’s ability to meet its contractually committed delivery schedules. Generally, if the Company fails to meet its delivery schedules under its contracts, it may be subject to substantial penalties or liquidated damages, or contract termination, which in turn could adversely affect the Company's results of operations, business, financial condition, or prospects.

Failure to attract, retain and motivate personnel may adversely affect the Company's ability to competecompete.

The Company's ability to attract and retain key management, product development, finance, marketing, and research and development personnel, and its ability to attract and maintain a diverse workforce, is directly linked to the Company's continued success. TheIn all of the industries in which the Company operates, the market for qualified executives and highly-skilled technical workers is intensely competitive, and increasing competition for talent and changing expectations of current and prospective employees pose new challenges relating to the attraction and retention of key personnel. The loss of key employees or an inability to hire a sufficient number of technical staff could limit the Company's ability to develop successful products and could cause delays in getting new products to the market. The Company has established an Office of Diversity, Equity, and Inclusion to promote a fair and inclusive culture that enables all employees to feel valued, respected, engaged, and empowered to contribute to the business.

The Company’s business prospects and future success rely heavily upon the integrity of its employees, directors, and agents and the security of its systemsagents.
The real and perceived integrity and security of the Company's products are critical to its ability to attract players.
The Company strives to set exacting standards of personal integrity for its employees, directors and directors, as well as system security for the systems that it provides to its customers,agents and its reputation in this regard is an important factor in its business dealings with lottery, gaming, and other governmental agencies. For this reason, an allegation or a finding of improper conduct on the Company’s part, or on the part of one or more of its current or former employees, directors or agents, that is attributableor the failure to the Company, or an actual or alleged system security defect or failure attributable to the Company,detect fraudulent activity by employees in a timely manner, could have a material adverse effect upon the Company’s results of operations, business, financial condition, or prospects, including its ability to retain or renew existing contracts or obtain new contracts.

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For example, in October 2020, the Italian Tax Police announced that it was investigating alleged misconduct by a small number of the Company’s former employees. The alleged misconduct involved unauthorized access to the Company’s lottery system in Italy in order to identify and redeem winning scratch-off lottery tickets. The investigation progressed with the Italian prosecutor commencing criminal proceedings against several of the Company’s former employees.The Company faces supply chain risks that, if not properly managed, could adversely affect its financial results
fully cooperated with the Italian Tax Police and other regulators in order to facilitate their reviews and has taken proactive steps to ensure the integrity of the Company’s games and to protect the interests of the Company’s customers. The Company purchases mosthas also taken measures to review its operational systems and processes designed to prevent fraudulent activities and remains focused on ensuring its business is conducted at the highest levels of integrity. Nevertheless, the investigation and other governmental reviews and inspections (including any resulting adverse impact on the perceived integrity and security of the parts, components,Company’s products and subassemblies necessary for its terminals and slot machines from outside sources. The Company outsources all ofsystems) could have a material adverse effect upon the manufacturing and assembly of certain lottery terminals to a single vendor and portions of other products to multiple vendors. Although the Company works closely with its manufacturing outsourcing vendor of such lottery terminals and the Company is likely to be able to realign its manufacturing facilities to manufacture such lottery terminals itself, the Company’s operating results could be adversely affected if one or more of its manufacturing outsourcing vendors fails to meet production schedules. The Company’s management believes that if a supply contract with one of these vendors were to be terminated or breached, it may take time to replace such vendor under some circumstances and any replacement parts, components or subassemblies may be more expensive, which could reduce the Company’s margins. Depending on a number of factors, including the Company’s available inventory of replacement parts, components or subassemblies, the time it takes to replace a vendor may result in a delay for a customer. Generally, if the Company fails to meet its delivery schedules under its contracts, it may be subject to substantial penalties or liquidated damages, or contract termination, which in turn could adversely affect the Company's results of operations, business, financial condition, or prospects.prospects, including its ability to retain or renew existing contracts or obtain new contracts.

The success of the Company’s business is dependent on customers’ confidence in the integrity of the Company’s products and systems.

The real and perceived integrity and security of the Company’s products and systems are critical to its ability to attract customers and players. In the event of an actual or alleged defect in a Company product, the Company’s existing and prospective customers may lose confidence in the integrity and security of the Company’s products and systems. Such a failure could have a material adverse effect upon the Company’s results of operations, business, financial condition or prospects, including its ability to attract new customers and retain its existing customers.

The Company and its operations are subject to cyber-attackscyberattacks and cyber-securitycybersecurity risks which may have an adverse effect on its business and results of operations and result in increasing costs to minimize these risksrisks.

The Company's business involves the storage and transmission of confidential business and personal information, including trade secrets, customer information, and other sensitive information, and theft, and security breaches, or unauthorized access of a Company system may expose the Company to a risk of loss of, or improper use and disclosure of, such information, which may result in significant litigation expenses, liability exposure, reputational harm, and liability exposure.loss of consumer confidence in the integrity and security of the Company’s products and systems. The Company experiences cyber-attackshas developed an information security management system (the “ISMS”) to safeguard the confidentiality, integrity, and availability of varying degreesall physical and electronic information assets and ensure that regulatory, operational, and contractual requirements are fulfilled. Cyberattacks on a regular basis.businesses, including those targeting the gaming industry, are becoming more frequent and increasingly more difficult to anticipate and prevent due to their rapidly evolving nature, and the Company believes that risks and exposures related to cybersecurity will remain high for the foreseeable future. While the Company expectsmonitors risks from cybersecurity threats, we are not aware of any cybersecurity incidents occurring during the reporting period that have materially affected the Company, including its business strategy, results of operations, or financial condition; however, there can be no guarantee that the Company will not experience such a cybersecurity incident in the future.

Within the ISMS, the Company maintains policies, procedures, and controls designed to continue to expend significant resources to maintain security protections that

shield against theftprevent, detect, and security breaches, any systems failure or compromisemitigate the potential negative effects of malware attacks, phishing attacks, password attacks, “Man-in-the-Middle” attacks, Denial-of-Service attacks, and other cybersecurity risks. The Company periodically reviews these elements of the Company'sISMS for continued effectiveness, incorporating updates to reflect new business realities and changes to the Company’s risk profile. However, despite these efforts, the Company may not be able to prevent or detect every cyberattack or incident or reduce the negative effects they may cause.

Any failure, compromise, or breach of the Company’s security measures that results in the release of confidential business and/or personal information could seriously harm the Company'sCompany’s reputation and have a materially adverse effect on the results of operations, business, financial condition, or prospects of the Company and the Company’s customers. Additionally, cyberattacks could also compromise trade secrets and other sensitive information and result in such information being disclosed to others and becoming less valuable, which could have a material adverse effect onupon the Company’s results of operations, business, financial condition, or prospects.
The Company'sCompany’s security measures may also be breached due to employee error, malfeasance, system errors, or vulnerabilities, including the vulnerabilities of the Company'sCompany’s subcontractors, vendors, suppliers, or otherwise. Such breach could result in significant reputational, legal, and financial liability, and may potentially have a material adverse effect upon the Company’s business, results of operations and financial condition. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, become more sophisticated, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or to implement adequate preventative measures. Additionally, cyber-attacks could also compromise trade secrets

Though the Company maintains first and other sensitive information and resultthird-party cybersecurity insurance coverage in an attempt to mitigate cybersecurity risks, such information being disclosedpolicies may not be sufficient to others and becoming less valuable, which could havemitigate all the potential negative effects of a material adverse effect upon the Company’s resultscyberattack or incident that occurs.

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Table of operations, business, financial condition, or prospects.Contents
Systems, network or telecommunicationsTechnology failures may disrupt the Company’s business and have an adverse effect on its results of operationsoperations.
Any
The Company’s success depends on its ability to avoid, detect, replicate, and correct software and hardware defects and fraudulent manipulation of its products. The Company incorporates security features into the design of its products which are designed to prevent its customers and players from being defrauded. The Company also monitors its software and hardware in an effort to avoid, detect and correct any technical errors. However, there can be no guarantee that the Company’s security features or technical efforts will continue to be effective in the future.

In addition, any disruption in the Company’s network or telecommunications services, or those of third parties that the Company utilizesuses in its operations, could affect the Company’s ability to operate its systems, which could result in reduced revenues and customer downtime. The Company’s network and databases of business and customer information, including intellectual property and other proprietary business information and those of third parties the Company utilizes,uses, are susceptible to outages due to fire, floods, power loss, break-ins, cyber-attacks,cyberattacks, network penetration, data privacy or security breaches, denial of service attacks, and similar events, including inadvertent dissemination of information due to increased use of social media. Despite the implementation of network security measures and data protection safeguards, including a disaster recovery strategy for back office systems, the Company’s servers and computer resources, and those of third parties the Company utilizes, are vulnerable to viruses, malicious software, hacking, break-ins or theft, third party security breaches, employee error or malfeasance, and other potential compromises. Disruptions from unauthorized access to or tampering with such systems in any such event could result in a wide range of negative outcomes, including devaluation of the Company’s intellectual property, increased expenditures on data security, and costly litigation and potential payment of liquidated damages, each of which could have a material adverse effect on the Company’s results of operations, business, financial condition, or prospects.

Financial Risks

Covenants in the Company’s debt agreements may limit its ability to pay dividends, repurchase shares and operate its business, and the Company’s breach of such covenants could materially and adversely affect its results of operations, business, financial condition, or prospectsprospects.

Certain of the Company’s debt agreements require that it to comply with covenants that may limit the Company’s ability to:
pay
•return capital to shareholders either through the payment of dividends and repurchase shares;and/or share repurchases;
•raise additional capital, including the issuance of debt;
•react to industry changes or economic conditions;
•acquire assets of other companies or acquire, merge or consolidate with other companies;
•dispose of assets;
incur indebtedness;•manage interest rate risk on its variable rate debt; and
•grant security interests in its assets.

The Company’s ability to comply with these covenants may be affected by events beyond its control, such as prevailing economic, financial, regulatory and industry conditions. Theseconditions, and these covenants may limit its ability to react to market conditions or take advantage of potential business opportunities. Further, a breach of such covenants could, if not cured or waived, result in acceleration of its indebtedness, result in the enforcement of security interests or force the Company into bankruptcy or liquidation. Such a breach or any failure to otherwise timely repay outstanding indebtedness could have a material adverse effect on the Company’s results of operations, business, financial condition or prospects.

The Company may have to recognizeincur additional impairment charges with regard tocharges.

The Company reviews its long-lived and amortizable intangible assets for impairment when events or changes in circumstances indicate the amount ofcarrying value may not be recoverable. The Company tests goodwill and other indefinite-lived intangible assets recognized on its consolidated balance sheets

From time to time,for impairment at least annually. Factors that may indicate a change in circumstances, such that the carrying value of the Company’s goodwill, amortizable intangible assets, or other non-amortizing assets may not be recoverable, include a decline in the Company’s stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in industry segments in which the Company purchases all or a part of the equity interests in or assets of other companies. The Company accounts for certain of those and similar purchases and acquisitions as a business combination by allocating our acquisition costs to the assets acquired and liabilities assumed and recognizing the remaining amount as goodwill.participates. The Company may havebe required to recognizerecord a significant charge in its Consolidated Financial Statements during the period in which any impairment charges, as well as other losses associated with subsequent transactions, with regard to the amount of goodwill and otheror intangible assets and, if recognized, such charges mayis determined, which would negatively affect the Company’s business, financial condition, and results of operations. InWhile during the third quarter of 2017,

year ended December 31, 2023, the Company did not identify any events or circumstances that would indicate that it is more likely than not that the fair value of any reporting unit was less than its carrying amount, the Company cannot provide assurance that future changes will not require additional material impairment charges in any of its business segments in the future.

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The establishment and utilization of alternative reference rates may increase the amount of interest the Company pays with respect to floating rate indebtedness denominated in U.S. dollars.

As of December 31, 2023, $476 million of the Company’s outstanding indebtedness had an interest rate which was calculated with reference to the Secured Overnight Financing Rate (“SOFR”). SOFR is the principal replacement reference rate for the U.S. dollar London Inter-Bank Offered Rate (“USD LIBOR”) in the Company’s outstanding indebtedness agreements, with the one-week and two-month U.S.-dollar LIBOR having ceased at the end of 2021 and the remaining tenors of the U.S.-dollar LIBOR having ceased publication after June 30, 2023. Because SOFR is based on overnight funding transactions secured by U.S. Treasury securities, it differs fundamentally from USD LIBOR. SOFR has a limited history, having been first published in April 2018. There is no assurance that SOFR will perform in the same or similar way as USD LIBOR would have performed, an interim goodwill impairment test that resultedSOFR will be a suitable replacement for USD LIBOR, or that the replacement of USD LIBOR with SOFR will not increase the amount of interest that the Company pays with respect to floating rate indebtedness denominated in U.S. dollars.

Fluctuations in foreign currency exchange rates affect our reported operating results in U.S. dollar terms.

Revenue generated and expenses incurred by our subsidiaries are often denominated in the currencies of the local countries. As a $714.0 million non-cash goodwill impairment loss which had noresult, our consolidated U.S. dollar financial statements are subject to fluctuations due to changes in exchange rates when the financial results of our international subsidiaries are translated from local currencies into U.S. dollars. In addition, our financial results are subject to changes in exchange rates that impact on the Company's operations, cash flows,settlement of transactions in non-functional currencies. Our primary foreign currency exchange rate exposure arises from translating Euros into U.S. dollars.

Global events, including geopolitical developments, fluctuating commodity prices, trade tariff developments, and inflation, have caused and/or contributed to, and may in the future cause or contribute to, economic uncertainty and uncertainty about the interest rate environment. These factors could amplify the volatility of currency fluctuations, as has been the case in jurisdictions including Argentina in recent years. Therefore, fluctuations in the value of foreign currencies may impact our operating results when translated into U.S. dollars. Such fluctuations may also impact our ability to service debt, compliance withaccurately predict our future results. Although we maintain a hedging program to mitigate some of this volatility and related risks, there can be no assurance that the hedging program will be effective in offsetting the adverse financial covenants, or underlying liquidity. See “Item 5.A Operating Results—Critical Accounting Estimates—Goodwill, Intangible Assets and Long-lived Assets” for additional information. impacts that may result from unfavorable movements in foreign currency exchange rates.

Risks related to the Parent's CapitalLoyalty Voting Structure

The Parent's concentrated voting power held by De Agostini S.p.A., and the Parent’s loyalty voting structure, may limit other shareholders' ability to influence corporate decisionsdecisions.

At March 12, 2018,7, 2024, De Agostini S.p.A. (“De Agostini”) had an economic interest in the Parent of approximately 42.61% (excluding treasury shares) and, due to its election to exercise the Special Voting Shares associated with its ordinary shares pursuant to the loyalty plan, a voting interest in the Parent of approximately 50.83%59.75% of the total voting rights (excluding treasury shares). See “Item“Item 7. Major Shareholders and Related Party Transactions”Transactions” for additional information. This shareholder may make decisions with which other shareholders may disagree, including, among other things, delaying, discouraging, or preventing a change of control of the Company or a potential merger, consolidation, tender offer, takeover, or other business combination and may also prevent or discourage shareholders’ initiatives aimed at changes in the Parent’s management.
The loyalty voting structure set forth in the Articles, when it becomes effective in 2018, may further concentrate or sustain voting power in a small number of shareholders.  Under the loyalty voting structure, the Parent's shareholders that maintain their ownership of the Parent's ordinary shares continuously for at least three years will be entitled, upon election, to direct the voting rights in respect of one special voting share per ordinary share held for such period, provided that such shareholders meet certain conditions.  If the Parent's shareholders maintaining ownership of a significant number of the Parent's ordinary shares for an uninterrupted period of at least three years elect to receive the right to direct the exercise of the voting rights attaching to special voting shares, it is possible that a relatively large proportion of the voting power of the Parent could be further concentrated in a relatively small number of shareholders with significant influence over the Company.
The tax consequences of the loyalty voting structure are uncertainuncertain.

No statutory, judicial, or administrative authority has provided public guidance in respect of the special voting sharesSpecial Voting Shares of the Parent and as a result, the tax consequences of owning such shares are uncertain. The fair market value of the Parent's special voting shares,Special Voting Shares, which may be relevant to the tax consequences of owning, acquiring, or disposing of such shares, is a factual determination and is not governed by any guidance that directly addresses such a situation. Because, among other things, (i) the special voting sharesSpecial Voting Shares are not transferable (other than in very limited circumstances as provided for in the loyalty voting structure), (ii) on a return of capital of the Parent onin a winding up or otherwise, the holders of the special voting sharesSpecial Voting Shares will only be entitled to receive out of the Parent's assets available for distribution to its shareholders, in aggregate, $1, and (iii) loss of the entitlement to instruct the nominee on how to vote in respect of special voting sharesSpecial Voting Shares will occur without consideration, the Parent believes and intends to take the position that the value of each special voting share is minimal. However, the relevant tax authorities could assert that the value of the special voting sharesSpecial Voting Shares as determined by the Parent is incorrect. Shareholders are urged to consult their own tax advisors with respect to treatment of special voting shares.Special Voting Shares. See “Item 10.E Taxation”“Item 10. ETaxation” for additional information.

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The loyalty voting structure may affect the liquidity of ourthe Parent's ordinary shares and reduce ourtheir ordinary share priceprice.


The loyalty voting structure may limit the liquidity and adversely affect the trading prices of the Parent's ordinary shares. The loyalty voting structure is intended to reward shareholders for maintaining long-term share ownership by granting persons holding ordinary shares continuously for at least three years the option to elect to receive special voting shares.Special Voting Shares. The special voting sharesSpecial Voting Shares cannot be traded and, immediately prior to the deregistration of ordinary shares from the register of loyalty shares, any corresponding special voting sharesSpecial Voting Shares shall cease to confer any voting rights in connection with such special voting shares.Special Voting Shares. This loyalty voting structure is designed to encourage a stable shareholder base, but it may deter trading by those shareholders who are interested in gaining or retaining the special voting shares.Special Voting Shares. Therefore, the loyalty voting structure may reduce liquidity in ourthe Parent's ordinary shares and adversely affect their trading price.



Item 4.
Risks related to the Company’s Separation & Divestiture of the Global Gaming and PlayDigital Businesses

The Company may not complete the Separation & Divestiture of the Global Gaming and PlayDigital businesses with Everi within the time frame anticipated or at all.

On February 28, 2024, the Parent entered into definitive agreements for the Separation & Divestiture of the Global Gaming and PlayDigital businesses, as described in “Notes to the Consolidated Financial Statements—26. Subsequent Events”. The Separation & Divestiture, which is expected to be taxable for the Parent’s shareholders for U.S. federal income tax purposes and UK tax purposes, will be subject to the satisfaction of a number of customary conditions, including, among others: (i) final approval by the Parent’s shareholders and Everi’s stockholders; (ii) receipt of regulatory approvals, including from gaming regulators in the jurisdictions where the Combined Company will operate and from U.S. antitrust authorities; and (iii) the filing with the SEC and effectiveness of registration statements for Everi and SpinCo. The failure to satisfy all of the required conditions could delay the completion of the Separation & Divestiture for a significant period of time or prevent it from occurring at all.

Transactions, such as the Separation & Divestiture contemplated between the Company and Everi, are complex in nature, and unanticipated developments or changes, including, among other things, changes in law, the macroeconomic environment, market conditions, regulatory or geopolitical conditions, or natural disasters may affect our ability to complete the Separation & Divestiture as currently expected and within the anticipated time frame or at all. Additionally, the Agreement and Plan of Merger by and among the Company, SpinCo, Everi, and Merger Sub (the “Merger Agreement”) contains specified termination rights for Everi and the Parent, including, among other things, that either party may terminate the Merger Agreement if either Everi’s or the Parent’s board adopts, approves, endorses, declares advisable, or recommends to its stockholders an acquisition proposal other than the contemplated Separation & Divestiture, and under other circumstances as set forth in the Merger Agreement. The Merger Agreement further provides that in connection with a termination of the Merger Agreement under specified circumstances, each of Everi and the Parent may be obligated to pay a termination fee of $80 million and/or reimburse the other party for certain fees and expenses.

Any changes to the proposed Separation & Divestiture or delay in completing the Separation & Divestiture could cause the Company not to realize some or all of the expected benefits or realize them on a different timeline than expected. In addition, the terms and conditions of the required regulatory authorizations and consents that are granted, if any, may impose requirements, limitations or costs, or place restrictions on the conduct of the Combined Company or may materially delay the completion of the Separation & Divestiture. If the completion of the proposed Separation & Divestiture is delayed or does not occur, this could result in a material adverse effect on our financial condition, results of operations, ability to pursue alternative transactions, and reputation.

The pendency of the Separation & Divestiture with Everi could adversely affect our business and operations.

Whether or not the proposed Separation & Divestiture is completed, the Company’s businesses and operations may face material challenges in connection with the Separation & Divestiture, including, without limitation:

•the diversion of management’s attention from ongoing business concerns as a result of the devotion of management’s attention to the Separation & Divestiture;
•maintaining employee morale and retaining key management and other employees;
•retaining existing business and operational relationships, including with customers, suppliers, employees and other counterparties, and attracting new business and operational relationships;
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•execution and related risks in connection with financing transactions undertaken by the Company in connection with the Separation & Divestiture;
•dis-synergy costs, costs of restructuring transactions (including taxes), and other significant costs and expenses; and
•potential negative reactions from the financial markets if the Company fails to complete the Separation & Divestiture as currently expected, within the anticipated time frame or at all.

Any of these factors could have a material adverse effect on the Company’s business, financial condition, results of operations, cash flows, and/or the price of our ordinary shares.

Costs associated with the Separation & Divestiture with Everi may be higher than anticipated.

We expect to incur significant costs in connection with the Separation & Divestiture, including the cost of financing, separation costs, transaction costs, legal and regulatory fees, and other costs that our management team believes are necessary to execute the Separation & Divestiture. The incurrence of these costs could have a material adverse effect on our financial condition and results of operations in the periods in which they are incurred. Additionally, the Company, the Parent’s shareholders, and/or the Combined Company may incur higher than anticipated tax liabilities in connection with the Separation & Divestiture.

There can be no assurance that the total projected market capitalization of the Parent's ordinary shares after the proposed Separation & Divestiture with Everi will be equal to or greater than the total projected market capitalization before the proposed Separation & Divestiture or that the price per share of the Parent's ordinary shares following the Separation & Divestiture will either exceed or remain higher than the current anticipated per share price.

There can be no assurance that the market price per share of the Parent's ordinary shares after the Separation & Divestiture will rise or remain constant. If the Company completes the Separation & Divestiture and the market price of the Parent's ordinary shares declines, the percentage decline as an absolute number and as a percentage of the Parent's overall market capitalization may be greater than would occur in the absence of the Separation & Divestiture. In many cases, both the total market capitalization of an issuer and the market price of a share of such issuer's common stock following separation, divestiture or combination transactions are lower than they were before the consummation of such transactions, and the liquidity of the Parent's ordinary shares could potentially be affected by any decreases in share price and investor sentiment following the consummation of the proposed Separation & Divestiture. Additionally, the Company cannot predict whether the market value of the Parent’s ordinary shares and ordinary shares of the Combined Company after the Separation & Divestiture will be, in the aggregate, less than, equal to, or greater than the market value of the Parent’s ordinary shares prior to the Separation & Divestiture.

If the Separation & Divestiture with Everi is completed, the Company’s operational and financial profile will change, and it will be a smaller, less diversified business than exists today.

The Separation & Divestiture will result in the Company being a smaller, less diversified company with a more limited business and concentrated in the lottery sector. Of note, the Company’s Global Lottery business following the expected Separation & Divestiture will be significantly more reliant on its FMCs and LMAs in the United States and Italy.As a result, the Company may be more vulnerable to changing market conditions, which could have a material adverse effect on its business, financial condition, and results of operations. In addition, the diversification of revenues, costs, and cash flows will diminish, such that the Company’s results of operations, cash flows, working capital, effective tax rate, and financing requirements may be subject to increased volatility and its ability to fund capital expenditures and investments, pay dividends, and service debt may be diminished.

The Separation & Divestiture with Everi may not achieve the intended benefits and may expose the Company to potential risks and liabilities.

Information on the Company
A.History and Development of the Company
The Parent believes, among other things, that the Separation & Divestiture could provide more value to its shareholders than other potential strategic options for the Global Gaming and PlayDigital businesses. The Parent may not benefit as expected from the increased focus on its core business and the simpler business model made possible by the Separation & Divestiture. In addition, the value of the Separation & Divestiture may be reduced by potential liabilities related to post-closing indemnities, which could adversely affect the Parent’s results of operations.

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If the Separation & Divestiture with Everi is completed, there may be changes in our shareholder base, which may cause the price of the Parent’s ordinary shares to fluctuate.

Investors holding the Parent’s ordinary shares may hold such ordinary shares because of a decision to invest in a company that operates in multiple gaming markets with a diversified portfolio. If the Separation & Divestiture is completed, shares of the Parent’s ordinary shares will represent an investment in a business concentrated in the lottery sector. These changes may not match some shareholders’ investment strategies, which could cause them to sell their shares of the Parent’s ordinary shares, and excessive selling pressure could cause the market price to decrease prior to and following the consummation of the Separation & Divestiture.

Item 4.        Information on the Company
A.        History and Development of the Company

International Game Technology PLC was organized in 2014 as a public limited company under the laws of England and Wales. The Parent’s principal office is located at 66 Seymour Street, 2nd10 Finsbury Square, Third Floor, London W1H 5BT,EC2A 1AF, United Kingdom, telephone number +44 (0) 207 535 3200.203 866 1240. The Parent’s agent for service in the United States is TheCT Corporation Trust Company of Nevada,System, 701 S. Carson Street - Suite 200, Carson City, Nevada 89701 (telephone number: +1 518 433 4740).
The Company conducts business through various subsidiaries and variable interest entities (see “Item 4.C. – Organizational Structure”), and the Parent was formed as a business combination shell companyis publicly-traded on July 11, 2014the NYSE under the name “Georgia Worldwide Limited.symbol “IGT”.
Capital Expenditures and Divestitures
For a description, including the amount invested, of the Company’s principal capital expenditures (including interests in other companies) for the years ended December 31, 2023, 2022, and 2021, see “Item 5. B. Liquidity and Capital Resources—Capital Expenditures.”
For a description of the Company’s principal divestitures for the years ended December 31, 2023, 2022, and 2021, see “Item 5.A. Operating Results.”
On September 16, 2014, it changed its nameFebruary 29, 2024, the Company announced the Separation & Divestiture of the Global Gaming and PlayDigital businesses, with an anticipated closing in late 2024 or early 2025. Refer to “Georgia Worldwide PLC,”“Separation & Divestiture of the Global Gaming and on February 26, 2015, it changed its name to “International Game Technology PLC.” PriorPlayDigital Businesses” below and the “Notes to the Mergers,Consolidated Financial Statements—26. Subsequent Events” for more information. The Company has not made, nor does it have in progress, any other capital expenditures or divestitures in calendar year 2024 that were not in the ordinary course of business.
Separation & Divestiture of the Global Gaming and PlayDigital Businesses
On February 28, 2024, the Parent did not conduct any material activities other thanentered into definitive agreements with Everi, SpinCo, and Merger Sub with respect to the Separation & Divestiture pursuant to which, and subject to, the terms and conditions of those incidentdefinitive agreements discussed under “Item 10. Additional Information — C. Material Contracts”, (i) the Parent will transfer (or cause to its formation and the matters contemplated by the agreement for the Mergers (the "Merger Agreement"), such as the formation of Georgia Worldwide Corporation, the making of certain required securities law filings and the preparationbe transferred) to SpinCo substantially all of the proxy statement/prospectus filedassets, and SpinCo will assume substantially all of the liabilities, of the Parent’s Global Gaming and PlayDigital businesses (the “SpinCo Business”) (the “Separation”), (ii) in connection with the Mergers.
AcquisitionSeparation, the Parent will contribute all of the equity interests of International Game Technology,
The Parent is the successor of GTECH a Nevada corporation and the parent of IGT.
On April 7, 2015, GTECH merged with and into the Parent, with the Parent surviving the Holdco Merger, and IGT merged with and into a direct wholly owned subsidiary of the Parent (“Gaming HoldCo”), to SpinCo (the “SpinCo Contribution”) in exchange for (a) SpinCo issuing to the Parent additional units of SpinCo (“SpinCo Units”), resulting in the Parent owning all of the issued and outstanding SpinCo Units, and (b) Gaming HoldCo issuing to the Parent a promissory note (the “Intercompany Note”). (iii) immediately following the completion of the Separation, the Parent will distribute all of the issued and outstanding SpinCo Units pro rata to the Parent’s shareholders (the “Distribution”), and (iv) immediately after the Distribution, (a) prior to the Merger Effective Time (as defined herein), Everi will purchase two SpinCo Units from De Agostini in exchange for a price per purchased SpinCo Unit equal to the greater of the 30-day average share price of Everi’s common stock, $0.001 par value per share (“Everi common stock”), prior to the closing date or the share price of Everi common stock as of the end of the business day immediately prior to the closing date and (b) at the Merger Effective Time, Merger Sub will merge with IGTand into SpinCo (the “Merger”), with SpinCo surviving the Subsidiary Merger as a direct wholly owned subsidiary of Everi, and all outstanding SpinCo Units will be converted into the right to receive shares of Everi common stock, as calculated and subject to adjustment as set forth in the Merger Agreement and in accordance with the Delaware Limited Liability Company Act. Immediately following the Merger Effective Time, (I) Everi will cause SpinCo to merge with and into Gaming HoldCo (the “Second Step Merger”), with Gaming HoldCo surviving the Second Step Merger as a direct wholly owned subsidiary of Everi, and (II) Everi will contribute the Cash Payment (as defined herein) to Gaming HoldCo and, immediately thereafter, Gaming HoldCo will pay the Cash Payment to the Parent in
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full satisfaction of all obligations owing by Gaming HoldCo to the Parent pursuant to the Intercompany Note. When the Second Step Merger Agreement. is completed (the “Closing”), Gaming HoldCo (which at that time will hold the SpinCo Business) will be a direct wholly owned subsidiary of Everi.
More Information
The objectiveSEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. The Company’s SEC filings can be found there and on the Company’s website: www.igt.com.
B.    Business Overview

The Company is a global leader in gaming that delivers entertaining and responsible gaming experiences for players across all channels and regulated segments, from Lotteries and Gaming Machines to Digital Gaming and Sports Betting. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, the Company’s solutions deliver gaming experiences that responsibly engage players and drive growth. The Company has a well-established local presence and relationships with governments and regulators around the world, and creates value by adhering to the highest standards of service, integrity, and responsibility.

Our business is organized into three business segments: Global Lottery, Global Gaming, and PlayDigital. Through our three business segments, we operate and provide an integrated portfolio of innovative gaming technology products and services, including online and instant lottery systems, iLottery, instant ticket printing, lottery management services, gaming systems, electronic gaming machines, iGaming, and sports betting.

The Global Lottery segment has full responsibility for the worldwide traditional lottery and iLottery business, including sales, operations, product development, technology, and support. The Global Gaming segment has full responsibility for the worldwide land-based gaming business, including sales, product management, studios, global manufacturing, operations, and technology. The PlayDigital segment has full responsibility for the worldwide iGaming and sports betting business, including sales, operations, studios, technology, and support. Our three business segments are supported by central corporate support functions, including finance, people and transformation, legal, marketing and communications, corporate public affairs, and strategy and corporate development.

The Company is headquartered in London, United Kingdom, with the following principal locations: (i) administrative functional office in Providence, Rhode Island; (ii) the Global Lottery headquarters in Rome, Italy; (iii) the Global Gaming headquarters in Las Vegas, Nevada; (iv) the PlayDigital headquarters in San Francisco, California; and (v) the principal location of manufacturing, logistics, and supply chain leadership in Reno, Nevada. The Company had 11,016 employees at December 31, 2023.

Products and Services

1. Global Lottery

Through its Global Lottery segment, the Company supplies a unique set of lottery solutions to 92 customersworldwide, including to 37 of the Mergers was48 U.S. lotteries (including the District of Columbia, Puerto Rico, and U.S. Virgin Islands). Lottery customers frequently designate their revenues for particular purposes, such as education, economic development, conservation, transportation, programs for senior citizens and veterans, health care, sports facilities, capital construction projects, cultural activities, tax relief, and others. Many governments have become increasingly dependent on their lotteries as revenues from lottery ticket sales are often a significant source of funding for these programs.

Lottery products and services are provided through operating contracts, FMCs, LMAs, and product sales contracts. In the majority of jurisdictions, lottery authorities award contracts through a competitive bidding process. Typical service contracts are five (5) to combine GTECH’sten (10) years in duration, often with multiple multi-year extension options. After the expiration of the initial or extended contract term, a lottery authority generally may either seek to negotiate further extensions or commence a new competitive bidding process. Certain customers may require the Company to pay an upfront fee for the right to exclusively manage their lottery.

The Company designs, sells, leases, and IGT’s businesses. Foroperates a complete suite of point-of-sale machines that are electronically linked with a centralized transaction processing system that reconciles lottery funds between the retailer and the lottery authority. The Company provides and operates highly secure, online lottery transaction processing systems that are capable of processing approximately 1 million transactions per minute. The Company provides more informationthan 428,000 point-of-sale devices to lottery
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customers and lotteries that it supports worldwide. The Company also produces high-quality instant ticket games and provides printing services such as instant ticket marketing plans and graphic design, programming, packaging, shipping, and delivery services.

The Company has developed and continues to develop new lottery games, licenses new game brands from third parties, and installs a range of new lottery distribution devices, all of which are designed to drive responsible same-store sales growth for its customers. In connection with its delivery of lottery services, the Company actively advises its customers on growth strategies. Depending on the Mergers, please see Item 4.Atype of contract and the jurisdiction, the Company also provides marketing services, including retail optimization and lottery brand awareness campaigns. The Company works closely with its lottery customers and retailers to help retailers sell lottery games more effectively. These programs include product merchandising and display recommendations, a selection of appropriate lottery product mix for each location, and account reviews to plan lottery sales growth strategies. The Company leverages years of experience accumulated from being the exclusive licensee for the Italian Scratch & Win instant lottery game and the Italian Lotto, one of the Parent'sworld’s largest lotteries. This lottery B2C expertise in Italy, which includes management of all the activities along the lottery value chain, allows the Company to better serve B2B customers.

The Company also provides a complete suite of iLottery solutions and services. This, coupled with its professional expertise, allows lotteries to fully engage their players on any digital channel in regulated markets. Existing lottery game portfolios are extended to the digital channel to provide a spectrum of engaging content such as e-Instant tickets.

The Company operates in the highly regulated global lottery market, with a customer base of public and private entities that are secured on a contractual basis. The Company faces competition from vendors in the lottery technology and instant ticket printing segments, who possess a wide range of industry experience and financial capabilities. The Company also faces competition from smaller, less-established iLottery content providers. With high barriers to entry, particularly in the retail lottery and instant ticket segments, the Company’s competitor base remains largely static year-to-year.

The primary types of lottery agreements are outlined below:

Operating and Facilities Management Contracts

The majority of the Company’s revenue in the Lottery business comes from operating contracts and FMCs.

Since 1998, and for a term expiring in 2025, the Company has been the exclusive licensee for the Italian Lotto game (management of operations commenced in 1994). Beginning in November of 2016, the Company’s exclusive license for the Italian Lotto includes purely financial partners as part of a joint venture. Lottoitalia s.r.l. (“Lottoitalia”), a joint venture company among IGT Lottery S.p.A., Italian Gaming Holding a.s., Arianna 2001 (an entity associated with the Federation of Italian Tobacconists), and Novomatic Italia, is the exclusive manager of the Italian Lotto game. Lottoitalia is 61.5% owned by IGT Lottery S.p.A. The Company, through Lottoitalia, manages the activities along the lottery value chain, such as creating games, determining payouts, collecting wagers through its network, paying out prizes, managing all accounting and other back-office functions, running advertising and promotions, operating data transmission networks and processing centers, training staff, providing retailers with assistance, supplying materials (including play slips, tickets and receipts), and marketing and point-of-sale materials for the game. Since 2004, and for a term expiring in 2028, the Company also has been the exclusive licensee for the instant ticket lottery (“Gratta e Vinci” or “Scratch & Win”) through Lotterie Nazionali S.r.l., a joint venture 64.0% owned by the Parent’s subsidiary IGT Lottery S.p.A., with the remainder directly and indirectly owned by Scientific Games Corporation and Arianna 2001. As of December 31, 2023, the revenue weighted-average remaining term of the Company’s existing lottery contracts in Italy was 3.4 years.

The Company’s FMCs typically require the Company to design, install, and operate the lottery system and retail terminal network for an initial term, which is typically five (5) to ten (10) years. The Company’s FMCs are granted on an exclusive basis and usually contain extension options under the same or similar terms and conditions, generally ranging from one (1) to five (5) years. Under a typical FMC, the Company maintains ownership of the technology and equipment, and is responsible for capital investments throughout the duration of the contract, although the investments are generally concentrated during the early years. The Company provides a wide range of services to lottery customers related to the technology, equipment, and facilities such as hosting, maintenance, marketing, and other support services. The Company generally provides its lottery customers retailer terminal and communication network equipment through operating leases. In return, the Company typically receives fees based upon a percentage of the sales of all lottery tickets, including draw-based and/or instant ticket games, though under certain of its agreements, the Company may receive fixed fees for certain goods or services. In limited instances, the Company provides instant tickets and online lottery systems and services under the same FMC. As of March 7, 2024, the Company had FMCs with or for the benefit of 25 U.S. jurisdictions. As of December 31, 2023, the Company’s largest FMCs by annual service revenue were Texas, California, New York, Georgia, and Florida, and the revenue weighted-average remaining term of the Company’s
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existing U.S. FMCs was 6.0 years (8.3 years including available extensions). Also, as of March 7, 2024, the Company operated under operating contracts or FMCs in 15 international jurisdictions, excluding U.S. and Italy.

Operating contracts and FMCs often require the Company to pay substantial monetary liquidated damages in the event of non-performance by the Company. The Company’s revenues from operating contracts and FMCs are generally service fees paid to the Company directly by the lottery authority based on a percentage of such lottery’s wagers or ticket sales. The Company categorizes revenue from operating contracts and FMCs as service revenue from “Operating and facilities management contracts” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

Another form of operating contract is an LMA. Under an LMA, the Company manages, within parameters determined by the lottery customer, the core lottery functions, including the lottery systems and the majority of the day-to-day activities along the lottery value chain. This includes collecting wagers, managing accounting and other back-office functions, running advertising and promotions, operating data transmission networks and processing centers, training staff, providing retailers with assistance, and supplying materials for the games. LMAs also include a separate FMC, pursuant to which the Company leases certain hardware and equipment, and provides access to software and support services. The Company provides lottery management services in New Jersey as part of a joint venture and in Indiana through a wholly-owned subsidiary of the Parent. The Company’s revenues from LMAs include incentives based on achievement of contractual metrics, and, with respect to the supply agreements, are based generally on a percentage of wagers. The Company is also subject to penalties for failure to achieve contractual metrics under its LMAs. The Company categorizes revenue from LMAs as service revenue from “Operating and facilities management contracts” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

Instant Ticket Services

As an end-to-end provider of instant tickets and related services, the Company produces high-quality instant ticket games and provides ancillary services such as instant ticket marketing plans and graphic design, programming, packaging, shipping, and delivery services. Instant tickets are sold at numerous types of retail outlets but most successfully in grocery and convenience stores.

Instant ticket contracts are priced based on a percentage of ticket sales revenues or on a price per unit basis and generally range from two (2) to five (5) years with extension opportunities. Government-sponsored lotteries grant printing contracts on both an exclusive and non-exclusive basis where there is typically one primary vendor and one or more secondary vendors. A primary contract permits the vendor to supply the majority of the lottery’s ticket printing needs and includes the complete production process from concept development through production and shipment. It also typically includes marketing and research support. A primary printing contract can include any or all of the following services: warehousing, distribution, telemarketing, and sales/field support. A secondary printing contract includes providing backup printing services and alternate product sources. It may or may not include a guarantee of a minimum or maximum number of games. As of March 7, 2024, the Company provided instant ticket printing products and services to 30 customers in North America and 25 customers in international jurisdictions. The Company categorizes revenue from instant ticket printing contracts that are not part of an operator or LMA contract as product sales from “Lottery products” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.” The instant ticket production business is also highly competitive and subject to strong, price-based competition.

Product Sales and Services Contracts

Under product sales and services contracts, the Company assembles, sells, delivers, and installs turnkey lottery systems or lottery equipment, provides related services, and licenses related software. The lottery authority maintains, in most instances, responsibility for lottery operations. The Company sells additional machines and central computers to expand existing systems and/or replace existing equipment and provides ancillary maintenance and support services related to the systems, equipment sold, and software licensed. The Company categorizes revenue from product sales and services contracts on a case-by-case basis as either service revenue or product sales from “Systems, software, and other” or “Lottery products” respectively, as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

Commercial Services

The Company develops innovative technology and offers commercial and payment services over a standalone network. Leveraging its distribution network and secure transaction processing experience, the Company offers high-volume processing
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of commercial and payment transactions including: prepaid cellular telephone recharges, bill payments, e-vouchers, electronic tax payments, stamp duty services and prepaid card recharges. These services are primarily offered outside of North America. As described in “Notes to the Consolidated Financial Statements—3. Business Acquisitions and Divestitures” included in “Item 18. Financial Statements”, the Italian commercial services business was sold on September 14, 2022.The Company categorizes revenue from commercial services as service revenue from “Systems, software, and other” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

2. Global Gaming
The Company designs, develops, assembles or orders the assembly of, and provides cabinets, games, systems, and software for customers in regulated gaming markets throughout the world under fixed fee, participation and product sales contracts. As of March 7, 2024, the Company holds more than 440 global gaming licenses and primarily does business with commercial casino operators, tribal casino operators, and governmental organizations (primarily consisting of lottery operators).

The Company operates in the highly competitive global gaming industry. Primary and secondary competitors possess a wide range of financial resources, technical capabilities, and geographic focus.

Gaming Machines and Game Content

The Company offers a diverse range of gaming machine cabinets from which land-based casino customers can choose to maximize functionality, flexibility, and player comfort. In addition to cabinets, the Company develops a wide range of casino games taking into account local jurisdictional requirements, market dynamics, and player preferences. The Company combines elements of mathematics, play mechanics, sound, art, and technological advancements with a library of entertainment licenses and a proprietary intellectual property portfolio to provide gaming products designed to provide a high degree of player appeal and entertainment. The Company offers a wide array of casino-style slot machines in a variety of multi-line, multi-coin, and multi-currency configurations.

The Company’s slot games typically fall into two (2) categories: (i) premium games; and (ii) core games.

Premium games, include:

•Wide Area Progressives (“WAP”) - games that are linked across several casinos and/or jurisdictions and share a large common jackpot, including the Wheel of Fortune® franchise; and
•Multi-Level Progressives - games, such as Prosperity Link™ and Mystery of the Lamp™, where the machines offering the game within the casino are connected and offer players the opportunity to win different levels of jackpots.

Core games, which include video reel, mechanical reel, and video poker, are typically sold and in some situations leased to customers. Some of the Company’s most popular core games in 2023 included Wolf Run EclipseTM, Egyptian LinkTM, Samurai 888TM, Double Chili Mania, PinballTM Double Gold, Keno Star, Powerhouse PlusTM, and Big City 4sTM Poker.

The Company produces other types of games including:
•“Centrally Determined” games, which are games connected to a central server that determines the game outcome;
•Class II games, which are centrally determined electronic video bingo machines that can be typically found in North American tribal casinos and certain other jurisdictions like South Africa; and
•Random-number-generated and electronic table games, including baccarat and roulette.

Gaming service revenue is primarily generated through providing premium game content and cabinets on short duration leases to customers. The pricing of these arrangements is largely variable where the casino customer pays fees to the Company based on a percentage of amounts wagered, a percentage of net win, or a daily fixed fee for use of the game content, cabinets, and related support services.
Gaming product sales revenue is generated from the sales of land-based gaming machines (equipment and game content), systems, component parts (including game conversion sales), other equipment and services. The Company also licenses intellectual property rights to third parties through royalty-bearing patent licensing agreements. The Company categorizes revenue from gaming machines as product sales from “Gaming terminals” and revenue from game content and intellectual property revenue as product sales from “Other” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”
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Video Lottery Terminals

The Company provides video lottery terminals (each, a “VLT” and together, “VLTs”), VLT central systems, and VLT games worldwide. VLTs are gaming machines which are regulated by lotteries, and are usually connected to a central system.

The Company provides VLT systems and machines to lotteries, either as a product sale or with long-term, fee-based contracts where the service revenue earned is generally based on a percentage of wagers, net of applicable gaming taxes. The Company categorizes revenue from VLTs as either service revenue from “Gaming terminal services” or product sales from “Gaming terminals”, depending on the nature of the transaction, as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

Gaming Management Systems
The Company offers a comprehensive range of system modules and applications for all areas of casino management. Gaming systems products include infrastructure and applications for casino management, customer relationship management, patron management, and server-based gaming. The Company’s main casino management system offering is the Advantage® System, which offers solutions and modules for a wide-range of activities from accounting and payment processing to patron management and regulatory compliance.

The Company’s systems feature customized player messaging, tournament management, and integrated marketing and business intelligence modules that provide analytical, predictive, and management tools for maximizing casino operational effectiveness. The server-based solutions enable electronic game delivery and configuration for slot machines, as well as providing casino operators with opportunities to increase profits by enhancing the players’ experience, connecting with players interactively, and creating operational efficiencies. Service Window enables operators to market to customers more effectively by leveraging an additional piece of hardware onto existing machines for delivering in-screen messaging. The Company’s systems portfolio also encompasses mobile solutions such as the Resort Wallet™, which is a cardless, cashless loyalty solution for casino players. Resort Wallet™ includes IGTPay™, a fully cashless land-based offering for casino operators which provides a direct link to external funding. Mobile solutions that drive efficiencies and enable floor monitoring for operators while decreasing response time to player needs include Mobile Host, Mobile Responder, and Mobile Notifier. The Company categorizes revenue from gaming management systems as product sales from “Other” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

3. PlayDigital

iGaming

Digital gaming enables game play for real money wagers via applications on mobile devices and internet websites. The Company, through its PlayDigital brand, designs, assembles, and distributes a full suite of configurable products, systems, content, and services, and holds more than 50 licenses, 30 of which are specific to digital gaming only, that authorize the provision of digital gaming products and services worldwide, including digital products such as slot games, blackjack, roulette, poker, bingo, and other casino card games with features such as single and multiplayer options with branded titles and select third-party content.
The Company’s iGaming systems and digital platforms offer customers a remote game server solution, which is a fast gateway to extensive casino content, and digital gaming services that enhance player experiences and create marketing opportunities around either the Company’s games or third-party games via our aggregation capabilities. PlayDigital has a vast content offering, either through our dedicated studios or our content library to meet the needs of the market served. The content is either digital only or omnichannel in combination with our land-based gaming operations.

The Company maintains a diverse iGaming B2B customer base from both the public and private sectors, and faces competition from broad-based traditional B2B providers, as well as from in-house game development by some operators and an increasing number of content providers entering the market. The Company also faces competition in the digital space from other gaming suppliers.

The Company categorizes revenue from digital gaming products as product sales from “Other” and revenue from digital gaming services as service revenue from “PlayDigital services” as described in “Notes to the Consolidated Financial Statements— 4.Revenue Recognition” included in “Item 18. Financial Statements.”

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PlaySports

In states where sports betting is legal, the Company provides sports betting technology and management services, branded as PlaySports, to licensed sports betting operators in over 30 states and territories in the U.S. and a province in Canada, holding 54 licenses that authorize the provision of sports betting products and services, 29 of which are specific to sports betting only.

To comply with local regulations and market conditions, the offering may be different in each market. The Company currently packages its PlaySports services in two (2) ways:
•“Sports betting platform” solutions offer modular services hosted and maintained in each U.S. state or tribal jurisdiction where sports betting is legal. These solutions provide certified and managed sports betting software made available for customers to operate retail and account-based interactive sports as well as retail components such as self-service betting kiosks and employee operated betting terminals, and integrate with parimutuel race wagering in a particular jurisdiction; and
•“Turnkey” managed service solutions combine the Company’s end-to-end sports betting management technology with a portfolio of value-added services, principally trading and trading support services, but that also may include offer management, payments, fraud management, advisory functions, and interactive components such as mobile web and desktop applications, all of which support the operations of land-based, digital, and omnichannel sports betting operators.

The sports betting supplier business is highly competitive; however, IGT has been able to continue to win new contracts in both existing and new jurisdictions due to the reliability of our product offerings and our customer relationships.
The Company categorizes revenue from sports betting as service revenue from “PlayDigital services” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

Business Segment Revenue

Revenues for the Company by business segment are as follows:
 For the year ended December 31,
($ in millions)202320222021
Service revenue2,359 2,436 2,690 
Product sales171 157 123 
Global Lottery2,530 2,593 2,812 
Service revenue762 714 630 
Product sales791 709 482 
Global Gaming1,552 1,423 1,112 
Service revenue227 209 163 
Product sales1 1 1 
PlayDigital228 209 165 
Total revenue4,310 4,225 4,089 

For a further description of the principal services and products the Company provides by business segment, including a breakdown of the Company’s revenues by geographic market, see “Item 5. Operating and Financial Review and Prospects” and “Notes to the Consolidated Financial Statements—24. Segment Information” included in “Item 18. Financial Statements”.

Seasonality

In general, the Company’s business is not materially affected by seasonal variation. In the lottery business, consumption may increase in December and around the holidays but decrease over the summer months due to the tendency of consumers to be on vacation during that time. Seasonal gaming trends generally show higher play levels in the spring and summer months and lower levels in the fall and winter months. Gaming product sales may be uneven throughout the year and can be affected by several factors, including the timing of large transactions and new casino openings.
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Source of Materials
The Company uses a variety of raw materials across its business. Metals, woods, plastics, glass, electronic components, and LCD screens are frequently used during the manufacturing of gaming hardware and devices, and the lottery ticket printing facility consumes significant quantities of paper, toner, and ink throughout production. When ultimately delivering these goods to customers, the packaging process employs large amounts of paper, including cardboard.
During 2021 and 2022, the Company experienced shortages in the availability of electronic components necessary for the manufacture of gaming machines. See “Item 3.D. Risk Factors - Operational Risks - The Company depends on its suppliers and faces supply chain risks that could adversely affect its financial results.” While supply chain reliability normalized throughout 2023, price increases recognized for most of the Company’s principal raw materials impacted financial performance. The Company generally has global material suppliers and uses multi-sourcing practices to promote component and raw material availability, quality assurance, and cost consciousness.
Product Development
The Company devotes substantial resources to research and development and incurred $234 million, $255 million, and $238 million of related expenses, excluding amortization of capitalized software, in 2023, 2022, and 2021, respectively. In addition to expensed R&D, a portion of the investment in R&D has been capitalized and recorded as intangible assets, which is amortized to cost of services, cost of product sales, or selling, general and administrative expenses. The Company’s research and development efforts cover multiple creative and engineering disciplines for its Lottery, Gaming and PlayDigital businesses, including creative game content, hardware, and software; and land-based, online social, and digital real-money applications. These products are created primarily by employee designers, engineers, and artists, as well as third-party content creators. Third-party technologies are used to improve the yield from development investment and concentrate increased resources on product differentiation engineering.
Product assembly operations primarily involve the configuration and assembly of electronic components, cables, harnesses, video monitors, and prefabricated parts purchased from outside sources.
Intellectual Property
The Company maintains a significant intellectual property portfolio comprised of patents, trademarks, copyrights, and other licensed rights, and the Company’s business depends in part on its ability to protect and enforce its intellectual property rights. For example, some of the Company’s most popular games and features, including the Wheel of Fortune® franchise of premium games, are based on trademarks, patents and/or other intellectual property licensed from third parties. The Company routinely obtains, retains, and expands licenses for popular intellectual property such as the ten-year license agreement executed with Califon Productions, Inc. (“Sony”) in June 2023 for exclusive rights to the Wheel of Fortune® franchise for use across segments. At December 31, 2023, the Company held more than 4,600 patents and more than 9,800 trademarks filed and registered worldwide. The Company’s intellectual property portfolio is widely diversified with patents related to a variety of products, including game designs, bonus and secondary embedded game features, device components, systems features, and web-based or mobile functionality. The Company also relies on trade secret protection, believing that its technical “know-how” and the creative skills of its personnel are of substantial importance to its success.
Most of the Company’s products are marketed under trademarks and copyrights that provide product recognition and promote widespread acceptance. The Company seeks protection for its copyrights and trademarks in the U.S. and various foreign countries, where applicable, and uses intellectual property assets offensively and defensively to protect its innovation. The Company also has a program where it licenses its patents to others under terms designed to promote standardization in the gaming industry.
Software Development
The Company has developed software for use in the management of a range of lottery, gaming, and betting functions and products, including leveraging integration with third-party software components. Software developed by the Company is used in a variety of applications including: (i) in centralized systems for the management of lotteries, gaming (including digital gaming) and betting, and other commercial services; (ii) to enhance functions connected to services provided through websites and mobile applications (including lotteries, sports betting, instant win, and casino style games); and (iii) in a variety of back-office functions. Software developed by the Company is also used in machines for: (i) the management of lotteries, gaming, betting and online payments; (ii) the provision of gaming and non-gaming content; and (iii) integration with other devices such as mobile phones and tablets.
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Regulatory Framework
The lottery and gaming industries are subject to extensive and evolving governmental regulation in the U.S. and other jurisdictions. Gaming laws are based upon declarations of public policy designed to ensure that gaming is conducted honestly, competitively, and free of criminal and corruptive elements. While the regulatory requirements vary from jurisdiction to jurisdiction, the majority typically require some form of licensing or regulatory suitability of operators, suppliers, manufacturers, and distributors as well as their major shareholders, officers, directors, and key employees. Regulators review many aspects of an applicant, including their financial stability, integrity, and business experience. Additionally, the Company’s lottery and gaming products and technologies require certification or approval in most jurisdictions where the Company conducts business.
A comprehensive network of internal and external resources and controls is required to achieve compliance with the broad governmental oversight of the Company’s business. The Company maintains a robust enterprise compliance program designed to ensure compliance with applicable requirements imposed in connection with its lottery and gaming activities, as well as legal requirements generally applicable to publicly traded companies in the U.S. The Company employs approximately 165 individuals to support global compliance, which is directed on a day-to-day basis by the Company’s Senior Vice President, Chief Compliance and Risk Management Officer. The Company’s Legal department, in addition to outside experts, provide legal advice and support on compliance matters, as may be deemed necessary. The Global Compliance Governance Committee, comprised of employee and non-employee directors and a non-employee gaming law expert, oversees the enterprise compliance program under the supervision of the Board. Through these efforts, the Company seeks to assure both regulators and investors that its operations maintain the highest levels of integrity.
Lottery
Lotteries in the U.S. are regulated by state or other applicable law. There are currently 48 U.S. jurisdictions (including the District of Columbia, Puerto Rico, and the U.S. Virgin Islands) that authorize the operation of lotteries. Additionally, a few state lotteries offer internet instant game sales to in-state lottery customers and several states allow subscription sales of draw games over the internet. The ongoing operations of lotteries and lottery operators are typically subject to extensive and broad regulation, which vary state-by-state. The awarding of lottery contracts and ongoing operations of lotteries in international jurisdictions are also extensively regulated, although international regulations typically vary from those prevailing in the U.S.
Lottery regulatory authorities generally exercise significant discretion, including with respect to: (i) the determination of the types of games played; (ii) the price of each wager; (iii) the manner in which the lottery is marketed; (iv) the selection of suppliers of equipment, technology, and services; and (v) the retailers of lottery products. To ensure the integrity of contract awards and lottery operations, most jurisdictions require detailed background disclosure on a continuous basis from vendors and their officers, directors, subsidiaries, affiliates, and principal stockholders. Background investigations of the vendors’ employees who will be directly responsible for the operation of lottery systems are also generally conducted. Certain jurisdictions also require extensive personal and financial disclosure and background checks from persons and entities beneficially owning a specified percentage of a vendor’s securities.

Gaming

The assembly, sale, and distribution of gaming devices, equipment, and related technology and services are subject to federal, state, tribal, and local regulations in the U.S. and foreign jurisdictions. The initial regulatory requirement in most jurisdictions is to obtain the privileged licenses that allow the Company to participate in gaming activities. The Company’s operating entities and key personnel have obtained or applied for all known government licenses, permits, registrations, findings of suitability, and approvals necessary to assemble, distribute, and/or operate gaming products in all jurisdictions where the Company does business. Although many gaming regulations across jurisdictions are similar or overlapping, the Company must satisfy all conditions individually for each jurisdiction. Obtaining the required licenses at a corporate and individual level is a thorough process, in which the authorities review detailed information about the companies and individuals applying for suitability, as well as the processes used in the assembly, sale, and distribution of gaming devices. Once the license has been granted, regulatory oversight is designed to ensure that the licensee continues to operate with honesty and integrity.
Frequently, gaming regulators not only govern the activities within their jurisdiction or origin, but also monitor activities in other jurisdictions to ensure that the Company complies with local standards on a worldwide basis. A violation in any jurisdiction could result in disciplinary action in another.
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The Company holds over 500 gaming, digital, and sports betting licenses across approximately 350 jurisdictions. Key regulatory authorities that have licensed the Company include, among others, the United Kingdom Gambling Commission, the Nevada State Gaming Control Board and the New Jersey Division of Gaming Enforcement.
PlayDigital
In 2023, there was continued growth in sports wagering across the U.S., with more states legalizing and adopting regulations to govern sports wagers, and others expected to launch in 2024 and beyond. The channels for offering sports wagering differ from state to state, with most states seeking to offer sports wagering both in person and through some electronic means, such as via a mobile phone app.
In the U.S., the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) prohibits, among other things, the acceptance by a business of a wager by means of the internet where such wager is prohibited by any applicable law where initiated, received, or otherwise made. Under UIGEA, severe criminal and civil sanctions may be imposed on the owners and operators of such systems and on financial institutions that process wagering transactions. The law contains a safe harbor for wagers placed within a single state (disregarding intermediate routing of the transmission) where the method of placing the bet and receiving the bet is authorized by that state’s law, provided the underlying regulations establish appropriate age and location verification.

Also in the U.S., the Wire Act prohibits several types of wager-related communications over a “wire communications facility.” Please see the “Legal Proceedings” discussion included within “Key Factors Affecting Operations and Financial Condition” within “Item 5.A. - Operating Results” for information regarding the U.S. Department of Justice’s (the “DOJ”) interpretations of the Wire Act and the related legal challenges.

Connecticut has joined Michigan, Delaware, New Jersey, Pennsylvania, and West Virginia as states that have authorized internet casino gaming, and Nevada has authorized online poker.

The Company participates in digital gaming and sports wagering in the U.S. as a content and technology provider within fully regulated gaming and lottery frameworks.

Digital gaming in the E.U. is characterized by diverse regulatory frameworks with some E.U. countries having monopolistic regimes run by a sole operator and others having established licensing systems for more than one operator. The Company carefully evaluates each E.U. jurisdiction to ensure adherence to applicable laws and regulations. As local regulations and related guidance from authorities change, the Company re-evaluates its position in any given country. In 2018, the E.U. Court of Justice announced that it was dropping all enforcement proceedings related to gambling which allows the individual E.U. country rulings to stand, regardless of whether or not they violate E.U. laws. As a result, the Company has made adjustments to its strategy, to respect the individual E.U. country rulings.
Italian Gaming Regulations
The Company is subject to regulatory oversight by the ADM in Italy. At December 31, 2023, the Company held licenses for: (i) the activation and operation of the network for Italy’s Gioco del Lotto game; and (ii) the operation of the Italian Scratch & Win instant ticket game.
Gaming in Italy is an activity reserved to the State. Any game that is carried out without proper authorization is illegal and subject to criminal penalties. Italian law grants the Ministry of Economy and Finance, through ADM, the power to introduce games and to manage gaming and betting activities directly or by granting licenses to qualified operators selected by means of public tenders as further explained below. The process of creating and granting gaming and betting licenses in Italy is heavily regulated.
Gaming and betting licenses are granted pursuant to a public tender procurement process. The license provides for all of the licensee’s requirements, in accordance with the provisions of Italian law and regulation, activities, and duties, including collection of the game’s revenues, the payment of winnings, the payment of the point of sale, payment of gaming taxes and all the other amounts due to the State, the drawings and the management of all of the technological assets to operate gaming, requirements of the technological infrastructure, and the relevant service levels. Licenses are for a determined time period, generally nine (9) years, and are not renewable unless indicated in the licensing agreement; in such event, the renewal is not guaranteed to be on the same terms. In certain cases, the license may be extended at the option of the ADM on the same terms. Under other circumstances, which are typically defined in the licensing agreement, the license may be revoked or terminated. Most cases of early termination are related to the breach of the terms of the licensing agreement or the non-fulfillment of
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conditions of that agreement as well as the loss of the requirements prescribed by Italian law and regulation for the assignment and the maintenance of gaming licenses. In some cases, the early termination of the license allows the State to draw upon the entire amount of the performance bond presented by the licensee. Upon governmental request, the licensee has an obligation to transfer, free of charge, the assets subject of the license to the State at the end of the term of the license or in the event of its revocation or early termination. Each single license contains specific provisions enacting such general obligation.
Sustainability

As a global leader in one of the most regulated industries, IGT has operations across a broad spectrum of regions and cultures. The Company is committed to growing its business responsibly by implementing a structured and dedicated governance framework, which includes high standards of ESG practices.

The Nominating and Corporate Governance Committee (the “NCGC”) is responsible for overseeing the Company’s strategy on sustainability, monitoring implementation of the Company’s sustainability program, and reviewing the Company’s public disclosures regarding ESG matters (including the annual Sustainability Report and the Modern Slavery Statement). The most significant ESG-related updates are typically reported by the NCGC to the Board. Marco Sala serves as Executive Chair of the Board with specific responsibilities in addressing corporate governance, sustainability initiatives (including climate-related and environmental matters), and providing strategic guidance.

IGT seeks to serve the global gaming market with the utmost integrity and in accordance with disciplined ethical principles, with sustainability and good corporate citizenship at the core of this ethos. The Sustainability Steering Committee (“SSC”), chaired by the Senior Vice President, Marketing, Communications and Sustainability (a direct report to the Company’s CEO) and comprised of IGT senior management and members of the Global Sustainability team, supports programs and initiatives that contribute to IGT’s sustainability strategy. The SSC cultivates a long-term vision and related objectives on sustainability, fosters a consistent sustainability approach across all regions and businesses, and increases communication on sustainability by sharing best practices at global and local levels. Responsible and sustainable practices encompass a broad spectrum of sustainability initiatives, including the Company’s energy use, environmental and human rights issues, and establishing policies and strategic initiatives, such as its Sustainability Policy, Responsible Gaming Policy, Human Rights Policy, Environmental Policy, Diversity, Equity and Inclusion Global Policy, Board Diversity Policy, Sustainable Procurement Policy and Community Giving & Engagement Policy.

To achieve these objectives, the SSC developed the IGT Sustainability Plan to align the Company’s sustainability pillars with business priorities, under the theme of “Inspiring Global Transformation.” This plan, approved by the SSC in July 2022, aims at further integrating sustainability along the entire value chain and improving ESG impact in daily operations, including the identification of a comprehensive set of targets and actions to lead IGT in achieving its priorities and ambitions.

In 2023, IGT launched Sustainable PlayTM, the program that represents IGT’s commitment to leading the gaming industry in global sustainability by aligning its sustainability plan and strategy and celebrating the Company’s dedication to its people and the planet. IGT also published its Global Sustainability Policy, which outlines goals and objectives in relation to ESG practices and defines the framework for sustainability at IGT. The Global Sustainability Policy provides a governing platform for the Company’s sustainability work in all key areas of business activity, including providing services, working with suppliers, employee interactions, and industry-affecting activities.

The IGT Global Sustainability team leads project planning for the IGT Sustainability Plan, including the coordination of sustainability working groups, data collection, and reporting systems to fulfill criteria of ESG questionnaires. The Global Sustainability team also leads the development of a global community engagement strategy, the establishment of partnerships with non-profit associations, and the implementation of global responsible gaming initiatives consistent with industry standards. At the operating level, several working groups with employees from different departments are responsible for analyzing sustainability initiatives and defining an action plan.

The Company’s ongoing pledge to sustainable growth within the gaming industry includes the guiding principles set forth by the 2030 United Nations (“UN”) Agenda for Sustainable Development and its 17 Sustainable Development Goals (“SDGs”). Based on its business activities and its sustainability priorities, the Company has identified nine (9) SDGs as key areas of focus: (i) no poverty (SDG 1); (ii) good health and well-being (SDG 3); (iii) quality education (SDG 4); (iv) gender equality (SDG 5); (v) affordable and clean energy (SDG 7); (vi) decent work and economic growth (SDG 8); (vii) industry innovation and infrastructure (SDG 9); (viii) reduced inequalities (SDG 10); and (ix) climate action (SDG 13).

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In early 2019, IGT joined the United Nations Global Compact (“UNGC”), which is widely recognized as the largest corporate responsibility initiative in the world for the development, implementation, and disclosure of responsible corporate policies and practices.

The Company’s global sustainability strategy is centered on four (4) pillars:

Valuing and Protecting Our People - The organizational climate of a business reflects how employees at all levels perceive the workplace environment. Many factors can contribute to an employee’s perception, and the Company strives to develop initiatives and programs that support a positive organizational climate, including through IGT's Modern Slavery Act statements, employee-led Employee Impact Groups, and a variety of other initiatives to support this pillar in daily work life. IGT’s people strategy, which among others includes commitments to sustainability, diversity, equity, inclusion, and ethical operations, has been recognized by the 2023 Top Employer Certification for IGT operations in Canada, Italy, and the United States. IGT demonstrated not only that initiatives are in place, but that employees are engaging with them to create a working environment where professional growth, inclusion and communication are paramount. Furthermore, in recognition of the commitment to human rights protection, in 2023 IGT was included in the Human Rights Campaign Foundation’s Corporate Equality Index, which measures LGBTQ+ inclusion in the workplace.

Advancing Responsibility - The Company maintains certifications in responsible gaming through both the World Lottery Association and the Global Gambling Guidance Group (G4). The Company incorporates responsible gaming capabilities and features into its suite of products, and IGT partners with customers to help achieve their responsible gaming goals. IGT’s commitment to responsible gaming starts with its own people and is woven into the fabric of product development, services, programs, and policies. IGT has adopted a positive play approach that encourages all users to apply healthy play behaviors to their game play. IGT believes that it is incumbent upon all stakeholders in the gaming industry to take a proactive approach to problem and underage gambling.

IGT trains employees, at all levels and responsibilities, to support and promote responsible gaming in their daily activities, with additional in-depth courses for employees in specific roles, such as game designers and contact center associates. IGT’s products, games, systems, and portals include advanced responsible gaming tools that help safeguard players’ interests and address regulators’ concerns. IGT maintains close relationships with customers, gaming regulators, and researchers to further its support of player protection. In 2023, IGT received responsible gaming re-certifications for Gaming, PlayDigital, and PlaySports from G4.

Supporting Our Communities - The Company supports our communities through corporate initiatives and employee-driven programs. The flagship After School Advantage Program (the ASA Program), for example, was launched in 1999 with the goal of bringing technology and skill development in STEAM (Science, Technology, Engineering, Arts, and Mathematics) education to youth. Over the life of the ASA Program, the Company has placed over 360 digital learning centers. This aligns with IGT Sustainability Plan goals: (i) Engage with community partners to facilitate opportunities for support, learning, and growth; and (ii) Develop education programs and digital learning centers to encourage skill development and create a sustainable workforce for the future. In addition, the Company supports communities financially through various charitable endeavors, with the giving program aligned with the Company’s SDGs. Employee programs support the unique passions of employees and promote volunteerism. IGT maintains a formal Global Community Giving & Engagement Policy designed to educate and inform all relevant stakeholders about how the Company strives to create opportunities within our communities.

Fostering Sustainable Operations - The Company aspires to serve the global gaming market in accordance with the highest level of ethical and integrity principles, and has committed to continually incorporating sustainability into decision-making to increase its ESG performance. In 2021, IGT pledged by signing the Science Based Targets initiative (SBTi) commitment letter to set science-based targets to reduce GHG emissions according to scientific evidence. In 2022, IGT completed its first Scope 3 emissions inventory and submitted near-term and long-term science-based targets for validation by the SBTi. Specifically, IGT committed to reduce Scope 1 and Scope 2 emissions (combined) by 50% and Scope 3 emissions by 30% by 2030 compared to 2019, and to reduce both Scope 1, Scope 2, and Scope 3 emissions by 90% by 2050 compared to 2019. Moreover, the Company pledged to reach Net-Zero by 2050, thus offsetting the residual 10% of emissions. These emissions reduction targets were validated by the SBTi in August 2023 and IGT is actively pursuing its Decarbonization Pathway through the implementation of several workstreams throughout the value chain and operations. IGT also implemented the Environmental, Social and Governance Supplier Qualification Questionnaire in 2023, an annual exercise designed to measure the ESG performance of Suppliers and track their progress towards compliance of the Supplier Code of Conduct. Topics covered include Business Ethics, Social & Inclusive Supply Chain, Environmental Management, Human Rights, Health and Safety and Conflict Minerals aligned to the aforementioned Supplier Code of Conduct.

IGT’s sustainability efforts are also routinely evaluated by ESG rating agencies. IGT received a Management level (B) score from the CDP – formerly known as the Carbon Disclosure Project – recognizing the Company for taking coordinated actions on climate issues. The Company most recently received a gold medal sustainability rating from EcoVadis, positioning IGT among
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the top 5% of global companies for sustainable practices. EcoVadis assesses companies using 21 sustainability criteria within the categories of environment, labor and human rights, ethics, and sustainable procurement. In September 2023, IGT achieved a score of 54 from the S&P Corporate Sustainability Assessment, one of the foremost global sustainability benchmarks. Based on this assessment, IGT was included in the 2024 S&P Sustainability Yearbook, which distinguishes companies within their industries that have demonstrated strengths in corporate sustainability. As of 2023, IGT received an MSCI ESG rating of AAA. In November 2022, IGT achieved a sector-leading sustainability score from Moody’s ESG Solutions, positioning the Company in the number one spot within the North American hotel, leisure goods, and services sector.
C.        Organizational Structure
A listing of the Parent’s directly and indirectly owned subsidiaries at March 7, 2024 is set forth in Exhibit 8.1 to this annual report on Form 20-F. At March 7, 2024, De Agostini had an economic interest in the Parent of approximately 42.61% (excluding treasury shares) and, due to its election to exercise the Special Voting Shares associated with its ordinary shares pursuant to the Loyalty Plan, a voting interest in the Parent of approximately 59.75% of the total voting rights (excluding treasury shares). See “Item 7. Major Shareholders and Related Party Transactions.
The following is a diagram of the Parent and certain of its subsidiaries and associated companies at March 7, 2024:
igtorgstructure2.jpg

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D.        Property, Plants and Equipment
The Parent’s principal office is located at 10 Finsbury Square, Third Floor, London EC2A 1AF United Kingdom, telephone number +44 (0) 203 866 1240. At March 7, 2024, the Company leased approximately: (i) 110 properties in the U.S. under approximately 140 leases; and (ii) 100 properties outside of the U.S. under approximately 120 leases. Certain properties leased by the Company are subject to multiple leases (e.g., buildings where each floor leased by the Company is under a separate lease). As of March 7, 2024, the Company owned a number of facilities and properties, including:
•An approximately 113,000 square foot production and research and development office building in Moncton, New Brunswick, Canada; and
•An approximately 13,050 square foot enterprise data center in West Greenwich, Rhode Island.
The following table shows the Company’s material properties at March 7, 2024:
U.S. Properties
LocationSquare
Feet		Use and Productive CapacityExtent of
Utilization		Holding
Status
9295 Prototype Drive,
Reno, NV(1)
1,251,179Office; Warehouse; Game Studios; Hardware/Software Engineering; Global Production Center; Electronic Gaming Machine80 %Leased
6355 S. Buffalo Drive,
Las Vegas, NV(2)
222,268U.S. Principal Operating Facility; Game Studio; Systems Software; Showroom100 %Leased
4000 South Frontage Road, Suite 101
Lakeland, FL		174,720Printing Plant: Printing facility; Storage and Distribution; Office100 %Leased
55 Technology Way,
West Greenwich, RI		170,000Office; Research and Testing; Storage and Distribution100 %Leased
10 Memorial Boulevard,
Providence, RI		124,769Administrative functional office; Lottery regional HQ80 %Leased
8520 Tuscany Way, Bldg. 6, Suite 100,
Austin, TX		81,933Texas Warehouse and National Response Center: Contact Center; Storage and Distribution; Office95 %Leased
8200 Cameron Road, Suite E120,
Austin, TX		41,705Data Center of the Americas: Data Center; Network Operations; Office80 %Leased
5300 Riata Park Court, Bldg. E, Suite 100,
Austin, TX		26,759Austin Tech Campus: Research and Test; Office80 %Leased
47 Technology Way,
West Greenwich, RI		13,050Enterprise Data Center: Data Center; Network Operations100 %Owned
5 Funston Avenue,
San Francisco, CA		4,072PlayDigital HQ: Office100 %Leased
(1) 321,473 sq. ft. of this property is sub-leased to sub-tenants.
(2) 120,586 sq. ft. of this property has been sub-leased to a sub-tenant.


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Non-U.S. Properties
LocationSquare
Feet		Use and Productive CapacityExtent of
Utilization		Holding
Status
Viale del Campo Boario 56/D 00154
Roma, Italy		174,526Principal Operating Facility in Italy; Office; Italy Data Center: Data Center; Network Operations100 %Leased
Via delle Monachelle S.N.C.
Pomezia, Rome, Italy		129,167Instant Ticket Warehouse; Instant Ticket Distribution100 %Leased
328 Urquhart Ave,
Moncton, New Brunswick, Canada		113,000Canada HQ; Office; Research and Testing; Gaming Production100 %Owned
Seering 13-14,
Unterpremstatten, Austria		78,082Austria Gaming HQ; Office; Research and Test90 %Leased
Al. Jerozolimskie, 92
Brama Building,
Warsaw, Poland		48,283Global Tech Hub; Office; Research and Test95 %Leased
USCE Tower
Bulevar Mihajla, Pupina No. 6
Belgrade, Serbia		42,764Software Development Office; Lottery; Gaming Products95 %Leased
2310 Szigetszentmiklós
Leshegy u. 30
Budapest, Hungary
34,661Warehousing; Gaming Production and Parts Distribution for EMEA Region; Office100 %Leased
11 Talavera Rd.
Building B,
Sydney, Australia		27,432Office; Sales & Marketing; Financial Support100 %Leased
10 Finsbury Square, 3rd Floor London EC2A 1AD, United Kingdom(1)
17,340Registered Global Headquarters of the Parent; Global Management HQ, PlayDigital
100 %Leased
(1) 4,600 sq. ft. of this property has been sub-leased to a sub-tenant.
IGT has adopted a hybrid working arrangement for employees who are capable of performing their function remotely, with the Company’s employees afforded the ability to work both in the office and remotely.
IGT maintains its facilities in good condition, and these locations are fit for the purposes for which the Company uses them. There are no known environmental issues that may affect the Company’s utilization of its real property assets.
IGT does not have any plans to construct, expand, or improve its facilities in any material manner other than general maintenance of facilities. As such, the Company does not anticipate an increase in productive capacity.
None of the Company’s properties are subject to mortgages or other material security interests.

Item 4A.        Unresolved Staff Comments

None.

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Item 5.        Operating and Financial Review and Prospects

Management’s Discussion and Analysis

The following discussion and analysis of IGT’s financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, included in this annual report, as well as “Presentation of Financial and Certain Other Information,” “Item 3.D. Risk Factors,” and “Item 4.B. Business Overview.”
The following discussion includes information for the fiscal years ended December 31, 2023 and 2022. For a discussion and analysis of IGT’s consolidated operating results and non-operating results and segment revenues and operating results for the year ended December 31, 2022, compared to the year ended December 31, 2021, please refer to the disclosure under “Item 5. Operating and Financial Review and Prospects - A. Operating Results” in the Company’s Annual Report on Form 20-F for 2015,the fiscal year ended December 31, 2022, filed with the SEC on April 29, 2016.February 28, 2023.
Dividend Payments

A.    Operating Results

Business Overview
IGT is a global leader in gaming that delivers entertaining and responsible gaming experiences for players across all channels and regulated segments, from Lotteries and Gaming Machines to Digital Gaming and Sports Betting. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, the Company’s solutions deliver gaming experiences that responsibly engage players and drive growth. IGT has a well-established local presence and relationships with governments and regulators around the world, and creates value by adhering to the highest standards of service, integrity, and responsibility.

IGT manages and reports the Company’s operating results through three (3) business segments: Global Lottery, Global Gaming, and PlayDigital, along with a corporate support function (“Corporate and Other”). IGT's operations for the periods presented herein are discussed accordingly.

Business Acquisitions

On July 1, 2022, the Company completed the acquisition of iSoftBet by purchasing 100% of the equity interests in certain entities of the iSoftBet group for cash consideration of €162 million (inclusive of €20 million deposited into an escrow account) and contingent consideration of €4 million. The Parent paidacquisition of iSoftBet provides market-tested proprietary digital content, advanced game aggregation capabilities, scalable promotional tools, analytics, and creative talent to the PlayDigital segment. The financial results of iSoftBet have been included within our PlayDigital segment in our Consolidated Financial Statements since the date of purchase.

Divestitures

On September 14, 2022, the Company completed the sale of 100% of the share capital of Lis Holding S.p.A., a wholly owned subsidiary of IGT Lottery S.p.A. that conducted the Company’s Italian commercial services business, to PostePay S.p.A. – Patrimonio Destinato IMEL for a purchase price of €700 million. The net consideration received of €479 million resulted in a pre-tax gain on sale of $278 million, ($276 million net of tax). The business was a component of continuing operations within our Global Lottery segment through the closing date.

Discontinued Operations

On May 10, 2021, IGT completed the sale of its Italian B2C businesses to Gamenet Group S.p.A. for a cash dividendssale price of €950 million. The sale of the businesses met the criteria to be reported as a discontinued operation and, as a result, the discussion that follows in this Item 5. has been prepared on its ordinary shares during 2017 as follows:a continuing operations basis and excludes results from discontinued operations, discussed in detail in “Notes to the Consolidated Financial Statements—3. Business Acquisitions and Divestitures” included in “Item 18. Financial Statements.”

OPtiMa

In connection with the 2020 introduction of our global product organizations, IGT identified opportunities to optimize the Company’s portion of the value chain across businesses and regions and launched the “OPtiMa” program. In 2021, the Company successfully achieved the $200 million in structural cost savings and capital expenditure reductions relative to 2019
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 Declaration Date Payment Date Per Share Amount ($) 
Aggregate
Payment ($)
 
 November 14, 2017 December 12, 2017 0.20
 40,483,920
 August 1, 2017 August 24, 2017 0.20
 40,678,056
 May 25, 2017 June 22, 2017 0.20
 40,678,221
 March 9, 2017 April 6, 2017 0.20
 40,687,958
      
 162,528,155
anticipated under the program. Following the successful achievement of OPtiMa, IGT launched OPtiMa 2.0, which was expected to yield an incremental $150 million in structural profit improvement by the end of 2023 relative to 2019. OPtiMa 2.0 focused on three key areas: (i) operational excellence and margin improvement initiatives; (ii) interest expense reductions; and (iii) structural improvements to the effective tax rate. As of December 31, 2022, the Company achieved the targeted reduction in interest expense and improvements to the effective tax rate, net of non-recurring items. The achievement of the operational excellence initiatives was partially offset by supply chain headwinds and inflationary cost increases, however, the Company still achieved the targeted margin improvement in 2023 as operations continued to normalize and we finalized a more structured approach to software development and multi-year licensing agreements.
Other Transactions
Effective January 1, 2016, GTECH Holdings Corporation merged
Key Factors Affecting Operations and Financial Condition
The Company’s worldwide operations can be affected by industrial, economic, and political factors on both a regional and global level. The ongoing conflict between Russia and Ukraine, the Israeli-Hamas conflict, Argentina’s economic and financial crisis, the tightening of monetary policy by central banks and other macroeconomic factors have caused disruptions and uncertainty in the global economy, including rising interest rates, increased inflationary pressures, foreign exchange rate fluctuations, potential cybersecurity risks, and exacerbated supply chain challenges. However, these events did not have a material impact on our supply chain or our results of operations. The extent to which our business, or the business of our suppliers or manufacturers, will be impacted in the future is unknown. We will continue to monitor the effects of these events on our business and our results of operations. The following are the principal factors which have affected the Company’s results of operations and financial condition and/or which may affect results of operations and financial condition for future periods.

On June 8, 2023, the Company announced the Board would begin evaluating potential strategic alternatives for the Global Gaming and PlayDigital businesses with the goal of unlocking the full value of IGT's portfolio. The Board considered a broad range of potential alternatives, with an agreement reached with Everi on February 28, 2024 for the Separation & Divestiture of the Global Gaming and PlayDigital segments. Refer to the “Notes to the Consolidated Financial Statements—26. Subsequent Events” for further information. To support the Board in their assessment of potential transactions, including the Separation & Divestiture, the Company retained advisors, legal counsel, and consultants who will continue to support the Company through the closing date of the Separation & Divestiture.

Product Sales: Product sales fluctuate from year to year due to the mix, volume, and timing of the transactions. Product sales amounted to $963 million, $866 million, and $606 million, or approximately 22%, 21%, and 15% of total revenues for the years ended December 31, 2023, 2022, and 2021, respectively.

Jackpots: The Company believes that the performance of lottery products is influenced by the size of advertised jackpots in jurisdictions that offer such jackpots. Typically as jackpots increase, sales of lottery tickets also increase, further increasing the advertised jackpot level. However, in a rising interest rate environment, advertised jackpot levels will increase more rapidly than they previously did given the annuity basis of the displayed jackpots. Therefore, in a higher interest rate environment, jackpot game ticket sales may be increasing at a relatively slower rate than the corresponding jackpot levels. In a lower interest rate environment, advertised jackpot levels are slower to increase which can negatively impact the sales of lottery tickets.

Effects of Foreign Exchange Rates: The Company is affected by fluctuations in foreign exchange rates (i) through translation of foreign currency financial statements into IGT Global Solutions Corporation (formerly knownU.S. dollars for consolidation, which is referred to as GTECH Corporation), with IGT Global Solutions Corporation being the surviving entity.translation impact, and (ii) through transactions by subsidiaries in currencies other than their own functional currencies, which is referred to as the transaction impact. Translation impacts arise in the preparation of the Consolidated Financial Statements; in particular, the Consolidated Financial Statements are prepared in U.S. dollars while the financial statements of each of the Company’s subsidiaries are generally prepared in the functional currency of that subsidiary. In preparing Consolidated Financial Statements, assets and liabilities measured in the functional currency of the subsidiaries are translated into U.S. dollars using the exchange rate prevailing at the balance sheet date, while income and expenses are translated using the average exchange rates for the period covered. Accordingly, fluctuations in the exchange rate of the functional currencies of the Company’s subsidiaries against the U.S. dollar impacts the Company’s results of operations. The Company is particularly exposed to movements in the euro/U.S. dollar exchange rate. Although the fluctuations in exchange rates have had a significant impact on the Company’s revenues, net income, and net debt, the impact on operating income and cash flows is less significant as revenues are typically matched to costs denominated in the same currency.
Other than
Given the impact of foreign exchange rates on our consolidated results, certain key performance indicators (such as described above under “—Acquisitionsame-store sales) and financial fluctuations are reported on a constant-currency basis in order to facilitate period-to-period comparisons of International Game Technology,”, there have not been any public takeover offersour results without regard to the impact of fluctuating foreign currency exchange rates.
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Legal Proceedings

From time to time, the Parent and/or one or more of its subsidiaries are party to legal, regulatory, or administrative proceedings regarding, among other matters, claims by and against us, and injunctions by third parties in respectarising out of the Parent’s sharesordinary course of business or its other business activities. Licenses are also subject to legal challenges by competitors seeking to annul awards made to the Company. The Parent and/or one or more of its subsidiaries are also, from time to time, subjects of, or parties to, ethics and compliance inquiries and investigations related to the Company’s ongoing operations.

There are no new material legal, regulatory, or administrative proceedings. Please refer to “Process for Disclosure and Recording of Liabilities Related to Legal Proceedings” and“Legal Proceedings” within “Notes to the Consolidated Financial Statements - Note 2. Summary of Significant Accounting Policies” and “19. Commitments and Contingencies” included in “Item 18.Financial Statements”, respectively,for additional information.

Results of Operations

Comparison of the years ended December 31, 2023 and 2022

Total Revenue
 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Total service revenue3,347 78 3,359 79 (12)— 
Total product sales963 22 866 21 96 11 
Total revenue4,310 100 4,225 100 85 2 

Total revenue for the year ended December 31, 2023 increased $85 million, or 2%, to $4.3 billion from $4.2 billion for the prior corresponding period due primarily to player demand and product and game performance.

Product sales growth is primarily attributable to our Global Gaming segment experiencing increases in both machine units sold and a higher global average selling price from the prior corresponding period. Service revenue increases in our Global Gaming and PlayDigital segments were driven by game performance, install base growth, and player demand. Global Lottery increases, principally due to multi-jurisdiction jackpot game same-store sales in the U.S. and instant ticket and draw-games same-store sales in Italy, were fully offset by the Parentdisposition in respectSeptember 2022 of our Italian Commercial Services business which contributed $197 million in the prior corresponding period as well as unfavorable foreign currency impacts primarily related to the euro of $32 million. Excluding the contribution from the Italian Commercial Services business, total revenue increased 7%, with service revenue increasing 5% in our Global Lottery segment.

See “Segment Operating Results” section below for further discussion related to the principal drivers of changes to Total revenue.

Operating expenses
 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Service Revenue$% of Service Revenue$%
Cost of services1,630 49 1,671 50 (40)(2)

Cost of services for the year ended December 31, 2023 decreased $40 million, or 2%, to $1.6 billion from $1.7 billion for the prior corresponding period primarily attributable to our Global Lottery segment experiencing a $127 million decrease in point of sale (“POS”) fees due to the disposal of the Italian Commercial Services business, partially offset by a $22 million increase in POS consumables used in providing instant and draw-based game sales, a $13 million increase in the amortization of capitalized software costs, a $10 million increase in insurance and taxes, and a $12 million increase in bank service fees and postage and freight in the aggregate. Additionally, within our Global Gaming segment, depreciation and amortization expense increased $37 million due primarily to amortization expense related to a multi-year license agreement of intellectual property entered into in December 2022, partially offset by a $29 million reduction in usage-based royalties. Global Gaming also had a $6 million increase in postage and freight. Our PlayDigital segment had a $6 million decrease in depreciation and amortization
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expense and together with Global Lottery saw an increase in licensing and royalties expense of $7 million in the aggregate. Increased payroll and benefits in Global Gaming and PlayDigital of $16 million correlated to the service revenue growth in those segments.

As a percentage of service revenue, cost of services decreased by approximately 100 basis points in total. The overall increase in gross service margin was $29 million primarily due to the disposal in September 2022 of the relatively lower margin Italy Commercial Services business, with gross margin as a percentage of service revenue increasing 100 basis points and 550 basis points in our Global Lottery and PlayDigital segments, respectively, and our Global Gaming segment decreasing 140 basis points.

 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Product Revenue$% of Product Revenue$%
Cost of product sales573 59 554 64 19 3 

Cost of product sales increased $19 million, or 3%, from the prior corresponding period, primarily as a result of a $96 million increase in total product sales. Cost of product sales as a percentage of product sales decreased by approximately 450 basis points principally due to product mix and improved supply chain costs in our Global Gaming segment.

 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Selling, general and administrative834 19 814 19 20 3 

Selling, general and administrative increased $20 million, or 3%, to $834 million as compared to $814 million for the prior corresponding period. This increase was primarily attributable to an increase in payroll and benefit costs across all segments of $25 million in the aggregate primarily due to increased headcount, partially offset by a $7 million decrease in incentive compensation cost in the aggregate for all segments.

 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Research and development234 5 255 6 (21)(8)

Research and development decreased $21 million, or 8%, from the prior corresponding period primarily due to process improvements resulting in increased capitalization of software development activities, partially offset by increases in payroll and benefit costs.

Non-operating expenses
 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Interest expense, net285 7 289 7 (4)(1)
Foreign exchange loss, net75 2 36 1 38 105 
Other non-operating expense, net12 — 7 — 5 62 
Total non-operating expenses372 9 333 8 39 12 

Interest expense, net decreased $4 million, or 1%, from the prior corresponding period. This decrease was primarily due to the Company maintaining a lower average balance in its Senior Secured Notes, partially as a result of the notes redemptions in 2023 described in “Notes to the Consolidated Financial Statements”— 15 Debt compared to the prior corresponding period.

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Foreign exchange loss, net was $75 million compared to $36 million for the prior corresponding period. Foreign exchange loss, net is principally related to fluctuations in the euro to U.S. dollar exchange rate on internal and external debt and to a $34 million loss related to the devaluation of the Argentine peso for the year ended December 31, 2023.

Other non-operating expense, net was $12 million of expense, compared to $7 million of expense for the prior corresponding period. During the year ended December 31, 2023, the expense was primarily due to $5 million in losses on extinguishment of debt and $5 million in losses on the purchase and sale of a blue-chip swap, a legal mechanism used to transfer funds out of Argentina. During the prior corresponding period, the Company completed the sale of its Italian commercial services business, resulting in a $278 million gain, which was offset by the recognition of $270 million of expense for the settlement of the Benson Matter and $13 million in losses on extinguishment of debt.

Provision for income taxes
 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Provision for income taxes322 7 175 4 147 84 

The increase in provision for income taxes was primarily driven by a higher valuation allowance related to our business interest expense limitation carryforward, the impact of the international provisions of the U.S. Tax Cut and Jobs Act of 2017, and the settlement of the 2015-2022 Italy tax audit. In addition, there was no book tax benefit arising from the settlement provision of Adrienne Benson and Mary Simonson, individually and on behalf of all others similarly situated v. Double Down Interactive LLC, et al. (the “DDI / Benson Matter provision”) for the year ended December 31, 2023, compared to a $66 million book tax benefit for the prior corresponding period.

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Segment Operating Results

Global Lottery

Revenues and Key Performance Indicators

Service revenue
 For the year ended December 31,Change
($ in millions)20232022$%
Operating and facilities management contracts2,306 2,181 125 6 
Systems, software, and other53 255 (202)(79)
Total service revenue2,359 2,436 (77)(3)
For the year ended December 31,
(% on a constant-currency basis)20232022
Global same-store sales growth (%)
Instant ticket & draw games1.9 %(3.9)%
Multi-jurisdiction jackpots5.8 %15.3 %
Total2.3 %(2.2)%
North America & Rest of world same-store sales growth (%)
Instant ticket & draw games0.6 %(2.4)%
Multi-jurisdiction jackpots5.8 %15.3 %
Total1.2 %(0.4)%
Italy same-store sales growth (%)
Instant ticket & draw games6.6 %(8.5)%

Operating and facilities management contracts revenue increased $125 million, or 6%, from the prior corresponding period. This increase was primarily the result of a $127 million increase in instant, draw-based, and multi-jurisdiction jackpot ticket sales that experienced same-store sales growth of 6.6% in Italy, and a 2.3% increase in global same-store sales in the aggregate. Global same-store sales for multi-jurisdiction jackpot ticket sales experienced a 5.8% increase, primarily attributable to elevated jackpot levels in the U.S. Additionally, other companies’ shareslottery revenue increased $5 million principally due to iLottery fees, which was fully offset by a $7 million decrease in LMA incentive revenue.

Systems, software, and other revenue decreased $202 million, or 79%, to $53 million from $255 million for the prior corresponding period primarily due to the sale of our Italian commercial services business that concluded September 14, 2022.

Product sales

 For the year ended December 31,Change
($ in millions)20232022$%
Lottery products171 157 14 9 
Total product sales171 157 14 9 

Lottery products revenue for the year ended December 31, 2023 increased $14 million, or 9%, from the prior corresponding period, principally due to higher terminal deliveries in North America of $25 million primarily as a result of contracts in Michigan and Canada, as well as a $27 million increase in International sales in the aggregate attributable to the extension of a multi-year central system software license in Switzerland, an iLottery license in Poland, and the U.K. Lottery supplier contract. These increases were partially offset by a $14 million decrease in terminal and system deliveries primarily related to the prior year contract renewal with the Poland Lottery as well as a $19 million decrease in software sales principally related to International system software upgrades, sales, and deliveries in the prior corresponding period. Instant ticket printing operations revenue decreased $9 million due primarily to increased volume in Florida in the prior corresponding period.
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Operating Margins
 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Gross margin
Service1,173 1,186(13)(1)
% of service revenue50 %49 %100 bps
Product60 3822 58 
% of product sales35 %24 %1100 bps

Gross margin as a percentage of service revenue increased to 50% from 49% for the prior corresponding period primarily as a result of increased Operating and facilities management contracts revenues as discussed above and decreased Systems, software, and other revenue from the former Italy commercial services business where margins were typically lower as a result of the POS fees.

Gross margin on product sales for the year ended December 31, 2023 increased 1,100 basis points from the prior corresponding period principally due to the increase in higher margin terminal and software license sales.

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Operating income913 909 4 — 
Operating margin36 %35 %100  bps

Segment operating margin increased 100 basis points primarily as a result of increased Operating and facilities management contracts revenue coupled with the increase in higher margin product sales compared with the prior corresponding period as discussed above.

Global Gaming

Revenues and Key Performance Indicators

Service revenue
 For the year ended December 31,Change
($ in millions, except yields)20232022$%
Gaming terminal services520 483 37 8 
Systems, software, and other242 232 10 4 
Total service revenue762 714 47 7 
For the year ended December 31,Change
20232022Units / $%
Installed base units
Total installed base units53,906 49,586 4,320 9 
Total yields(1)
$29.68$29.89$(0.21)(1)
(1) Total yields represent revenue per day for the average installed base units. Installed base units included active and inactive units deployed to a customer location.

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Gaming terminal services revenue increased $37 million, or 8%, from the prior corresponding period. This increase was primarily driven by a 9% increase in installed base units and yields holding constant at approximately $30 per unit per day primarily attributable to game performance partially offset by Regional mix.

Systems, software, and other revenue increased $10 million, or 4%, from the prior corresponding period principally related to an increase in systems maintenance and recurring software revenue from our poker install base.

Product sales
 For the year ended December 31,Change
($ in millions)20232022$%
Gaming terminals571 501 70 14 
Gaming other220 208 12 6 
Total product sales791 709 82 12 
For the year ended December 31,Change
20232022Units / $%
Global machine units sold
Total machine units sold35,090 32,820 2,270 7 

Gaming terminals increased $70 million, or 14%, from the prior corresponding period. This increase was primarily associated with an increase in machine units sold of 2,270, the majority of which were replacement machine units in the U.S. and Canada and a 5% higher global average selling price than those sold in the prior corresponding period.

Gaming other increased $12 million, or 6%, from the prior corresponding period, principally related to a $40 million increase in poker software licenses and system sales, partially offset by a $29 million decrease in intellectual property licenses associated with patents tied to remote game server solutions and game features.

Operating Margins

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Gross margin
Service427 41116 4 
% of service revenue56 %58 %(200)bps
Product336 28056 20 
% of product sales43 %40 %300 bps

Gross margin as a percentage of service revenue decreased 200 basis points compared to the prior corresponding period as costs increased in excess of revenues, primarily due to increased payroll and benefits, and postage and freight costs.

Gross margin as a percentage of product sales increased to 43% from 40% from the prior corresponding period, principally as a result of increased unit sales and a higher average selling price as referenced above, offset slightly by unfavorable product mix due to high margin intellectual property revenues in the prior period.

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Operating income313 24271 29 
Operating margin20 %17 %320 bps

Segment operating margin increased to 20% from 17% for the prior corresponding period primarily due to an increase in revenues of $129 million resulting from the increased demand for terminal sales and game performance, as well as supply chain costs receding and process improvements resulting in higher capitalization of software development activities. Increased units sales, system deliveries, poker licensing sales, and higher yields on our installed base units improved operating leverage.

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PlayDigital

Revenues and Key Performance Indicators

Service revenue
 For the year ended December 31,Change
($ in millions)20232022$%
PlayDigital services227 209 18 9 
Total service revenue227 209 18 9 

PlayDigital services revenue for the year ended December 31, 2023 increased $18 million, or 9%, from the prior corresponding period, principally related to a $15 million contribution from the acquisition of iSoftBet and a $3 million increase in PlaySports driven by the expansion into new jurisdictions and growth in existing market from sports betting solutions in the period.

Operating Margins

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Gross margin
Service163 13925 18 
% of service revenue72 %67 %500 bps

Gross margin as a percentage of service revenue increased to 72% from 67% for the prior corresponding period primarily driven by higher service revenues and increased operating leverage.

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Operating income65 5016 32 
Operating margin29 %24 %490 bps

Operating margin increased to 29% from 24% for the prior corresponding period primarily driven by increased gross service margin, partially offset by increased investments in research & development, and increased selling, general, and administrative costs to support growth.

B.        Liquidity and Capital Resources

Overview

The Company’s business is capital intensive and requires liquidity to meet its obligations and fund growth. Historically, the Company’s primary sources of liquidity have occurred duringbeen cash flows from operations and, to a lesser extent, cash proceeds from financing activities, including amounts available under the last threeRevolving Credit Facilities. In addition to general working capital and operational needs, the Company’s liquidity requirements arise primarily from its need to meet debt service obligations and to fund capital expenditures and upfront license fee payments. The Company also requires liquidity to fund acquisitions and associated costs. The Company’s cash flows generated from operating activities together with cash flows generated from financing activities have historically been sufficient to meet the Company's liquidity needs.

The Company believes its ability to generate cash from operations to reinvest in its business is one of its fundamental financial years.strengths. Combined with funds currently available and committed borrowing capacity, the Company expects to have sufficient liquidity to meet its financial obligations in the ordinary course of business for the next 12 months from the date of issuance of these Consolidated Financial Statements and for the longer-term period thereafter.

The cash management activities, funding of operations, and investment of excess liquidity are centrally coordinated by a dedicated treasury team with the objective of ensuring effective and efficient management of funds.
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At December 31, 2023 and 2022, the Company’s total available liquidity was as follows: 
 December 31,
($ in millions)20232022
Revolving Credit Facilities1,234 1,822 
Cash and cash equivalents572 590 
Total Liquidity1,805 2,412 

The Revolving Credit Facilities are subject to customary covenants (including maintaining a minimum ratio of EBITDA to total net interest costs and a maximum ratio of total net debt to EBITDA) and events of default, none of which are expected to impact the Company’s liquidity or capital resources. 

The Company completed multiple debt transactions in 2023 and 2022. Refer to the “Notes to the Consolidated Financial Statements—15. Debt” included in “Item 18. Financial Statements” for further discussion of these transactions as well as information regarding the Company’s other debt obligations, including the maturity profile of borrowings and committed borrowing facilities.

At December 31, 2023 and 2022, approximately 28% and 20% of the Company’s debt portfolio was exposed to interest rate fluctuations, respectively. The Company’s exposure to floating rates of interest primarily relates to the Revolving Credit Facilities and Euro Term Loan Facilities due January 2027.

The following table summarizes the Company’s USD equivalent cash and cash equivalent balances by currency: 
 December 31, 2023December 31, 2022
($ in millions)$%$%
Euros310 54 312 53 
U.S. dollars137 24 147 25 
Other currencies125 22 131 22 
Total Cash and cash equivalents572 100 590 100 
The Company maintains its cash deposits in a diversified portfolio of global banks, the majority of which are considered Global Systemically Important Banks. The Company holds an immaterial amount of cash in countries where there may be legal or economic restrictions on the ability of subsidiaries to transfer funds in the form of cash dividends, loans, or advances. As a result of the continued instability of the Argentine peso, at December 31, 2023, after transferring $8 million in November 2023 through the use of a blue-chip swap mechanism, $2.8 billion in Argentine Pesos ($3 million USD equivalent) of the Company’s remaining cash in Argentina was held in a money market fund and $1.9 billion in Argentine Pesos ($2 million USD equivalent) was held in a fixed income fund in an effort to offset the negative impact of further continued devaluation. Argentina’s economy remains highly inflationary for accounting purposes.

Cash Flow Summary

The following tables summarize the Consolidated Statements of Cash Flows. A complete statement of cash flows is provided in the Consolidated Financial Statements included herein.

Cash Flows - Operating Activities 
 For the year ended December 31,Change
($ in millions)20232022$%
Net cash provided by operating activities from continuing operations1,040 899 142 16 

Non-cash adjustments to net income for the year ended December 31, 2023 were $880 million, compared to $692 million for the prior corresponding period. The principal drivers of the increase in non-cash adjustments were related to $98 million in additional deferred incomes taxes primarily related to U.S. income, unfavorable changes in foreign exchange of $38 million, and an increase in depreciation and amortization of $37 million. The prior corresponding period gain on the sale of the Italian Commercial Services Business of $278 million was substantially offset by the DDI / Benson Matter provision recorded in the prior period of $270 million.

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Changes in operating assets and liabilities resulted in cash outflows of $147 million and $207 million for the years ended December 31, 2023 and December 31, 2022, respectively, primarily decreasing due to a $179 million increase in accrued income taxes payable as well as a $70 million increase in accounts payable, partially offset by a $170 million increase in payments of the DDI / Benson Matter provision with $220 million paid in the current period and $50 million paid in the prior corresponding period.

The cash impact of payments on the DDI / Benson Matter provision, net of tax benefits, was $184 million and $50 million for the years ended December 31, 2023 and December 31, 2022, respectively.

Cash Flows - Investing Activities from Continuing Operations
For the year ended December 31,Change
($ in millions)20232022$%
Net cash (used in) provided by investing activities from continuing operations(393)42 (435)> 200.0

During the year ended December 31, 2023, the Company used $393 million of net cash for investing activities, an increase of $435 million from the prior corresponding period, principally due to $476 million generated from the sale of the Italian Commercial Services Business in the prior corresponding period and an $82 million increase in capital expenditures primarily due to increased capitalization of software development activities and increased systems and equipment as a result of the growth in our install base. These increases were partially offset by a decrease of $142 million related to the acquisition of iSoftBet in the prior period.

Cash Flows - Investing Activities from Discontinued Operations

During the year ended December 31, 2021, the Company completed the sale of its Italian B2C businesses and received the €125 million payment due September 30, 2022 on July 13, 2022. Refer to “Notes to the Consolidated Financial Statements—3. Business Acquisitions and Divestitures”, included in “Item 18. Financial Statements”.

Cash Flows - Financing Activities
For the year ended December 31,Change
($ in millions)20232022$%
Net cash used in financing activities(638)(1,065)428 40 
During 2023, cash flows used in financing activities primarily included principal payments on long-term debt of $801 million, dividends paid to shareholders of $160 million, dividends paid to non-controlling interests of $158 million, $74 million in return of capital to non-controlling interests, and payments on deferred license obligations of $22 million. These cash outflows were partially offset by net proceeds from Revolving Credit Facilities of $609 million.

During 2022, cash flows used in financing activities primarily included principal payments on long-term debt of $597 million, dividends paid to non-controlling interests of $178 million, dividends paid to shareholders of $161 million, repurchases of common stock of $115 million, $75 million in return of capital to non-controlling interests, and net payments of short-term borrowings of $51 million. These cash outflows were partially offset by net receipts from financial liabilities of $75 million and net proceeds from Revolving Credit Facilities of $72 million.

Capital ExpendituresProduct Sales and Services Contracts

Under product sales and services contracts, the Company assembles, sells, delivers, and installs turnkey lottery systems or lottery equipment, provides related services, and licenses related software. The lottery authority maintains, in most instances, responsibility for lottery operations. The Company sells additional machines and central computers to expand existing systems and/or replace existing equipment and provides ancillary maintenance and support services related to the systems, equipment sold, and software licensed. The Company categorizes revenue from product sales and services contracts on a case-by-case basis as either service revenue or product sales from “Systems, software, and other” or “Lottery products” respectively, as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

Commercial Services

The Company develops innovative technology and offers commercial and payment services over a standalone network. Leveraging its distribution network and secure transaction processing experience, the Company offers high-volume processing
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of commercial and payment transactions including: prepaid cellular telephone recharges, bill payments, e-vouchers, electronic tax payments, stamp duty services and prepaid card recharges. These services are primarily offered outside of North America. As described in “Notes to the Consolidated Financial Statements—3. Business Acquisitions and Divestitures” included in “Item 18. Financial Statements”, the Italian commercial services business was sold on September 14, 2022.The Company categorizes revenue from commercial services as service revenue from “Systems, software, and other” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

2. Global Gaming
The Company designs, develops, assembles or orders the assembly of, and provides cabinets, games, systems, and software for customers in regulated gaming markets throughout the world under fixed fee, participation and product sales contracts. As of March 7, 2024, the Company holds more than 440 global gaming licenses and primarily does business with commercial casino operators, tribal casino operators, and governmental organizations (primarily consisting of lottery operators).

The Company operates in the highly competitive global gaming industry. Primary and secondary competitors possess a wide range of financial resources, technical capabilities, and geographic focus.

Gaming Machines and Game Content

The Company offers a diverse range of gaming machine cabinets from which land-based casino customers can choose to maximize functionality, flexibility, and player comfort. In addition to cabinets, the Company develops a wide range of casino games taking into account local jurisdictional requirements, market dynamics, and player preferences. The Company combines elements of mathematics, play mechanics, sound, art, and technological advancements with a library of entertainment licenses and a proprietary intellectual property portfolio to provide gaming products designed to provide a high degree of player appeal and entertainment. The Company offers a wide array of casino-style slot machines in a variety of multi-line, multi-coin, and multi-currency configurations.

The Company’s slot games typically fall into two (2) categories: (i) premium games; and (ii) core games.

Premium games, include:

•Wide Area Progressives (“WAP”) - games that are linked across several casinos and/or jurisdictions and share a large common jackpot, including the Wheel of Fortune® franchise; and
•Multi-Level Progressives - games, such as Prosperity Link™ and Mystery of the Lamp™, where the machines offering the game within the casino are connected and offer players the opportunity to win different levels of jackpots.

Core games, which include video reel, mechanical reel, and video poker, are typically sold and in some situations leased to customers. Some of the Company’s most popular core games in 2023 included Wolf Run EclipseTM, Egyptian LinkTM, Samurai 888TM, Double Chili Mania, PinballTM Double Gold, Keno Star, Powerhouse PlusTM, and Big City 4sTM Poker.

The Company produces other types of games including:
•“Centrally Determined” games, which are games connected to a central server that determines the game outcome;
•Class II games, which are centrally determined electronic video bingo machines that can be typically found in North American tribal casinos and certain other jurisdictions like South Africa; and
•Random-number-generated and electronic table games, including baccarat and roulette.

Gaming service revenue is primarily generated through providing premium game content and cabinets on short duration leases to customers. The pricing of these arrangements is largely variable where the casino customer pays fees to the Company based on a percentage of amounts wagered, a percentage of net win, or a daily fixed fee for use of the game content, cabinets, and related support services.
Gaming product sales revenue is generated from the sales of land-based gaming machines (equipment and game content), systems, component parts (including game conversion sales), other equipment and services. The Company also licenses intellectual property rights to third parties through royalty-bearing patent licensing agreements. The Company categorizes revenue from gaming machines as product sales from “Gaming terminals” and revenue from game content and intellectual property revenue as product sales from “Other” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”
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Video Lottery Terminals

The Company provides video lottery terminals (each, a “VLT” and together, “VLTs”), VLT central systems, and VLT games worldwide. VLTs are gaming machines which are regulated by lotteries, and are usually connected to a central system.

The Company provides VLT systems and machines to lotteries, either as a product sale or with long-term, fee-based contracts where the service revenue earned is generally based on a percentage of wagers, net of applicable gaming taxes. The Company categorizes revenue from VLTs as either service revenue from “Gaming terminal services” or product sales from “Gaming terminals”, depending on the nature of the transaction, as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

Gaming Management Systems
The Company offers a comprehensive range of system modules and applications for all areas of casino management. Gaming systems products include infrastructure and applications for casino management, customer relationship management, patron management, and server-based gaming. The Company’s main casino management system offering is the Advantage® System, which offers solutions and modules for a wide-range of activities from accounting and payment processing to patron management and regulatory compliance.

The Company’s systems feature customized player messaging, tournament management, and integrated marketing and business intelligence modules that provide analytical, predictive, and management tools for maximizing casino operational effectiveness. The server-based solutions enable electronic game delivery and configuration for slot machines, as well as providing casino operators with opportunities to increase profits by enhancing the players’ experience, connecting with players interactively, and creating operational efficiencies. Service Window enables operators to market to customers more effectively by leveraging an additional piece of hardware onto existing machines for delivering in-screen messaging. The Company’s systems portfolio also encompasses mobile solutions such as the Resort Wallet™, which is a cardless, cashless loyalty solution for casino players. Resort Wallet™ includes IGTPay™, a fully cashless land-based offering for casino operators which provides a direct link to external funding. Mobile solutions that drive efficiencies and enable floor monitoring for operators while decreasing response time to player needs include Mobile Host, Mobile Responder, and Mobile Notifier. The Company categorizes revenue from gaming management systems as product sales from “Other” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

3. PlayDigital

iGaming

Digital gaming enables game play for real money wagers via applications on mobile devices and internet websites. The Company, through its PlayDigital brand, designs, assembles, and distributes a full suite of configurable products, systems, content, and services, and holds more than 50 licenses, 30 of which are specific to digital gaming only, that authorize the provision of digital gaming products and services worldwide, including digital products such as slot games, blackjack, roulette, poker, bingo, and other casino card games with features such as single and multiplayer options with branded titles and select third-party content.
The Company’s iGaming systems and digital platforms offer customers a remote game server solution, which is a fast gateway to extensive casino content, and digital gaming services that enhance player experiences and create marketing opportunities around either the Company’s games or third-party games via our aggregation capabilities. PlayDigital has a vast content offering, either through our dedicated studios or our content library to meet the needs of the market served. The content is either digital only or omnichannel in combination with our land-based gaming operations.

The Company maintains a diverse iGaming B2B customer base from both the public and private sectors, and faces competition from broad-based traditional B2B providers, as well as from in-house game development by some operators and an increasing number of content providers entering the market. The Company also faces competition in the digital space from other gaming suppliers.

The Company categorizes revenue from digital gaming products as product sales from “Other” and revenue from digital gaming services as service revenue from “PlayDigital services” as described in “Notes to the Consolidated Financial Statements— 4.Revenue Recognition” included in “Item 18. Financial Statements.”

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PlaySports

In states where sports betting is legal, the Company provides sports betting technology and management services, branded as PlaySports, to licensed sports betting operators in over 30 states and territories in the U.S. and a province in Canada, holding 54 licenses that authorize the provision of sports betting products and services, 29 of which are specific to sports betting only.

To comply with local regulations and market conditions, the offering may be different in each market. The Company currently packages its PlaySports services in two (2) ways:
•“Sports betting platform” solutions offer modular services hosted and maintained in each U.S. state or tribal jurisdiction where sports betting is legal. These solutions provide certified and managed sports betting software made available for customers to operate retail and account-based interactive sports as well as retail components such as self-service betting kiosks and employee operated betting terminals, and integrate with parimutuel race wagering in a particular jurisdiction; and
•“Turnkey” managed service solutions combine the Company’s end-to-end sports betting management technology with a portfolio of value-added services, principally trading and trading support services, but that also may include offer management, payments, fraud management, advisory functions, and interactive components such as mobile web and desktop applications, all of which support the operations of land-based, digital, and omnichannel sports betting operators.

The sports betting supplier business is highly competitive; however, IGT has been able to continue to win new contracts in both existing and new jurisdictions due to the reliability of our product offerings and our customer relationships.
The Company categorizes revenue from sports betting as service revenue from “PlayDigital services” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

Business Segment Revenue

Revenues for the Company by business segment are as follows:
 For the year ended December 31,
($ in millions)202320222021
Service revenue2,359 2,436 2,690 
Product sales171 157 123 
Global Lottery2,530 2,593 2,812 
Service revenue762 714 630 
Product sales791 709 482 
Global Gaming1,552 1,423 1,112 
Service revenue227 209 163 
Product sales1 1 1 
PlayDigital228 209 165 
Total revenue4,310 4,225 4,089 

For a further description of the principal services and products the Company provides by business segment, including a breakdown of the Company’s revenues by geographic market, see “Item 5. Operating and Financial Review and Prospects” and “Notes to the Consolidated Financial Statements—24. Segment Information” included in “Item 18. Financial Statements”.

Seasonality

In general, the Company’s business is not materially affected by seasonal variation. In the lottery business, consumption may increase in December and around the holidays but decrease over the summer months due to the tendency of consumers to be on vacation during that time. Seasonal gaming trends generally show higher play levels in the spring and summer months and lower levels in the fall and winter months. Gaming product sales may be uneven throughout the year and can be affected by several factors, including the amount invested,timing of large transactions and new casino openings.
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Source of Materials
The Company uses a variety of raw materials across its business. Metals, woods, plastics, glass, electronic components, and LCD screens are frequently used during the manufacturing of gaming hardware and devices, and the lottery ticket printing facility consumes significant quantities of paper, toner, and ink throughout production. When ultimately delivering these goods to customers, the packaging process employs large amounts of paper, including cardboard.
During 2021 and 2022, the Company experienced shortages in the availability of electronic components necessary for the manufacture of gaming machines. See “Item 3.D. Risk Factors - Operational Risks - The Company depends on its suppliers and faces supply chain risks that could adversely affect its financial results.” While supply chain reliability normalized throughout 2023, price increases recognized for most of the Company’s principal capital expendituresraw materials impacted financial performance. The Company generally has global material suppliers and divestituresuses multi-sourcing practices to promote component and raw material availability, quality assurance, and cost consciousness.
Product Development
The Company devotes substantial resources to research and development and incurred $234 million, $255 million, and $238 million of related expenses, excluding amortization of capitalized software, in 2023, 2022, and 2021, respectively. In addition to expensed R&D, a portion of the investment in R&D has been capitalized and recorded as intangible assets, which is amortized to cost of services, cost of product sales, or selling, general and administrative expenses. The Company’s research and development efforts cover multiple creative and engineering disciplines for its Lottery, Gaming and PlayDigital businesses, including creative game content, hardware, and software; and land-based, online social, and digital real-money applications. These products are created primarily by employee designers, engineers, and artists, as well as third-party content creators. Third-party technologies are used to improve the yield from development investment and concentrate increased resources on product differentiation engineering.
Product assembly operations primarily involve the configuration and assembly of electronic components, cables, harnesses, video monitors, and prefabricated parts purchased from outside sources.
Intellectual Property
The Company maintains a significant intellectual property portfolio comprised of patents, trademarks, copyrights, and other licensed rights, and the Company’s business depends in part on its ability to protect and enforce its intellectual property rights. For example, some of the Company’s most popular games and features, including the Wheel of Fortune® franchise of premium games, are based on trademarks, patents and/or other intellectual property licensed from third parties. The Company routinely obtains, retains, and expands licenses for popular intellectual property such as the ten-year license agreement executed with Califon Productions, Inc. (“Sony”) in June 2023 for exclusive rights to the Wheel of Fortune® franchise for use across segments. At December 31, 2023, the Company held more than 4,600 patents and more than 9,800 trademarks filed and registered worldwide. The Company’s intellectual property portfolio is widely diversified with patents related to a variety of products, including game designs, bonus and secondary embedded game features, device components, systems features, and web-based or mobile functionality. The Company also relies on trade secret protection, believing that its technical “know-how” and the creative skills of its personnel are of substantial importance to its success.
Most of the Company’s products are marketed under trademarks and copyrights that provide product recognition and promote widespread acceptance. The Company seeks protection for its copyrights and trademarks in the U.S. and various foreign countries, where applicable, and uses intellectual property assets offensively and defensively to protect its innovation. The Company also has a program where it licenses its patents to others under terms designed to promote standardization in the gaming industry.
Software Development
The Company has developed software for use in the management of a range of lottery, gaming, and betting functions and products, including leveraging integration with third-party software components. Software developed by the Company is used in a variety of applications including: (i) in centralized systems for the management of lotteries, gaming (including digital gaming) and betting, and other commercial services; (ii) to enhance functions connected to services provided through websites and mobile applications (including lotteries, sports betting, instant win, and casino style games); and (iii) in a variety of back-office functions. Software developed by the Company is also used in machines for: (i) the management of lotteries, gaming, betting and online payments; (ii) the provision of gaming and non-gaming content; and (iii) integration with other devices such as mobile phones and tablets.
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Regulatory Framework
The lottery and gaming industries are subject to extensive and evolving governmental regulation in the U.S. and other jurisdictions. Gaming laws are based upon declarations of public policy designed to ensure that gaming is conducted honestly, competitively, and free of criminal and corruptive elements. While the regulatory requirements vary from jurisdiction to jurisdiction, the majority typically require some form of licensing or regulatory suitability of operators, suppliers, manufacturers, and distributors as well as their major shareholders, officers, directors, and key employees. Regulators review many aspects of an applicant, including their financial stability, integrity, and business experience. Additionally, the Company’s lottery and gaming products and technologies require certification or approval in most jurisdictions where the Company conducts business.
A comprehensive network of internal and external resources and controls is required to achieve compliance with the broad governmental oversight of the Company’s business. The Company maintains a robust enterprise compliance program designed to ensure compliance with applicable requirements imposed in connection with its lottery and gaming activities, as well as legal requirements generally applicable to publicly traded companies in the U.S. The Company employs approximately 165 individuals to support global compliance, which is directed on a day-to-day basis by the Company’s Senior Vice President, Chief Compliance and Risk Management Officer. The Company’s Legal department, in addition to outside experts, provide legal advice and support on compliance matters, as may be deemed necessary. The Global Compliance Governance Committee, comprised of employee and non-employee directors and a non-employee gaming law expert, oversees the enterprise compliance program under the supervision of the Board. Through these efforts, the Company seeks to assure both regulators and investors that its operations maintain the highest levels of integrity.
Lottery
Lotteries in the U.S. are regulated by state or other applicable law. There are currently 48 U.S. jurisdictions (including the District of Columbia, Puerto Rico, and the U.S. Virgin Islands) that authorize the operation of lotteries. Additionally, a few state lotteries offer internet instant game sales to in-state lottery customers and several states allow subscription sales of draw games over the internet. The ongoing operations of lotteries and lottery operators are typically subject to extensive and broad regulation, which vary state-by-state. The awarding of lottery contracts and ongoing operations of lotteries in international jurisdictions are also extensively regulated, although international regulations typically vary from those prevailing in the U.S.
Lottery regulatory authorities generally exercise significant discretion, including with respect to: (i) the determination of the types of games played; (ii) the price of each wager; (iii) the manner in which the lottery is marketed; (iv) the selection of suppliers of equipment, technology, and services; and (v) the retailers of lottery products. To ensure the integrity of contract awards and lottery operations, most jurisdictions require detailed background disclosure on a continuous basis from vendors and their officers, directors, subsidiaries, affiliates, and principal stockholders. Background investigations of the vendors’ employees who will be directly responsible for the operation of lottery systems are also generally conducted. Certain jurisdictions also require extensive personal and financial disclosure and background checks from persons and entities beneficially owning a specified percentage of a vendor’s securities.

Gaming

The assembly, sale, and distribution of gaming devices, equipment, and related technology and services are subject to federal, state, tribal, and local regulations in the U.S. and foreign jurisdictions. The initial regulatory requirement in most jurisdictions is to obtain the privileged licenses that allow the Company to participate in gaming activities. The Company’s operating entities and key personnel have obtained or applied for all known government licenses, permits, registrations, findings of suitability, and approvals necessary to assemble, distribute, and/or operate gaming products in all jurisdictions where the Company does business. Although many gaming regulations across jurisdictions are similar or overlapping, the Company must satisfy all conditions individually for each jurisdiction. Obtaining the required licenses at a corporate and individual level is a thorough process, in which the authorities review detailed information about the companies and individuals applying for suitability, as well as the processes used in the assembly, sale, and distribution of gaming devices. Once the license has been granted, regulatory oversight is designed to ensure that the licensee continues to operate with honesty and integrity.
Frequently, gaming regulators not only govern the activities within their jurisdiction or origin, but also monitor activities in other jurisdictions to ensure that the Company complies with local standards on a worldwide basis. A violation in any jurisdiction could result in disciplinary action in another.
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The Company holds over 500 gaming, digital, and sports betting licenses across approximately 350 jurisdictions. Key regulatory authorities that have licensed the Company include, among others, the United Kingdom Gambling Commission, the Nevada State Gaming Control Board and the New Jersey Division of Gaming Enforcement.
PlayDigital
In 2023, there was continued growth in sports wagering across the U.S., with more states legalizing and adopting regulations to govern sports wagers, and others expected to launch in 2024 and beyond. The channels for offering sports wagering differ from state to state, with most states seeking to offer sports wagering both in person and through some electronic means, such as via a mobile phone app.
In the U.S., the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) prohibits, among other things, the acceptance by a business of a wager by means of the internet where such wager is prohibited by any applicable law where initiated, received, or otherwise made. Under UIGEA, severe criminal and civil sanctions may be imposed on the owners and operators of such systems and on financial institutions that process wagering transactions. The law contains a safe harbor for wagers placed within a single state (disregarding intermediate routing of the transmission) where the method of placing the bet and receiving the bet is authorized by that state’s law, provided the underlying regulations establish appropriate age and location verification.

Also in the U.S., the Wire Act prohibits several types of wager-related communications over a “wire communications facility.” Please see the “Legal Proceedings” discussion included within “Key Factors Affecting Operations and Financial Condition” within “Item 5.A. - Operating Results” for information regarding the U.S. Department of Justice’s (the “DOJ”) interpretations of the Wire Act and the related legal challenges.

Connecticut has joined Michigan, Delaware, New Jersey, Pennsylvania, and West Virginia as states that have authorized internet casino gaming, and Nevada has authorized online poker.

The Company participates in digital gaming and sports wagering in the U.S. as a content and technology provider within fully regulated gaming and lottery frameworks.

Digital gaming in the E.U. is characterized by diverse regulatory frameworks with some E.U. countries having monopolistic regimes run by a sole operator and others having established licensing systems for more than one operator. The Company carefully evaluates each E.U. jurisdiction to ensure adherence to applicable laws and regulations. As local regulations and related guidance from authorities change, the Company re-evaluates its position in any given country. In 2018, the E.U. Court of Justice announced that it was dropping all enforcement proceedings related to gambling which allows the individual E.U. country rulings to stand, regardless of whether or not they violate E.U. laws. As a result, the Company has made adjustments to its strategy, to respect the individual E.U. country rulings.
Italian Gaming Regulations
The Company is subject to regulatory oversight by the ADM in Italy. At December 31, 2023, the Company held licenses for: (i) the activation and operation of the network for Italy’s Gioco del Lotto game; and (ii) the operation of the Italian Scratch & Win instant ticket game.
Gaming in Italy is an activity reserved to the State. Any game that is carried out without proper authorization is illegal and subject to criminal penalties. Italian law grants the Ministry of Economy and Finance, through ADM, the power to introduce games and to manage gaming and betting activities directly or by granting licenses to qualified operators selected by means of public tenders as further explained below. The process of creating and granting gaming and betting licenses in Italy is heavily regulated.
Gaming and betting licenses are granted pursuant to a public tender procurement process. The license provides for all of the licensee’s requirements, in accordance with the provisions of Italian law and regulation, activities, and duties, including collection of the game’s revenues, the payment of winnings, the payment of the point of sale, payment of gaming taxes and all the other amounts due to the State, the drawings and the management of all of the technological assets to operate gaming, requirements of the technological infrastructure, and the relevant service levels. Licenses are for a determined time period, generally nine (9) years, and are not renewable unless indicated in the licensing agreement; in such event, the renewal is not guaranteed to be on the same terms. In certain cases, the license may be extended at the option of the ADM on the same terms. Under other circumstances, which are typically defined in the licensing agreement, the license may be revoked or terminated. Most cases of early termination are related to the breach of the terms of the licensing agreement or the non-fulfillment of
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conditions of that agreement as well as the loss of the requirements prescribed by Italian law and regulation for the assignment and the maintenance of gaming licenses. In some cases, the early termination of the license allows the State to draw upon the entire amount of the performance bond presented by the licensee. Upon governmental request, the licensee has an obligation to transfer, free of charge, the assets subject of the license to the State at the end of the term of the license or in the event of its revocation or early termination. Each single license contains specific provisions enacting such general obligation.
Sustainability

As a global leader in one of the most regulated industries, IGT has operations across a broad spectrum of regions and cultures. The Company is committed to growing its business responsibly by implementing a structured and dedicated governance framework, which includes high standards of ESG practices.

The Nominating and Corporate Governance Committee (the “NCGC”) is responsible for overseeing the Company’s strategy on sustainability, monitoring implementation of the Company’s sustainability program, and reviewing the Company’s public disclosures regarding ESG matters (including the annual Sustainability Report and the Modern Slavery Statement). The most significant ESG-related updates are typically reported by the NCGC to the Board. Marco Sala serves as Executive Chair of the Board with specific responsibilities in addressing corporate governance, sustainability initiatives (including climate-related and environmental matters), and providing strategic guidance.

IGT seeks to serve the global gaming market with the utmost integrity and in accordance with disciplined ethical principles, with sustainability and good corporate citizenship at the core of this ethos. The Sustainability Steering Committee (“SSC”), chaired by the Senior Vice President, Marketing, Communications and Sustainability (a direct report to the Company’s CEO) and comprised of IGT senior management and members of the Global Sustainability team, supports programs and initiatives that contribute to IGT’s sustainability strategy. The SSC cultivates a long-term vision and related objectives on sustainability, fosters a consistent sustainability approach across all regions and businesses, and increases communication on sustainability by sharing best practices at global and local levels. Responsible and sustainable practices encompass a broad spectrum of sustainability initiatives, including the Company’s energy use, environmental and human rights issues, and establishing policies and strategic initiatives, such as its Sustainability Policy, Responsible Gaming Policy, Human Rights Policy, Environmental Policy, Diversity, Equity and Inclusion Global Policy, Board Diversity Policy, Sustainable Procurement Policy and Community Giving & Engagement Policy.

To achieve these objectives, the SSC developed the IGT Sustainability Plan to align the Company’s sustainability pillars with business priorities, under the theme of “Inspiring Global Transformation.” This plan, approved by the SSC in July 2022, aims at further integrating sustainability along the entire value chain and improving ESG impact in daily operations, including the identification of a comprehensive set of targets and actions to lead IGT in achieving its priorities and ambitions.

In 2023, IGT launched Sustainable PlayTM, the program that represents IGT’s commitment to leading the gaming industry in global sustainability by aligning its sustainability plan and strategy and celebrating the Company’s dedication to its people and the planet. IGT also published its Global Sustainability Policy, which outlines goals and objectives in relation to ESG practices and defines the framework for sustainability at IGT. The Global Sustainability Policy provides a governing platform for the Company’s sustainability work in all key areas of business activity, including providing services, working with suppliers, employee interactions, and industry-affecting activities.

The IGT Global Sustainability team leads project planning for the IGT Sustainability Plan, including the coordination of sustainability working groups, data collection, and reporting systems to fulfill criteria of ESG questionnaires. The Global Sustainability team also leads the development of a global community engagement strategy, the establishment of partnerships with non-profit associations, and the implementation of global responsible gaming initiatives consistent with industry standards. At the operating level, several working groups with employees from different departments are responsible for analyzing sustainability initiatives and defining an action plan.

The Company’s ongoing pledge to sustainable growth within the gaming industry includes the guiding principles set forth by the 2030 United Nations (“UN”) Agenda for Sustainable Development and its 17 Sustainable Development Goals (“SDGs”). Based on its business activities and its sustainability priorities, the Company has identified nine (9) SDGs as key areas of focus: (i) no poverty (SDG 1); (ii) good health and well-being (SDG 3); (iii) quality education (SDG 4); (iv) gender equality (SDG 5); (v) affordable and clean energy (SDG 7); (vi) decent work and economic growth (SDG 8); (vii) industry innovation and infrastructure (SDG 9); (viii) reduced inequalities (SDG 10); and (ix) climate action (SDG 13).

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In early 2019, IGT joined the United Nations Global Compact (“UNGC”), which is widely recognized as the largest corporate responsibility initiative in the world for the development, implementation, and disclosure of responsible corporate policies and practices.

The Company’s global sustainability strategy is centered on four (4) pillars:

Valuing and Protecting Our People - The organizational climate of a business reflects how employees at all levels perceive the workplace environment. Many factors can contribute to an employee’s perception, and the Company strives to develop initiatives and programs that support a positive organizational climate, including through IGT's Modern Slavery Act statements, employee-led Employee Impact Groups, and a variety of other initiatives to support this pillar in daily work life. IGT’s people strategy, which among others includes commitments to sustainability, diversity, equity, inclusion, and ethical operations, has been recognized by the 2023 Top Employer Certification for IGT operations in Canada, Italy, and the United States. IGT demonstrated not only that initiatives are in place, but that employees are engaging with them to create a working environment where professional growth, inclusion and communication are paramount. Furthermore, in recognition of the commitment to human rights protection, in 2023 IGT was included in the Human Rights Campaign Foundation’s Corporate Equality Index, which measures LGBTQ+ inclusion in the workplace.

Advancing Responsibility - The Company maintains certifications in responsible gaming through both the World Lottery Association and the Global Gambling Guidance Group (G4). The Company incorporates responsible gaming capabilities and features into its suite of products, and IGT partners with customers to help achieve their responsible gaming goals. IGT’s commitment to responsible gaming starts with its own people and is woven into the fabric of product development, services, programs, and policies. IGT has adopted a positive play approach that encourages all users to apply healthy play behaviors to their game play. IGT believes that it is incumbent upon all stakeholders in the gaming industry to take a proactive approach to problem and underage gambling.

IGT trains employees, at all levels and responsibilities, to support and promote responsible gaming in their daily activities, with additional in-depth courses for employees in specific roles, such as game designers and contact center associates. IGT’s products, games, systems, and portals include advanced responsible gaming tools that help safeguard players’ interests and address regulators’ concerns. IGT maintains close relationships with customers, gaming regulators, and researchers to further its support of player protection. In 2023, IGT received responsible gaming re-certifications for Gaming, PlayDigital, and PlaySports from G4.

Supporting Our Communities - The Company supports our communities through corporate initiatives and employee-driven programs. The flagship After School Advantage Program (the ASA Program), for example, was launched in 1999 with the goal of bringing technology and skill development in STEAM (Science, Technology, Engineering, Arts, and Mathematics) education to youth. Over the life of the ASA Program, the Company has placed over 360 digital learning centers. This aligns with IGT Sustainability Plan goals: (i) Engage with community partners to facilitate opportunities for support, learning, and growth; and (ii) Develop education programs and digital learning centers to encourage skill development and create a sustainable workforce for the future. In addition, the Company supports communities financially through various charitable endeavors, with the giving program aligned with the Company’s SDGs. Employee programs support the unique passions of employees and promote volunteerism. IGT maintains a formal Global Community Giving & Engagement Policy designed to educate and inform all relevant stakeholders about how the Company strives to create opportunities within our communities.

Fostering Sustainable Operations - The Company aspires to serve the global gaming market in accordance with the highest level of ethical and integrity principles, and has committed to continually incorporating sustainability into decision-making to increase its ESG performance. In 2021, IGT pledged by signing the Science Based Targets initiative (SBTi) commitment letter to set science-based targets to reduce GHG emissions according to scientific evidence. In 2022, IGT completed its first Scope 3 emissions inventory and submitted near-term and long-term science-based targets for validation by the SBTi. Specifically, IGT committed to reduce Scope 1 and Scope 2 emissions (combined) by 50% and Scope 3 emissions by 30% by 2030 compared to 2019, and to reduce both Scope 1, Scope 2, and Scope 3 emissions by 90% by 2050 compared to 2019. Moreover, the Company pledged to reach Net-Zero by 2050, thus offsetting the residual 10% of emissions. These emissions reduction targets were validated by the SBTi in August 2023 and IGT is actively pursuing its Decarbonization Pathway through the implementation of several workstreams throughout the value chain and operations. IGT also implemented the Environmental, Social and Governance Supplier Qualification Questionnaire in 2023, an annual exercise designed to measure the ESG performance of Suppliers and track their progress towards compliance of the Supplier Code of Conduct. Topics covered include Business Ethics, Social & Inclusive Supply Chain, Environmental Management, Human Rights, Health and Safety and Conflict Minerals aligned to the aforementioned Supplier Code of Conduct.

IGT’s sustainability efforts are also routinely evaluated by ESG rating agencies. IGT received a Management level (B) score from the CDP – formerly known as the Carbon Disclosure Project – recognizing the Company for taking coordinated actions on climate issues. The Company most recently received a gold medal sustainability rating from EcoVadis, positioning IGT among
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the top 5% of global companies for sustainable practices. EcoVadis assesses companies using 21 sustainability criteria within the categories of environment, labor and human rights, ethics, and sustainable procurement. In September 2023, IGT achieved a score of 54 from the S&P Corporate Sustainability Assessment, one of the foremost global sustainability benchmarks. Based on this assessment, IGT was included in the 2024 S&P Sustainability Yearbook, which distinguishes companies within their industries that have demonstrated strengths in corporate sustainability. As of 2023, IGT received an MSCI ESG rating of AAA. In November 2022, IGT achieved a sector-leading sustainability score from Moody’s ESG Solutions, positioning the Company in the number one spot within the North American hotel, leisure goods, and services sector.
C.        Organizational Structure
A listing of the Parent’s directly and indirectly owned subsidiaries at March 7, 2024 is set forth in Exhibit 8.1 to this annual report on Form 20-F. At March 7, 2024, De Agostini had an economic interest in the Parent of approximately 42.61% (excluding treasury shares) and, due to its election to exercise the Special Voting Shares associated with its ordinary shares pursuant to the Loyalty Plan, a voting interest in the Parent of approximately 59.75% of the total voting rights (excluding treasury shares). See “Item 7. Major Shareholders and Related Party Transactions.
The following is a diagram of the Parent and certain of its subsidiaries and associated companies at March 7, 2024:
igtorgstructure2.jpg

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D.        Property, Plants and Equipment
The Parent’s principal office is located at 10 Finsbury Square, Third Floor, London EC2A 1AF United Kingdom, telephone number +44 (0) 203 866 1240. At March 7, 2024, the Company leased approximately: (i) 110 properties in the U.S. under approximately 140 leases; and (ii) 100 properties outside of the U.S. under approximately 120 leases. Certain properties leased by the Company are subject to multiple leases (e.g., buildings where each floor leased by the Company is under a separate lease). As of March 7, 2024, the Company owned a number of facilities and properties, including:
•An approximately 113,000 square foot production and research and development office building in Moncton, New Brunswick, Canada; and
•An approximately 13,050 square foot enterprise data center in West Greenwich, Rhode Island.
The following table shows the Company’s material properties at March 7, 2024:
U.S. Properties
LocationSquare
Feet		Use and Productive CapacityExtent of
Utilization		Holding
Status
9295 Prototype Drive,
Reno, NV(1)
1,251,179Office; Warehouse; Game Studios; Hardware/Software Engineering; Global Production Center; Electronic Gaming Machine80 %Leased
6355 S. Buffalo Drive,
Las Vegas, NV(2)
222,268U.S. Principal Operating Facility; Game Studio; Systems Software; Showroom100 %Leased
4000 South Frontage Road, Suite 101
Lakeland, FL		174,720Printing Plant: Printing facility; Storage and Distribution; Office100 %Leased
55 Technology Way,
West Greenwich, RI		170,000Office; Research and Testing; Storage and Distribution100 %Leased
10 Memorial Boulevard,
Providence, RI		124,769Administrative functional office; Lottery regional HQ80 %Leased
8520 Tuscany Way, Bldg. 6, Suite 100,
Austin, TX		81,933Texas Warehouse and National Response Center: Contact Center; Storage and Distribution; Office95 %Leased
8200 Cameron Road, Suite E120,
Austin, TX		41,705Data Center of the Americas: Data Center; Network Operations; Office80 %Leased
5300 Riata Park Court, Bldg. E, Suite 100,
Austin, TX		26,759Austin Tech Campus: Research and Test; Office80 %Leased
47 Technology Way,
West Greenwich, RI		13,050Enterprise Data Center: Data Center; Network Operations100 %Owned
5 Funston Avenue,
San Francisco, CA		4,072PlayDigital HQ: Office100 %Leased
(1) 321,473 sq. ft. of this property is sub-leased to sub-tenants.
(2) 120,586 sq. ft. of this property has been sub-leased to a sub-tenant.


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Non-U.S. Properties
LocationSquare
Feet		Use and Productive CapacityExtent of
Utilization		Holding
Status
Viale del Campo Boario 56/D 00154
Roma, Italy		174,526Principal Operating Facility in Italy; Office; Italy Data Center: Data Center; Network Operations100 %Leased
Via delle Monachelle S.N.C.
Pomezia, Rome, Italy		129,167Instant Ticket Warehouse; Instant Ticket Distribution100 %Leased
328 Urquhart Ave,
Moncton, New Brunswick, Canada		113,000Canada HQ; Office; Research and Testing; Gaming Production100 %Owned
Seering 13-14,
Unterpremstatten, Austria		78,082Austria Gaming HQ; Office; Research and Test90 %Leased
Al. Jerozolimskie, 92
Brama Building,
Warsaw, Poland		48,283Global Tech Hub; Office; Research and Test95 %Leased
USCE Tower
Bulevar Mihajla, Pupina No. 6
Belgrade, Serbia		42,764Software Development Office; Lottery; Gaming Products95 %Leased
2310 Szigetszentmiklós
Leshegy u. 30
Budapest, Hungary
34,661Warehousing; Gaming Production and Parts Distribution for EMEA Region; Office100 %Leased
11 Talavera Rd.
Building B,
Sydney, Australia		27,432Office; Sales & Marketing; Financial Support100 %Leased
10 Finsbury Square, 3rd Floor London EC2A 1AD, United Kingdom(1)
17,340Registered Global Headquarters of the Parent; Global Management HQ, PlayDigital
100 %Leased
(1) 4,600 sq. ft. of this property has been sub-leased to a sub-tenant.
IGT has adopted a hybrid working arrangement for employees who are capable of performing their function remotely, with the Company’s employees afforded the ability to work both in the office and remotely.
IGT maintains its facilities in good condition, and these locations are fit for the purposes for which the Company uses them. There are no known environmental issues that may affect the Company’s utilization of its real property assets.
IGT does not have any plans to construct, expand, or improve its facilities in any material manner other than general maintenance of facilities. As such, the Company does not anticipate an increase in productive capacity.
None of the Company’s properties are subject to mortgages or other material security interests.

Item 4A.        Unresolved Staff Comments

None.

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Item 5.        Operating and Financial Review and Prospects

Management’s Discussion and Analysis

The following discussion and analysis of IGT’s financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, included in this annual report, as well as “Presentation of Financial and Certain Other Information,” “Item 3.D. Risk Factors,” and “Item 4.B. Business Overview.”
The following discussion includes information for the fiscal years ended December 31, 2023 and 2022. For a discussion and analysis of IGT’s consolidated operating results and non-operating results and segment revenues and operating results for the year ended December 31, 2022, compared to the year ended December 31, 2021, please refer to the disclosure under “Item 5. Operating and Financial Review and Prospects - A. Operating Results” in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2022, filed with the SEC on February 28, 2023.


A.    Operating Results

Business Overview
IGT is a global leader in gaming that delivers entertaining and responsible gaming experiences for players across all channels and regulated segments, from Lotteries and Gaming Machines to Digital Gaming and Sports Betting. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, the Company’s solutions deliver gaming experiences that responsibly engage players and drive growth. IGT has a well-established local presence and relationships with governments and regulators around the world, and creates value by adhering to the highest standards of service, integrity, and responsibility.

IGT manages and reports the Company’s operating results through three (3) business segments: Global Lottery, Global Gaming, and PlayDigital, along with a corporate support function (“Corporate and Other”). IGT's operations for the periods presented herein are discussed accordingly.

Business Acquisitions

On July 1, 2022, the Company completed the acquisition of iSoftBet by purchasing 100% of the equity interests in certain entities of the iSoftBet group for cash consideration of €162 million (inclusive of €20 million deposited into an escrow account) and contingent consideration of €4 million. The acquisition of iSoftBet provides market-tested proprietary digital content, advanced game aggregation capabilities, scalable promotional tools, analytics, and creative talent to the PlayDigital segment. The financial results of iSoftBet have been included within our PlayDigital segment in our Consolidated Financial Statements since the date of purchase.

Divestitures

On September 14, 2022, the Company completed the sale of 100% of the share capital of Lis Holding S.p.A., a wholly owned subsidiary of IGT Lottery S.p.A. that conducted the Company’s Italian commercial services business, to PostePay S.p.A. – Patrimonio Destinato IMEL for a purchase price of €700 million. The net consideration received of €479 million resulted in a pre-tax gain on sale of $278 million, ($276 million net of tax). The business was a component of continuing operations within our Global Lottery segment through the closing date.

Discontinued Operations

On May 10, 2021, IGT completed the sale of its Italian B2C businesses to Gamenet Group S.p.A. for a cash sale price of €950 million. The sale of the businesses met the criteria to be reported as a discontinued operation and, as a result, the discussion that follows in this Item 5. has been prepared on a continuing operations basis and excludes results from discontinued operations, discussed in detail in “Notes to the Consolidated Financial Statements—3. Business Acquisitions and Divestitures” included in “Item 18. Financial Statements.”

OPtiMa

In connection with the 2020 introduction of our global product organizations, IGT identified opportunities to optimize the Company’s portion of the value chain across businesses and regions and launched the “OPtiMa” program. In 2021, the Company successfully achieved the $200 million in structural cost savings and capital expenditure reductions relative to 2019
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anticipated under the program. Following the successful achievement of OPtiMa, IGT launched OPtiMa 2.0, which was expected to yield an incremental $150 million in structural profit improvement by the end of 2023 relative to 2019. OPtiMa 2.0 focused on three key areas: (i) operational excellence and margin improvement initiatives; (ii) interest expense reductions; and (iii) structural improvements to the effective tax rate. As of December 31, 2022, the Company achieved the targeted reduction in interest expense and improvements to the effective tax rate, net of non-recurring items. The achievement of the operational excellence initiatives was partially offset by supply chain headwinds and inflationary cost increases, however, the Company still achieved the targeted margin improvement in 2023 as operations continued to normalize and we finalized a more structured approach to software development and multi-year licensing agreements.

Key Factors Affecting Operations and Financial Condition
The Company’s worldwide operations can be affected by industrial, economic, and political factors on both a regional and global level. The ongoing conflict between Russia and Ukraine, the Israeli-Hamas conflict, Argentina’s economic and financial crisis, the tightening of monetary policy by central banks and other companies)macroeconomic factors have caused disruptions and uncertainty in the global economy, including rising interest rates, increased inflationary pressures, foreign exchange rate fluctuations, potential cybersecurity risks, and exacerbated supply chain challenges. However, these events did not have a material impact on our supply chain or our results of operations. The extent to which our business, or the business of our suppliers or manufacturers, will be impacted in the future is unknown. We will continue to monitor the effects of these events on our business and our results of operations. The following are the principal factors which have affected the Company’s results of operations and financial condition and/or which may affect results of operations and financial condition for future periods.

On June 8, 2023, the Company announced the Board would begin evaluating potential strategic alternatives for the Global Gaming and PlayDigital businesses with the goal of unlocking the full value of IGT's portfolio. The Board considered a broad range of potential alternatives, with an agreement reached with Everi on February 28, 2024 for the Separation & Divestiture of the Global Gaming and PlayDigital segments. Refer to the “Notes to the Consolidated Financial Statements—26. Subsequent Events” for further information. To support the Board in their assessment of potential transactions, including the Separation & Divestiture, the Company retained advisors, legal counsel, and consultants who will continue to support the Company through the closing date of the Separation & Divestiture.

Product Sales: Product sales fluctuate from year to year due to the mix, volume, and timing of the transactions. Product sales amounted to $963 million, $866 million, and $606 million, or approximately 22%, 21%, and 15% of total revenues for the years ended December 31, 2023, 2022, and 2021, respectively.

Jackpots: The Company believes that the performance of lottery products is influenced by the size of advertised jackpots in jurisdictions that offer such jackpots. Typically as jackpots increase, sales of lottery tickets also increase, further increasing the advertised jackpot level. However, in a rising interest rate environment, advertised jackpot levels will increase more rapidly than they previously did given the annuity basis of the displayed jackpots. Therefore, in a higher interest rate environment, jackpot game ticket sales may be increasing at a relatively slower rate than the corresponding jackpot levels. In a lower interest rate environment, advertised jackpot levels are slower to increase which can negatively impact the sales of lottery tickets.

Effects of Foreign Exchange Rates: The Company is affected by fluctuations in foreign exchange rates (i) through translation of foreign currency financial statements into U.S. dollars for consolidation, which is referred to as the translation impact, and (ii) through transactions by subsidiaries in currencies other than their own functional currencies, which is referred to as the transaction impact. Translation impacts arise in the preparation of the Consolidated Financial Statements; in particular, the Consolidated Financial Statements are prepared in U.S. dollars while the financial statements of each of the Company’s subsidiaries are generally prepared in the functional currency of that subsidiary. In preparing Consolidated Financial Statements, assets and liabilities measured in the functional currency of the subsidiaries are translated into U.S. dollars using the exchange rate prevailing at the balance sheet date, while income and expenses are translated using the average exchange rates for the period covered. Accordingly, fluctuations in the exchange rate of the functional currencies of the Company’s subsidiaries against the U.S. dollar impacts the Company’s results of operations. The Company is particularly exposed to movements in the euro/U.S. dollar exchange rate. Although the fluctuations in exchange rates have had a significant impact on the Company’s revenues, net income, and net debt, the impact on operating income and cash flows is less significant as revenues are typically matched to costs denominated in the same currency.

Given the impact of foreign exchange rates on our consolidated results, certain key performance indicators (such as same-store sales) and financial fluctuations are reported on a constant-currency basis in order to facilitate period-to-period comparisons of our results without regard to the impact of fluctuating foreign currency exchange rates.
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Legal Proceedings

From time to time, the Parent and/or one or more of its subsidiaries are party to legal, regulatory, or administrative proceedings regarding, among other matters, claims by and against us, and injunctions by third parties arising out of the ordinary course of business or its other business activities. Licenses are also subject to legal challenges by competitors seeking to annul awards made to the Company. The Parent and/or one or more of its subsidiaries are also, from time to time, subjects of, or parties to, ethics and compliance inquiries and investigations related to the Company’s ongoing operations.

There are no new material legal, regulatory, or administrative proceedings. Please refer to “Process for Disclosure and Recording of Liabilities Related to Legal Proceedings” and“Legal Proceedings” within “Notes to the Consolidated Financial Statements - Note 2. Summary of Significant Accounting Policies” and “19. Commitments and Contingencies” included in “Item 18.Financial Statements”, respectively,for additional information.

Results of Operations

Comparison of the years ended December 31, 2023 and 2022

Total Revenue
 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Total service revenue3,347 78 3,359 79 (12)— 
Total product sales963 22 866 21 96 11 
Total revenue4,310 100 4,225 100 85 2 

Total revenue for the year ended December 31, 2023 increased $85 million, or 2%, to $4.3 billion from $4.2 billion for the prior corresponding period due primarily to player demand and product and game performance.

Product sales growth is primarily attributable to our Global Gaming segment experiencing increases in both machine units sold and a higher global average selling price from the prior corresponding period. Service revenue increases in our Global Gaming and PlayDigital segments were driven by game performance, install base growth, and player demand. Global Lottery increases, principally due to multi-jurisdiction jackpot game same-store sales in the U.S. and instant ticket and draw-games same-store sales in Italy, were fully offset by the disposition in September 2022 of our Italian Commercial Services business which contributed $197 million in the prior corresponding period as well as unfavorable foreign currency impacts primarily related to the euro of $32 million. Excluding the contribution from the Italian Commercial Services business, total revenue increased 7%, with service revenue increasing 5% in our Global Lottery segment.

See “Segment Operating Results” section below for further discussion related to the principal drivers of changes to Total revenue.

Operating expenses
 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Service Revenue$% of Service Revenue$%
Cost of services1,630 49 1,671 50 (40)(2)

Cost of services for the year ended December 31, 2023 decreased $40 million, or 2%, to $1.6 billion from $1.7 billion for the prior corresponding period primarily attributable to our Global Lottery segment experiencing a $127 million decrease in point of sale (“POS”) fees due to the disposal of the Italian Commercial Services business, partially offset by a $22 million increase in POS consumables used in providing instant and draw-based game sales, a $13 million increase in the amortization of capitalized software costs, a $10 million increase in insurance and taxes, and a $12 million increase in bank service fees and postage and freight in the aggregate. Additionally, within our Global Gaming segment, depreciation and amortization expense increased $37 million due primarily to amortization expense related to a multi-year license agreement of intellectual property entered into in December 2022, partially offset by a $29 million reduction in usage-based royalties. Global Gaming also had a $6 million increase in postage and freight. Our PlayDigital segment had a $6 million decrease in depreciation and amortization
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expense and together with Global Lottery saw an increase in licensing and royalties expense of $7 million in the aggregate. Increased payroll and benefits in Global Gaming and PlayDigital of $16 million correlated to the service revenue growth in those segments.

As a percentage of service revenue, cost of services decreased by approximately 100 basis points in total. The overall increase in gross service margin was $29 million primarily due to the disposal in September 2022 of the relatively lower margin Italy Commercial Services business, with gross margin as a percentage of service revenue increasing 100 basis points and 550 basis points in our Global Lottery and PlayDigital segments, respectively, and our Global Gaming segment decreasing 140 basis points.

 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Product Revenue$% of Product Revenue$%
Cost of product sales573 59 554 64 19 3 

Cost of product sales increased $19 million, or 3%, from the prior corresponding period, primarily as a result of a $96 million increase in total product sales. Cost of product sales as a percentage of product sales decreased by approximately 450 basis points principally due to product mix and improved supply chain costs in our Global Gaming segment.

 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Selling, general and administrative834 19 814 19 20 3 

Selling, general and administrative increased $20 million, or 3%, to $834 million as compared to $814 million for the prior corresponding period. This increase was primarily attributable to an increase in payroll and benefit costs across all segments of $25 million in the aggregate primarily due to increased headcount, partially offset by a $7 million decrease in incentive compensation cost in the aggregate for all segments.

 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Research and development234 5 255 6 (21)(8)

Research and development decreased $21 million, or 8%, from the prior corresponding period primarily due to process improvements resulting in increased capitalization of software development activities, partially offset by increases in payroll and benefit costs.

Non-operating expenses
 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Interest expense, net285 7 289 7 (4)(1)
Foreign exchange loss, net75 2 36 1 38 105 
Other non-operating expense, net12 — 7 — 5 62 
Total non-operating expenses372 9 333 8 39 12 

Interest expense, net decreased $4 million, or 1%, from the prior corresponding period. This decrease was primarily due to the Company maintaining a lower average balance in its Senior Secured Notes, partially as a result of the notes redemptions in 2023 described in “Notes to the Consolidated Financial Statements”— 15 Debt compared to the prior corresponding period.

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Foreign exchange loss, net was $75 million compared to $36 million for the prior corresponding period. Foreign exchange loss, net is principally related to fluctuations in the euro to U.S. dollar exchange rate on internal and external debt and to a $34 million loss related to the devaluation of the Argentine peso for the year ended December 31, 2023.

Other non-operating expense, net was $12 million of expense, compared to $7 million of expense for the prior corresponding period. During the year ended December 31, 2023, the expense was primarily due to $5 million in losses on extinguishment of debt and $5 million in losses on the purchase and sale of a blue-chip swap, a legal mechanism used to transfer funds out of Argentina. During the prior corresponding period, the Company completed the sale of its Italian commercial services business, resulting in a $278 million gain, which was offset by the recognition of $270 million of expense for the settlement of the Benson Matter and $13 million in losses on extinguishment of debt.

Provision for income taxes
 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Provision for income taxes322 7 175 4 147 84 

The increase in provision for income taxes was primarily driven by a higher valuation allowance related to our business interest expense limitation carryforward, the impact of the international provisions of the U.S. Tax Cut and Jobs Act of 2017, 2016 and 2015, see “Item 5.B the settlement of the 2015-2022 Italy tax audit. In addition, there was no book tax benefit arising from the settlement provision of Adrienne Benson and Mary Simonson, individually and on behalf of all others similarly situated v. Double Down Interactive LLC, et al. (the “DDI / Benson Matter provision”) for the year ended December 31, 2023, compared to a $66 million book tax benefit for the prior corresponding period.

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Segment Operating Results

Global Lottery

Revenues and Key Performance Indicators

Service revenue
 For the year ended December 31,Change
($ in millions)20232022$%
Operating and facilities management contracts2,306 2,181 125 6 
Systems, software, and other53 255 (202)(79)
Total service revenue2,359 2,436 (77)(3)
For the year ended December 31,
(% on a constant-currency basis)20232022
Global same-store sales growth (%)
Instant ticket & draw games1.9 %(3.9)%
Multi-jurisdiction jackpots5.8 %15.3 %
Total2.3 %(2.2)%
North America & Rest of world same-store sales growth (%)
Instant ticket & draw games0.6 %(2.4)%
Multi-jurisdiction jackpots5.8 %15.3 %
Total1.2 %(0.4)%
Italy same-store sales growth (%)
Instant ticket & draw games6.6 %(8.5)%

Operating and facilities management contracts revenue increased $125 million, or 6%, from the prior corresponding period. This increase was primarily the result of a $127 million increase in instant, draw-based, and multi-jurisdiction jackpot ticket sales that experienced same-store sales growth of 6.6% in Italy, and a 2.3% increase in global same-store sales in the aggregate. Global same-store sales for multi-jurisdiction jackpot ticket sales experienced a 5.8% increase, primarily attributable to elevated jackpot levels in the U.S. Additionally, other lottery revenue increased $5 million principally due to iLottery fees, which was fully offset by a $7 million decrease in LMA incentive revenue.

Systems, software, and other revenue decreased $202 million, or 79%, to $53 million from $255 million for the prior corresponding period primarily due to the sale of our Italian commercial services business that concluded September 14, 2022.

Product sales

 For the year ended December 31,Change
($ in millions)20232022$%
Lottery products171 157 14 9 
Total product sales171 157 14 9 

Lottery products revenue for the year ended December 31, 2023 increased $14 million, or 9%, from the prior corresponding period, principally due to higher terminal deliveries in North America of $25 million primarily as a result of contracts in Michigan and Canada, as well as a $27 million increase in International sales in the aggregate attributable to the extension of a multi-year central system software license in Switzerland, an iLottery license in Poland, and the U.K. Lottery supplier contract. These increases were partially offset by a $14 million decrease in terminal and system deliveries primarily related to the prior year contract renewal with the Poland Lottery as well as a $19 million decrease in software sales principally related to International system software upgrades, sales, and deliveries in the prior corresponding period. Instant ticket printing operations revenue decreased $9 million due primarily to increased volume in Florida in the prior corresponding period.
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Operating Margins
 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Gross margin
Service1,173 1,186(13)(1)
% of service revenue50 %49 %100 bps
Product60 3822 58 
% of product sales35 %24 %1100 bps

Gross margin as a percentage of service revenue increased to 50% from 49% for the prior corresponding period primarily as a result of increased Operating and facilities management contracts revenues as discussed above and decreased Systems, software, and other revenue from the former Italy commercial services business where margins were typically lower as a result of the POS fees.

Gross margin on product sales for the year ended December 31, 2023 increased 1,100 basis points from the prior corresponding period principally due to the increase in higher margin terminal and software license sales.

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Operating income913 909 4 — 
Operating margin36 %35 %100  bps

Segment operating margin increased 100 basis points primarily as a result of increased Operating and facilities management contracts revenue coupled with the increase in higher margin product sales compared with the prior corresponding period as discussed above.

Global Gaming

Revenues and Key Performance Indicators

Service revenue
 For the year ended December 31,Change
($ in millions, except yields)20232022$%
Gaming terminal services520 483 37 8 
Systems, software, and other242 232 10 4 
Total service revenue762 714 47 7 
For the year ended December 31,Change
20232022Units / $%
Installed base units
Total installed base units53,906 49,586 4,320 9 
Total yields(1)
$29.68$29.89$(0.21)(1)
(1) Total yields represent revenue per day for the average installed base units. Installed base units included active and inactive units deployed to a customer location.

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Gaming terminal services revenue increased $37 million, or 8%, from the prior corresponding period. This increase was primarily driven by a 9% increase in installed base units and yields holding constant at approximately $30 per unit per day primarily attributable to game performance partially offset by Regional mix.

Systems, software, and other revenue increased $10 million, or 4%, from the prior corresponding period principally related to an increase in systems maintenance and recurring software revenue from our poker install base.

Product sales
 For the year ended December 31,Change
($ in millions)20232022$%
Gaming terminals571 501 70 14 
Gaming other220 208 12 6 
Total product sales791 709 82 12 
For the year ended December 31,Change
20232022Units / $%
Global machine units sold
Total machine units sold35,090 32,820 2,270 7 

Gaming terminals increased $70 million, or 14%, from the prior corresponding period. This increase was primarily associated with an increase in machine units sold of 2,270, the majority of which were replacement machine units in the U.S. and Canada and a 5% higher global average selling price than those sold in the prior corresponding period.

Gaming other increased $12 million, or 6%, from the prior corresponding period, principally related to a $40 million increase in poker software licenses and system sales, partially offset by a $29 million decrease in intellectual property licenses associated with patents tied to remote game server solutions and game features.

Operating Margins

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Gross margin
Service427 41116 4 
% of service revenue56 %58 %(200)bps
Product336 28056 20 
% of product sales43 %40 %300 bps

Gross margin as a percentage of service revenue decreased 200 basis points compared to the prior corresponding period as costs increased in excess of revenues, primarily due to increased payroll and benefits, and postage and freight costs.

Gross margin as a percentage of product sales increased to 43% from 40% from the prior corresponding period, principally as a result of increased unit sales and a higher average selling price as referenced above, offset slightly by unfavorable product mix due to high margin intellectual property revenues in the prior period.

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Operating income313 24271 29 
Operating margin20 %17 %320 bps

Segment operating margin increased to 20% from 17% for the prior corresponding period primarily due to an increase in revenues of $129 million resulting from the increased demand for terminal sales and game performance, as well as supply chain costs receding and process improvements resulting in higher capitalization of software development activities. Increased units sales, system deliveries, poker licensing sales, and higher yields on our installed base units improved operating leverage.

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PlayDigital

Revenues and Key Performance Indicators

Service revenue
 For the year ended December 31,Change
($ in millions)20232022$%
PlayDigital services227 209 18 9 
Total service revenue227 209 18 9 

PlayDigital services revenue for the year ended December 31, 2023 increased $18 million, or 9%, from the prior corresponding period, principally related to a $15 million contribution from the acquisition of iSoftBet and a $3 million increase in PlaySports driven by the expansion into new jurisdictions and growth in existing market from sports betting solutions in the period.

Operating Margins

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Gross margin
Service163 13925 18 
% of service revenue72 %67 %500 bps

Gross margin as a percentage of service revenue increased to 72% from 67% for the prior corresponding period primarily driven by higher service revenues and increased operating leverage.

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Operating income65 5016 32 
Operating margin29 %24 %490 bps

Operating margin increased to 29% from 24% for the prior corresponding period primarily driven by increased gross service margin, partially offset by increased investments in research & development, and increased selling, general, and administrative costs to support growth.

B.        Liquidity and Capital Resources—Capital Expenditures.”Resources

Overview

The Company’s business is capital intensive and requires liquidity to meet its obligations and fund growth. Historically, the Company’s primary sources of liquidity have been cash flows from operations and, to a lesser extent, cash proceeds from financing activities, including amounts available under the Revolving Credit Facilities. In addition to general working capital and operational needs, the Company’s liquidity requirements arise primarily from its need to meet debt service obligations and to fund capital expenditures and upfront license fee payments. The Company also requires liquidity to fund acquisitions and associated costs. The Company’s cash flows generated from operating activities together with cash flows generated from financing activities have historically been sufficient to meet the Company's liquidity needs.

The Company did not make any capital expendituresbelieves its ability to generate cash from operations to reinvest in its business is one of its fundamental financial strengths. Combined with funds currently available and committed borrowing capacity, the first quarter of calendar 2018 that were notCompany expects to have sufficient liquidity to meet its financial obligations in the ordinary course of business.business for the next 12 months from the date of issuance of these Consolidated Financial Statements and for the longer-term period thereafter.

B. Business Overview
The Company iscash management activities, funding of operations, and investment of excess liquidity are centrally coordinated by a dedicated treasury team with the world’s largest end-to-end gaming company, with leading market positions in North Americaobjective of ensuring effective and Italyefficient management of funds.
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At December 31, 2023 and 2022, the most extensive gaming content library inCompany’s total available liquidity was as follows: 
 December 31,
($ in millions)20232022
Revolving Credit Facilities1,234 1,822 
Cash and cash equivalents572 590 
Total Liquidity1,805 2,412 

The Revolving Credit Facilities are subject to customary covenants (including maintaining a minimum ratio of EBITDA to total net interest costs and a maximum ratio of total net debt to EBITDA) and events of default, none of which are expected to impact the world. Company’s liquidity or capital resources. 

The Company operatescompleted multiple debt transactions in 2023 and provides an integrated2022. Refer to the “Notes to the Consolidated Financial Statements—15. Debt” included in “Item 18. Financial Statements” for further discussion of these transactions as well as information regarding the Company’s other debt obligations, including the maturity profile of borrowings and committed borrowing facilities.

At December 31, 2023 and 2022, approximately 28% and 20% of the Company’s debt portfolio was exposed to interest rate fluctuations, respectively. The Company’s exposure to floating rates of innovative technology productsinterest primarily relates to the Revolving Credit Facilities and services across all gaming markets, including: lottery management services, onlineEuro Term Loan Facilities due January 2027.

The following table summarizes the Company’s USD equivalent cash and instants lotteries, instant ticket printing, electronic gaming machines, sports betting, and interactive gaming. The Company offers business-to-consumer (“B2C”) and business-to-business (“B2B”) products and services to customers in over 100 countries. Leveraging a wealth of premium content, substantial investment in technology, in-depth customer intelligence, and operational expertise, the Company's solutions anticipate the demands of consumers wherever they decide to play, providing its customers with leading edge solutions.cash equivalent balances by currency: 
 December 31, 2023December 31, 2022
($ in millions)$%$%
Euros310 54 312 53 
U.S. dollars137 24 147 25 
Other currencies125 22 131 22 
Total Cash and cash equivalents572 100 590 100 
 
The Company is headquarteredmaintains its cash deposits in London, with principal operating facilities located in Providence, Rhode Island; Las Vegas, Nevada; and Rome, Italy.a diversified portfolio of global banks, the majority of which are considered Global Systemically Important Banks. The Company is organized into four business segments, which are supported by corporate shared services: North America Gaming and Interactive, North America Lottery, International and Italy. Research and development and manufacturing are mostly centralizedholds an immaterial amount of cash in North America. The Company had over 12,000 employeescountries where there may be legal or economic restrictions on the ability of subsidiaries to transfer funds in the form of cash dividends, loans, or advances. As a result of the continued instability of the Argentine peso, at December 31, 2017.2023, after transferring $8 million in November 2023 through the use of a blue-chip swap mechanism, $2.8 billion in Argentine Pesos ($3 million USD equivalent) of the Company’s remaining cash in Argentina was held in a money market fund and $1.9 billion in Argentine Pesos ($2 million USD equivalent) was held in a fixed income fund in an effort to offset the negative impact of further continued devaluation. Argentina’s economy remains highly inflationary for accounting purposes.


Cash Flow Summary

The Company strivesfollowing tables summarize the Consolidated Statements of Cash Flows. A complete statement of cash flows is provided in the Consolidated Financial Statements included herein.

Cash Flows - Operating Activities 
 For the year ended December 31,Change
($ in millions)20232022$%
Net cash provided by operating activities from continuing operations1,040 899 142 16 

Non-cash adjustments to create shareholder value by adheringnet income for the year ended December 31, 2023 were $880 million, compared to $692 million for the highest levelsprior corresponding period. The principal drivers of service, integrity, responsibility,the increase in non-cash adjustments were related to $98 million in additional deferred incomes taxes primarily related to U.S. income, unfavorable changes in foreign exchange of $38 million, and innovation. Social responsibility is vitalan increase in depreciation and amortization of $37 million. The prior corresponding period gain on the Company is committed to responsible gaming, giving back to its communities, and doing its part to protectsale of the environment.

The Company’s lottery operations have been certified for compliance with the WLA Associate Member CSR Standards and Certification Framework. In February 2017, the Company achieved Internet Responsible Gambling Compliance Assessment Program (“iCAP”) re-certification. Also in 2017, the Company became the first gaming supplier to achieve responsible gaming accreditation for its land-based casino and lottery segments from the Global Gambling Guidance Group. The certifications awarded to the CompanyItalian Commercial Services Business of $278 million was substantially offset by the most important industry associations worldwide are testimony toDDI / Benson Matter provision recorded in the Company’s commitment to responsible gaming with the goal to create value for all our stakeholders.prior period of $270 million.



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ProductsChanges in operating assets and Services

The Company has five broad categoriesliabilities resulted in cash outflows of products$147 million and services: (1) Lottery, (2) Machine Gaming, (3) Sports Betting, (4) Interactive and Social Gaming, and (5) Commercial Services.

1. Lottery

The Company supplies a unique set of lottery solutions to more than 100 customersworldwide. Lottery revenues are frequently designated for particular purposes, such as education, economic development, conservation, transportation, programs for senior citizens and veterans, health care, sports facilities, capital construction projects, cultural activities, tax relief, and others. Many governments have become increasingly dependent on their lotteries as revenues from lottery ticket sales are often a significant source of funding for these programs.

Lottery services are provided through facilities management contracts, lottery management agreements, and product sales contracts. In the majority of jurisdictions, lottery authorities award contracts through a competitive bidding process. Typical service contracts are five to 10 years in duration, with multi-year extension options. After the expiration of the initial or extended contract term, a lottery authority generally may either seek to negotiate further extensions or commence a new competitive bidding process.

The Company designs, sells, and operates a complete suite of point-of-sale terminals that are electronically linked with a centralized transaction processing system that reconciles lottery funds between the retailer, where a transaction is enabled, and the lottery authority, where the transaction is captured. The Company provides and operates highly secure, online lottery transaction processing systems that are capable of processing over 500,000 transactions per minute. The Company provides more than 450,000 point-of-sale devices to lottery customers and lotteries that it supports worldwide. The Company also produces high-quality instant ticket games and provides printing services such as instant ticket marketing plans and graphic design, programming, packaging, shipping and delivery services.

The Company has developed and continues to develop new lottery games, licenses new game brands from third parties, and installs a range of new lottery distribution devices, all of which are designed to drive responsible same-store sales growth for its customers. In connection with its delivery of lottery services, the Company actively advises its customers on growth strategies. The Company also provides marketing services, in particular retail optimization and lottery brand awareness campaigns. The

Company works closely with its lottery customers and retailers to help retailers sell lottery games more effectively. These programs include product merchandising and display recommendations, selection of appropriate lottery product mix for each location, and account reviews to plan lottery sales growth strategies. The Company leverages years of experience accumulated from being the concessionaire$207 million for the Italian Lotto, one of the world’s largest lotteries. This B2C expertiseyears ended December 31, 2023 and December 31, 2022, respectively, primarily decreasing due to a $179 million increase in Italy, which includes management of all of the activities along the lottery value chain, allows the Company to better serve B2B customers in its North America Lottery and International segments.

The lottery business is highly competitive and typically subject to strong, price-based competition. The Company's primary competitors in the lottery business include Scientific Games Corporation and Intralot S.A. The instant tickets production business is also highly competitive and subject to strong, price-based competition. The Company's instant ticket competitors in the U.S. include Scientific Games Corporation and Pollard Banknote Limited.  Internationally, a number of instant ticket game vendors compete with the Company, including the competitors mentioned above,accrued income taxes payable as well as diversified printing companies such as Eagle Pressa $70 million increase in accounts payable, partially offset by a $170 million increase in payments of India. The private manager, operator,the DDI / Benson Matter provision with $220 million paid in the current period and licensee sector continues to emerge globally.  Competitors$50 million paid in this market primarily consist of commercial lottery operators including SAZKA a.s., Camelot U.K. Lotteries Limited, Sisal S.p.A. (“Sisal”), and Tattersalls Ltd.  the prior corresponding period.


The primary typescash impact of lottery agreements are outlined below:payments on the DDI / Benson Matter provision, net of tax benefits, was $184 million and $50 million for the years ended December 31, 2023 and December 31, 2022, respectively.


Facilities Management Contracts (“FMCs”)Cash Flows - Investing Activities from Continuing Operations

For the year ended December 31,Change
($ in millions)20232022$%
Net cash (used in) provided by investing activities from continuing operations(393)42 (435)> 200.0
The majority
During the year ended December 31, 2023, the Company used $393 million of net cash for investing activities, an increase of $435 million from the prior corresponding period, principally due to $476 million generated from the sale of the Company’s North American Lottery revenues are earned under FMCs. The Company’s FMCs typically requireItalian Commercial Services Business in the prior corresponding period and an $82 million increase in capital expenditures primarily due to increased capitalization of software development activities and increased systems and equipment as a result of the growth in our install base. These increases were partially offset by a decrease of $142 million related to the acquisition of iSoftBet in the prior period.

Cash Flows - Investing Activities from Discontinued Operations

During the year ended December 31, 2021, the Company completed the sale of its Italian B2C businesses and received the €125 million payment due September 30, 2022 on July 13, 2022. Refer to design, install,“Notes to the Consolidated Financial Statements—3. Business Acquisitions and operate the lottery system for an initial term, which is typically five to 10 years. The Company’s FMCs usually contain extension options under the same or similar terms and conditions, generally ranging from one to five years. Under a typical FMC, the Company maintains ownershipDivestitures”, included in “Item 18. Financial Statements”.

Cash Flows - Financing Activities
For the year ended December 31,Change
($ in millions)20232022$%
Net cash used in financing activities(638)(1,065)428 40 
During 2023, cash flows used in financing activities primarily included principal payments on long-term debt of the technology and facilities, and is responsible for capital investments throughout the duration of the contract, although the investments are generally concentrated during the early years. FMC revenues are generally service fees$801 million, dividends paid to the Company directly from the lottery authority based on a percentageshareholders of such lottery’s wagers or ticket sales. Under a number$160 million, dividends paid to non-controlling interests of the Company’s FMCs, the Company additionally provides a wide range of support services and equipment for the lottery’s instant ticket games, such as marketing, distribution and automation of validation, inventory and accounting systems. In return, the Company receives either fixed fees or fees based upon a percentage of the sales of the instant ticket games. In limited instances, the Company provides instant tickets and online lottery systems and services under the same facilities management contract. Also, the Company offers Lottery Vending Machines ("LVMs") that sell instant tickets as well as draw-based games.

The table below sets forth the lottery authorities and customers with which the Company had FMCs for the installation and operation of lottery systems at March 1, 2018, and as to which the Company is the sole supplier of central computer systems and terminals and material services. The table below does not include FMCs in jurisdictions where the Company also has contracts listed below under the heading "Concessions and Lottery Management Agreements.”
U.S. Jurisdiction
Date of Commencement
of Current Contract*
Date of
Expiration of Current
Contract
Current Extension Options**Additional Commentary
CaliforniaOctober 2003October 2026In September 2017, the California Lottery and IGT Global Solutions Corporation agreed to extend the term of the contract for seven years, through October 2026. At the end of the final extension option period, the contract will remain in effect under the same terms and conditions until either party provides at least two years’ notice of termination.
ColoradoJanuary 2014June 2021Two two-year
Florida(1)
September 2016April 2031Two three-year
GeorgiaSeptember 2003September 2025
IllinoisJuly 2011April 2019For a description of the current contract, please see “Item 10.C — Material Contracts.”
KansasJuly 2008July 2018
KentuckyJuly 2011July 2021Five one-year
MichiganJanuary 2009January 2021
MinnesotaApril 2015November 2023Up to three years
MissouriOctober 2014June 2022Up to three years
NebraskaDecember 2010June 2021
New YorkSeptember 2009August 2020In August 2017, the New York Lottery and IGT Global Solutions Corporation agreed to extend the term of its contract for three years, through August 2020.
North CarolinaMarch 2016June 2027Up to five years
OregonOctober 2007November 2020
Rhode IslandJuly 2003June 2023
South CarolinaMay 2018May 2028In August 2017, the South Carolina Education Lottery and IGT Global Solutions Corporation entered into a new contract for an initial term of 10 years following conversion.
South DakotaAugust 2009August 2019
TennesseeApril 2015June 2022Up to seven years
TexasSeptember 2011August 2026
VirginiaMarch 2016October 2024Up to six years
WashingtonOctober 2014June 2026Up to 10 years
West VirginiaMay 2017June 2025Up to three yearsIn May 2017, the West Virginia Lottery and IGT Global Solutions Corporation entered into a new contract for an initial term of seven years, through June 2025.
WisconsinFebruary 2016May 2024Up to five years

1.On February 17, 2017, the Speaker for the Florida House of Representatives (the "Speaker") filed an action in Circuit Court in Florida, against the Florida Lottery. On Tuesday, March 7, 2017, the Circuit Court issued an order in favor of the Speaker, the effect of which was to temporarily void the lottery contract (the "2016 Contract"). On March 28, 2017, an appeal was filed by the Secretary of the State of Florida. The appeal automatically stayed the Circuit Court decision, which pending resolution of the appeal, reinstates the effectiveness of the 2016 Contract. On December 8, 2017, IGT Global Solutions Corporation and the Florida Lottery executed a Memorandum of Understanding (“MoU”). The MoU provides that a new contract (“2017 Contract”) will replace the 2016 Contract when the Governor has approved, signed and ratified within the State of Florida’s Budget for the 2018-2019 Fiscal Year (the Fiscal Year commencing July 1, 2018) a specific appropriation of amounts equal to the expected annual payment obligations for the 2018-2019 Fiscal Year (the “Budget Approval Date”). The 2017 Contract will have an initial term of 13 years following conversion, and conversion will be the date that is 12 months following the Budget Approval Date.

* Reflects the date on which the contract was executed. The execution date typically precedes the date on which compensation is provided under the contract and includes a period of time (usually between six and 18 months) during which the new system is developed, installed, and tested.

** Reflects extensions available to the lottery authority under the current contract.


Non-U.S. Jurisdiction
Date of Commencement
of Current Contract*
Date of
Expiration of Current
Contract
Current Extension Options**Additional Commentary
Caribbean and Latin America:
Argentina - Slot Machines S.A. (San Luis Province/Agencia Financiera de Loterías, Casinos y Juegos de Azar)April 2012October 2021Sole discretion of Agencia, up to 10 years
Jamaica-Supreme Ventures LimitedNovember 2000January 2026
Mexico-Pronosticos Para La Asistencia PublicaDecember 2014December 2020
Europe, Africa, Asia:
Belgium - Loterie Nationale de BelgiqueJune 2014May 2024One six month
China - Beijing Welfare LotteryJanuary 2012December 2020Automatic two one-year terms unless a party gives at least 180 days’ notice before the end of initial or extension term
Czech Republic-SAZKA a.s. (f/k/a Czech Republic-SAZKA sázková kanceláø a.s.)January 2015December 2022
Luxembourg-Loterie NationaleMarch 2013March 2021One five-year
Poland-Totalizator SportowyDecember 2011November 2018Three one-year or one three-year
Slovak Republic-TIPOS, National Lottery Company, a.s.January 2007December 2018
Spain-Organizacion Nacional de Ciegos Españoles (ONCE)October 2009December 2020Five years and subsequently for biannual periods unless either party elects to terminate with prior notice of two years
South Africa - Ithuba Holding (Pty.) Ltd.June 2015May 2020 One three-year
Turkey-Turkish National LotteryNovember 1996November 2018The term of the contract renews for successive one-year periods unless either party gives at least 90 days’ notice of non-renewal prior to the expiration date
United Kingdom-The National LotteryFebruary 2009January 2023One year or two six monthsOperated by Camelot U.K. Lotteries Limited on a facilities management basis.

* Reflects the date on which the contract was executed. The execution date typically precedes the date on which compensation is provided under the contract and includes a period of time (usually between six and 18 months) during which the new system is developed, installed, and tested.

** Reflects extensions available to the lottery authority under the current contract.

Concessions and Lottery Management Agreements (“LMAs”)

A portion of the Company’s revenues, primarily from its Italy segment, is derived from concessions or LMAs. Under a typical concession, the Company manages the core lottery functions, including the lottery systems and the majority of the day-to-day activities along the lottery value chain. This includes collecting wagers, managing accounting and other back-office functions, running advertising and promotions, operating data transmission networks and processing centers, training staff, providing retailers with assistance, and supplying materials for the games. LMAs are similar to concessions although most LMAs also include a separate supply agreement, pursuant to which the Company provides certain hardware, equipment, software, and support services. The service revenues the Company earns$158 million, $74 million in return for operating these concessionsof capital to non-controlling interests, and LMAs are generally fixed basedpayments on the percentagedeferred license obligations of wagers. The Company provides lottery management services$22 million. These cash outflows were partially offset by net proceeds from Revolving Credit Facilities of $609 million.

During 2022, cash flows used in New Jersey as partfinancing activities primarily included principal payments on long-term debt of a joint venture$597 million, dividends paid to non-controlling interests of $178 million, dividends paid to shareholders of $161 million, repurchases of common stock of $115 million, $75 million in return of capital to non-controlling interests, and in Indiana indirectly through a wholly-owned subsidiarynet payments of the Parent. In Italy both lottery concessions are heldshort-term borrowings of $51 million. These cash outflows were partially offset by a joint venture, with the Lotto Concession awarded in June 2016net receipts from financial liabilities of $75 million and operating since November 30, 2016, and the instant ticket lottery (“Gratta e Vinci”) concession renewed in 2017.net proceeds from Revolving Credit Facilities of $72 million.

The table below sets forth the lottery authorities with which the Company had concessions or LMAs at March 1, 2018.
Jurisdiction
Date of Commencement
of Current Contract*
Date of
Expiration of Current
Contract
Current Extension Options**Additional Commentary
Italy:
Agenzia delle Dogane e dei Monopoli - LottoJune 2016November 2025
Agenzia delle Dogane e dei Monopoli - “Scratch & Win” Instant LotteriesOctober 2010September 2028In December 2017, the concession was renewed to a consortium led by the Company extending the concession for nine additional years.
U.S.:
IndianaOctober 2012June 202810 one-year
New JerseyJune 2013June 2029
Caribbean and Latin America:
Colombia - ETESA/ COLJUEGOSApril 2017April 2022In January 2017, an affiliate of the Parent executed a five-year contract with Coljuegos to operate the draw-based game Baloto.
Costa Rica - Junta de Protección SocialJune 2013June 2019Automatic renewals for two-year periods up to a total of 10 years unless the Junta gives notice of non-renewal
Trinidad & Tobago-National Lotteries Control BoardDecember 1993March 2021Automatic extension for one three-year period
Anguilla-LILHCoMay 2007May 2027One 10-year
Antigua/Barbuda-LILHCoFebruary 2017January 2027One 10-year
Barbados-LILHCoJune 2005June 2023
Bermuda-LILHCoMay 2004Automatic annual renewal
St. Kitts/Nevis-LILHCoOctober 2013October 2019
St. Maarten-LILHCoSeptember 2007September 2027One 10-year
U.S. Virgin Islands-LILHCoDecember 2001December 2021

* Reflects the date on which the contract was executed. The execution date typically precedes the date on which compensation is provided under the contract and includes a period of time (usually between six and 18 months) during which the new system is developed, installed, and tested.

** Reflects extensions available to the lottery authority under the current contract.


Instant Ticket Printing Contracts

As an end-to-end provider of instant tickets and related services, the Company produces high-quality instant ticket games and provides printing services such as instant ticket marketing plans and graphic design, programming, packaging, shipping, and delivery services. Instant tickets are sold at numerous types of retail outlets but most successfully in grocery and convenience stores.

Instant ticket contracts are priced based on a percentage of ticket sales revenues or on a price per unit basis and generally range from two to five years with extension opportunities. Government-sponsored lotteries grant printing contracts on both an exclusive and non-exclusive basis where there is typically one primary vendor and one or more secondary vendors. A primary contract permits the vendor to supply the majority of the lottery’s ticket printing needs and includes the complete production process from concept development through production and shipment. It also typically includes marketing and research support. A primary printing contract can include any or all of the following services: warehousing, distribution, telemarketing, and sales/field support. A secondary printing contract includes providing backup printing services and alternate product sources. It may or may not include a guarantee of a minimum or maximum number of games. The Company recently invested in a new state-of-the-art printing press, which began production in February 2018.

Product Sales and Services Contracts


Under product sales and services contracts, the Company constructs,assembles, sells, delivers, and installs turnkey lottery systems or lottery equipment, provides related services, and licenses related software. The lottery authority maintains, in most instances, responsibility for lottery operations. The Company sells additional terminalsmachines and central computers to expand existing systems and/or replace existing equipment as well as to provideand provides ancillary maintenance and support services related to the systems, equipment sold, and software licensed.

2. Machine Gaming
The Company designs, develops, manufactures and provides cabinets, games, systems and software for customers in regulated gaming markets throughout the world under fixed fee, participation andcategorizes revenue from product sales contracts. The Company holds more than 450 global gaming licenses and does business with commercial casino operators, tribal casino operators, and governmental organizations (primarily consisting of Lottery operators). Large customers include MGM Resorts International, Caesars Entertainment, Boyd Gaming, and Station Casinos.

The Company’s primary competitors in Machine Gaming are Aristocrat, Konami, Novomatic, and Scientific Games.

Gaming Machines

The Company offersservices contracts on a diverse range of machine cabinets which land-based casino customers can choose from to maximize functionality, flexibility, and player comfort. In addition to cabinets, the Company develops a wide range of casino games taking into account local jurisdictional requirements, market dynamics, and player preferences. The Company's casino games typically fall into two categories: premium games and core games.
Premium games include:

•
Wide Area Progressives - games that are linked across several casinos and/or jurisdictions and share a large common jackpot. The Wheel of Fortune®franchise is one of the most successful games in the world, and an example of one of the Company's Wide Area Progressive premium offerings.

Multi-Level Progressives - games that are linked to a number of other games within the casino itself and offer players the opportunity to win different levels of jackpots.  An example of a Multi-Level Progressive game offered by the Company is Fort Knox® Video Slots.

Core games, which include core video reel, core mechanical reel, and core video poker, are typically sold and in some situations leased to customers.


The Company produces other types of games including:
"Centrally Determined" games which are games connected to a central server that determines the game outcome;

Class II games which are electronic video bingo machines that can be typically found in North American tribal casinos and certain other jurisdictions like South Africa; and

Random number generated and live dealer electronic table games, including baccarat and roulette.

Gamingcase-by-case basis as either service revenue is primarily generated through the leasing to customers of premium gamesor product sales from “Systems, software, and cabinets. These pricing arrangements are largely variable where the casino customer pays service feesother” or “Lottery products” respectively, as described in “Notes to the Company based on a percentage of amounts wagered (aka coin-in or play), net win, or a daily fixed fee.Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

Machine gaming product sales revenues are generated from the sales of land-based gaming machines (equipment and game content), systems, component parts (including game conversion sales), other equipment and services.

Video Lottery Terminals

The Company provides video lottery terminals (“VLTs”), VLT central systems and VLT games primarily to government customers worldwide. VLTs are usually connected to a central system. The Company provides a dedicated client service team to each of its VLT and VLT systems customers. In addition, it provides amusement with prize machines (“AWPs”) and games to licensed operators in Italy and the rest of Europe. AWPs are typically low-denomination gaming machines installed in retail outlets and connected to a central system.

Game Content
The Company combines elements of math, play mechanics, sound, art, and technological advancements with a library of entertainment licenses and a proprietary intellectual property portfolio to provide gaming products designed to provide a high degree of player appeal and entertainment.  New content, popular brands, and appealing bonuses address player preferences and other market trends. The Company offers a wide array of casino-style games in a variety of multi-line, multi-coin and multi-currency configurations. Examples of successful game content from the Company include: Wheel of Fortune®, Fort Knox®, and SPHINX 4D™.

Gaming Management Systems
The Company offers a comprehensive range of system modules and applications for all areas of casino management. Gaming systems products include infrastructure and applications for casino management, customer relationship management, patron management, and server-based gaming. The Company's main casino management system offering is the Advantage System, which offers solutions and modules for a wide-range of activities from accounting and payment processing to patron management and regulatory compliance.

The Company's patron management solutions feature customized player messaging, tournament management, and integrated marketing and business intelligence modules that provide analytical, predictive, and management tools for maximizing casino operational effectiveness. The server-based solutions enable electronic game delivery and configuration for slot machines, as well as providing casino operators with opportunities to increase profits by enhancing the players’ experience, connecting with players interactively, and creating operational efficiencies.

The Company's latest multi-functional end-to-end systems solutions provide operators with a full suite of products that offer real time business analytics to optimize productivity and give players a seamless, customized gaming experience. Service Window enables operators to market to customers more effectively by leveraging an additional piece of hardware onto existing machines for delivering in-screen messaging. The Company's systems portfolio also extends to encompass mobile solutions such as the Cardless Connect™ app, which offers a cardless, cashless loyalty solution for casino players. Mobile solutions that drive efficiencies and enable floor monitoring for operators while decreasing response time to player needs include Mobile Host, Mobile Responder, and Mobile Notifier.

3. Sports Betting
The Company provides sports betting technology to lotteries and commercial operators in regulated markets, primarily in Italy and other countries in Europe as well as in the U.S. The Company offers a sports betting platform localized and certified for each market composed of either (i) core engine and associated support modules, as well as trading and risk management tools, provided to customers as a fully managed service, or (ii) “software only” technical solutions to create a complete one-stop solution or to integrate new functionality to existing operations. The Company also provides secure retail betting solutions, point-of-sale display systems, call center facilities, internet and mobile betting technology, and fixed odds or pool betting options. WLA customers of the Company include: OPAP and Lottery National Belgium (LNB). Commercial customers include BetFred and MGM Resorts International.
The Company operates an expansive, land-based B2C betting network in Italy through its “Better” brand on a fixed odds, parimutuel, or virtual betting basis. For parimutuel betting the total pool of wagers placed, minus a specified percentage, is divided among the winning players according to a formula. In Italy, this formula is set by the Italian regulatory body ADM. A winner will be paid an amount equal to his or her share of the prize pool. For fixed odds the payout amount is agreed upon in advance between the player and the bookmaker. In the case of a win, the bookmaker pays an amount equal to the bet multiplied by the odds fixed at the moment of the bet. The maximum prize for a ticket cannot exceed €10,000.
Through sports betting point-of-sale locations, the Company offers directly to customers betting on sports events (including basketball, horse racing, soccer, cycling, downhill skiing, cross country skiing, tennis, sailing, and volleyball), motor sports (car and motorcycle racing), and non-sports events connected with the world of entertainment, music, culture, and current affairs of primary national and international importance.

The Company’s primary competitors in Sports Betting in the U.K. and the E.U. are Bet365, Betfair/PaddyPower, Eurobet, Sisal, SNAITECH, and William Hill.

4. Interactive and Social Gaming

Interactive gaming (or iGaming) enables game play via the internet for real money or for fun (social).  The Company designs, manufactures, and distributes a full suite of award-winning configurable products, systems, and services including:  poker, table games, slot games, bingo, iLottery, virtual reality, mobile-to-retail products, player management systems, and market intelligence services. The Company holds more than 20 interactive gaming licenses worldwide and, in Italy, acts as both a complete internet gaming operator and mobile casino operator. The Company's diverse interactive B2B customer base includes Caesar's Entertainment, the Georgia Lottery, and William Hill.

The interactive gaming B2B competitive landscape has evolved to mirror industry-wide trends of product and channel (online and mobile) convergence and vertical integration. The Company is playing a key role in this environment, with its omnichannel offering that connects retail offerings to mobile device offerings. As for content, the Company is launching premium brands across interactive channels (i.e., Wheel of Fortune® is a casino slot machine, VLT, iCasino game, eInstant game and an instant ticket in several jurisdictions) offering extension of gameplay across multiple platforms. In the Customer Relationship Management ("CRM") part of the interactive business, a single player account management system connects retail with online together with an advanced analytics framework, thereby ensuring a single view of the player which allows cross-selling and upselling via effective promotions, churn management and customer care programs.

The Company faces competition from operators, such as 888 Holdings and bwin.party, and broad-based traditional B2B providers, such as Playtech plc and Microgaming. The Company also faces competition from traditional machine gaming suppliers, such as Scientific Games and The Stars Group.
Products

The Company's products include poker, bingo, and online casino table and slot games with features such as single and multiplayer options with branded titles and select third-party content. The Company provides social casino content as part of a multi-year strategic partnership with DoubleU Games. The Company’s complete suite of iLottery solutions, services, and professional expertise allows lotteries to fully engage their players on any interactive channel in regulated markets. Existing lottery game portfolios are extended to the interactive channel to provide a spectrum of engaging content such as eInstant tickets. The Company offers a vast library of mobile content available on any device.


Technology
The Company’s iGaming systems and interactive platforms offer customers an integrated system that provides player account management, advanced marketing and analytical capabilities, and a highly reliable and secure payment system. IGT Interactive's IGT Connect integrates third-party player account management systems, third-party game engines, and regulatory systems.
The Company also offers a remote games server, which is a fast gateway to extensive casino and eInstant content, virtual reality games, and interactive and social gaming services that enhance player experiences and create marketing opportunities around either the Company's games or third-party games.

IGT PlaySpot™ mobile solution, a mobile, app-based product for casinos and lotteries enabling mobile games, services, and payments in specific retail environments that are defined by regulator-grade geo-location technologies, is offered by the Company in both lottery and casino environments. Wagering for money can be offered in the IGT PlaySpot™ Lottery mobile solution locations and options include eInstants, lottery ticket purchases, and keno. IGT PlaySpot™ Casino mobile solution offers real money wagering on activities including sports wagering and betting on live roulette and baccarat tables on premise. IGT PlaySpot™ Casino mobile solution ties into existing Casino loyalty and back-office systems to fully integrate into customers' marketing and operations programs.

Services
The Company offers a complete range of services to support interactive customers. These services are aimed at helping lower the cost of player acquisition and increasing lifetime player value. The Company’s player service centers are located worldwide to serve players 24 hours a day, 365 days a year. The Company's marketing intelligence services manage the player lifecycle to maximize player yield while ensuring the player is entertained and plays responsibly. Additionally, the Company provides player services, including marketing, portal, player acquisition, CRM, VIP, player support, payment solutions, fraud and collusion protection, responsible gaming, game management, migration, and trading services.
5. Commercial Services
The Company develops innovative technology to enable lotteries to offer commercial services over their existing lottery infrastructure or over standalone networks separate from the lottery. Leveraging its distribution network and secure transaction processing experience, the Company offers high-volume processing of commercial transactions including: prepaid cellular telephone recharges, bill payments, e-vouchers and retail-based programs, electronic tax payments, stamp duty services, prepaid card recharges, and money transfers. These services are primarily offered outside of North America.


Business Segments

The Company has four business segments based on product and/or geography: North America Gaming and Interactive, North America Lottery, International, and Italy. Revenues for the Company by segment are as follows:
  Year Ended December 31,
($ thousands) 2017 2016 2015
Service revenue 780,633
 975,206
 780,169
Product sales 377,065
 398,248
 321,624
North America Gaming and Interactive 1,157,698
 1,373,454
 1,101,793
       
Service revenue 1,093,048
 1,128,306
 992,684
Product sales 92,174
 65,269
 52,986
North America Lottery 1,185,222
 1,193,575
 1,045,670
       
Service revenue 557,049
 512,668
 512,014
Product sales 332,015
 314,637
 341,064
International 889,064
 827,305
 853,078
       
Service revenue 1,703,901
 1,759,843
 1,702,184
Product sales 1,149
 1,295
 1,872
Italy 1,705,050
 1,761,138
 1,704,056
       
Other 1,925
 (1,576) (15,541)
       
Total revenue 4,938,959
 5,153,896
 4,689,056

North America Gaming and Interactive
The North America Gaming and Interactive (“NAGI”) segment develops and delivers leading games, systems and solutions for land-based casinos, DoubleU Games' DoubleDown casino free-to-play social casino app, and interactive for-wager online play. The segment is responsible for research and development for commercial gaming products that are distributed to casinos throughout the world.  NAGI's operations are based in Las Vegas, Nevada, and has sales offices throughout North America.  NAGI provides a full suite of casino-related products and solutions to its commercial, government and tribal customers in the U.S. and Canada.

The NAGI segment includes revenue from the sale or lease of commercial gaming machines and software to casinos and government entities in the U.S. and Canada. NAGI develops, sells and licenses casino management systems. These systems help casino customers to increase operational efficiencies and enhance player engagement by delivering personalized player amenities and promotional offers.  Additionally, service revenue is generated for commercial gaming from the maintenance of machines and systems. 
For land-based casino customers, NAGI provides leadership in the development and distribution of global premium product, including licensed content such as Wheel of Fortune® slots. In addition, the Global Core Product organization within NAGI develops slot themes such as Cleopatra® and Double Diamond® and video poker themes such as Game King®.
North America Lottery
The North America Lottery (“NALO”) segment develops and delivers innovative and future-focused lottery solutions, performing research and development for all lottery-related products globally. Based in Providence, Rhode Island, NALO is the Company’s global lottery product development and delivery organization that supports WLA customers worldwide and provides end-to-end support to WLA North America customers with a single point of contact, leveraging the Company’s full lottery product suite. The NALO segment supports 39 of the 45 U.S. lotteries.

NALO includes revenue related to the sale or lease of lottery central system hardware and software, and the sale or lease of lottery and gaming terminals to government entities. The majority of the revenue earned in the NALO segment is derived from FMCs. The Company also has LMAs in Indiana and New Jersey. NALO generates revenue from the sale of physical instant tickets to government entities, and earns recurring revenue f

rom participation games in the form of VLTs in Rhode Island, Delaware, and New York.

International
The International segment is a global leader in delivering innovative end-to-end solutions and services across all channels to regulated clients in Commercial Gaming and Lottery sectors. IGT International is responsible for the strategic development and operation management for all markets in Europe (except Italy), the Middle East, Africa, Central and Latin America (including Mexico), the Caribbean, Asia Pacific, and Oceania, across the Company’s entire product portfolio. In Italy, the International segment supplies AWP content and commercial gaming systems and gaming machines to third parties.The Company's global strategy capitalizes on its experience in Italy and North American markets, while customizing products for foreign languages, unique local preferences, and regulatory requirements.

The International segment includes revenue from the sale, lease or revenue share of commercial gaming machines, game software, central systems, loyalty and bonusing systems and services, field services supplied to gaming operators and government entities, and from the sale or hosting or real-money interactive wagering games played over the internet. The Company offers a variety of interactive gaming products within the International segment, including poker, casino, bingo and mobile systems. In addition, it offers products and services to sports betting operators, including retail and full online support.

The International segment includes revenue from the sale or lease of lottery central system hardware and software, related marketing, operations and technical services, and the sale or lease of lottery terminals to government entities. The International segment also includes revenue from professional services in the form of lottery facility management and lottery operation fees. Another source of revenue from some lottery customers in Latin America and Caribbean regions includes point-of-sale transaction processing services such as prepaid cellular telephone recharges, bill payments, and money transfers.

Italy
The majority of the revenue earned in the Italy segment is derived from lottery and machine gaming concessions. The Italy segment also includes sports betting, interactive gaming, and commercial services. The Italy segment operates and provides a full range of B2C gaming products, including:
Lottery
Since 1998, the Company has been the concessionaire for the Italian Lotto game (management of operations commenced in 1994). Beginning in November of 2016, the Company's new Lotto concession includes partners as part of a joint venture. Lottoitalia s.r.l., the exclusive manager of the Italian Lotto game, is 61.5% owned by the Parent's subsidiary Lottomatica and the remainder is owned by Italian Gaming Holding a.s. (a subsidiary of Czech lottery operator SAZKA a.s.), Arianna 2001, and Novomatic Italia. The Company has gained substantial experience in managing the activities along the lottery value chain, such as collecting wagers through its network, paying out prizes, managing all accounting and other back-office functions, running advertising and promotions, operating data transmission networks and processing centers, training staff, providing retailers with assistance and supplying materials including play slips, tickets and receipts, and marketing and point-of-sale materials for the game. Since 2004, the Company also has been the concessionaire for instant ticket lotteries, which are games involving pre-printed paper tickets for the Gratta e Vinci instant game. Lotterie Nazionali S.r.l., a joint venture which is the exclusive manager of the Gratta e Vinci instant game is 64% owned by the Parent's subsidiary Lottomatica Holding, and the remainder is directly and indirectly owned by Scientific Games Corporation and Arianna 2001. The Company operates approximately 40,000 terminals in 34,000 Lotto points-of-sale and has 62,400 instant ticket points-of-sale.
Machine Gaming
With respect to the Company's machine gaming concessions in Italy, the Company directly manages stand-alone AWPs and VLTs that are installed in various retail outlets and linked to a central system. The Company collects the wagers, deducts the applicable gaming taxes, and pays out prizes to winners and fees to retailers. The Company also provides systems and machines to other machine gaming concessionaires, either as a product sale or with long-term, fee-based contracts where the service revenue earned is generally based on a percentage of wagers, net of applicable gaming taxes. At December 31, 2017, the Company had approximately 76,000 machines in the Italian installed base.

Sports Betting
The Company operates an expansive land-based B2C betting network in Italy through its “Better” brand on a fixed odds, parimutuel, or virtual betting basis. Sports events and non-sports events connected with current affairs are the subjects of legal betting in Italy. As a sports betting license concessionaire, with approximately 1,400 corner shops and 350 points-of-sale, the Company offers a sports betting platform composed of a core engine and associated support modules. It also provides secure retail betting solutions, point-of-sale display systems, call center facilities, internet betting technology, and fixed odds or pool betting options.
Interactive
The Company provides all of the internet games currently authorized in the Italian market, including skill games such as poker and other board and skill games; bingo; casino games such as roulette and blackjack and reel games; live dealer roulette, blackjack, baccarat, and poker; horse and sports betting (fixed odds); pool games, such as a local game based on soccer events (parimutuel); virtual betting on events such as car, motorcycle, horse, and dog races and tennis or soccer matches; lottery including Lotto and “10 and Lotto” and Superenalotto with “Win for Life,” and “Eurojackpot”; and instant lottery (iGratta e Vinci online).
Commercial Services
In addition to the gaming products and related services described above, the Company processes high volumes of transactions in commercial, payment, and eMoney services in Italy including prepaid cellular telephone recharges, e-vouchers and retail-based programs, bill payments, electronic tax payments, stamp duty services, and prepaid card recharges. The Company's commercial payment and eMoney services network comprises approximately 60,000 points of sale divided among tobacconists, bars, petrol stations, newspaper stands, and motorway restaurants.
Seasonality
In general, the Company’s business is not materially affected by seasonal variation. However, in the sports betting business, the volume of bets that are collected over the year can be affected by the schedules of sporting events and the particular season of such sports. The volume of bets collected may also be affected by schedules of significant sporting events that occur at regular, but infrequent, intervals, such as the FIFA Football World Cup. In the lottery business, lottery consumption and gaming may decrease over the summer months due to the tendency of consumers to be on vacation during that time. Gaming operations revenues are affected by variations in the number and type of machines in service, levels and frequency of player wagers, and pricing arrangement terms. Seasonal gaming trends generally show higher play levels in the spring and summer months and lower in the fall and winter months. Gaming product sales may be uneven throughout the year, and can be affected by factors including the timing of large transactions and new casino openings.
Source of Materials
The Company uses a variety of raw materials to assemble gaming devices (e.g., metals, wood, plastics, glass, electronic components, and LCD screens). Moreover, there is significant paper, toner, and ink consumption in our offices and at our two ticket printing facilities. A large portion of the materials used involve packaging, most of which is cardboard and paper.
Management believes that adequate supplies and alternate sources of the Company’s principal raw materials are available, and does not believe that the prices of these raw materials are especially volatile. The Company has global material suppliers and utilizes multi-sourcing practices to promote component availability, and is not substantially dependent on any single supplier.
Product Development
The Company devotes substantial resources on research and development and incurred $313.1 million, $343.5 million and $277.4 million in 2017, 2016 and 2015, respectively. 

The Company's research and development efforts cover multiple creative and engineering disciplines, including creative game content, hardware, electrical, systems and software for lottery, land-based, online social, and online real-money applications. The gaming products are created primarily by employee designers, engineers, and artists, as well as third-party content creators. Third-party technologies are used to improve the yield from development investment and concentrate increased resources on product differentiation engineering.

Manufacturing operations primarily involve the configuration and assembly of electronic components, cables, harnesses, video monitors, and prefabricated parts purchased from outside sources. The Company's main manufacturing and production facility is located in Reno, Nevada, with approximately 594,000 square feet dedicated to product development, warehousing, shipping, and receiving. The Company maintains development facilities in Rhode Island (Providence), Italy (Rome), Nevada (Las Vegas and Reno), Europe (Austria, Poland, Netherlands and Serbia), Canada (Moncton, New Brunswick), California (San Francisco), Washington (Seattle), Australia (Sydney and Melbourne) and China (Beijing). These facilities provide local community presence, customized products, and, where beneficial or required, regional production.
Intellectual Property
The Company’s intellectual property (“IP”) portfolio of patents, trademarks, copyrights, and other licensed rights is significant. At December 31, 2017, the Company held approximately 5,000 patents or patent applications and approximately 7,600 trademarks filed and registered worldwide.
The Company seeks to protect its investment in research and development and the new and original features of its products by perfecting and maintaining its IP rights. The Company obtains patent protection covering many of its products and has a significant number of U.S. and foreign patent applications pending. The Company's IP portfolio is widely diversified with patents related to a variety of products, including game designs, bonus and secondary imbedded game features, device components, systems features, and online or mobile functionality. The Company also relies on trade secret protection, believing that its technical “know-how” and the creative skills of its personnel are of substantial importance to its success.
Most of the Company’s products are marketed under trademarks and copyrights that provide product recognition and promote widespread acceptance. The Company seeks protection for its copyrights and trademarks in the U.S. and various foreign countries, where applicable, and uses IP assets offensively and defensively to protect its innovation. The Company also has a program where it licenses its patents to others under terms designed to promote standardization in the gaming industry.

The Company also licenses certain trademarks from third parties such as Wheel of Fortune®, Jeopardy!™, The Ellen DeGeneres Show™, Jurassic Park™, The Voice™, Plants v. Zombies™, Ghostbusters™, Bejeweled™, Zuma™, Sex and the City™, Harley-Davidson®, Caesars®, Harrah’s®, Rio Las Vegas®, Paris Las Vegas®, Horseshoe®, James Cameron's Avatar™, Bridesmaids™, Life is Good™, Circuit of the Americas™, and The Three Stooges®.
Software Development
The Company has developed software for use in the management of a range of lottery, gaming, and betting functions and products, including leveraging integration with third-party software components. Software developed by the Company is used in a variety of applications including (i) in centralized systems for the management of lotteries, machine gaming and betting, and other commercial services; (ii) to enhance functions connected to services provided through websites and mobile applications including lotteries, sports, instant win, and casino style games; and (iii) in a variety of back office functions. Software developed by the Company is also used in terminals and gaming machines for: management of lotteries, machine gaming, betting and online payments; provision of gaming and non-gaming content; and integration with other devices such as mobile phones and tablets.

Regulatory Framework
The gaming and lottery industries are subject to extensive and evolving governmental regulation in the U.S. and foreign jurisdictions. Gaming laws are based upon declarations of public policy designed to ensure that gaming is conducted honestly, competitively and free of criminal and corruptive elements. While the regulatory requirements vary from jurisdiction to jurisdiction, the majority typically require some form of licensing or regulatory suitability of operators, suppliers, manufacturers and distributors as well as their major shareholders, officers, directors and key employees. Regulators review many aspects of an applicant including financial stability, integrity and business experience. Additionally, the Company’s gaming products and technologies require certification or approval in most jurisdictions where we conduct business.

A comprehensive network of internal and external resources and controls is required to achieve compliance with the broad governmental oversight of the Company’s business. The Company has a robust internal compliance program to ensure compliance with applicable requirements imposed in connection with our gaming and lottery activities, as well as legal requirements generally applicable to all publicly traded companies. The Company employs over 120 people to support global compliance which is directed on a day-to-day basis by the Company’s Senior Vice President, Chief Compliance and Risk Management Officer. Legal advice is provided by attorneys from the Company’s legal department as well as outside experts. The compliance program, accountable to the Parent’s board of directors, is overseen by the Global Compliance Governance C

ommittee, which is comprised of employee and nonemployee directors and a non-employee gaming law expert. Through these efforts, the Company seeks to assure both regulators and investors that all its operations maintain the highest levels of integrity.

Gaming

The manufacture, sale and distribution of gaming devices, equipment, and related technology and services are subject to federal, state, tribal, and local regulations in the U.S. and foreign jurisdictions. The initial regulatory requirement in most jurisdictions is to obtain the privileged licenses that allow the Company to participate in gaming activities. The Company’s operating entities and key personnel have obtained or applied for all known government licenses, permits, registrations, findings of suitability, and approvals necessary to manufacture, distribute and/or operate gaming products in all jurisdictions where it does business. Although many gaming regulations across jurisdictions are similar or overlapping, the Company must satisfy all conditions individually for each jurisdiction. Obtaining the required licenses at a corporate and individual level is a thorough process, in which the authorities review detailed information about the companies and individuals applying for suitability. Once the license has been granted, regulatory oversight ensures that the licensee continue to operate with honesty and integrity.

Frequently, gaming regulators not only govern the activities within their jurisdiction or origin, but also monitor activities in other jurisdictions to ensure that the Company complies with local standards on a worldwide basis. A violation in one jurisdiction could result in disciplinary action in another.

The Company holds over 450 gaming licenses across approximately 340 jurisdictions. Key regulatory authorities which have licensed the Company include, among others, the United Kingdom Gambling Commission, the Nevada State Gaming Control Board and the New Jersey Division of Gaming Enforcement. The Company has never been denied a gaming related license, nor had any of its licenses suspended or revoked.

Lottery

Lotteries in the U.S. are regulated by state law. There are currently 45 U.S. jurisdictions that authorize the operation of state lotteries. The ongoing operations of lotteries and lottery operators are typically subject to extensive and broad regulation, which vary state-by-state. Lottery regulatory authorities generally exercise significant discretion, including with respect to the determination of the types of games played, the price of each wager, the manner in which the lottery is marketed and the selection of suppliers of equipment, technology, and services, as well as the retailers of lottery products. To ensure the integrity of contract awards and lottery operations, most jurisdictions require detailed background disclosure on a continuous basis from vendors and their officers, directors, subsidiaries, affiliates, and principal stockholders. Background investigations of the vendors’ employees who will be directly responsible for the operation of lottery systems are also generally conducted. Certain jurisdictions also require extensive personal and financial disclosure and background checks from persons and entities beneficially owning a specified percentage of a vendor’s securities. The awarding of lottery contracts and ongoing operations of lotteries in international jurisdictions are also extensively regulated, although international regulations typically vary from those prevailing in the U.S.

Interactive

In the U.S., the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) prohibits among other things, the acceptance by a business of a wager by means of the internet where such wager is prohibited by any applicable law where initiated, received or otherwise made. Under UIGEA severe criminal and civil sanctions may be imposed on the owners and operators of such systems and on financial institutions that process wagering transactions. The law contains a safe harbor for wagers placed within a single state (disregarding intermediate routing of the transmission) where the method of placing the bet and receiving the bet is authorized by that state’s law, provided the underlying regulations establish appropriate age and location verification.
Both Delaware and New Jersey have authorized internet casino gaming and Nevada has authorized online poker. Pennsylvania recently passed legislation authorizing internet casino gaming and is in the process of finalizing regulations for such. Additionally, a few state lotteries offer internet instant game sales to in-state lottery customers and several states allow subscription sales of draw games over the internet.

The Company participates in interactive gaming in the U.S. as a content and technology provider within fully regulated gaming and lottery frameworks.

Interactive gaming in the E.U. is characterized by diverse regulatory frameworks with some E.U. countries having monopolistic regimes run by a sole operator and others having established licensing systems for more than one operator. The Company carefully evaluates each E.U. jurisdiction to ensure adherence to applicable laws and regulations.  As local regulations and related guidance from authorities change, the Company re-evaluates its position in any given country. The E.U. Court of Justice recently announced

that it is dropping all enforcement proceedings related to gambling which allows the individual E.U. country rulings to stand, regardless of whether or not they violate E.U. laws. It is possible that this decision by the European Court of Justice could impact some of the previous legal analysis conducted by the Company and its decisions to enter certain European markets.

Italian Gaming and Betting Regulations
The Company operates in Italy in both the gaming and betting sectors and is subject to regulatory oversight by the ADM. At December 31, 2017, the Company held concessions for (1) the activation and operation of the network for Italy's Lotto game, (2) the operation of instant and traditional lotteries, (3) the activation and operation of the network for the telematic operation of legalized AWPs and VLTs, (4) the land based collection of parimutuel and fixed odds betting through physical points of sale and interactive channels and (5) the online gaming collection operated through interactive channels, including online sports betting, skill games, casino games, and online Bingo.

Gaming in Italy is an activity reserved to the State. Any game that is carried out without proper authorization is illegal and subject to criminal penalties. Italian law grants the Ministry of Economy and Finance, through ADM, the power to introduce games and to manage gaming and betting activities directly or by granting concessions to qualified operators selected by means of public tenders as further explained below. The process of creating and granting gaming and betting concessions in Italy is heavily regulated.

Gaming and betting concessions are granted pursuant to a public tender procurement process. The concession provides for all of the concessionaire’s requirements, in accordance with the provisions of Italian law and regulation, activities and duties, including collection of the game’s revenues, the payment of winnings, the payment of the point of sale, payment of gaming taxes and all the other amounts due to the State, the drawings and the management of all of the technological assets to operate gaming, requirements of the technological infrastructure and the relevant service levels. Concessions are for a determined time period and are not renewable unless indicated in the concession agreement; in such event, the renewal is not guaranteed to be on the same terms. In certain cases, the concession may be extended at the option of the ADM on the same terms. Under other circumstances, which are typically defined in the concession agreement, the concession may be revoked or terminated. Most cases of early termination are related to the breach of the terms of the concession agreement or the non-fulfillment of conditions of that agreement as well as the loss of the requirements prescribed by Italian law and regulation for the assignment and the maintenance of gaming concessions. In some cases, the early termination of the concession allows the State to draw upon the entire amount of the performance bond presented by the concessionaire. Upon governmental request, the concessionaire has an obligation to transfer, free of charge, the assets subject of the concession to the State at the end of the term of the concession or in the event of its revocation or early termination. Each single concession contains specific provisions enacting such general obligation.


C.Organizational Structure
A listing of the Parent’s directly and indirectly owned subsidiaries at March 1, 2018 is set forth in Exhibit 8.1 to this annual report on Form 20-F.
The following is a diagram of the Parent and certain of its subsidiaries and associated companies at March 1, 2018: 
a2018orgcharta06.gif

D.Property, Plant and Equipment
The Parent's principal office is located at Marble Arch House, 66 Seymour Street, 2nd Floor, London W1H 5BT, U.K., telephone number +44 (0) 207 535 3200. At February 20, 2018, the Company leased approximately 145 properties in the U.S. and 139 properties outside of the U.S., and owned a number of facilities and properties, including:
an approximately 113,000 square foot manufacturing, research and development and office building in Moncton, New Brunswick, Canada;
an approximately 52,500 square foot research and development lab and engineering office in Reno, Nevada;
an approximately 51,000 square foot manufacturing and office facility in Gross St. Florian, Austria; and
an approximately 13,000 square foot enterprise data center in West Greenwich, Rhode Island.
The following table shows the Company's material owned and leased properties at February 20, 2018:
U.S. Properties
Location 
Square
Feet
 Use and Productive Capacity 
Extent of
Utilization
 
Holding
Status
 
Products
Produced
9295 Prototype Drive,
Reno, NV
 1,180,418 Office, Warehouse, Game Studios, Hardware/Software Engineering; Global Manufacturing Center 100% Leased EGMs
6355 S. Buffalo Drive,
Las Vegas, NV
 222,268 Office, Game Studio, Systems Software, Showroom 100% Leased N/A
55 Technology Way,
West Greenwich, RI
 170,000 WG Technology Center: Office; research and testing; storage and distribution 100% Leased N/A
10 Memorial Boulevard,
Providence, RI
 124,769 Principal U.S. Operating Facility 100% Leased N/A
4000 South Frontage Road, Suite 101
Lakeland, FL
 141,960 Printing Plant: Printing facility; storage and distribution; office 100% Leased Printed tickets
8520 Tuscany Way,
Bldg. 6, Suite 100,
Austin, TX		 81,933 Texas Warehouse and National Response Center: Contact center; storage and distribution; office 95% Leased N/A
1000 Sandhill Road,
Reno, NV		 52,500 Office, Warehouse, Global Test & Interoperability Center 60% Owned N/A
2401 Police Center Drive,
Plant City, FL
 48,800 Backup instant ticket printing plant 90% Leased Printed tickets
5300 Riata Park Court, Bldg. E,
Suite 100,
Austin, TX		 42,537 Austin Tech Campus: Research and test; office 90% Leased N/A
403 Westcoat Road,
Egg Harbor
Township, NJ		 30,698 Service Office, Warehouse, Game Studio, MJP Monitoring 75% Leased N/A
405 Howard Street, Floor 6,
San Francisco, CA		 28,921 Office, Interactive 100% Leased N/A
8200 Cameron Road, Suite E120,
Austin, TX		 41,705 Data Center of the Americas: Data center; network operations; office 80% Leased N/A
47 Technology Way,
West Greenwich, RI		 13,050 Enterprise Data Center: Data center; network operations 75% Owned N/A
75 Baker Street,
Providence, RI		 10,640 RI National Response Center: Office; contact center 100% Leased N/A


Non-U.S. Properties
Location 
Square
Feet
 Use and Productive Capacity 
Extent of
Utilization
 
Holding
Status
 
Products
Produced
Galwin 2
1046 AW Amsterdam
Netherlands
 125,128 EMEA Gaming manufacturing/distribution/repair facility; research and test; office 90% Leased EGMs
Viale del Campo Boario 56/D 00154
Roma, Italy
 123,740 Principal Operating Facility in Italy: Office Italy Data Center: Data center; network operations 100% Leased N/A
328 Urquhart Ave,
Moncton, New Brunswick,
Canada
 113,000 Canada HQ: office; research and test 100% Owned VLTs
Viale del Campo Boario 19 00154
Roma, Italy
 96,840 Office for administration, software development 95% Leased N/A
Seering 13-14,
Unterpremstatten,
Austria		 73,776 Austria Gaming HQ: Office; research and test 90% Leased N/A
Building 2, Reserve
Industrial Estate,
6 Hope Street,
Ermington, Australia		 62,277 Office, Warehouse, Game Studio, Systems Software, Sales, AUS Final Assembly 100% Leased N/A
29, Suzhoujie Street,
Viva Plaza,
Haidian District,
Room No. 1-20,
11th and 18th Floors,
Beijing
100080, China		 56,898 Game Studio, Systems Software, Office 85% Leased N/A
Al. Jerozolimskie, 92
Brama Building,
Warsaw, Poland		 51,072 International Tech Hub: Office; research and test 95% Leased N/A
Lasnitzstrasse 19,
Gross St.
Florian, Austria		 50,808 Storage and distribution 75% Owned VLTs
48 Indianapolis Street, Kyalami Business Park, Midrand, South Africa 44,001 Office, Warehouse, Systems Software, Sales, SA Final Assembly 90% Leased EGMs
USCE Tower
Bulevar Mihajla
Pupina No. 6
Belgrade, Serbia		 28,471 Software development office, Lottery and Gaming products 95% Leased N/A
11 Talavera Rd.
Building  B,
Sydney, Australia		 27,432 Office, Sales & Marketing, Financial support 100% Leased N/A
Marble Arch House,
66 Seymour Street, 2nd Floor,
London W1H 5BT,
United Kingdom		 11,495 Registered global headquarters of the Parent 75% Leased N/A
The Company's facilities are in good condition and are adequate for its present needs and there are no known environmental issues that may affect the Company's utilization of its real property assets.
The Company does not have any plans to construct, expand or improve its facilities in any material manner other than general maintenance of facilities.  As such, no increase in productive capacity is anticipated.
None of the Company's properties is subject to mortgages or other security interests.


Item 4A.Unresolved Staff Comments
As disclosed on Forms 6-K furnished with the SEC on November 14, 2017 and February 13, 2018, the Company received a comment from the SEC’s Division of Corporation Finance on July 27, 2017 relating to the Company’s Form 20-F for the fiscal year ended December 31, 2016 inquiring about the cash flow classification of the upfront payment of $665.3 million, made in two installments in 2016, to the Italian governmental authority in connection with the Italian Gioco del Lotto service concession (the “Upfront Payment”). After additional correspondence with the Division and consultation with the SEC’s Office of the Chief Accountant, the Company concluded the Upfront Payment should be classified as an operating activity rather than as an investing activity in the Company’s consolidated statements of cash flows in accordance with ASC 230, Statement of Cash Flows. As a result, the Company’s consolidated financial statements for the year ended December 31, 2016, are restated herein to correct the classification of the Upfront Payment as an operating activity. Please see the Consolidated Financial Statements included in “Item 18. Financial Statements” and in particular “Notes to Consolidated Financial Statements—1. Description of Business and Restatement and Revision of Consolidated Statements of Cash Flows” for additional information on the restatement.


Item 5.
Operating and Financial Review and Prospects
The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, included in this annual report, as well as “Presentation of Financial and Certain Other Information,” “Item 3.A. Selected Financial Data,”  “Item 3.D. Risk Factors” and “Item 4.B. Business Overview.”
The following discussion includes certain forward-looking statements. Actual results may differ materially from those discussed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report, including in “Item 5.G. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995” and “Item 3.D. Risk Factors.”
A.Operating Results

Overview
The Company is a leading commercial operator and provider of technology in the regulated worldwide gaming markets that operates and provides a full range of services and leading-edge technology products across all gaming markets, including lotteries, machine gaming, sports betting and interactive gaming. The Company also provides high-volume processing of commercial transactions. The Company's state-of-the-art information technology platforms and software enable distribution of its products and services through land-based systems, Internet and mobile devices. The Company provides business-to-consumer (B2C) and business-to-business (B2B) products and services to customers in over 100 countries worldwide on six continents.
The structure of the Company’s internal organization is customer-facing aligned around four business segments operating in three regions as follows:
North America Gaming and Interactive
North America Lottery
International
Italy

Income Statement Overview
Revenue
The Company's revenue is composed of service revenue and product sales. Service revenue is principally derived from multi-year contracts under which the Company earns revenue over time upon the provision of services underlying such contracts. Service revenue composes the majority of the Company's revenue, amounting to $4.137 billion, $4.376 billion and $3.978 billion, or approximately 83.8%, 84.9% and 84.8% of total revenues in 2017, 2016 and 2015, respectively. Product sales are derived principally from the installation of new and replacement systems, software, lottery terminals and gaming machines. Product sales fluctuate due to the mix, volume and timing of product sales contracts and therefore may not be comparable from period to period.

The principal services and products the Company provides are summarized by operating segment below.
North America Gaming and Interactive segment
The majority of the revenue the Company earns in the North America Gaming and Interactive segment is derived from service revenue generated from commercial gaming. Commercial gaming service revenue is derived from the lease of gaming machines and software to casinos and government entities in the U.S. and Canada.

Product sales in the North America Gaming and Interactive segment are derived from the sale of real money “commercial” gaming machines, systems, software, conversion kits and parts to casinos and government entities in the U.S. and Canada.

Revenues in the North America Gaming and Interactive segment amounted to $1.158 billion, $1.373 billion and $1.102 billion, or approximately 23.4%, 26.6% and 23.5% of total revenues in 2017, 2016 and 2015, respectively.

North America Lottery segment
The majority of the revenue the Company earns in the North America Lottery segment is derived from Lottery contracts. Revenues in the North America Lottery segment amounted to $1.185 billion, $1.194 billion and $1.046 billion, or approximately 24.0%, 23.2% and 22.3% of total revenues in 2017, 2016 and 2015, respectively.
Service revenue in the North America Lottery segment is derived from contracts, under which the Company designs, installs, operates and retains ownership of the gaming system. These contracts generally provide for a variable amount of monthly or weekly service fees paid to the Company directly from its customers based on a percentage of sales or net machine income. The Company recorded fees earned under these contracts as service revenue in the period earned. Expenses associated with providing services under these contracts principally consist of cost of personnel, telecommunications, equipment maintenance and repair, consumables for the games and depreciation of tangible assets.
Product sales in the North America Lottery segment are derived from contracts under which the Company (i) constructs, sells, delivers and installs a turnkey system or (ii) delivers equipment and licenses the computer software for a fixed price, in each case with the customer subsequently operating the system or equipment. Revenue attributable to any ongoing services (such as post-contract support) provided subsequent to customer acceptance, are recorded as service revenue in the period earned.
International segment
The majority of the revenue the Company earns in the International segment is derived from Lottery and Machine Gaming contracts. Revenues in the International segment amounted to $889.1 million, $827.3 million and $853.1 million, or approximately 18.0%, 16.1% and 18.2% of total revenues in 2017, 2016 and 2015, respectively.
Service revenue in the International segment is derived from contracts, under which the Company designs, installs, operates and retains ownership of the gaming system. These contracts generally provide for a variable amount of monthly or weekly service fees paid to the Company directly from its customer based on a percentage of sales or net machine income. The Company recorded fees earned under these contracts as service revenue in the period earned. Expenses associated with providing services under these contracts principally consist of cost of personnel, telecommunications, equipment maintenance and repair, consumables for the games and depreciation of tangible assets.
Product sales in the International segment are derived from contracts under which the Company (i) constructs, sells, delivers and installs a turnkey system or (ii) delivers equipment and licenses the computer software for a fixed price, in each case with the customer subsequently operating the system or equipment. Revenue attributable to any ongoing services (such as post-contract support) provided subsequent to customer acceptance, are recorded as service revenue in the period earned.
Italy segment
The majority of the revenue the Company earns in the Italy segment is derived from Lottery and Machine Gaming concessions. Revenues in the Italy segment amounted to $1.705 billion, $1.761 billion and $1.704 billion, or approximately 34.5%, 34.2% and 36.3% of total revenues in 2017, 2016 and 2015, respectively. The Company also earns service revenue under Sports Betting and Interactive Gaming concessions, and from Commercial Services. Summarized below is an overview of the key services within the Italy segment:

Lottery
Under the Company's Lotto and Gratta e Vinci (“Scratch and Win”) concessions, it manages all of the activities along the value chain including collecting wagers, paying out prizes, managing all accounting and other back-office functions, running advertising and promotions, operating data transmission networks and processing centers, training staff, providing retailers with assistance and supplying materials for the games. The service revenues earned in return for operating these concessions are based on a percentage of wagers. For the prior Lotto concession, this percentage of wagers decreased as the total wagers increased during an annual period. Under the new Lotto concession and the Scratch and Win concession, the Company's fee is a fixed percentage of wagers. ADM pays the Company its Lotto fee on a weekly basis and the Scratch and Win fee on a monthly basis. For Lotto, the Company deposits wagers, net of prizes paid and retailer commissions retained by the retailer at point of sale, into bank accounts which are reported on the consolidated balance sheet as restricted cash with an offsetting liability to ADM. Scratch and Win sales to the retailers are recorded as a receivable on the consolidated balance sheet with a corresponding payable to ADM. The Company collects Scratch and Win wagers from retailers, net of prizes paid directly by retailers and the retailers’ fee, on a weekly basis. On a monthly basis, the Company remits amounts due to ADM. Expenses associated with providing services under these concessions principally consist of consumable costs, postage and freight, network costs, marketing and advertising of the games, cost of personnel dedicated to these activities and depreciation and amortization of tangible and intangible assets.
Machine Gaming
Under the Company's Machine Gaming concessions, it directly manages stand-alone AWP machines and VLTs that are installed in various retail outlets and linked to a central system. For Machine Gaming, the Company collects the wagers, deducts the applicable gaming taxes, and pays prizes to winners and fees to retailers. The service revenue earned in return for operating these concessions are generally based on a percentage of wagers net of applicable gaming taxes. The Company records service revenue net, equal to total wagers less the payout for prizes and applicable gaming taxes. Expenses associated with providing services under these concessions principally consist of point of sale fees, network costs, marketing and advertising of the games, cost of personnel dedicated to these activities, concession fees, and depreciation and amortization of tangible and intangible assets. The Company also provides systems and machines to other machine gaming concessionaires, either as a product sale or with long-term, fee-based contracts.
Sports Betting
The Company has a number of concessions to operate sports betting and the right to operate sports betting over the Internet. Sports betting concessions are principally composed of arrangements under which the Company collects the wagers, pays prizes and pays a percentage fee to retailers. The Company records service revenue net, equal to wagers less prizes and taxes. Expenses associated with providing services under these concessions principally consist of point of sale commissions and depreciation and amortization of tangible and intangible assets.
Commercial Services

The Company develops innovative technology and offers commercial and payment services over a standalone network. Leveraging its distribution network and secure transaction processing experience, the Company offers high-volume processing
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of commercial and payment transactions including: prepaid cellular telephone recharges, bill payments, e-vouchers, electronic tax payments, stamp duty services and prepaid card recharges. These services are primarily offered outside of North America. As described in “Notes to the Consolidated Financial Statements—3. Business Acquisitions and Divestitures” included in “Item 18. Financial Statements”, the Italian commercial services business was sold on September 14, 2022.The Company categorizes revenue from commercial services as service revenue from “Systems, software, and other” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

2. Global Gaming
 
The Company leveragesdesigns, develops, assembles or orders the distribution networksassembly of, and provides cabinets, games, systems, and software for customers in regulated gaming markets throughout the world under fixed fee, participation and product sales contracts. As of March 7, 2024, the Company holds more than 440 global gaming licenses and primarily does business with commercial casino operators, tribal casino operators, and governmental organizations (primarily consisting of lottery operators).

The Company operates in the highly competitive global gaming industry. Primary and secondary competitors possess a wide range of financial resources, technical capabilities, and geographic focus.

Gaming Machines and Game Content

The Company offers high-volume transaction processing servicesa diverse range of gaming machine cabinets from which land-based casino customers can choose to maximize functionality, flexibility, and player comfort. In addition to cabinets, the Company develops a wide range of casino games taking into account local jurisdictional requirements, market dynamics, and player preferences. The Company combines elements of mathematics, play mechanics, sound, art, and technological advancements with a library of entertainment licenses and a proprietary intellectual property portfolio to provide gaming products designed to provide a high degree of player appeal and entertainment. The Company offers a wide array of casino-style slot machines in a variety of multi-line, multi-coin, and multi-currency configurations.

The Company’s slot games typically fall into two (2) categories: (i) premium games; and (ii) core games.

Premium games, include:

•Wide Area Progressives (“WAP”) - games that are linked across several casinos and/or jurisdictions and share a large common jackpot, including the Wheel of Fortune® franchise; and
•Multi-Level Progressives - games, such as Prosperity Link™ and Mystery of the Lamp™, where the machines offering the game within the casino are connected and offer players the opportunity to win different levels of jackpots.

Core games, which include bill payments, electronic tax payments, utility payments, prepaid cellular telephone recharges, prepaid cardsvideo reel, mechanical reel, and retail-based programs. video poker, are typically sold and in some situations leased to customers. Some of the Company’s most popular core games in 2023 included Wolf Run EclipseTM, Egyptian LinkTM, Samurai 888TM, Double Chili Mania, PinballTM Double Gold, Keno Star, Powerhouse PlusTM, and Big City 4sTM Poker.

The Company earnsproduces other types of games including:
•“Centrally Determined” games, which are games connected to a fee for processing such transactionscentral server that determines the game outcome;
•Class II games, which are centrally determined electronic video bingo machines that can be typically found in North American tribal casinos and certain other jurisdictions like South Africa; and
•Random-number-generated and electronic table games, including baccarat and roulette.

Gaming service revenue is transaction-based (a fixed fee per transaction or a feeprimarily generated through providing premium game content and cabinets on short duration leases to customers. The pricing of these arrangements is largely variable where the casino customer pays fees to the Company based on a percentage of monetary volume processed).amounts wagered, a percentage of net win, or a daily fixed fee for use of the game content, cabinets, and related support services.
Gaming product sales revenue is generated from the sales of land-based gaming machines (equipment and game content), systems, component parts (including game conversion sales), other equipment and services. The Company recognizes these feesalso licenses intellectual property rights to third parties through royalty-bearing patent licensing agreements. The Company categorizes revenue from gaming machines as product sales from “Gaming terminals” and revenue from game content and intellectual property revenue as product sales from “Other” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”
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Video Lottery Terminals

The Company provides video lottery terminals (each, a “VLT” and together, “VLTs”), VLT central systems, and VLT games worldwide. VLTs are gaming machines which are regulated by lotteries, and are usually connected to a central system.

The Company provides VLT systems and machines to lotteries, either as a product sale or with long-term, fee-based contracts where the service revenue atearned is generally based on a percentage of wagers, net of applicable gaming taxes. The Company categorizes revenue from VLTs as either service revenue from “Gaming terminal services” or product sales from “Gaming terminals”, depending on the time anature of the transaction, is processed. Expenses associated with providing services under these concessions principally consist of point of sale commissions, network costs, banking fees and depreciation of tangible assets.as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”


Interactive Gaming Management Systems
 
The Company provides interactive skill gamesoffers a comprehensive range of system modules and applications for all areas of casino management. Gaming systems products include infrastructure and applications for casino management, customer relationship management, patron management, and server-based gaming. The Company’s main casino management system offering is the Advantage® System, which offers solutions and modules for a wide-range of activities from accounting and payment processing to patron management and regulatory compliance.

The Company’s systems feature customized player messaging, tournament management, and integrated marketing and business intelligence modules that provide analytical, predictive, and management tools for maximizing casino operational effectiveness. The server-based solutions enable electronic game delivery and configuration for slot machines, as well as providing casino operators with opportunities to increase profits by enhancing the players’ experience, connecting with players interactively, and creating operational efficiencies. Service Window enables operators to market to customers more effectively by leveraging an additional piece of hardware onto existing machines for delivering in-screen messaging. The Company’s systems portfolio also encompasses mobile solutions such as the Resort Wallet™, which is a cardless, cashless loyalty solution for casino players. Resort Wallet™ includes IGTPay™, a fully cashless land-based offering for casino operators which provides a direct link to external funding. Mobile solutions that drive efficiencies and enable floor monitoring for operators while decreasing response time to player needs include Mobile Host, Mobile Responder, and Mobile Notifier. The Company categorizes revenue from gaming management systems as product sales from “Other” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

3. PlayDigital

iGaming

Digital gaming enables game play for real money wagers via applications on mobile devices and internet websites. The Company, through its PlayDigital brand, designs, assembles, and distributes a full suite of configurable products, systems, content, and services, and holds more than 50 licenses, 30 of which are specific to digital gaming only, that authorize the provision of digital gaming products and services worldwide, including digital products such as slot games, blackjack, roulette, poker, bingo, and other boardcasino card games with features such as single and softmultiplayer options with branded titles and select third-party content.
The Company’s iGaming systems and digital platforms offer customers a remote game server solution, which is a fast gateway to extensive casino content, and digital gaming services that enhance player experiences and create marketing opportunities around either the Company’s games or third-party games via our aggregation capabilities. PlayDigital has a vast content offering, either through our dedicated studios or our content library to meet the needs of the market served. The content is either digital only or omnichannel in combination with our land-based gaming operations.

The Company maintains a diverse iGaming B2B customer base from both the public and private sectors, and faces competition from broad-based traditional B2B providers, as well as from in-house game development by some operators and an increasing number of content providers entering the market. The Company also faces competition in the digital space from other gaming suppliers.

The Company categorizes revenue from digital gaming products as product sales from “Other” and revenue from digital gaming services as service revenue from “PlayDigital services” as described in “Notes to the Consolidated Financial Statements— 4.Revenue Recognition” included in “Item 18. Financial Statements.”

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PlaySports

In states where sports betting is legal, the Company provides sports betting technology and management services, branded as PlaySports, to licensed sports betting operators in over 30 states and territories in the U.S. and a province in Canada, holding 54 licenses that authorize the provision of sports betting products and services, 29 of which are specific to sports betting only.

To comply with local regulations and market conditions, the offering may be different in each market. The Company currently packages its PlaySports services in two (2) ways:
•“Sports betting platform” solutions offer modular services hosted and maintained in each U.S. state or tribal jurisdiction where sports betting is legal. These solutions provide certified and managed sports betting software made available for customers to operate retail and account-based interactive sports as well as retail components such as self-service betting kiosks and employee operated betting terminals, and integrate with parimutuel race wagering in a particular jurisdiction; and
•“Turnkey” managed service solutions combine the Company’s end-to-end sports betting management technology with a portfolio of value-added services, principally trading and trading support services, but that also may include offer management, payments, fraud management, advisory functions, and interactive components such as mobile web and desktop applications, all of which support the operations of land-based, digital, and omnichannel sports betting operators.

The sports betting supplier business is highly competitive; however, IGT has been able to continue to win new contracts in both existing and new jurisdictions due to the reliability of our product offerings and our customer relationships.
The Company categorizes revenue from sports betting as service revenue from “PlayDigital services” as described in “Notes to the Consolidated Financial Statements—4. Revenue Recognition” included in “Item 18. Financial Statements.”

Business Segment Revenue

Revenues for the Company by business segment are as follows:
 For the year ended December 31,
($ in millions)202320222021
Service revenue2,359 2,436 2,690 
Product sales171 157 123 
Global Lottery2,530 2,593 2,812 
Service revenue762 714 630 
Product sales791 709 482 
Global Gaming1,552 1,423 1,112 
Service revenue227 209 163 
Product sales1 1 1 
PlayDigital228 209 165 
Total revenue4,310 4,225 4,089 

For a further description of the principal services and products the Company provides by business segment, including a breakdown of the Company’s revenues by geographic market, see “Item 5. Operating and Financial Review and Prospects” and “Notes to the Consolidated Financial Statements—24. Segment Information” included in “Item 18. Financial Statements”.

Seasonality

In general, the Company’s business is not materially affected by seasonal variation. In the lottery business, consumption may increase in December and around the holidays but decrease over the summer months due to the tendency of consumers to be on vacation during that time. Seasonal gaming trends generally show higher play levels in the spring and summer months and lower levels in the fall and winter months. Gaming product sales may be uneven throughout the year and can be affected by several factors, including the timing of large transactions and new casino openings.
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Source of Materials
The Company uses a variety of raw materials across its business. Metals, woods, plastics, glass, electronic components, and LCD screens are frequently used during the manufacturing of gaming hardware and devices, and the lottery ticket printing facility consumes significant quantities of paper, toner, and ink throughout production. When ultimately delivering these goods to customers, the packaging process employs large amounts of paper, including cardboard.
During 2021 and 2022, the Company experienced shortages in the availability of electronic components necessary for the manufacture of gaming machines. See “Item 3.D. Risk Factors - Operational Risks - The Company depends on its suppliers and faces supply chain risks that could adversely affect its financial results.” While supply chain reliability normalized throughout 2023, price increases recognized for most of the Company’s principal raw materials impacted financial performance. The Company generally has global material suppliers and uses multi-sourcing practices to promote component and raw material availability, quality assurance, and cost consciousness.
Product Development
The Company devotes substantial resources to research and development and incurred $234 million, $255 million, and $238 million of related expenses, excluding amortization of capitalized software, in 2023, 2022, and 2021, respectively. In addition to expensed R&D, a portion of the investment in R&D has been capitalized and recorded as intangible assets, which is amortized to cost of services, cost of product sales, or selling, general and administrative expenses. The Company’s research and development efforts cover multiple creative and engineering disciplines for its Lottery, Gaming and PlayDigital businesses, including creative game content, hardware, and software; and land-based, online social, and digital real-money applications. These products are created primarily by employee designers, engineers, and artists, as well as third-party content creators. Third-party technologies are used to improve the yield from development investment and concentrate increased resources on product differentiation engineering.
Product assembly operations primarily involve the configuration and assembly of electronic components, cables, harnesses, video monitors, and prefabricated parts purchased from outside sources.
Intellectual Property
The Company maintains a significant intellectual property portfolio comprised of patents, trademarks, copyrights, and other licensed rights, and the Company’s business depends in part on its ability to protect and enforce its intellectual property rights. For example, some of the Company’s most popular games and features, including the Wheel of Fortune® franchise of premium games, are based on trademarks, patents and/or other intellectual property licensed from third parties. The Company routinely obtains, retains, and expands licenses for popular intellectual property such as the ten-year license agreement executed with Califon Productions, Inc. (“Sony”) in June 2023 for exclusive rights to the Wheel of Fortune® franchise for use across segments. At December 31, 2023, the Company held more than 4,600 patents and more than 9,800 trademarks filed and registered worldwide. The Company’s intellectual property portfolio is widely diversified with patents related to a variety of products, including game designs, bonus and secondary embedded game features, device components, systems features, and web-based or mobile functionality. The Company also relies on trade secret protection, believing that its technical “know-how” and the creative skills of its personnel are of substantial importance to its success.
Most of the Company’s products are marketed under trademarks and copyrights that provide product recognition and promote widespread acceptance. The Company seeks protection for its copyrights and trademarks in the U.S. and various foreign countries, where applicable, and uses intellectual property assets offensively and defensively to protect its innovation. The Company also has a program where it licenses its patents to others under terms designed to promote standardization in the gaming industry.
Software Development
The Company has developed software for use in the management of a range of lottery, gaming, and betting functions and products, including leveraging integration with third-party software components. Software developed by the Company is used in a variety of applications including: (i) in centralized systems for the management of lotteries, gaming (including digital gaming) and betting, and other commercial services; (ii) to enhance functions connected to services provided through websites and mobile applications (including lotteries, sports betting, instant win, and casino style games); and (iii) in a variety of back-office functions. Software developed by the Company is also used in machines for: (i) the management of lotteries, gaming, betting and online payments; (ii) the provision of gaming and non-gaming content; and (iii) integration with other devices such as mobile phones and tablets.
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Regulatory Framework
The lottery and gaming industries are subject to extensive and evolving governmental regulation in the U.S. and other jurisdictions. Gaming laws are based upon declarations of public policy designed to ensure that gaming is conducted honestly, competitively, and free of criminal and corruptive elements. While the regulatory requirements vary from jurisdiction to jurisdiction, the majority typically require some form of licensing or regulatory suitability of operators, suppliers, manufacturers, and distributors as well as their major shareholders, officers, directors, and key employees. Regulators review many aspects of an applicant, including their financial stability, integrity, and business experience. Additionally, the Company’s lottery and gaming products and technologies require certification or approval in most jurisdictions where the Company conducts business.
A comprehensive network of internal and external resources and controls is required to achieve compliance with the broad governmental oversight of the Company’s business. The Company maintains a robust enterprise compliance program designed to ensure compliance with applicable requirements imposed in connection with its lottery and gaming activities, as well as legal requirements generally applicable to publicly traded companies in the U.S. The Company employs approximately 165 individuals to support global compliance, which is directed on a day-to-day basis by the Company’s Senior Vice President, Chief Compliance and Risk Management Officer. The Company’s Legal department, in addition to outside experts, provide legal advice and support on compliance matters, as may be deemed necessary. The Global Compliance Governance Committee, comprised of employee and non-employee directors and a non-employee gaming law expert, oversees the enterprise compliance program under the supervision of the Board. Through these efforts, the Company seeks to assure both regulators and investors that its operations maintain the highest levels of integrity.
Lottery
Lotteries in the U.S. are regulated by state or other applicable law. There are currently 48 U.S. jurisdictions (including the District of Columbia, Puerto Rico, and the U.S. Virgin Islands) that authorize the operation of lotteries. Additionally, a few state lotteries offer internet instant game sales to in-state lottery customers and several states allow subscription sales of draw games over the internet. The ongoing operations of lotteries and lottery operators are typically subject to extensive and broad regulation, which vary state-by-state. The awarding of lottery contracts and ongoing operations of lotteries in international jurisdictions are also extensively regulated, although international regulations typically vary from those prevailing in the U.S.
Lottery regulatory authorities generally exercise significant discretion, including with respect to: (i) the determination of the types of games played; (ii) the price of each wager; (iii) the manner in which the lottery is marketed; (iv) the selection of suppliers of equipment, technology, and services; and (v) the retailers of lottery products. To ensure the integrity of contract awards and lottery operations, most jurisdictions require detailed background disclosure on a continuous basis from vendors and their officers, directors, subsidiaries, affiliates, and principal stockholders. Background investigations of the vendors’ employees who will be directly responsible for the operation of lottery systems are also generally conducted. Certain jurisdictions also require extensive personal and financial disclosure and background checks from persons and entities beneficially owning a specified percentage of a vendor’s securities.

Gaming

The assembly, sale, and distribution of gaming devices, equipment, and related technology and services are subject to federal, state, tribal, and local regulations in the U.S. and foreign jurisdictions. The initial regulatory requirement in most jurisdictions is to obtain the privileged licenses that allow the Company to participate in gaming activities. The Company’s operating entities and key personnel have obtained or applied for all known government licenses, permits, registrations, findings of suitability, and approvals necessary to assemble, distribute, and/or operate gaming products in all jurisdictions where the Company does business. Although many gaming regulations across jurisdictions are similar or overlapping, the Company must satisfy all conditions individually for each jurisdiction. Obtaining the required licenses at a corporate and individual level is a thorough process, in which the authorities review detailed information about the companies and individuals applying for suitability, as well as the processes used in the assembly, sale, and distribution of gaming devices. Once the license has been granted, regulatory oversight is designed to ensure that the licensee continues to operate with honesty and integrity.
Frequently, gaming regulators not only govern the activities within their jurisdiction or origin, but also monitor activities in other jurisdictions to ensure that the Company complies with local standards on a worldwide basis. A violation in any jurisdiction could result in disciplinary action in another.
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The Company holds over 500 gaming, digital, and sports betting licenses across approximately 350 jurisdictions. Key regulatory authorities that have licensed the Company include, among others, the United Kingdom Gambling Commission, the Nevada State Gaming Control Board and the New Jersey Division of Gaming Enforcement.
PlayDigital
In 2023, there was continued growth in sports wagering across the U.S., with more states legalizing and adopting regulations to govern sports wagers, and others expected to launch in 2024 and beyond. The channels for offering sports wagering differ from state to state, with most states seeking to offer sports wagering both in person and through some electronic means, such as via a mobile phone app.
In the U.S., the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”) prohibits, among other things, the acceptance by a business of a wager by means of the internet where such wager is prohibited by any applicable law where initiated, received, or otherwise made. Under UIGEA, severe criminal and civil sanctions may be imposed on the owners and operators of such systems and on financial institutions that process wagering transactions. The law contains a safe harbor for wagers placed within a single state (disregarding intermediate routing of the transmission) where the method of placing the bet and receiving the bet is authorized by that state’s law, provided the underlying regulations establish appropriate age and location verification.

Also in the U.S., the Wire Act prohibits several types of wager-related communications over a “wire communications facility.” Please see the “Legal Proceedings” discussion included within “Key Factors Affecting Operations and Financial Condition” within “Item 5.A. - Operating Results” for information regarding the U.S. Department of Justice’s (the “DOJ”) interpretations of the Wire Act and the related legal challenges.

Connecticut has joined Michigan, Delaware, New Jersey, Pennsylvania, and West Virginia as states that have authorized internet casino gaming, and Nevada has authorized online poker.

The Company participates in digital gaming and sports wagering in the U.S. as a content and technology provider within fully regulated gaming and lottery frameworks.

Digital gaming in the E.U. is characterized by diverse regulatory frameworks with some E.U. countries having monopolistic regimes run by a sole operator and others having established licensing systems for more than one operator. The Company carefully evaluates each E.U. jurisdiction to ensure adherence to applicable laws and regulations. As local regulations and related guidance from authorities change, the Company re-evaluates its position in any given country. In 2018, the E.U. Court of Justice announced that it was dropping all enforcement proceedings related to gambling which allows the individual E.U. country rulings to stand, regardless of whether or not they violate E.U. laws. As a result, the Company has made adjustments to its strategy, to respect the individual E.U. country rulings.
Italian Gaming Regulations
The Company is subject to regulatory oversight by the ADM in Italy. At December 31, 2023, the Company held licenses for: (i) the activation and operation of the network for Italy’s Gioco del Lotto game; and (ii) the operation of the Italian Scratch & Win instant ticket game.
Gaming in Italy is an activity reserved to the State. Any game that is carried out without proper authorization is illegal and subject to criminal penalties. Italian law grants the Ministry of Economy and Finance, through ADM, the power to introduce games and to manage gaming and betting activities directly or by granting licenses to qualified operators selected by means of public tenders as further explained below. The process of creating and granting gaming and betting licenses in Italy is heavily regulated.
Gaming and betting licenses are granted pursuant to a public tender procurement process. The license provides for all of the licensee’s requirements, in accordance with the provisions of Italian law and regulation, activities, and duties, including collection of the game’s revenues, the payment of winnings, the payment of the point of sale, payment of gaming taxes and all the other amounts due to the State, the drawings and the management of all of the technological assets to operate gaming, requirements of the technological infrastructure, and the relevant service levels. Licenses are for a determined time period, generally nine (9) years, and are not renewable unless indicated in the licensing agreement; in such event, the renewal is not guaranteed to be on the same terms. In certain cases, the license may be extended at the option of the ADM on the same terms. Under other circumstances, which are typically defined in the licensing agreement, the license may be revoked or terminated. Most cases of early termination are related to the breach of the terms of the licensing agreement or the non-fulfillment of
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conditions of that agreement as well as the loss of the requirements prescribed by Italian law and regulation for the assignment and the maintenance of gaming licenses. In some cases, the early termination of the license allows the State to draw upon the entire amount of the performance bond presented by the licensee. Upon governmental request, the licensee has an obligation to transfer, free of charge, the assets subject of the license to the State at the end of the term of the license or in the event of its revocation or early termination. Each single license contains specific provisions enacting such general obligation.
Sustainability

As a global leader in one of the most regulated industries, IGT has operations across a broad spectrum of regions and cultures. The Company is committed to growing its business responsibly by implementing a structured and dedicated governance framework, which includes high standards of ESG practices.

The Nominating and Corporate Governance Committee (the “NCGC”) is responsible for overseeing the Company’s strategy on sustainability, monitoring implementation of the Company’s sustainability program, and reviewing the Company’s public disclosures regarding ESG matters (including the annual Sustainability Report and the Modern Slavery Statement). The most significant ESG-related updates are typically reported by the NCGC to the Board. Marco Sala serves as Executive Chair of the Board with specific responsibilities in addressing corporate governance, sustainability initiatives (including climate-related and environmental matters), and providing strategic guidance.

IGT seeks to serve the global gaming market with the utmost integrity and in accordance with disciplined ethical principles, with sustainability and good corporate citizenship at the core of this ethos. The Sustainability Steering Committee (“SSC”), chaired by the Senior Vice President, Marketing, Communications and Sustainability (a direct report to the Company’s CEO) and comprised of IGT senior management and members of the Global Sustainability team, supports programs and initiatives that contribute to IGT’s sustainability strategy. The SSC cultivates a long-term vision and related objectives on sustainability, fosters a consistent sustainability approach across all regions and businesses, and increases communication on sustainability by sharing best practices at global and local levels. Responsible and sustainable practices encompass a broad spectrum of sustainability initiatives, including the Company’s energy use, environmental and human rights issues, and establishing policies and strategic initiatives, such as its Sustainability Policy, Responsible Gaming Policy, Human Rights Policy, Environmental Policy, Diversity, Equity and Inclusion Global Policy, Board Diversity Policy, Sustainable Procurement Policy and Community Giving & Engagement Policy.

To achieve these objectives, the SSC developed the IGT Sustainability Plan to align the Company’s sustainability pillars with business priorities, under the theme of “Inspiring Global Transformation.” This plan, approved by the SSC in July 2022, aims at further integrating sustainability along the entire value chain and improving ESG impact in daily operations, including the identification of a comprehensive set of targets and actions to lead IGT in achieving its priorities and ambitions.

In 2023, IGT launched Sustainable PlayTM, the program that represents IGT’s commitment to leading the gaming industry in global sustainability by aligning its sustainability plan and strategy and celebrating the Company’s dedication to its people and the planet. IGT also published its Global Sustainability Policy, which outlines goals and objectives in relation to ESG practices and defines the framework for sustainability at IGT. The Global Sustainability Policy provides a governing platform for the Company’s sustainability work in all key areas of business activity, including providing services, working with suppliers, employee interactions, and industry-affecting activities.

The IGT Global Sustainability team leads project planning for the IGT Sustainability Plan, including the coordination of sustainability working groups, data collection, and reporting systems to fulfill criteria of ESG questionnaires. The Global Sustainability team also leads the development of a global community engagement strategy, the establishment of partnerships with non-profit associations, and the implementation of global responsible gaming initiatives consistent with industry standards. At the operating level, several working groups with employees from different departments are responsible for analyzing sustainability initiatives and defining an action plan.

The Company’s ongoing pledge to sustainable growth within the gaming industry includes the guiding principles set forth by the 2030 United Nations (“UN”) Agenda for Sustainable Development and its 17 Sustainable Development Goals (“SDGs”). Based on its business activities and its sustainability priorities, the Company has identified nine (9) SDGs as key areas of focus: (i) no poverty (SDG 1); (ii) good health and well-being (SDG 3); (iii) quality education (SDG 4); (iv) gender equality (SDG 5); (v) affordable and clean energy (SDG 7); (vi) decent work and economic growth (SDG 8); (vii) industry innovation and infrastructure (SDG 9); (viii) reduced inequalities (SDG 10); and (ix) climate action (SDG 13).

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In early 2019, IGT joined the United Nations Global Compact (“UNGC”), which is widely recognized as the largest corporate responsibility initiative in the world for the development, implementation, and disclosure of responsible corporate policies and practices.

The Company’s global sustainability strategy is centered on four (4) pillars:

Valuing and Protecting Our People - The organizational climate of a business reflects how employees at all levels perceive the workplace environment. Many factors can contribute to an employee’s perception, and the Company strives to develop initiatives and programs that support a positive organizational climate, including through IGT's Modern Slavery Act statements, employee-led Employee Impact Groups, and a variety of other initiatives to support this pillar in daily work life. IGT’s people strategy, which among others includes commitments to sustainability, diversity, equity, inclusion, and ethical operations, has been recognized by the 2023 Top Employer Certification for IGT operations in Canada, Italy, and the United States. IGT demonstrated not only that initiatives are in place, but that employees are engaging with them to create a working environment where professional growth, inclusion and communication are paramount. Furthermore, in recognition of the commitment to human rights protection, in 2023 IGT was included in the Human Rights Campaign Foundation’s Corporate Equality Index, which measures LGBTQ+ inclusion in the workplace.

Advancing Responsibility - The Company maintains certifications in responsible gaming through both the World Lottery Association and the Global Gambling Guidance Group (G4). The Company incorporates responsible gaming capabilities and features into its suite of products, and IGT partners with customers to help achieve their responsible gaming goals. IGT’s commitment to responsible gaming starts with its own people and is woven into the fabric of product development, services, programs, and policies. IGT has adopted a positive play approach that encourages all users to apply healthy play behaviors to their game play. IGT believes that it is incumbent upon all stakeholders in the gaming industry to take a proactive approach to problem and underage gambling.

IGT trains employees, at all levels and responsibilities, to support and promote responsible gaming in their daily activities, with additional in-depth courses for employees in specific roles, such as game designers and contact center associates. IGT’s products, games, systems, and portals include advanced responsible gaming tools that help safeguard players’ interests and address regulators’ concerns. IGT maintains close relationships with customers, gaming regulators, and researchers to further its support of player protection. In 2023, IGT received responsible gaming re-certifications for Gaming, PlayDigital, and PlaySports from G4.

Supporting Our Communities - The Company supports our communities through corporate initiatives and employee-driven programs. The flagship After School Advantage Program (the ASA Program), for example, was launched in 1999 with the goal of bringing technology and skill development in STEAM (Science, Technology, Engineering, Arts, and Mathematics) education to youth. Over the life of the ASA Program, the Company has placed over 360 digital learning centers. This aligns with IGT Sustainability Plan goals: (i) Engage with community partners to facilitate opportunities for support, learning, and growth; and (ii) Develop education programs and digital learning centers to encourage skill development and create a sustainable workforce for the future. In addition, the Company supports communities financially through various charitable endeavors, with the giving program aligned with the Company’s SDGs. Employee programs support the unique passions of employees and promote volunteerism. IGT maintains a formal Global Community Giving & Engagement Policy designed to educate and inform all relevant stakeholders about how the Company strives to create opportunities within our communities.

Fostering Sustainable Operations - The Company aspires to serve the global gaming market in accordance with the highest level of ethical and integrity principles, and has committed to continually incorporating sustainability into decision-making to increase its ESG performance. In 2021, IGT pledged by signing the Science Based Targets initiative (SBTi) commitment letter to set science-based targets to reduce GHG emissions according to scientific evidence. In 2022, IGT completed its first Scope 3 emissions inventory and submitted near-term and long-term science-based targets for validation by the SBTi. Specifically, IGT committed to reduce Scope 1 and Scope 2 emissions (combined) by 50% and Scope 3 emissions by 30% by 2030 compared to 2019, and to reduce both Scope 1, Scope 2, and Scope 3 emissions by 90% by 2050 compared to 2019. Moreover, the Company pledged to reach Net-Zero by 2050, thus offsetting the residual 10% of emissions. These emissions reduction targets were validated by the SBTi in August 2023 and IGT is actively pursuing its Decarbonization Pathway through the Internetimplementation of several workstreams throughout the value chain and mobile channels. For these services,operations. IGT also implemented the Environmental, Social and Governance Supplier Qualification Questionnaire in 2023, an annual exercise designed to measure the ESG performance of Suppliers and track their progress towards compliance of the Supplier Code of Conduct. Topics covered include Business Ethics, Social & Inclusive Supply Chain, Environmental Management, Human Rights, Health and Safety and Conflict Minerals aligned to the aforementioned Supplier Code of Conduct.

IGT’s sustainability efforts are also routinely evaluated by ESG rating agencies. IGT received a Management level (B) score from the CDP – formerly known as the Carbon Disclosure Project – recognizing the Company records service revenue net equalfor taking coordinated actions on climate issues. The Company most recently received a gold medal sustainability rating from EcoVadis, positioning IGT among
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the top 5% of global companies for sustainable practices. EcoVadis assesses companies using 21 sustainability criteria within the categories of environment, labor and human rights, ethics, and sustainable procurement. In September 2023, IGT achieved a score of 54 from the S&P Corporate Sustainability Assessment, one of the foremost global sustainability benchmarks. Based on this assessment, IGT was included in the 2024 S&P Sustainability Yearbook, which distinguishes companies within their industries that have demonstrated strengths in corporate sustainability. As of 2023, IGT received an MSCI ESG rating of AAA. In November 2022, IGT achieved a sector-leading sustainability score from Moody’s ESG Solutions, positioning the Company in the number one spot within the North American hotel, leisure goods, and services sector.
C.        Organizational Structure
A listing of the Parent’s directly and indirectly owned subsidiaries at March 7, 2024 is set forth in Exhibit 8.1 to wagers less prizesthis annual report on Form 20-F. At March 7, 2024, De Agostini had an economic interest in the Parent of approximately 42.61% (excluding treasury shares) and, taxes. Expensesdue to its election to exercise the Special Voting Shares associated with providing services under these concessions principally consistits ordinary shares pursuant to the Loyalty Plan, a voting interest in the Parent of marketing and advertisingapproximately 59.75% of the games.total voting rights (excluding treasury shares). See “Item 7. Major Shareholders and Related Party Transactions.

The following is a diagram of the Parent and certain of its subsidiaries and associated companies at March 7, 2024:
igtorgstructure2.jpg

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D.        Property, Plants and Equipment
The Parent’s principal office is located at 10 Finsbury Square, Third Floor, London EC2A 1AF United Kingdom, telephone number +44 (0) 203 866 1240. At March 7, 2024, the Company leased approximately: (i) 110 properties in the U.S. under approximately 140 leases; and (ii) 100 properties outside of the U.S. under approximately 120 leases. Certain properties leased by the Company are subject to multiple leases (e.g., buildings where each floor leased by the Company is under a separate lease). As of March 7, 2024, the Company owned a number of facilities and properties, including:
•An approximately 113,000 square foot production and research and development office building in Moncton, New Brunswick, Canada; and
•An approximately 13,050 square foot enterprise data center in West Greenwich, Rhode Island.
The following table shows the Company’s material properties at March 7, 2024:
U.S. Properties
LocationSquare
Feet		Use and Productive CapacityExtent of
Utilization		Holding
Status
9295 Prototype Drive,
Reno, NV(1)
1,251,179Office; Warehouse; Game Studios; Hardware/Software Engineering; Global Production Center; Electronic Gaming Machine80 %Leased
6355 S. Buffalo Drive,
Las Vegas, NV(2)
222,268U.S. Principal Operating Facility; Game Studio; Systems Software; Showroom100 %Leased
4000 South Frontage Road, Suite 101
Lakeland, FL		174,720Printing Plant: Printing facility; Storage and Distribution; Office100 %Leased
55 Technology Way,
West Greenwich, RI		170,000Office; Research and Testing; Storage and Distribution100 %Leased
10 Memorial Boulevard,
Providence, RI		124,769Administrative functional office; Lottery regional HQ80 %Leased
8520 Tuscany Way, Bldg. 6, Suite 100,
Austin, TX		81,933Texas Warehouse and National Response Center: Contact Center; Storage and Distribution; Office95 %Leased
8200 Cameron Road, Suite E120,
Austin, TX		41,705Data Center of the Americas: Data Center; Network Operations; Office80 %Leased
5300 Riata Park Court, Bldg. E, Suite 100,
Austin, TX		26,759Austin Tech Campus: Research and Test; Office80 %Leased
47 Technology Way,
West Greenwich, RI		13,050Enterprise Data Center: Data Center; Network Operations100 %Owned
5 Funston Avenue,
San Francisco, CA		4,072PlayDigital HQ: Office100 %Leased
(1) 321,473 sq. ft. of this property is sub-leased to sub-tenants.
(2) 120,586 sq. ft. of this property has been sub-leased to a sub-tenant.


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Non-U.S. Properties
LocationSquare
Feet		Use and Productive CapacityExtent of
Utilization		Holding
Status
Viale del Campo Boario 56/D 00154
Roma, Italy		174,526Principal Operating Facility in Italy; Office; Italy Data Center: Data Center; Network Operations100 %Leased
Via delle Monachelle S.N.C.
Pomezia, Rome, Italy		129,167Instant Ticket Warehouse; Instant Ticket Distribution100 %Leased
328 Urquhart Ave,
Moncton, New Brunswick, Canada		113,000Canada HQ; Office; Research and Testing; Gaming Production100 %Owned
Seering 13-14,
Unterpremstatten, Austria		78,082Austria Gaming HQ; Office; Research and Test90 %Leased
Al. Jerozolimskie, 92
Brama Building,
Warsaw, Poland		48,283Global Tech Hub; Office; Research and Test95 %Leased
USCE Tower
Bulevar Mihajla, Pupina No. 6
Belgrade, Serbia		42,764Software Development Office; Lottery; Gaming Products95 %Leased
2310 Szigetszentmiklós
Leshegy u. 30
Budapest, Hungary
34,661Warehousing; Gaming Production and Parts Distribution for EMEA Region; Office100 %Leased
11 Talavera Rd.
Building B,
Sydney, Australia		27,432Office; Sales & Marketing; Financial Support100 %Leased
10 Finsbury Square, 3rd Floor London EC2A 1AD, United Kingdom(1)
17,340Registered Global Headquarters of the Parent; Global Management HQ, PlayDigital
100 %Leased
(1) 4,600 sq. ft. of this property has been sub-leased to a sub-tenant.
IGT has adopted a hybrid working arrangement for employees who are capable of performing their function remotely, with the Company’s employees afforded the ability to work both in the office and remotely.
IGT maintains its facilities in good condition, and these locations are fit for the purposes for which the Company uses them. There are no known environmental issues that may affect the Company’s utilization of its real property assets.
IGT does not have any plans to construct, expand, or improve its facilities in any material manner other than general maintenance of facilities. As such, the Company does not anticipate an increase in productive capacity.
None of the Company’s properties are subject to mortgages or other material security interests.

Item 4A.        Unresolved Staff Comments

None.

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Item 5.        Operating and Financial Review and Prospects

Management’s Discussion and Analysis

The following discussion and analysis of IGT’s financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, included in this annual report, as well as “Presentation of Financial and Certain Other Information,” “Item 3.D. Risk Factors,” and “Item 4.B. Business Overview.”
The following discussion includes information for the fiscal years ended December 31, 2023 and 2022. For a discussion and analysis of IGT’s consolidated operating results and non-operating results and segment revenues and operating results for the year ended December 31, 2022, compared to the year ended December 31, 2021, please refer to the disclosure under “Item 5. Operating and Financial Review and Prospects - A. Operating Results” in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2022, filed with the SEC on February 28, 2023.


A.    Operating Results

Business Overview
IGT is a global leader in gaming that delivers entertaining and responsible gaming experiences for players across all channels and regulated segments, from Lotteries and Gaming Machines to Digital Gaming and Sports Betting. Leveraging a wealth of compelling content, substantial investment in innovation, player insights, operational expertise, and leading-edge technology, the Company’s solutions deliver gaming experiences that responsibly engage players and drive growth. IGT has a well-established local presence and relationships with governments and regulators around the world, and creates value by adhering to the highest standards of service, integrity, and responsibility.

IGT manages and reports the Company’s operating results through three (3) business segments: Global Lottery, Global Gaming, and PlayDigital, along with a corporate support function (“Corporate and Other”). IGT's operations for the periods presented herein are discussed accordingly.

Business Acquisitions

On July 1, 2022, the Company completed the acquisition of iSoftBet by purchasing 100% of the equity interests in certain entities of the iSoftBet group for cash consideration of €162 million (inclusive of €20 million deposited into an escrow account) and contingent consideration of €4 million. The acquisition of iSoftBet provides market-tested proprietary digital content, advanced game aggregation capabilities, scalable promotional tools, analytics, and creative talent to the PlayDigital segment. The financial results of iSoftBet have been included within our PlayDigital segment in our Consolidated Financial Statements since the date of purchase.

Divestitures

On September 14, 2022, the Company completed the sale of 100% of the share capital of Lis Holding S.p.A., a wholly owned subsidiary of IGT Lottery S.p.A. that conducted the Company’s Italian commercial services business, to PostePay S.p.A. – Patrimonio Destinato IMEL for a purchase price of €700 million. The net consideration received of €479 million resulted in a pre-tax gain on sale of $278 million, ($276 million net of tax). The business was a component of continuing operations within our Global Lottery segment through the closing date.

Discontinued Operations

On May 10, 2021, IGT completed the sale of its Italian B2C businesses to Gamenet Group S.p.A. for a cash sale price of €950 million. The sale of the businesses met the criteria to be reported as a discontinued operation and, as a result, the discussion that follows in this Item 5. has been prepared on a continuing operations basis and excludes results from discontinued operations, discussed in detail in “Notes to the Consolidated Financial Statements—3. Business Acquisitions and Divestitures” included in “Item 18. Financial Statements.”

OPtiMa

In connection with the 2020 introduction of our global product organizations, IGT identified opportunities to optimize the Company’s portion of the value chain across businesses and regions and launched the “OPtiMa” program. In 2021, the Company successfully achieved the $200 million in structural cost savings and capital expenditure reductions relative to 2019
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anticipated under the program. Following the successful achievement of OPtiMa, IGT launched OPtiMa 2.0, which was expected to yield an incremental $150 million in structural profit improvement by the end of 2023 relative to 2019. OPtiMa 2.0 focused on three key areas: (i) operational excellence and margin improvement initiatives; (ii) interest expense reductions; and (iii) structural improvements to the effective tax rate. As of December 31, 2022, the Company achieved the targeted reduction in interest expense and improvements to the effective tax rate, net of non-recurring items. The achievement of the operational excellence initiatives was partially offset by supply chain headwinds and inflationary cost increases, however, the Company still achieved the targeted margin improvement in 2023 as operations continued to normalize and we finalized a more structured approach to software development and multi-year licensing agreements.

Key Factors Affecting Operations and Financial Condition
 
The Company’s worldwide operations can be affected by industrial, economic, and political factors on both a regional and global level. The ongoing conflict between Russia and Ukraine, the Israeli-Hamas conflict, Argentina’s economic and financial crisis, the tightening of monetary policy by central banks and other macroeconomic factors have caused disruptions and uncertainty in the global economy, including rising interest rates, increased inflationary pressures, foreign exchange rate fluctuations, potential cybersecurity risks, and exacerbated supply chain challenges. However, these events did not have a material impact on our supply chain or our results of operations. The extent to which our business, or the business of our suppliers or manufacturers, will be impacted in the future is unknown. We will continue to monitor the effects of these events on our business and our results of operations. The following are a description of the principal factors which have affected the Company'sCompany’s results of operations and financial condition for the years ended December 31, 2017, December 31, 2016 and December 31, 2015 and/or which may affect results of operations and financial condition for future periods.

The IGT Acquisition:On April 7, 2015,June 8, 2023, the Company acquired IGT,announced the Board would begin evaluating potential strategic alternatives for the Global Gaming and PlayDigital businesses with the goal of unlocking the full value of IGT's portfolio. The Board considered a global leaderbroad range of potential alternatives, with an agreement reached with Everi on February 28, 2024 for the Separation & Divestiture of the Global Gaming and PlayDigital segments. Refer to the “Notes to the Consolidated Financial Statements—26. Subsequent Events” for further information. To support the Board in casinotheir assessment of potential transactions, including the Separation & Divestiture, the Company retained advisors, legal counsel, and social gaming entertainment, headquartered in Las Vegas, Nevada.consultants who will continue to support the Company through the closing date of the Separation & Divestiture.

Product Sales: Product sales fluctuate from year to year due to the mix, volume, and timing of the transactions. Product sales amounted to $963 million, $866 million, and $606 million, or approximately 22%, 21%, and 15% of total revenues for the years ended December 31, 2023, 2022, and 2021, respectively.

Jackpots: The Company recorded $1.7 million and $49.4 millionbelieves that the performance of professional fees and expenses related tolottery products is influenced by the acquisitionsize of IGTadvertised jackpots in 2016 and 2015, respectively, which is classifiedjurisdictions that offer such jackpots. Typically as jackpots increase, sales of lottery tickets also increase, further increasing the advertised jackpot level. However, in transaction (income) expense, net ina rising interest rate environment, advertised jackpot levels will increase more rapidly than they previously did given the consolidated statements of operations.
Sale of Double Down Interactive LLC: On June 1, 2017, the Company sold Double Down Interactive LLC ("DoubleDown") to DoubleU Games Co., Ltd. The $27.2 million gain on sale, net of selling costs, is classified within transaction (income) expense, net on the consolidated statement of operations. As a resultannuity basis of the sale,displayed jackpots. Therefore, in a higher interest rate environment, jackpot game ticket sales may be increasing at a relatively slower rate than the North America Gaming and Interactive segment experiencedcorresponding jackpot levels. In a lower service and operating income from social gaming ininterest rate environment, advertised jackpot levels are slower to increase which can negatively impact the second halfsales of 2017.lottery tickets.


Effects of Foreign Exchange Rates: The Company is affected by fluctuations in foreign exchange rates (i) through translation of foreign currency financial statements into U.S. dollars for consolidation, which is referred to as the translation impact, and to a lesser extent (ii) through transactions by subsidiaries in currencies other than their own functional currencies, which is referred to as the transaction impact. Translation impacts arise in the preparation of the consolidated financial statements;Consolidated Financial Statements; in particular, the consolidated financial statementsConsolidated Financial Statements are prepared in U.S. dollars while the financial statements of each of the Company'sCompany’s subsidiaries are generally prepared in the functional currency of that subsidiary. In preparing consolidated financial statements,Consolidated Financial Statements, assets and liabilities measured in the functional currency of the subsidiaries are translated into U.S. dollars using the exchange rate prevailing at the balance sheet date, while income and expenses are translated using the average exchange rates for the period covered. Accordingly, fluctuations in the exchange rate of the functional currencies of the Company'sCompany’s subsidiaries against the U.S. dollar impacts the Company'sCompany’s results of operations. The Company is particularly exposed to movements in the euro/U.S. dollar exchange rate. Although the fluctuations in foreign exchange rates hashave had a materialsignificant impact on the Company'sCompany’s revenues, net income, and net debt, the impact on operating income and cash flows is less significant in thatas revenues are mostlytypically matched byto costs denominated in the same currency.

Jackpots and Late Numbers:The Company believes that the performance of lottery products is influenced by the size of available jackpots in jurisdictions that offer such jackpots. In general, when jackpots increase, sales of lottery tickets also increase, further increasing the jackpot. The Company also believes that consumers in Italy monitor “late numbers” (numbers which have not been drawn for more than 100 draws) and when there is a good pipeline of late numbers, wagers in Italy increase. Under both of these circumstances, the Company's service revenues are positively impacted.
Product Sales: The Company's product sales fluctuate from year to year due to the mix, volume and timing of the product sales transactions. In general, product sales contracts are dependent on the timing of replacement cycles. Product sales amounted to $802.4 million, $778.3 million and $711.4 million, or approximately 16.2%, 15.1% and 15.2% of total revenues, in 2017, 2016 and 2015, respectively.
Restructuring Costs: The Company has undertaken various restructuring plans, principally related to the April 2015 acquisition of IGT to eliminate redundant costs and achieve synergies across the business. The Company recorded restructuring costs associated with these plans of $39.9 million, $27.9 million and $76.9 million, in 2017, 2016 and 2015, respectively.
Incentive Payments and Shortfall Payments under Minimum Profit Contracts: The Company has two contracts (each of which is an LMA) where it has provided customers with minimum profit level guarantees (the Indiana contract and the New Jersey contract). Under these contracts, subject to certain caps, the Company may earn incentive compensation if it exceeds minimum profit level guarantees and may be required to make shortfall payments should it fail to achieve them.
In relation to the Indiana contract, the Company guaranteed a minimum profit level to the State of Indiana commencing with the contract year ending June 30, 2014. The Company recorded a reduction of service revenue of $8.0 million in 2015 in connection with the Company's performance during the fiscal year ended June 30, 2015 related to this guarantee. In 2015, the

Company and the State of Indiana renegotiated the Indiana contract which resulted in revised guarantee levels, and in consideration, the Company paid the State of Indiana $18.3 million which the Company capitalized to other non-current assets in its consolidated balance sheet and which the Company is amortizing to service revenue over the remaining contract term. The Company did not earn incentive compensation or make shortfall payments related to the guarantee in 2017 or 2016.
In relation to the New Jersey contract, the Company guaranteed a minimum profit level to the State of New Jersey commencing with the contract year ending June 30, 2014. In 2015, the Company and the State of New Jersey renegotiated the New Jersey contract which resulted in revised guarantee levels, and in consideration, the Company paid the State of New Jersey $15.4 million which the Company capitalized to other non-current assets in its consolidated balance sheet and which the Company is amortizing to service revenue over the remaining contract term. The Company earned incentive compensation of $29.0 million and $30.6 million in 2017 and 2016, respectively based on its performance for the fiscal years ended June 30, 2017 and June 30, 2016, respectively, which was recorded as service revenue in the consolidated statements of operations.

Research and Development Activities: The Company devotes substantial resources on research and development and incurred $313.1 million, $343.5 million and $277.4 million of related expenses in 2017, 2016 and 2015, respectively. As anticipated, investments in research and development increased following the April 2015 acquisition of IGT and decreased in 2017 as a result of integration efforts.

Critical Accounting Estimates
The Company's consolidated financial statements are prepared in conformity with GAAP which require the use of estimates, judgments and assumptions that affect the carrying amount of assets and liabilities and the amounts of income and expenses recognized. The estimates and underlying assumptions are based on information available at the date that the financial statements are prepared, on historical experience, judgments and assumptions considered to be reasonable and realistic.
The Company periodically and continuously reviews the estimates and assumptions. Actual results for those areas requiring management judgment or estimates may differ from those recorded in the consolidated financial statements due to the occurrence of events and the uncertainties which characterize the assumptions and conditions on which the estimates are based.
The areas which require greater subjectivity of management in making estimates and judgments and where a change in such underlying assumptions could have a significant impact on the Company's consolidated financial statements are discussed below.
Revenue Recognition
The Company has two categories of revenue: service revenue and product sales.
Service revenue is derived from the following sources:
Operating contracts predominantly related to Italian concessions and LMAs;
Gaming operations arrangements where the Company provides customers with proprietary gaming equipment, systems, content licensing, and services;
FMCs;
Interactive contracts; and
Other professional services.
Product sales are derived from the following sources:
Sale of lottery terminals and gaming machines, including game content; and
Sale of lottery and gaming systems, including the licensing of proprietary software, and implementation services.


Revenue is recognized when all of the following conditions are met:
(i)Persuasive evidence of an arrangement exists;
(ii)Delivery has occurred or services have been rendered;
(iii)The price to the customer is fixed or determinable; and
(iv)Collectability is reasonably assured (or probable under ASC 985, Software).
Revenues are reported net of incentives, rebates, discounts and amortization of upfront payments to customers for licenses. Sales taxes, gaming taxes and other taxes of a similar nature are presented on a net basis (excluded from revenue). Amounts billed prior to completing the earnings process are deferred until revenue recognition criteria is met.
Service revenue
Service revenue is derived from the following types of arrangements:
Operating contracts
Certain of the Company’s revenue, primarily revenue from the Italy segment and to a lesser extent the North America Lottery segment, is derived from concessions or LMAs (“operating contracts”). Under operating contracts, the Company manages all the activities along the lottery value chain including collecting wagers, paying out prizes, managing all accounting and other back-office functions, running advertising and promotions, operating data transmission networks and processing centers, training staff, providing retailers with assistance and supplying materials for the game. In arrangements where the Company is performing services on behalf of the government and the government is considered the Company’s customer, revenue is recognized net of prize payments, taxes, retailer commissions and remittances to state authorities, because the Company is acting as an agent to the authorities. In arrangements where the Company’s customers are the end players and/or retailers, the Company records revenue net of prizes and taxes only, and records the retailer commissions as a cost of service, because the Company is acting as the principal.
The Company also provides sports pools and sports betting services. Under sports pools arrangements, the Company manages the sports pool where the sports pool prizes are divided among those players who select the correct outcome. There are no odds involved in sports pools and each winner’s payoff depends on the number of players and the size of the pool. Under sports pools arrangements, the Company collects the wagers, pays prizes, pays a percentage fee to retailers, withholds its fee, and remits the balance to the respective regulatory agency. The Company assumes no risk associated with sports pool wagering. The Company records revenue net of prize payouts, gaming taxes, retailer commissions and remittances to state authorities, because the Company is acting as an agent to the authorities.
In sports betting contracts, the Company establishes and assumes the risks related to the odds. Under fixed odds betting, the potential payout is fixed at the time bets are placed and the Company bears the risk of odds setting. The Company is responsible for collecting the wagers, paying prizes, and paying fees to retailers. The Company retains the remaining cash as profits. Under these arrangements, the Company records revenue net, calculated as total wagers less the estimated payout for prizes, because the betting contract is considered a derivative and is required to be recorded at fair value. Taxes are recorded as contra revenue and retailer commissions are shown as expenses.
Fees earned under operating contracts are recognized as revenue in the period earned and are classified as service revenue in the consolidated statement of operations when all of the criteria outlined above are met.
Under operating contracts, the Company is generally required to pay an upfront license fee. When such upfront payments are made to the Company’s customers, the payment is recorded as a non-current asset and amortized as a reduction of service revenue over the license term.
Gaming Operations
Gaming operations revenues are generated by providing customers with proprietary land-based gaming equipment, systems, content licensing, and services under a variety of recurring revenue arrangements, including a percentage of coin-in (amounts wagered), a percentage of net win, or a fixed daily/monthly fee.
Included in gaming operations are Wide Area Progressive (“WAP”) systems. WAP systems consist of linked slot machines located in multiple casino properties, connected to a central computer system. WAP games differ from all other games in that a

Company-sponsored progressive jackpot increases with every wager until a player wins the top award combination. Casinos with WAP machines pay a percentage of the coin-in (amounts wagered) for services related to the design, assembly, installation, operation, maintenance, and marketing of the WAP systems, as well as funding and administration of Company-sponsored progressive jackpots. A portion of the total fee collected is allocated to the WAP jackpot and is recorded as a component of the cost of providing the WAP service.
Fees earned under gaming operations are recognized as revenue in the period earned and are classified as service revenue in the consolidated statement of operations when all of the criteria outlined above are met.
Facilities Management Contracts
Under FMCs, the Company constructs, installs, and operates the online system. Under a typical FMC, the Company maintains ownership of the technology and facilities, and is responsible for capital investments throughout the duration of the contract. The FMCs may also include a wide range of support services. These contracts, principally in the North America Lottery segment, generally provide for a variable amount of monthly or weekly service fees paid to the Company directly from the customer based on a percentage of sales.
Fees earned under FMCs are recognized as revenue in the period earned, throughout the service period, and are classified as service revenue in the consolidated statement of operations when all of the criteria outlined above are met.
Interactive Contracts
Interactive revenues are principally generated from online social gaming and online real-money products and services (“IGTi”).
Social gaming revenues are generated from the sale of virtual casino chips to players in the online DoubleDown Casino that can be used for additional play or game enhancements. Revenues from player purchases are recognized ratably over the estimated average service period in which the chips are consumed based on historical data analysis. Because DoubleDown is the principal, responsible for substantially all aspects of the casino services and sale of virtual goods to the player, revenues are recorded on a gross basis. Payment processing fees paid to Facebook, Apple and Google on a revenue participation basis are recorded within cost of services.
IGTi revenues are generated from online real-money gaming solutions offerings, which encompass gaming systems infrastructure, applications, content licensing, and back office operational support services, including WAP jackpot funding and administration. IGTi solutions are generally provided under revenue sharing arrangements based on a percentage of net win similar to gaming operations discussed above.
Other Professional Services
Product sales contracts generally include other professional services, which includes telephone support, software maintenance, hardware maintenance, the right to receive unspecified upgrades/enhancements on a when-and-if-available basis, and other professional services. Fees earned for these professional services are generally recognized as revenue in the period earned (i.e., over the support period) and are classified as service revenue in the consolidated statement of operations when all of the criteria outlined above are met.
Product Sales
Product sales are derived from the following types of arrangements:
Sale of Lottery Terminals and Sale of Gaming Machines, including Game Content
These arrangements include the sale of gaming machines including game content, non-machine gaming related equipment, licensing and royalty fees, and component parts (including game themes and electronics conversion kits). The Company’s credit terms are predominantly short-term in nature. The Company also grants extended payment terms under contracts where the sale is secured by the related equipment sold. Revenue from the sale of lottery terminals and gaming machines is recognized based upon the contractual terms of each arrangement, but predominantly upon delivery or acceptance. If the sale of lottery terminals and gaming machines include multiple elements, these arrangements are accounted for under Multiple Element Accounting, discussed below.


System Sales (Lottery and Gaming)
System sale arrangements typically include multiple elements, where the Company constructs, sells, delivers and installs a turnkey system (inclusive of point-of-sale terminals, if applicable) or delivers equipment and licenses the computer software for a fixed price, and the customer subsequently operates the system. System sale arrangements generally include customer acceptance provisions and general rights to terminate the contract if the Company is in breach of the contract. Such arrangements include non-software elements, software, and other professional services. Amounts due to the Company and costs incurred by the Company in implementing the system prior to customer acceptance are deferred. Revenue attributable to the system is classified as product sales in the consolidated statement of operations and is recognized upon customer acceptance as long as there are no substantial doubts regarding collectability. Revenues attributable to other professional services provided subsequent to customer acceptance are classified as service revenue in the consolidated statement of operations in the period earned.
Shipping and Handling

Shipping and handling reimbursements from customers are included in product sales revenue with the associated costs included in cost of product sales.

Multiple Element Arrangements
The Company enters into multiple element arrangements in which a customer may purchase both products and services. In some scenarios, all deliverables are considered one element, while other arrangements contain multiple elements. When arrangements contain multiple elements, the Company allocates revenue to each element based on a relative selling price hierarchy. The relative selling price for each element is determined using vendor-specific objective evidence (“VSOE”) if available, third-party evidence (“TPE”) if VSOE is not available, or best estimate of selling price (“BESP”) if neither VSOE nor TPE is available.
VSOE of selling price is based on the price charged when the element is sold separately. Establishing VSOE requires judgment to determine if there is a sufficient quantity of items sold on a stand-alone basis or if there are substantive contractual renewal rates and whether these prices demonstrate an appropriate level of concentration to conclude that VSOE exists.

TPE of selling price is established by evaluating largely interchangeable competitor products or services in stand-alone sales to similar customers. However, as the Company’s products contain a significant element of proprietary technology and the Company’s solutions offer different features and functionality, the comparable pricing of third-party products with similar functionality typically cannot be obtained.

BESP is established considering multiple factors including, but not limited to, market conditions, competitive landscape, internal costs, and gross profit objectives. In some scenarios, contractual pricing may serve as the best estimate given the variability among jurisdictions and customers, while in other scenarios the cost for each deliverable plus a reasonable margin is used as management’s best estimate of selling price.
In scenarios where the Company’s products include hardware containing required software that function together to provide the essential functionality of the product, the Company considers both the hardware and required software as “non-software deliverables” and has therefore concluded that such arrangements are not subject to the industry-specific software revenue recognition guidance. The Company recognizes revenue for these arrangements based on ASC 605, Revenue Recognition, and allocates the arrangement consideration based on the relative selling price of the deliverables. In scenarios where the Company’s products include hardware where the software is not considered essential to the functionality of the hardware, the hardware revenue is recognized based on when the revenue recognition criteria is met (i.e., shipment, delivery and/or acceptance) and the software revenue is recognized under the software revenue recognition guidance provided under ASC 985, Software.

Goodwill, Intangible Assets and Long-lived Assets

The process of evaluating the potential impairment related to goodwill, intangible assets other than goodwill and long-lived assets requires the application of significant judgment. If an event occurs that would cause revisions to the estimates and assumptions used in analyzing the fair value of goodwill, intangible assets other than goodwill and long-lived assets, the revision could result in a non-cash impairment loss that could have a material impact on financial results.

Goodwill
Goodwill is tested for impairment annually at November 1 of each year, or on an interim basis if facts or circumstances indicate that it may be impaired. Goodwill is tested for impairment at the reporting unit level, which is one level below or the same level as an operating segment. The Company has four reporting units (which are equivalent to its segments) at December 31, 2017 as follows:
North America Gaming and Interactive
North America Lottery
International
Italy

In January 2017, the FASB issued ASU no. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Given the simplified nature of the new standard, the Company adopted it prospectively on January 1, 2017 and applied the guidance to its interim and annual goodwill impairment test.

The Company's goodwill impairment test compares the fair value of a reporting unit with its carrying amount, and an impairment loss is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit.
In performing the goodwill impairment test, the Company estimates the fair value of the reporting units using an income approach that analyzes projected discounted cash flows. The procedures the Company follows include, but are not limited to, the following:
Analysis of the conditions in, and the economic outlook for, the reporting units;
Analysis of general market data, including economic, governmental, and environmental factors;
Review of the history, current state, and future operations of the reporting units;
Analysis of financial and operating projections based on historical operating results, industry results and expectations;
Analysis of financial, transactional and trading data for companies engaged in similar lines of business to develop appropriate valuation multiples and operating comparisons; and
Calculation of the Company's market capitalization, total invested capital, the implied market participant acquisition premium, and supporting qualitative and quantitative analysis.
Under the income approach, fair value of the reporting units is determined based on the present value of each unit's estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company uses internal forecasts to estimate future cash flows and estimates long-term future growth rates based on internal projections of the long-term outlook for each reporting unit. Actual results may differ from those assumed in forecasts. The discount rates are based on a weighted average cost of capital analysis computed by calculating the after-tax cost of debt and the cost of equity and then weighted based on the concluded capital structure of the respective reporting unit. The Company uses discount rates that are commensurate with the risks and uncertainty inherent in each reporting unit and in internally developed forecasts. Discount rates used in the reporting unit valuations ranged from 8.60% to 9.20%.

Estimating the fair value of reporting units requires the Company's management to use its judgment in making estimates and making forecasts that are based on a number of factors including future cash flows, growth rates, market comparables, perpetual growth rates, weighted average cost of capital, and actual operating results. As with all forecasts, it is possible that the judgments and estimates described above may change in future periods.



Interim Test

The North America Gaming and Interactive reporting unit's long-term strategy of improving content and game performance to stabilize and then grow market share has taken longer than expected. The Company had anticipated that the underperformance when compared to expectations in the first half of 2017 would be recovered in the second half of 2017 given planned market introductions of new games and hardware. However, the forecasted third quarter improvements did not fully materialize as actual results were still below expectations. The Company continues to expect improved results for the North America Gaming and Interactive reporting unit as the Company brings new games and hardware to the market and continues to expect a normalized growth rate of 3%, but from a lower base.

In light of the factors discussed above, the Company determined there was an impairment indicator for the North America Gaming and Interactive reporting unit. The Company performed an interim goodwill impairment test at September 30, 2017 for this reporting unit that resulted in a $714.0 million non-cash goodwill impairment loss with no income tax benefit to reduce the carrying amount of the North America Gaming and Interactive reporting unit to fair value. The impairment loss had no impact on the Company's operations, cash flows, ability to service debt, compliance with financial covenants, or underlying liquidity.

There were no goodwill impairment losses recorded in 2016 or 2015.

The results of the Company’s interim impairment testing were as follows ($ thousands): 
  Estimated Fair Value Carrying Amount Deficit %
North America Gaming and Interactive 2,810,000
 3,524,000
 (714,000) (20.3)

In calculating the fair value of the North America Gaming and Interactive reporting unit using the income approach, the following estimates and assumptions were also used in the discounted cash flow analysis:
A normalized growth rate of 3.00% based on the estimated sustainable long-term growth rate for the reporting unit;
A normalized operating EBITDA margin percentage was estimated based on a review of average margins within the projection period;
Normalized capital expenditure requirements were estimated based on a review of historical and projected capital expenditures and typical replacement cycles; and
A discount rate of 8.65% based on the weighted average cost of capital.

Annual Test

At November 1, the Company performed its annual goodwill impairment test for all reporting units.

The Company performed a qualitative assessment on the North America Lottery and Italy reporting units by evaluating the significance of all identified events and circumstances, both company-specific and market/industry related to determine whether it was more likely than not that the fair value of the reporting unit was less than its carrying amount. A qualitative assessment was elected for the North America Lottery and Italy reporting units based on the prior year fair values of each respective reporting unit substantially exceeding their carrying amounts, which the Company believes to be 20% or more.
For these reporting units that were tested using only the qualitative assessment, the Company determined that the fair value of each reporting unit is more likely than not greater than the carrying amount and, as a result, quantitative analysis was not required.

The Company performed a quantitative assessment on the North America Gaming and Interactive and International reporting units which indicated that the fair values of each of the reporting units exceeded their carrying amount. A quantitative assessment was elected for the North America Gaming and Interactive reporting unit due to the interim impairment loss recognized at September 30, 2017 and for the International reporting unit because in the prior year impairment test fair value exceeded carrying amount by 11.3% which was not considered a substantial excess over carrying amount.

The annual quantitative impairment test resulted in estimated fair values being in excess of their carrying amounts by less than 5% and greater than 15% for the North America Gaming and Interactive and International reporting units, respectively.




In calculating the fair value of the reporting units using the income approach, the following estimates and assumptions were also used in the discounted cash flow analysis:
North America Gaming and Interactive
A normalized growth rate of 3.00% based on the estimated sustainable long-term growth rate for the reporting unit;
A normalized operating EBITDA margin percentage was estimated based on a review of average margins within the projection period;
Normalized capital expenditure requirements were estimated based on a review of historical and projected capital expenditures and typical replacement cycles; and
A discount rate of 8.60% based on the weighted average cost of capital.

International
A normalized growth rate of 3.00% based on the estimated sustainable long-term growth rate for the reporting unit;
A normalized operating EBITDA margin percentage was estimated based on a review of average margins within the projection period;
Normalized capital expenditure requirements were estimated based on a review of historical and projected capital expenditures and typical replacement cycles; and
A discount rate of 9.20% based on the weighted average cost of capital.

Although the estimated fair values of the reporting units were in excess of their carrying amounts, they were not substantially in excess, which the Company believes to be 20% or more. A decrease in the fair value of the respective North America Gaming and Interactive and International reporting units could potentially result in a goodwill impairment loss.

The Company performed a sensitivity analysis on the North America Gaming and Interactive reporting unit fair value calculation to assess the impact of the Tax Act. The sensitivity analysis assumedforeign exchange rates on our consolidated results, certain key performance indicators (such as same-store sales) and financial fluctuations are reported on a reduced tax rate estimate based on the federal tax rate change from 35%constant-currency basis in order to 21%. This resulted in a substantial increasefacilitate period-to-period comparisons of our results without regard to the fair value slightly offset by an increase to the carrying amount which increased the excessimpact of fair value over carrying amount by more than $300 million, or greater than 10%.fluctuating foreign currency exchange rates.

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Goodwill for the North America Gaming and Interactive reporting unit was $1.440 billion at December 31, 2017.
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Legal Proceedings

Indefinite-lived Intangible assets (other than goodwill)

The Company evaluates indefinite-lived intangible assets other than goodwill for impairment annually at November 1 and whenever events or changes in circumstances indicate impairment may exist. The Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of indefinite-lived intangible assets are less than their carrying amount and whether the quantitative analysis is necessary. The quantitative analysis compares the fair value of indefinite-lived intangible assets to their carrying amount and an impairment loss is recognized when the carrying amount exceeds the fair value. The 2017 review did not result in any impairment losses. The 2016 review resulted in impairment losses of $30.0 million in the North America Gaming and Interactive segment for certain indefinite-lived trademarks relating to the forecasted slowing of growth in the social gaming market. The 2015 review resulted in impairment losses of $9.7 million in the International segment for certain indefinite-lived trademarks.
Long-lived assets

The Company evaluates long-lived assets, including definite-lived intangible assets and other assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Events or changes in circumstances that could result in an impairment review include, but are not limited to, significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the overall business strategy and significant negative industry or economic trends. Impairment is recognized when the asset is not recoverable and the carrying amount of an asset exceeds its fair value as calculated on a discounted cash flow basis. The Company recorded impairment losses related to long-lived assets of $1.2 million, $7.7 million and $2.8 million in 2017, 2016 and 2015, respectively.

Litigation Provisions

From time to time, the Company isParent and/or one or more of its subsidiaries are party to legal, regulatory, or administrative proceedings regarding, among other matters, claims by and against the Company,us, and injunctions by third parties arising out of the ordinary course of business and investigationsor its other business activities. Licenses are also subject to legal challenges by competitors seeking to annul awards made to the Company. The Parent and/or one or more of its subsidiaries are also, from time to time, subjects of, or parties to, ethics and compliance inquiries related to ongoing operations. The outcome of these proceedings and similar future proceedings cannot be predicted with certainty. It is difficult to accurately estimate the outcome of any proceeding. As such, the amounts of the provision for litigation risk, which has been accrued on the basis of assessments made by external counsel, could vary significantly from the amounts which the Company would ultimately be obligated to pay or agree to pay to settle any such proceeding. In addition, unfavorable resolution of or significant delay in adjudicating such proceedings could require the Company to pay substantial monetary damages or penalties and/or incur costs which may exceed any provision for litigation risks or, under certain circumstances, cause the termination or revocation of the relevant concession, license, or authorization, and thereby have a material adverse effect on the consolidated results of operations, business, financial condition or prospects. At December 31, 2017 and 2016, provisions for litigation matters amounted to $4.7 million and $4.0 million, respectively.
Jackpot Accounting
The Company incurs jackpot expense and accrues jackpot liabilities with every wager on devices connected to a WAP system. Only WAP games include Company-sponsored jackpots for which the Company incurs jackpot expense. A portion of the fees paid to the Company is used for the funding and administration of Company-sponsored WAP jackpot payments.
Jackpot expense represents the estimated cost to fund jackpots and is recorded to cost of services in the consolidated statement of operations. Changes in estimates for WAP jackpot liabilities and expenses are attributable to regular analysis and evaluation of the following factors: variations in slot play; number of WAP units in service and volume of play; interest rate movements; and the size of WAP jackpots at initial setup or after a WAP jackpot is won.
The Company’s WAP jackpots are generally payable in equal annual installments over 20 to 26 years, or immediately in the case of instant wins. Winners may elect to receive a lump sum payment for the present value of the jackpot discounted at applicable interest rates in lieu of periodic annual installments. Discount rates eligible for use in the lump sum payment calculation vary by jurisdiction and are impacted by market forces and other economic conditions.
Jackpot liabilities are composed of payments due to previous winners, as well as amounts due to future winners of WAP jackpots not yet won. Liabilities due to previous winners for periodic payments are carried at the accreted cost of a qualifying U.S. government or agency annuity investment that may be purchased at the time of the WAP jackpot win. If an annuity is subsequently sold and the periodic liability is instead guaranteed by surety bonds or letters of credit, the liability initially funded by an annuity continues to accrete at the same rate. If the periodic liability is not initially funded with an annuity investment, it is discounted and accreted using the risk-free rate (i.e. treasury rate) at the time of the WAP jackpot win.
Liabilities due to future winners are recorded at the present value of the estimated amount of WAP jackpots not yet won. The Company estimates the present value of future winner liabilities using current market rates (prime, treasury, or agency, as applicable), weighted with historical lump sum payout election ratios. The most recent historical patterns indicate that approximately 90% of winners will elect the lump sum payment option. Additionally, the Company estimates the current portion of future winner liabilities based on historical experience with winner payment elections, in conjunction with the theoretical projected number of WAP jackpots.

Minimum profit level guarantees
The Company's estimates of liabilities for minimum profit level guarantees take into consideration contract terms and financial information provided by its customers, the availability and timing of which could significantly impact the Company's estimates. The Company accounts for minimum profit level guarantees as a reduction of service revenue on an annual basis based on the best estimate of amounts due to the customer annually.
Further details of these guarantees, which require management to make estimates and assumptions concerning profit levels, are provided in the Company's consolidated financial statements included herein.
Research and Development and Capitalized Software Development Costs

R&D costs incurred prior to technological feasibility are expensed as incurred. R&D costs include salaries and benefits, stock-based compensation, consultants, facilities-related costs, material costs, depreciation and travel.

Costs incurred in the development of the Company’s externally-sold software products are expensed as incurred, except certain software development costs eligible for capitalization. Material software development costs incurred subsequent to establishing technological feasibility and through the general release of the software products are capitalized. Technological feasibility is demonstrated by the completion of a detailed program design or working model, if no program design is completed. Capitalized costs are amortized to cost of product sales over the products’ estimated economic life.

Costs incurred in the development of software to be used only for services provided to customers are capitalized as internal-use software and amortized over the useful life to cost of services. Costs incurred in the development of software to be used only for internal use are capitalized as internal-use software and amortized over the useful life to selling, general and administrative expenses.

Income taxes
The Company records a tax provision for the anticipated tax consequences of its reported operating results. The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to the taxable income in effect for the years in which those assets and liabilities are expected to be realized and settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based upon the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
Management believes it is more likely than not that forecasted income, including income that may be generated as a result of certain tax planning strategies, together with future reversals of existing taxable temporary differences, will be sufficient to fully recover the deferred tax assets not otherwise subject to a valuation allowance. In the event that the Company determines all or part of the deferred tax assets are not realizable in the future, the Company will record an adjustment to the valuation allowance that would be charged to earnings in the period such determination is made. In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of GAAP and complex tax laws.

On December 22, 2017, the Tax Act was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. The Company has estimated its provision for (benefit from) income taxes in accordance with the Tax Act and guidance available as of the date of this filing and as a result have recorded a $114.2 million income tax benefit in the fourth quarter of 2017, the period in which the legislation was enacted. The provisional benefit amountinvestigations related to the remeasurementCompany’s ongoing operations.

There are no new material legal, regulatory, or administrative proceedings. Please refer to “Process for Disclosure and Recording of certain deferred tax assetsLiabilities Related to Legal Proceedings” and liabilities, based on the rates at which they are expected to reverse in the future, was $174.7 million income tax benefit. The provisional amount related“Legal Proceedings” within “Notes to the one-time transition tax on the mandatory deemed repatriationConsolidated Financial Statements - Note 2. Summary of foreign earnings was $60.5 million based on foreign earningsSignificant Accounting Policies” and “19. Commitments and Contingencies” included in “Item 18.Financial Statements”, respectively,for additional information.

Results of $390.3 million.Operations

On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects
Comparison of the Act. In accordance with SAB 118, the Company has determined that the $174.7 million of the deferred income tax benefit recorded in connection with the remeasurement of certain deferred tax assets and liabilities and the $60.5 million of current income tax expense recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings was a provisional amount and a reasonable estimate atyears ended December 31, 2017. Additional analysis is necessary2023 and 2022

Total Revenue
 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Total service revenue3,347 78 3,359 79 (12)— 
Total product sales963 22 866 21 96 11 
Total revenue4,310 100 4,225 100 85 2 

Total revenue for a more detailed assessment of the Company's deferred tax assets and liabilities and historic foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 when the analysis is complete.


Redeemable non-controlling interests

In March 2016, the Parent, through its subsidiary Lottomatica S.p.A. (“Lottomatica”), Italian Gaming Holding a.s. ("IGH"), Arianna 2001 and Novomatic Italia (collectively the "Members") entered into a consortium (Lottoitalia S.r.l. or "Lottoitalia") to bid on the Italian Gioco del Lotto service concession (the “Lotto Concession”). On May 16, 2016, Lottoitalia was awarded management of the Lotto Concession for a nine-year term. Under the terms of the consortium agreement, Lottomatica is the principal operating partner fulfilling the requirements of the Lotto Concession.

Ownership in Lottoitalia at December 31, 2017 and December 31, 2016 is as follows:

Name of entity% Ownership
Lottomatica S.p.A.61.50%
Italian Gaming Holding a.s.32.50%
Arianna 20014.00%
Novomatic Italia2.00%

The Company fully consolidates Lottoitalia as a variable interest entity due to the Company's risks and rewards of the investment and Lottoitalia's current need for funding to finance planned operations.

All annual profits of Lottoitalia are distributed to the Members within five business days of the approval of its annual financial statements. In addition, quarterly for a period of nine years beginning in 2017, Lottoitalia makes equal distributions of cash to the Members in an aggregate amount equal to that additional paid in surplus but excluding any reserves deriving from profits or retained earnings generated in previous quarters ("return of capital"). Each distribution of annual profits and return of capital will be made pro rata to the Members ownership interest in Lottoitalia.

In connection with the formation of Lottoitalia, Lottomatica entered into an agreement with IGH in May 2016, which contains the following put/call options:
Underperformance put option - IGH has the right, at its discretion, to sell its interest in Lottoitalia to Lottomatica in the event that Lottoitalia underperforms relative to certain thresholds related to pro forma cash from operations generated in 2017. The put option is exercisable by IGH beginning on the date of approval of Lottoitalia's financial statements for the year ending December 31, 2017 and ending 60 days thereafter.
Deadlock put/call option - IGH has the right, at its discretion, to sell its interest in Lottoitalia to Lottomatica and Lottomatica has a reciprocal call right, in the event of certain specified events as defined in the agreement. The put/call options expire 60 days following written notice by either party following the applicable event. The strike price of the options is determined based on a specified formula as defined in the agreement.

The Company determined that it is not currently probable that IGH's non-controlling interest will be redeemed as Lottoitalia's 2017 results indicate the underperformance put option is not exercisable and the deadlock put/call options cannot be exercised unilaterally. The Company has recorded the non-controlling interest initially at fair value and no fair value adjustments will be recorded unless it becomes probable that IGH will redeem its non-controlling interest.

Consolidated Results
The discussion below includes information calculated at constant currency. The Company calculates constant currency by applying the prior-year/period exchange rates to current financial data expressed in local currency in order to eliminate the impact of foreign exchange rate fluctuations originating from translating the income statement of the Company's foreign entities into U.S. dollars. These constant currency measures are non-GAAP measures. Although the Company does not believe that these measures are a substitute for GAAP measures, it does believe that such results excluding the impact of currency fluctuations period-on-period provide additional useful information to investors regarding operating performance on a local currency basis.
For example, if an entity with euro functional currency recorded net revenues of €100 million for 2017 and 2016, the Company would report $120.0 million in net revenues for 2017 (using an average exchange rate of 1.20) compared to $110.0 million for 2016 (using an average exchange rate of 1.10). The constant currency presentation would translate the 2017 net revenue using the 2016 exchange rates, and indicate that the underlying net revenue on a constant currency basis were unchanged year-on-

year. The Company presents such information in order to assess how the underlying business has performed prior to the translation impact of fluctuations in foreign currency exchange rates.
Comparison of the year ended December 31, 20172023 increased $85 million, or 2%, to $4.3 billion from $4.2 billion for the prior corresponding period due primarily to player demand and 2016 product and game performance.

  For the year ended
  December 31, 2017 December 31, 2016
($ thousands) $ 
% of
Revenue
 $ 
% of
Revenue
Service revenue 4,136,556
 83.8
 4,375,586
 84.9
Product sales 802,403
 16.2
 778,310
 15.1
Total revenue 4,938,959
 100.0
 5,153,896
 100.0
         
Cost of services 2,553,083
 51.7
 2,553,479
 49.5
Cost of product sales 579,431
 11.7
 582,358
 11.3
Selling, general and administrative 816,093
 16.5
 945,824
 18.4
Research and development 313,088
 6.3
 343,531
 6.7
Restructuring expense 39,876
 0.8
 27,934
 0.5
Impairment loss 715,220
 14.5
 37,744
 0.7
Transaction (income) expense, net (26,740) (0.5) 2,590
 0.1
Total operating expenses 4,990,051
 101.0
 4,493,460
 87.2
         
Operating (loss) income (51,092) (1.0) 660,436
 12.8
         
Interest income 10,436
 0.2
 12,840
 0.2
Interest expense (458,899) (9.3) (469,268) (9.1)
Foreign exchange (loss) gain, net (443,977) (9.0) 101,040
 2.0
Other (expense) income, net (33,393) (0.7) 18,365
 0.4
Total non-operating expenses (925,833) (18.7) (337,023) (6.5)
         
(Loss) income before (benefit from) provision for income taxes (976,925) (19.8) 323,413
 6.3
         
(Benefit from) provision for income taxes (29,414) (0.6) 59,206
 1.1
         
Net (loss) income (947,511) (19.2) 264,207
 5.1
         
Less: Net income attributable to non-controlling interests 55,400
 1.1
 45,413
 0.9
Less: Net income attributable to redeemable non-controlling interests 65,665
 1.3
 7,457
 0.1
Net (loss) income attributable to IGT PLC (1,068,576) (21.6) 211,337
 4.1

Product sales growth is primarily attributable to our Global Gaming segment experiencing increases in both machine units sold and a higher global average selling price from the prior corresponding period. Service revenue
  For the year ended    
  December 31, Change
($ thousands) 2017 2016 $ %
North America Gaming and Interactive 780,633
 975,206
 (194,573) (20.0)
North America Lottery 1,093,048
 1,128,306
 (35,258) (3.1)
International 557,049
 512,668
 44,381
 8.7
Italy 1,703,901
 1,759,843
 (55,942) (3.2)
 Operating Segments
 4,134,631
 4,376,023
 (241,392) (5.5)
Corporate Support 1,203
 —
 1,203
 -
Purchase accounting 722
 (437) 1,159
 > 200.0
  4,136,556
 4,375,586
 (239,030) (5.5)
The following table sets forth changes increases in our Global Gaming and PlayDigital segments were driven by game performance, install base growth, and player demand. Global Lottery increases, principally due to multi-jurisdiction jackpot game same-store sales in the U.S. and instant ticket and draw-games same-store sales in Italy, were fully offset by the disposition in September 2022 of our Italian Commercial Services business which contributed $197 million in the prior corresponding period as well as unfavorable foreign currency impacts primarily related to the euro of $32 million. Excluding the contribution from the Italian Commercial Services business, total revenue increased 7%, with service revenue increasing 5% in 2017 compared to 2016:our Global Lottery segment.

  Change Constant
  Constant Foreign   Currency
($ thousands) Currency Currency $ Change %
North America Gaming and Interactive (194,458) (115) (194,573) (19.9)
North America Lottery (35,865) 607
 (35,258) (3.2)
International 47,382
 (3,001) 44,381
 9.2
Italy (108,838) 52,896
 (55,942) (6.5)
Operating Segments (291,779) 50,387
 (241,392) (6.8)
Corporate Support 1,203
 —
 1,203
 -
Purchase accounting 1,159
 —
 1,159
 > 200.0
  (289,417) 50,387
 (239,030) (6.8)

Information on the key performance driversSee “Segment Operating Results” section below for further discussion related to service revenues for eachthe principal drivers of the Company's operating segments is provided in the Operating Segment Results section of this report.changes to Total revenue.

Product sales
  For the year ended    
  December 31, Change
($ thousands) 2017 2016 $ %
North America Gaming and Interactive 377,065
 398,248
 (21,183) (5.3)
North America Lottery 92,174
 65,269
 26,905
 41.2
International 332,015
 314,637
 17,378
 5.5
Italy 1,149
 1,295
 (146) (11.3)
 Operating Segments
 802,403
 779,449
 22,954
 2.9
Purchase accounting —
 (1,139) 1,139
 100.0
  802,403
 778,310
 24,093
 3.1

 The following table sets forth changes in product sales in 2017 compared to 2016:
  Change Constant
  Constant Foreign   Currency
($ thousands) Currency Currency $ Change %
North America Gaming and Interactive (21,958) 775
 (21,183) (5.5)
North America Lottery 26,075
 830
 26,905
 40.0
International 11,198
 6,180
 17,378
 3.6
Italy (154) 8
 (146) (11.9)
Operating Segments 15,161
 7,793
 22,954
 1.9
Purchase accounting 1,139
 —
 1,139
 100.0
  16,300
 7,793
 24,093
 2.1

Information on the key performance drivers related to product sales for each of the Company's operating segments is provided in the Operating Segment Results section of this report.


Operating expenses
 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Service Revenue$% of Service Revenue$%
Cost of services1,630 49 1,671 50 (40)(2)
  For the year ended
December 31,		 Change
($ thousands) 2017 2016 Change Constant currency Foreign currency Total
Cost of services 2,553,083
 2,553,479
 (396) (37,368) 36,972
 (396)
Cost of product sales 579,431
 582,358
 (2,927) (5,652) 2,725
 (2,927)
Selling, general and administrative 816,093
 945,824
 (129,731) (135,273) 5,542
 (129,731)
Research and development 313,088
 343,531
 (30,443) (32,758) 2,315
 (30,443)
Restructuring expense 39,876
 27,934
 11,942
 11,743
 199
 11,942
Impairment loss 715,220
 37,744
 677,476
 677,415
 61
 677,476
Transaction (income) expense, net (26,740) 2,590
 (29,330) (29,315) (15) (29,330)
Total operating expenses 4,990,051
 4,493,460
 496,591
 448,792
 47,799
 496,591


  Constant Currency Change in Operating Expenses
($ thousands) North America
Gaming and Interactive		 North America Lottery International Italy Corporate Support Purchase Accounting Total
Cost of services (33,061) (21,124) 32,918
 26,604
 (6,353) (36,352) (37,368)
Cost of product sales
 (26,053) 22,528
 28,994
 (883) 984
 (31,222) (5,652)
Selling, general and administrative (67,310) 3,346
 (21,495) (9,589) (23,314) (16,911) (135,273)
Research and development (21,144) (1,208) (2,111) (5,505) (1,737) (1,053) (32,758)
Restructuring expense 156
 —
 3
 —
 11,584
 —
 11,743
Impairment loss —
 (2,307) (4,278) —
 —
 684,000
 677,415
Transaction (income) expense, net —
 —
 —
 —
 (29,315) —
 (29,315)
  (147,412) 1,235
 34,031
 10,627
 (48,151) 598,462
 448,792

Information onCost of services for the material changes in operating expenses onyear ended December 31, 2023 decreased $40 million, or 2%, to $1.6 billion from $1.7 billion for the prior corresponding period primarily attributable to our Global Lottery segment experiencing a constant currency basis for each of the Company's operating segments are discussed in the Operating Segment Results section of this report.


Information on the material changes in operating expenses for Corporate Support and Purchase Accounting on a constant currency basis are as follows:

Corporate Support

A$127 million decrease in selling, general and administrative expensepoint of $23.3 million, principallysale (“POS”) fees due to the January 2017 saledisposal of the Italian Commercial Services business, partially offset by a pre-merger IGT receivable for $17.9$22 million that was substantially fully reserved at the date of acquisition in April 2015.

A decrease in transaction (income) expense, net of $29.3 million, principally due to the June 2017 sale of DoubleDown. The Company received cash consideration of $825.8 million ($823.8 million net of cash divested) and recognized a gain on the sale of $27.2 million, net of selling costs.

Purchase Accounting

An increase in purchase accounting of $598.5POS consumables used in providing instant and draw-based game sales, a $13 million principally due to:
◦a $714.0 million impairment loss in the North America Gaming and Interactive segment as discussed in the Critical Accounting Estimates section, partially offset by;
◦the absence of the prior year impairment loss of $30.0 million for certain indefinite-lived trademarks in the North America Gaming and Interactive segment; and
◦a decrease in depreciation and amortization of $43.3 million from DoubleDown that was principally associated with the June 2017 sale of DoubleDown.

Operating (loss) income
  For the year ended    
  December 31, Change
($ thousands) 2017 2016 $ %
North America Gaming and Interactive 278,963
 349,275
 (70,312) (20.1)
North America Lottery 289,025
 299,182
 (10,157) (3.4)
International 163,799
 142,200
 21,599
 15.2
Italy 478,540
 583,504
 (104,964) (18.0)
Operating Segments 1,210,327
 1,374,161
 (163,834) (11.9)
Corporate support (197,089) (245,600) 48,511
 19.8
Purchase accounting (1,064,330) (468,125) (596,205) (127.4)
  (51,092) 660,436
 (711,528) (107.7)
The following table sets forth changes in operating (loss) income for 2017 compared to 2016 on a constant currency basis:
  Change Constant
  Constant Foreign   Currency
($ thousands) Currency Currency $ Change %
North America Gaming and Interactive (68,993) (1,319) (70,312) (19.8)
North America Lottery (11,026) 869
 (10,157) (3.7)
International 24,544
 (2,945) 21,599
 17.3
Italy (119,620) 14,656
 (104,964) (20.5)
 Operating Segments (175,095) 11,261
 (163,834) (12.7)
Corporate support 49,351
 (840) 48,511
 20.1
Purchase accounting (596,164) (41) (596,205) (127.4)
  (721,908) 10,380
 (711,528) (109.3)

Information on the key performance drivers related to each of the Company's operating segments is providedincrease in the Operating Segment Results sectionamortization of this report.

Operatingcapitalized software costs, a $10 million increase in insurance and taxes, and a $12 million increase in bank service fees and postage and freight in the aggregate. Additionally, within our Global Gaming segment, depreciation and amortization expense increased $37 million due primarily to amortization expense related to Corporate support decreased by $49.4 million compared to 2016, principally due to the $27.2 million gain on the June 2017 sale, neta multi-year license agreement of selling costs, of DoubleDown and a reduction of selling, general and administrative expense of $17.9 million associated with the January 2017 sale of a pre-merger IGT receivable that was substantially fully reserved at the date of acquisition.

Operating expense related to purchase accounting increased by $596.2 million compared to 2016, principally due to the $714.0 million impairment lossintellectual property entered into in the North America Gaming and Interactive segment,December 2022, partially offset by the absence of the prior year impairment loss of $30.0a $29 million for certain indefinite lived trademarksreduction in the North Americausage-based royalties. Global Gaming also had a $6 million increase in postage and Interactivefreight. Our PlayDigital segment andhad a $6 million decrease in depreciation and amortization
40
Table of $43.3Contents
expense and together with Global Lottery saw an increase in licensing and royalties expense of $7 million from DoubleDown, principally associated within the June 2017 saleaggregate. Increased payroll and benefits in Global Gaming and PlayDigital of DoubleDown.
Restructuring expense

The Company has undertaken various restructuring plans, principally related$16 million correlated to the April 2015 acquisitionservice revenue growth in those segments.

As a percentage of IGTservice revenue, cost of services decreased by approximately 100 basis points in total. The overall increase in gross service margin was $29 million primarily due to eliminate redundantthe disposal in September 2022 of the relatively lower margin Italy Commercial Services business, with gross margin as a percentage of service revenue increasing 100 basis points and 550 basis points in our Global Lottery and PlayDigital segments, respectively, and our Global Gaming segment decreasing 140 basis points.

 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Product Revenue$% of Product Revenue$%
Cost of product sales573 59 554 64 19 3 

Cost of product sales increased $19 million, or 3%, from the prior corresponding period, primarily as a result of a $96 million increase in total product sales. Cost of product sales as a percentage of product sales decreased by approximately 450 basis points principally due to product mix and improved supply chain costs in our Global Gaming segment.

 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Selling, general and administrative834 19 814 19 20 3 

Selling, general and achieve synergiesadministrative increased $20 million, or 3%, to $834 million as compared to $814 million for the prior corresponding period. This increase was primarily attributable to an increase in payroll and benefit costs across the business. The Company recorded restructuring costs associated with these plansall segments of $39.9 million and $27.9$25 million in 2017the aggregate primarily due to increased headcount, partially offset by a $7 million decrease in incentive compensation cost in the aggregate for all segments.

 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Research and development234 5 255 6 (21)(8)

Research and 2016, respectively.development decreased $21 million, or 8%, from the prior corresponding period primarily due to process improvements resulting in increased capitalization of software development activities, partially offset by increases in payroll and benefit costs.


Transaction (income) expense, net
  For the year ended    
  December 31, Change
($ thousands) 2017 2016 $ %
Gain on sale of DoubleDown, net of selling costs (27,232) —
 (27,232) -
Other transaction costs 492
 2,590
 (2,098) (81.0)
  (26,740) 2,590
 (29,330) > 200.0
Non-operating expenses

 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Interest expense, net285 7 289 7 (4)(1)
Foreign exchange loss, net75 2 36 1 38 105 
Other non-operating expense, net12 — 7 — 5 62 
Total non-operating expenses372 9 333 8 39 12 
The Company received cash consideration of $825.8 million ($823.8 million net of cash divested) and recognized a gain of $27.2 million in connection with the June 2017 sale of DoubleDown.

Interest expense
  For the year ended    
  December 31, Change
($ thousands) 2017 2016 $ %
Senior Secured Notes (389,879) (391,790) (1,911) (0.5)
Revolving Credit Facilities (34,984) (42,179) (7,195) (17.1)
Term Loan Facilities (23,567) (19,100) 4,467
 23.4
Other (10,469) (16,199) (5,730) (35.4)
  (458,899) (469,268) (10,369) (2.2)

Interest expense, in 2017net decreased by $10.4$4 million, or 2.2%1%, from the prior corresponding period. This decrease was primarily due to the Company maintaining a lower average balance in its Senior Secured Notes, partially as a result of the notes redemptions in 2023 described in “Notes to the Consolidated Financial Statements”— 15 Debt compared to 2016, principally driven by the decrease in the Revolving Credit Facilities outstanding following the June 2017 saleprior corresponding period.

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Foreign exchange gain (loss),loss, net

The Company recorded foreign was $75 million compared to $36 million for the prior corresponding period. Foreign exchange losses,loss, net of $444.0 million in 2017 and foreign exchange gains, net of $101.0 million in 2016, both of which areis principally non-cash and relaterelated to fluctuations in the euro to U.S. dollar exchange rate on euro denominated debt.internal and external debt and to a $34 million loss related to the devaluation of the Argentine peso for the year ended December 31, 2023.



Other (expense) income,non-operating expense, net
The components of other (expense) income, net are as follows: 
  For the year ended    
  December 31, Change
($ thousands) 2017 2016 $ %
Debt related transactions (31,593) (5,220) (26,373) > 200.0
Gain on sale of available-for-sale investment —
 20,365
 (20,365) (100.0)
Other (1,800) 3,220
 (5,020) (155.9)
  (33,393) 18,365
 (51,758) > 200.0
In June 2017, the Company offered to purchase any and all of its $500.0 million 7.500% Senior Secured Notes due 2019 and the Company purchased $355.7 was $12 million of these notesexpense, compared to $7 million of expense for total consideration, excluding interest, of $393.5 million. The Company recorded a $25.7the prior corresponding period. During the year ended December 31, 2023, the expense was primarily due to $5 million lossin losses on early extinguishment of debt and $5 million in connection withlosses on the purchase.purchase and sale of a blue-chip swap, a legal mechanism used to transfer funds out of Argentina. During the prior corresponding period, the Company completed the sale of its Italian commercial services business, resulting in a $278 million gain, which was offset by the recognition of $270 million of expense for the settlement of the Benson Matter and $13 million in losses on extinguishment of debt.


Provision for income taxes
  For the year ended
  December 31,
($ thousands, except percentages) 2017 2016
(Benefit from) provision for income taxes

 (29,414) 59,206
(Loss) income before provision for income taxes (976,925) 323,413
Effective income tax rate 3.0% 18.3%
 For the year ended
 December 31, 2023December 31, 2022Change
($ in millions)$% of Total Revenue$% of Total Revenue$%
Provision for income taxes322 7 175 4 147 84 

The Company’s effectiveincrease in provision for income taxes was primarily driven by a higher valuation allowance related to our business interest expense limitation carryforward, the impact of the international provisions of the U.S. Tax Cut and Jobs Act of 2017, and the settlement of the 2015-2022 Italy tax rateaudit. In addition, there was 3.0% in 2017 asno book tax benefit arising from the settlement provision of Adrienne Benson and Mary Simonson, individually and on behalf of all others similarly situated v. Double Down Interactive LLC, et al. (the “DDI / Benson Matter provision”) for the year ended December 31, 2023, compared to 18.3%a $66 million book tax benefit for the prior corresponding period.

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Segment Operating Results

Global Lottery

Revenues and Key Performance Indicators

Service revenue
 For the year ended December 31,Change
($ in millions)20232022$%
Operating and facilities management contracts2,306 2,181 125 6 
Systems, software, and other53 255 (202)(79)
Total service revenue2,359 2,436 (77)(3)
For the year ended December 31,
(% on a constant-currency basis)20232022
Global same-store sales growth (%)
Instant ticket & draw games1.9 %(3.9)%
Multi-jurisdiction jackpots5.8 %15.3 %
Total2.3 %(2.2)%
North America & Rest of world same-store sales growth (%)
Instant ticket & draw games0.6 %(2.4)%
Multi-jurisdiction jackpots5.8 %15.3 %
Total1.2 %(0.4)%
Italy same-store sales growth (%)
Instant ticket & draw games6.6 %(8.5)%

Operating and facilities management contracts revenue increased $125 million, or 6%, from the prior corresponding period. This increase was primarily the result of a $127 million increase in 2016. The principal driversinstant, draw-based, and multi-jurisdiction jackpot ticket sales that experienced same-store sales growth of 6.6% in Italy, and a 2.3% increase in global same-store sales in the change were capital gains taxes incurred onaggregate. Global same-store sales for multi-jurisdiction jackpot ticket sales experienced a 5.8% increase, primarily attributable to elevated jackpot levels in the June 2017U.S. Additionally, other lottery revenue increased $5 million principally due to iLottery fees, which was fully offset by a $7 million decrease in LMA incentive revenue.

Systems, software, and other revenue decreased $202 million, or 79%, to $53 million from $255 million for the prior corresponding period primarily due to the sale of DoubleDown,our Italian commercial services business that concluded September 14, 2022.

Product sales

 For the year ended December 31,Change
($ in millions)20232022$%
Lottery products171 157 14 9 
Total product sales171 157 14 9 

Lottery products revenue for the year ended December 31, 2023 increased $14 million, or 9%, from the prior corresponding period, principally due to higher terminal deliveries in North America of $25 million primarily as a netresult of contracts in Michigan and Canada, as well as a $27 million increase in valuation allowancesInternational sales in the aggregate attributable to the extension of a multi-year central system software license in Switzerland, an iLottery license in Poland, and the U.K. and foreign jurisdictions, and impairment loss incurred with no associated tax benefit,Lottery supplier contract. These increases were partially offset by a favorable net tax benefit recorded$14 million decrease in terminal and system deliveries primarily related to the provisionsprior year contract renewal with the Poland Lottery as well as a $19 million decrease in software sales principally related to International system software upgrades, sales, and deliveries in the prior corresponding period. Instant ticket printing operations revenue decreased $9 million due primarily to increased volume in Florida in the prior corresponding period.
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Table of Contents

Operating Margins
 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Gross margin
Service1,173 1,186(13)(1)
% of service revenue50 %49 %100 bps
Product60 3822 58 
% of product sales35 %24 %1100 bps

Gross margin as a percentage of service revenue increased to 50% from 49% for the prior corresponding period primarily as a result of increased Operating and facilities management contracts revenues as discussed above and decreased Systems, software, and other revenue from the former Italy commercial services business where margins were typically lower as a result of the Tax Act.POS fees.


Operating Segment Results
The following section sets forth an overview of the Company's revenue, operating expenses and operating income by operating segment.
North America Gaming and Interactive segment
Revenue in the North America Gaming and Interactive segment in 2017 decreased by $215.8 million, or 15.7% compared to 2016. At constant currency, revenue decreased by $216.4 million, or 15.8% compared to 2016.
Service revenue
Service revenue in the North America Gaming and Interactive segment in 2017 decreased by $194.6 million, or 20.0% compared to 2016. At constant currency, service revenue decreased by $194.5 million, or 19.9% compared to 2016.
The following table sets forth changes in service revenue for 2017 compared to 2016: 
  Service Revenue Change
($ thousands) 
Constant
Currency
 
Foreign
Currency
 Change
Social Gaming (167,016) (565) (167,581)
Machine revenue (37,321) 424
 (36,897)
Other 9,879
 26
 9,905
  (194,458) (115) (194,573)

The principal drivers of the $194.5 million constant currency decrease in service revenue were as follows:
A decrease of $167.0 million in Social Gaming associated with a decrease in service revenue of $149.2 million related to the June 2017 sale of DoubleDown, along with a decrease in service revenue from a lower volume of chips wagered; and

A decrease of $37.3 million in Machine revenue principally associated with a 6.8% decrease in the casino installed base (24,472 machines installed at December 31, 2016 compared to 22,807 machines installed at December 31, 2017) and a decrease in the average yield.

Product sales
Product sales in the North America Gaming and Interactive segment in 2017 decreased by $21.2 million, or 5.3% compared to 2016. At constant currency, product sales decreased by $22.0 million, or 5.5% compared to 2016.
The following table sets forth changes inGross margin on product sales for 2017 compared to 2016: 
  Product Sales Change
($ thousands) 
Constant
Currency
 
Foreign
Currency
 Change
Gaming machine sales (5,879) 283
 (5,596)
Non-machine sales (16,079) 492
 (15,587)
  (21,958) 775
 (21,183)
The principal drivers of the $22.0 million constant currency decrease in product sales were as follows:

A decrease of $5.9 million in Gaming machine sales principally associated with 1,665 fewer machines sold in 2017 than 2016; and

A decrease of $16.1 million in Non-machine sales driven by significant system related and intellectual property sales in 2016 that did not recur in 2017.

Segment operating expenses

The material changes in operating expenses inyear ended December 31, 2023 increased 1,100 basis points from the North America Gaming and Interactive segment on a constant currency basis are as follows:

A decrease in cost of services of $33.1 million, due to a decrease of $59.7 million from DoubleDown, principally associated with the June 2017 sale of DoubleDown, partially offset by an increase of $26.6 million principally related to:
◦Costs of $10.3 million associated with the agreement the Company entered into with DoubleU Games Co., Ltd. ("DoubleU") to enable DoubleU to offer the Company's extensive casino game library on DoubleU’s combined social casino platforms, in exchange for ongoing royalties to the Company; and
◦Costs of $12.3 million to grow and sustain the premium installed base, including higher than average jackpot expense.
A decrease in cost of product sales of $26.1 million,prior corresponding period principally due to the decreaseincrease in product sales of $22.0 millionhigher margin terminal and change in product mix.software license sales.
A decrease in selling, general and administrative expense of $67.3 million, principally due to:
◦A decrease of $43.5 million from DoubleDown, principally associated with the June 2017 sale of DoubleDown; and
◦A decrease of $23.8 million driven by:
▪A decrease of $11.3 million in performance based compensation; and
▪A decrease of $8.7 million related to a planned decrease in payroll related costs.


A decrease in research and development of $21.1 million, due to a decrease of $16.5 million from DoubleDown, principally associated with the June 2017 sale of DoubleDown, along with a decrease of $7.3 million in performance based compensation.
 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Operating income913 909 4 — 
Operating margin36 %35 %100  bps



Segment operating incomemargin increased 100 basis points primarily as a result of increased Operating and facilities management contracts revenue coupled with the increase in higher margin product sales compared with the prior corresponding period as discussed above.

Operating income in
Global Gaming

Revenues and Key Performance Indicators

Service revenue
 For the year ended December 31,Change
($ in millions, except yields)20232022$%
Gaming terminal services520 483 37 8 
Systems, software, and other242 232 10 4 
Total service revenue762 714 47 7 
For the year ended December 31,Change
20232022Units / $%
Installed base units
Total installed base units53,906 49,586 4,320 9 
Total yields(1)
$29.68$29.89$(0.21)(1)
(1) Total yields represent revenue per day for the North America average installed base units. Installed base units included active and inactive units deployed to a customer location.

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Gaming and Interactive segment in 2017 decreased by $70.3terminal services revenue increased $37 million, or 20.1% ($69.08%, from the prior corresponding period. This increase was primarily driven by a 9% increase in installed base units and yields holding constant at approximately $30 per unit per day primarily attributable to game performance partially offset by Regional mix.

Systems, software, and other revenue increased $10 million, or 19.8% on a constant currency basis) compared to 2016, while segment operating margin decreased4%, from 25.4% in 2016 to 24.1% in 2017, principally due to the product sales versus service revenue margin mix.
The principal driver of the $69.0 million constant currency decrease in segment operating income was the $47.4 million decrease in operating income related to DoubleDown,prior corresponding period principally related to an increase in systems maintenance and recurring software revenue from our poker install base.

Product sales
 For the year ended December 31,Change
($ in millions)20232022$%
Gaming terminals571 501 70 14 
Gaming other220 208 12 6 
Total product sales791 709 82 12 
For the year ended December 31,Change
20232022Units / $%
Global machine units sold
Total machine units sold35,090 32,820 2,270 7 

Gaming terminals increased $70 million, or 14%, from the June 2017 saleprior corresponding period. This increase was primarily associated with an increase in machine units sold of DoubleDown.

North America Lottery segment
Revenue2,270, the majority of which were replacement machine units in the North America Lottery segmentU.S. and Canada and a 5% higher global average selling price than those sold in 2017 decreased by $8.4the prior corresponding period.

Gaming other increased $12 million, or 0.7% compared6%, from the prior corresponding period, principally related to 2016, driven by a $35.3$40 million decreaseincrease in service revenuepoker software licenses and system sales, partially offset by a $26.9 million increase in product sales. At constant currency, revenue in 2017 decreased by $9.8 million, or 0.8% compared to 2016.
Service revenue
Service revenue in the North America Lottery segment in 2017 decreased by $35.3 million, or 3.1% ($35.9 million, or 3.2% at constant currency) compared to 2016.
The following table sets forth changes in service revenue for 2017 compared to 2016: 
  Service Revenue Change
($ thousands) Constant
Currency		 Foreign
Currency		 Change
Lottery (22,116) 13
 (22,103)
Lottery Management Services (16,958) —
 (16,958)
Machine revenue (374) (1) (375)
Other 3,583
 595
 4,178
  (35,865) 607
 (35,258)
The principal drivers of the $35.9 million constant currency decrease in service revenue were as follows:
A decrease in Lottery service revenue of $22.1 million, principally driven by lower service revenue related to the record multi-state jackpot activity in 2016, partially offset by an increase in same store revenue (revenue from existing customers as opposed to new customers) of 5.1% from an increase in instant tickets and other draw-based games; and

A decrease in Lottery Management Services revenues of $17.0 million in 2017, primarily related to a decrease in pass- through service revenue related to reimbursable expenses, and a $1.7$29 million decrease in incentivesintellectual property licenses associated with patents tied to remote game server solutions and game features.

Operating Margins

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Gross margin
Service427 41116 4 
% of service revenue56 %58 %(200)bps
Product336 28056 20 
% of product sales43 %40 %300 bps

Gross margin as a percentage of service revenue decreased 200 basis points compared to the prior corresponding period as costs increased in excess of revenues, primarily due to increased payroll and benefits, and postage and freight costs.

Gross margin as a percentage of product sales increased to 43% from 40% from the Company's New Jersey contract.

Productprior corresponding period, principally as a result of increased unit sales
Product sales and a higher average selling price as referenced above, offset slightly by unfavorable product mix due to high margin intellectual property revenues in the North America Lottery segment in 2017 increased by $26.9 million, or 41.2% ($26.1 million or 40.0% at constant currency) compared to 2016.prior period.

The following table sets forth changes in product sales for 2017 compared to 2016: 
 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Operating income313 24271 29 
Operating margin20 %17 %320 bps
  Product Sales Change
($ thousands) Constant
Currency		 Foreign
Currency		 Change
Lottery 13,955
 598
 14,553
Gaming 12,120
 232
 12,352
  26,075
 830
 26,905

The principal drivers of the $26.1 million constant currency increase in product sales were as follows:
An increase in Lottery product sales of $14.0 million driven primarily by terminal sales in Canada and instant ticket printing sales; and

An increase in Gaming product sales of $12.1 million driven by system and related hardware sales in Canada and Oregon.


Segment operating expenses

 The material changes in operating expenses inmargin increased to 20% from 17% for the North America Lottery segment on a constant currency basis are as follows:

A decrease in cost of services of $21.1 million, principally due to the decrease in service revenue of $35.9 million; and

An increase in cost of product sales of $22.5 million, principally due to the $26.1 million increase in product sales.

Segment operating income
Operating income in the North America Lottery segment in 2017 decreased by $10.2 million, or 3.4% ($11.0 million, or 3.7% on a constant currency basis) compared to 2016, while segment operating margin decreased from 25.1% in 2016 to 24.4% in 2017.
The principal drivers of the $11.0 million constant currency decrease in segment operating income was the decrease in service revenue related to lower multi-state jackpot activity in 2017, partially offset by a decrease in depreciation and amortization of $14.5 million driven by contract extensions with several customers in the United States.

International segment
Revenue in the International segment in 2017 increased by $61.8 million, or 7.5% compared to 2016. At constant currency, revenue increased by $58.6 million, or 7.1%.
Service revenue
Service revenue in the International segment in 2017 increased by $44.4 million, or 8.7% ($47.4 million or 9.2% at constant currency) compared to 2016.
The following table sets forth changes in service revenue for 2017 compared to 2016: 
  Service Revenue Change
($ thousands) Constant
Currency		 Foreign
Currency		 Change
Lottery 23,615
 (5,078) 18,537
Gaming 16,867
 (47) 16,820
Other 6,900
 2,124
 9,024
  47,382
 (3,001) 44,381
The principal drivers of the $47.4 million constant currency increase in service revenue were as follows:
An increase of $23.6 million in Lottery service revenue driven by a $23.0 million increase in service revenue from a customer in central Europe principally related to the achievement of certain contractual milestones.

An increase of $16.9 million in Gaming service revenue principally associated with:

◦An increase of $13.0 million from VLT software service revenue from a customer in central Europe principally related to the achievement of certain contractual milestones;
◦An increase of $6.6 million from the launch of the Greece VLT program; and
◦A decrease of $2.6 million associated with conversion sales principally to customers in Europe.


Product sales
Product sales in the International segment in 2017 increased by $17.4 million, or 5.5% ($11.2 million, or 3.6% at constant currency) compared to 2016.
The following table sets forth changes in product sales for 2017 compared to 2016: 
  Product Sales Change
($ thousands) Constant
Currency		 Foreign
Currency		 Change
Lottery 14,703
 983
 15,686
Gaming machine (3,493) 3,765
 272
Other (12) 1,432
 1,420
  11,198
 6,180
 17,378
The principal drivers of the $11.2 million constant currency increase in product sales were an increase of $14.7 million in Lottery principally associated with an $8.2 million increase in Europe and a $5.8 million increase in Latin America.

Segment operating expenses

The material changes in operating expenses in the International segment on a constant currency basis are as follows:

An increase in cost of services of $32.9 million, principally due to the $47.4 million increase in service revenues and a $15.9 million increase in depreciation and amortization expense, partially offset by a decrease in costs related to the exit of certain interactive contracts.
An increase in cost of product sales of $29.0 million, principallyprior corresponding period primarily due to an increase in deliveryrevenues of $129 million resulting from the increased demand for terminal sales and game performance, as well as supply chain costs receding and process improvements resulting in higher capitalization of software development activities. Increased units sales, system deliveries, poker licensing sales, and higher yields on our installed base units improved operating leverage.

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PlayDigital

Revenues and Key Performance Indicators

Service revenue
 For the year ended December 31,Change
($ in millions)20232022$%
PlayDigital services227 209 18 9 
Total service revenue227 209 18 9 

PlayDigital services revenue for the year ended December 31, 2023 increased $18 million, or 9%, from the prior corresponding period, principally related to product sales to customers in Greece, Germany and Argentina.
A decrease in selling, general and administrativea $15 million contribution from the acquisition of $21.5 million, principally due to cost savings initiativesiSoftBet and a decrease$3 million increase in incentive based compensation of $8.2 million.

Segment operating income
Operating incomePlaySports driven by the expansion into new jurisdictions and growth in existing market from sports betting solutions in the International segment in 2017period.

Operating Margins

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Gross margin
Service163 13925 18 
% of service revenue72 %67 %500 bps

Gross margin as a percentage of service revenue increased to 72% from 67% for the prior corresponding period primarily driven by $21.6 million, or 15.2% (an increase of $24.5 million, or 17.3% on a constant currency basis) compared to 2016, while segmenthigher service revenues and increased operating leverage.

 For the year ended December 31,Change
($ in millions)20232022$ / bps%
Operating income65 5016 32 
Operating margin29 %24 %490 bps

Operating margin increased to 29% from 17.2%24% for the prior corresponding period primarily driven by increased gross service margin, partially offset by increased investments in 2016 to 18.4% in 2017.
The principal drivers of the $24.5 million constant currency increase in segment operating income were as follows:

An increase of $21.5 million related to the decrease inresearch & development, and increased selling, general, and administrative costs principally due to actions taken to reduce costs and a decrease in incentive based compensation of $8.2 million;
support growth.
An increase of $14.5 million associated with the $47.4 million constant currency increase in service revenue.
An increase of $4.3 million related to the absence of the prior year impairment loss; and
A decrease of $17.8 million associated with product sales, due principally to product mix, and an increase in delivery costs principally related to product sales to customers in Greece, Germany and Argentina.

Italy segment
Service revenues
Service revenue in the Italy segment in 2017 decreased by $55.9 million, or 3.2% compared to 2016. The components of service revenue in the Italy segment in 2017 and 2016 are as follows: 
  For the year ended    
  December 31, Change
($ thousands) 2017 2016 $ %
Service revenue  
  
  
  
Lotto 418,043
 550,649
 (132,606) (24.1)
Instant tickets 303,605
 289,792
 13,813
 4.8
Lottery 721,648
 840,441
 (118,793) (14.1)
Machine Gaming 652,548
 626,371
 26,177
 4.2
Commercial Services 130,273
 126,854
 3,419
 2.7
Sports Betting 146,021
 118,243
 27,778
 23.5
Interactive Gaming 53,411
 47,934
 5,477
 11.4
  1,703,901
 1,759,843
 (55,942) (3.2)
The following table sets forth changes in service revenue for 2017 compared to 2016: 
  Service Revenue Change Constant
  Constant Foreign   Currency
($ thousands) Currency Currency Change Change %
Lotto (145,334) 12,728
 (132,606) (26.4)
Instant tickets 4,503
 9,310
 13,813
 1.6
Lottery (140,831) 22,038
 (118,793) (16.8)
Machine Gaming 6,878
 19,299
 26,177
 1.1
Commercial Services (355) 3,774
 3,419
 (0.3)
Sports Betting 21,593
 6,185
 27,778
 18.3
Interactive Gaming 3,877
 1,600
 5,477
 8.1
  (108,838) 52,896
 (55,942) (6.2)
The constant currency movements in service revenue for each of the core activities within the Italy segment are discussed below.

Lotto

At constant currency, Lotto service revenue in 2017 decreased by $145.3 million or 26.4% compared to 2016, due principally to $85.6 million of service revenue amortization associated with the €770.0 million upfront payment related to the new Lotto concession in 2016, a reduction in the fee earned (which is a fixed percentage of wagers under the new concession) and a decrease in wagers for late numbers (one of the 90 numbers of the Lotto game in Italy that has not been drawn for 100 drawings), partially offset by a 9.4% increase in 10eLotto wagers, as shown in the table below:  
  For the year ended    
  December 31, Change
(€ millions) 2017 2016 Wagers %
10eLotto wagers 5,160
 4,716
 444
 9.4
Core wagers 2,011
 2,227
 (216) (9.7)
Wagers for late numbers 310
 1,150
 (840) (73.0)
  7,481
 8,093
 (612) (7.6)

Instant tickets
At constant currency, Instant ticket service revenue in 2017 increased by $4.5 million, or 1.6%, compared to 2016, principally due to a 3.1% increase in the number of tickets sold which was partially offset by a 1.6% decrease in the average price point (the average value of the ticket sold), as detailed below. 
 For the year ended    
 December 31, Change
 2017 2016 Amount %
Total sales (in millions)€9,065
 €8,935
 €130
 1.5
Total tickets sold (in millions)1,820
 1,766
 54
 3.1
Average price point€4.98
 €5.06
 €(0.08) (1.6)

Machine Gaming
At constant currency, Machine Gaming service revenue in 2017 increased by $6.9 million, or 1.1% compared to 2016. Increased vertical integration in 2017 drove increased service revenues, which were almost fully offset by the 1.6% decrease in total machine gaming wagers (as shown in the table below) and an increase in gaming machine taxes that went into effect at the end of April 2017. 
  For the year ended    
  December 31, Change
(€ millions) 2017 2016 Amount %
VLT wagers 5,543
 5,460
 83
 1.5
AWP wagers 3,949
 4,188
 (239) (5.7)
Total wagers 9,492
 9,648
 (156) (1.6)
         
(Installed at the end of December)  
  
  
  
VLTs installed (B2C) 10,985
 11,036
 (51) (0.5)
VLTs installed (B2B) 8,592
 8,840
 (248) (2.8)
AWPs installed 56,590
 58,937
 (2,347) (4.0)
Total machines installed 76,167
 78,813
 (2,646) (3.4)
Total wagers and machines installed correspond to the management of VLTs and AWPs under the Company's concessions.
Commercial Services
At constant currency, Commercial Services service revenue in 2017 decreased by $0.4 million, or 0.3% compared to 2016, principally due to a decrease in the number of transactions processed.
Sports Betting
At constant currency, Sports Betting service revenue in 2017 increased by $21.6 million, or 18.3% compared to 2016, principally due to a 12.2% increase in wagers in 2017 compared to 2016 along with a decrease in the payout as shown in the table below. Network optimization and higher levels of online play drove the increase in wagers. 
  For the year ended    
  December 31, Change
(€ millions) 2017 2016 Wagers %
Fixed odds sports betting and other wagers 959
 855
 104
 12.2
Sports Betting payout 82.7% 84.0%    


Interactive Gaming
At constant currency, Interactive Gaming service revenue in 2017 increased by $3.9 million, or 8.1% compared to 2016, driven by a 5.2% increase in interactive game wagers as shown in the table below. 
  For the year ended    
  December 31, Change
(€ millions) 2017 2016 Wagers %
Interactive game wagers 1,745
 1,659
 86
 5.2
Segment operating expenses

The material changes in operating expenses in the Italy segment on a constant currency basis are as follows:

An increase in cost of services of $26.6 million, principally due to:
◦An increase of $18.2 million related to Instant Tickets principally associated with a VAT reduction on instant tickets in 2016 that did not recur;
◦An increase of $10.3 million in costs related to Machine Gaming, principally associated with the constant currency increase in AWP machine gaming service revenue; and
◦A decrease of $8.1 million related to Sport Betting principally associated with a decrease of $11.9 million in depreciation and amortization related to fully depreciated assets.

Segment operating income
Operating income in the Italy segment in 2017 decreased by $105.0 million, or 18.0% compared to 2016, while segment operating margin amounted to 28.1% and 33.1% in 2017 and 2016, respectively.

The $119.6 million constant currency decrease in operating income in the Italy segment in 2017 was principally driven by the $145.3 million decrease in Lotto service revenue, partially offset by a $30.5 million increase in operating income from Sports Betting driven by the $21.6 million increase in Sports Betting service revenues and the $11.9 million decrease in Sports Betting depreciation and amortization.

Comparison of the year ended December 31, 2016 and 2015
  For the year ended
  December 31, 2016 December 31, 2015
    % of   % of
($ thousands) $ Revenue $ Revenue
Service revenue 4,375,586
 84.9
 3,977,693
 84.8
Product sales 778,310
 15.1
 711,363
 15.2
Total revenue 5,153,896
 100.0
 4,689,056
 100.0
         
Cost of services 2,553,479
 49.5
 2,417,315
 51.6
Cost of product sales 582,358
 11.3
 520,343
 11.1
Selling, general and administrative 945,824
 18.4
 795,252
 17.0
Research and development 343,531
 6.7
 277,401
 5.9
Restructuring expense 27,934
 0.5
 76,896
 1.6
Impairment loss 37,744
 0.7
 12,497
 0.3
Transaction expense, net 2,590
 0.1
 49,396
 1.1
Total operating expenses 4,493,460
 87.2
 4,149,100
 88.5
         
Operating income 660,436
 12.8
 539,956
 11.5
         
Interest income 12,840
 0.2
 17,681
 0.4
Interest expense (469,268) (9.1) (457,984) (9.8)
Foreign exchange gain, net 101,040
 2.0
 5,611
 0.1
Other income (expense), net 18,365
 0.4
 (122,295) (2.6)
Total non-operating expenses (337,023) (6.5) (556,987) (11.9)
         
Income (loss) before income taxes 323,413
 6.3
 (17,031) (0.4)
         
Provision for income taxes 59,206
 1.1
 38,896
 0.8
         
Net income (loss) 264,207
 5.1
 (55,927) (1.2)
         
Less: Net income attributable to non-controlling interests 45,413
 0.9
 19,647
 0.4
Less: Net income attributable to redeemable non-controlling interests 7,457
 0.1
 —
 —
         
Net income (loss) attributable to IGT PLC 211,337
 4.1
 (75,574) (1.6)

Service revenue
  For the year ended    
  December 31, Change
($ thousands) 2016 2015 $ %
North America Gaming and Interactive 975,206
 780,169
 195,037
 25.0
North America Lottery 1,128,306
 992,684
 135,622
 13.7
International 512,668
 512,014
 654
 0.1
Italy 1,759,843
 1,702,184
 57,659
 3.4
 Operating Segments 4,376,023
 3,987,051
 388,972
 9.8
Purchase accounting (437) (9,358) 8,921
 95.3
  4,375,586
 3,977,693
 397,893
 10.0
The following table sets forth changes in service revenue in 2016 compared to 2015:
  Change Constant
  Constant Foreign   Currency
($ thousands) Currency Currency $ Change %
North America Gaming and Interactive 195,601
 (564) 195,037
 25.1
North America Lottery 135,780
 (158) 135,622
 13.7
International 32,679
 (32,025) 654
 6.4
Italy 59,904
 (2,245) 57,659
 3.5
Operating Segments 423,964
 (34,992) 388,972
 10.6
Purchase accounting 8,921
 —
 8,921
 (95.3)
  432,885
 (34,992) 397,893
 10.9

Information on the key performance drivers related to service revenues is provided in the Operating Segment Results section of this report.

Product sales
  For the year ended    
  December 31, Change
($ thousands) 2016 2015 $ %
North America Gaming and Interactive 398,248
 321,624
 76,624
 23.8
North America Lottery 65,269
 52,986
 12,283
 23.2
International 314,637
 341,064
 (26,427) (7.7)
Italy 1,295
 1,872
 (577) (30.8)
Operating Segments 779,449
 717,546
 61,903
 8.6
Purchase accounting (1,139) (6,183) 5,044
 81.6
  778,310
 711,363
 66,947
 9.4
The following table sets forth changes in product sales in 2016 compared to 2015:
  Change Constant
  Constant Foreign   Currency
($ thousands) Currency Currency $ Change %
North America Gaming and Interactive 76,774
 (150) 76,624
 23.9
North America Lottery 12,318
 (35) 12,283
 23.2
International (25,738) (689) (26,427) (7.5)
Italy (574) (3) (577) (30.7)
 Operating Segments
 62,780
 (877) 61,903
 8.7
Purchase accounting 5,044
 —
 5,044
 0.8
  67,824
 (877) 66,947
 9.5


Product sales fluctuate from period to period due to the mix, volume and timing of product sales transactions.
Information on the key performance drivers related to product sales is provided in the Operating Segment Results.

Operating expenses
  For the year ended
December 31,		 Change
($ thousands) 2016 2015 Change Impact of IGT Acquisition Constant currency Foreign currency Total
Cost of services 2,553,479
 2,417,315
 136,164
 140,214
 12,034
 (16,084) 136,164
Cost of product sales 582,358
 520,343
 62,015
 100,107
 (33,727) (4,365) 62,015
Selling, general and administrative 945,824
 795,252
 150,572
 125,605
 36,179
 (11,212) 150,572
Research and development 343,531
 277,401
 66,130
 58,326
 12,693
 (4,889) 66,130
Restructuring expense 27,934
 76,896
 (48,962) —
 (48,984) 22
 (48,962)
Impairment loss 37,744
 12,497
 25,247
 —
 25,391
 (144) 25,247
Transaction expense, net 2,590
 49,396
 (46,806) —
 (46,875) 69
 (46,806)
Total Operating Expenses 4,493,460
 4,149,100
 344,360
 424,252
 (43,289) (36,603) 344,360

  Constant Currency Change in Operating Expenses (excluding IGT acquisition)
($ thousands) North America
Gaming and Interactive		 North America Lottery International Italy Corporate Support Purchase Accounting Total
Cost of services (5,557) 4,322
 (7,117) 11,138
 6,654
 2,594
 12,034
Cost of product sales
 (3,314) 10,494
 (32,961) (221) (352) (7,373) (33,727)
Selling, general and administrative (2,286) 4,349
 (2,497) 10,701
 27,286
 (1,374) 36,179
Research and development (7,234) 3,859
 13,526
 5,200
 (2,458) (200) 12,693
Restructuring expense —
 —
 —
 —
 (48,984) —
 (48,984)
Impairment loss —
 3,551
 1,530
 —
 (9,690) 30,000
 25,391
Transaction expense, net —
 —
 —
 —
 (46,875) —
 (46,875)
  (18,391) 26,575
 (27,519) 26,818
 (74,419) 23,647
 (43,289)

The material changes in operating expenses on a constant currency basis, excluding the additional quarter of operations from the April 2015 acquisition of IGT, are as follows:

International

A decrease in cost of product sales of $33.0 million, principally due to the decrease in lottery product sales of $43.5 million, as more fully described in the operating income section of this report.

Corporate Support

An increase in selling, general and administrative expense of $27.3 million, principally due to:
◦An increase of $11.1 million in cost related to the sale of trade and other receivables on a non-recourse basis; and
◦An increase of $8.2 million in audit and compliance fees in connection with the Company becoming an SEC registrant and implementing Section 404 of the Sarbanes-Oxley Act.

A decrease in restructuring expense of $49.0 million, principally due to the winding down of restructuring activities related to the April 2015 acquisition of IGT.

A decrease in Transaction expense, net of $46.9 million, principally due to the absence of costs in 2016 related to the April 2015 acquisition of IGT.


Purchase Accounting

An increase of $23.6 million in purchase accounting, principally due to:
◦An increase of $30.0 million in the North America Gaming and Interactive segment in 2016 for impairment losses related to certain indefinite lived trademarks relating to the expected slowing of growth in the social gaming market; and
◦A decrease of $6.4 million in depreciation and amortization of acquired tangible and intangible assets.

Segment operating income
  For the year ended    
  December 31, Change
($ thousands) 2016 2015 $ %
North America Gaming and Interactive 349,275
 295,531
 53,744
 18.2
North America Lottery 299,182
 181,813
 117,369
 64.6
International 142,200
 164,190
 (21,990) (13.4)
Italy 583,504
 555,223
 28,281
 5.1
Operating Segments 1,374,161
 1,196,757
 177,404
 14.8
Corporate support (245,600) (292,371) 46,771
 16.0
Purchase accounting (468,125) (364,430) (103,695) (28.5)
  660,436
 539,956
 120,480
 22.3
The following table sets forth changes in operating (loss) income for 2016 compared to 2015 on a constant currency basis:
  Change Constant
  Constant Foreign   Currency
($ thousands) Currency Currency $ Change %
North America Gaming and Interactive 42,023
 11,721
 53,744
 13.0
North America Lottery 116,524
 845
 117,369
 64.0
International (3,824) (18,166) (21,990) (1.6)
Italy 28,634
 (353) 28,281
 5.6
 Operating Segments 183,357
 (5,953) 177,404
 15.3
Corporate support 41,477
 5,294
 46,771
 14.2
Purchase accounting (104,065) 370
 (103,695) (28.6)
  120,769
 (289) 120,480
 22.4

Information on the key performance drivers related to operating income is provided in the Operating Segment Results section.

Operating expense related to Corporate support decreased by $46.8 million in 2016 compared to 2015, principally due to a reduction in restructuring expense of $49.0 million related to the winding down of integration activities associated with the IGT acquisition and a reduction in transaction expense, net of $46.8 million principally associated with the IGT acquisition, partially offset by an increase in selling, general and administrative expense of $52.7 million due in part to one additional quarter of operations in 2016 from the April 2015 acquisition of IGT.
Transaction expense, net
  For the year ended    
  December 31, Change
($ thousands) 2016 2015 $ %
IGT acquisition costs 1,700
 49,396
 (47,696) (96.6)
Other transaction costs 890
 —
 890
 -
  2,590
 49,396
 (46,806) (94.8)

The Company incurred $1.7 million and $49.4 million of professional fees and expenses related to the April 2015 acquisition of IGT in 2016 and 2015, respectively.

Interest expense
  For the year ended    
  December 31, Change
($ thousands) 2016 2015 $ %
Senior Secured Notes (391,790) (345,592) 46,198
 13.4
Revolving Credit Facilities (42,179) (47,789) (5,610) (11.7)
Term Loan Facilities (19,100) (15,537) 3,563
 22.9
Bridge Facility —
 (23,717) (23,717) (100.0)
Other (16,199) (25,349) (9,150) (36.1)
  (469,268) (457,984) 11,284
 2.5
Interest expense in 2016 increased by $11.3 million, or 2.5% compared to 2015, driven by the full year impact in 2016 of the debt related to the April 2015 acquisition of IGT.

Foreign exchange gain, net

The Company recorded foreign exchange gains, net of $101.0 million in 2016, principally due to non-cash foreign exchange gains on euro denominated debt.

Other income (expense), net
The components of other income (expense), net are as follows:
  For the year ended    
  December 31, Change
($ thousands) 2016 2015 $ %
Debt related transactions (5,220) (117,877) 112,657
 95.6
Gain on sale of available-for-sale investment 20,365
 —
 20,365
 -
Other 3,220
 (4,418) 7,638
 172.9
  18,365
 (122,295) 140,660
 115.0
In 2016, the Company sold an available-for-sale investment in the Italy segment for approximately $23.9 million and recognized a gain on sale of $20.4 million. Other expense in 2015 was principally driven by certain refinancing activities related to the acquisition of IGT.

Provision for income taxes
  For the year ended
  December 31,
($ thousands, except percentages) 2016 2015
Provision for income taxes 59,206
 38,896
Income (loss) before provision for income taxes 323,413
 (17,031)
Effective income tax rate 18.3% (228.4)%
The Company's effective income tax rate in 2016 was 18.3%, compared to (228.4)% in 2015. The principal drivers of the change were one time non-deductible costs associated with the IGT acquisition in 2015, the non-recurring costs associated with the migration of the Parent company from Italy to the United Kingdom in 2015 and a reduction in operating losses in 2016 without tax benefits in certain foreign jurisdictions.

Operating Segment Results
The following section sets forth an overview of the Company's revenue and operating income by operating segment.

North America Gaming and Interactive segment
Revenue in the North America Gaming and Interactive segment in 2016 increased by $271.7 million, or 24.7% compared to 2015. At constant currency, revenue in the North America Gaming and Interactive segment in 2016 increased by $272.4 million, or 24.7% compared to 2015.
Service revenue
Service revenue in the North America Gaming and Interactive segment in 2016 increased by $195.0 million, or 25.0% compared to 2015. At constant currency, service revenue in the North America Gaming and Interactive segment increased by $195.6 million, or 25.1% compared to 2015.
The following table sets forth changes in service revenue for 2016 compared to 2015: 
  Service Revenue Change
($ thousands) Constant
Currency		 
Foreign
Currency
 Change
Machine revenue 93,999
 (416) 93,583
Social Gaming 42,562
 (71) 42,491
Other 59,040
 (77) 58,963
  195,601
 (564) 195,037

The principal drivers of the $195.6 million constant currency increase in service revenue were as follows:

An increase of $94.0 million in Machine revenue principally associated with one additional quarter of service revenue in 2016 from the April 2015 acquisition of IGT, partially offset by a decrease in service revenue from the decrease in the casino installed base (25,418 machines installed at December 31, 2015 compared to 24,472 machines installed at December 31, 2016);

An increase of $42.6 million of Social Gaming composed of $80.1 million of service revenue associated with one additional quarter of service revenue in 2016 from the April 2015 acquisition of IGT, partially offset by a decrease in service revenue of $37.5 million from fewer daily average users; and

An increase of $59.0 million in Other (composed principally of System and Software service revenue) principally associated with one additional quarter of service revenue in 2016 from the April 2015 acquisition of IGT.

Product sales
Product sales in the North America Gaming and Interactive segment in 2016 increased by $76.6 million, or 23.8% compared to 2015. At constant currency, product sales in the North America Gaming and Interactive segment increased by $76.8 million, or 23.9% compared to 2015.
The following table sets forth changes in product sales for 2016 compared to 2015: 
  Product Sales Change
($ thousands) Constant
Currency		 Foreign
Currency		 Change
Gaming machine sales 25,575
 60
 25,635
Non-machine sales 51,199
 (210) 50,989
  76,774
 (150) 76,624

The principal drivers of the $76.8 million constant currency increase in product sales were as follows:
An increase of $25.6 million in Gaming machine sales principally associated with one additional quarter of product sales in 2016 from the April 2015 acquisition of IGT, partially offset by fewer machines shipped in 2016 than 2015; and

An increase of $51.2 million in Non-machine sales driven by one additional quarter of product sales in 2016 from the April 2015 acquisition of IGT, along with an increase in product sales associated with several system sales in 2016 compared to 2015.

Segment operating income
Operating income in the North America Gaming and Interactive segment in 2016 increased by $53.7 million ($38.1 million on a constant currency basis) compared to 2015, while segment operating margin decreased modestly from 26.8% in 2015 to 25.4% in 2016, due to the mix of content sold.

The principal driver of the increase in segment operating income was one additional quarter of revenue in 2016 from the April 2015 acquisition of IGT and $11.7 million of favorable foreign exchange impacts.
North America Lottery segment
Revenue in the North America Lottery segment in 2016 increased by $147.9 million, or 14.1% compared to 2015, driven by a $135.6 million increase in service revenue and a $12.3 million increase in product sales. At constant currency, revenue in the North America Lottery segment in 2016 increased by $148.1 million, or 14.2% compared to 2015.
Service revenue
Service revenue in the North America Lottery segment in 2016 increased by $135.6 million, or 13.7% ($135.8 million, or 13.7% at constant currency) compared to 2015.
The following table sets forth changes in service revenue for 2016 compared to 2015: 
  Service Revenue Change
($ thousands) Constant Currency Foreign
Currency		 Change
Lottery 71,463
 —
 71,463
Lottery Management Services 46,389
 —
 46,389
Machine revenue 15,071
 (2) 15,069
Other 2,857
 (156) 2,701
  135,780
 (158) 135,622
The principal drivers of the $135.8 million constant currency increase in service revenue were as follows:
An increase in Lottery service revenue of $71.5 million, principally driven by an increase in same store revenue of 9.7%. The 9.7% increase in same store revenues in 2016 resulted in large part from record Powerball sales in the first quarter of 2016;

An increase of $46.4 million in Lottery Management Services revenues, primarily related to the $30.6 million in incentive payments the Company received from the New Jersey contract in 2016, along with the absence of prior year shortfall payments related to minimum profit level guarantees in Illinois ($10.0 million) and Indiana ($8.0 million); and

An increase in Machine revenue of $15.1 million, principally associated with one additional quarter of service revenue in 2016 from the April 2015 acquisition of IGT.


Product sales
Product sales in the North America Lottery segment in 2016 increased by $12.3 million, or 23.2% ($12.3 million, or 23.2% at constant currency) compared to 2015.
The following table sets forth changes in product sales for 2016 compared to 2015: 
  Product Sales Change
($ thousands) Constant
Currency		 Foreign
Currency		 Change
Lottery 13,347
 (31) 13,316
Gaming (1,029) (4) (1,033)
  12,318
 (35) 12,283
The principal drivers of the $12.3 million constant currency increase in product sales were as follows:
An increase of $13.3 million in Lottery product sales principally driven by an $8.5 million increase in instant ticket printing sales and a $6.1 million increase in product sales to the Company's customer in California.
Segment operating income
Operating income in the North America Lottery segment in 2016 increased by $117.4 million, or 64.6% ($116.9 million, or 64.0% on a constant currency basis) compared to 2015, while segment operating margin increased from 17.4% in 2015 to 25.1% in 2016.
The increase in segment operating income was principally driven by the increase in service revenue from Lottery and Lottery Management Services both of which benefited from the record Powerball jackpot in the first quarter of 2016.

International segment
Revenue in the International segment in 2016 decreased by $25.8 million, or 3.0% compared to 2015. At constant currency, revenue in the International segment in 2016 increased by $6.9 million, or 0.8%.
Service revenue
Service revenue in the International segment in 2016 increased by $0.7 million, or 0.1% ($32.7 million or 6.4% at constant currency) compared to 2015.
The following table sets forth changes in service revenue for 2016 compared to 2015: 
  Service Revenue Change
($ thousands) Constant
Currency		 Foreign
Currency		 Change
Lottery 1,300
 (10,976) (9,676)
Gaming 39,281
 (19,107) 20,174
Other (7,902) (1,942) (9,844)
  32,679
 (32,025) 654
The principal driver of the $32.7 million constant currency increase in service revenue was an increase of $39.3 million in Gaming service revenue principally associated with one additional quarter of service revenue in 2016 from the April 2015 acquisition of IGT.


Product sales
Product sales in the International segment in 2016 decreased by $26.4 million, or 7.7% ($25.7 million, or 7.5% at constant currency) compared to 2015.
The following table sets forth changes in product sales for 2016 compared to 2015: 
  Product Sales Change
($ thousands) Constant
Currency		 Foreign
Currency		 Change
Lottery (43,470) (358) (43,828)
Gaming 4,385
 245
 4,630
Other 13,347
 (576) 12,771
  (25,738) (689) (26,427)
The principal drivers of the $25.7 million constant currency decrease in product sales were as follows:
A decrease of $43.5 million in Lottery product sales principally related to prior year sales to the Company's customers in South Africa, Portugal and Germany that did not recur;

A net increase of $4.4 million in Gaming product sales driven by one additional quarter of product sales in 2016 from the April 2015 acquisition of IGT, partially offset by a decrease in Gaming sales recognized; and

An increase of $13.3 million in Other principally associated with an increase in systems and software sales in 2016 compared to 2015.
Segment operating income
Operating income in the International segment in 2016 decreased by $22.0 million, or 13.4% (a decrease of $2.7 million, or 1.6% on a constant currency basis) compared to 2015, while segment operating margin decreased from 19.2% in 2015 to 17.2% in 2016 due principally to one additional quarter of costs in 2016 from the April 2015 acquisition of IGT.

The decrease in segment operating income was principally driven by unfavorable foreign exchange impacts of $18.2 million along with a decrease in operating income related to the decrease in product sales, partially offset by an increase in operating income from the increase in service revenues.

Italy segment
Service revenue
Service revenue in the Italy segment in 2016 increased by $57.7 million, or 3.4% compared to 2015, driven by a $56.6 million increase in Lotto service revenue. The components of service revenue in the Italy segment in 2016 and 2015 are as follows: 
  For the year ended    
  December 31, Change
($ thousands) 2016 2015 $ %
Service revenue  
  
  
  
Lotto 550,649
 494,048
 56,601
 11.5
Instant tickets 289,792
 293,056
 (3,264) (1.1)
Lottery 840,441
 787,104
 53,337
 6.8
Machine Gaming 626,371
 626,637
 (266) —
Commercial Services 126,854
 126,372
 482
 0.4
Sports Betting 118,243
 112,899
 5,344
 4.7
Interactive Gaming 47,934
 49,172
 (1,238) (2.5)
  1,759,843
 1,702,184
 57,659
 3.4

The following table sets forth changes in service revenue for 2016 compared to 2015: 
  Service Revenue Change
  Constant Foreign  
($ thousands) Currency Currency Change
Lotto 56,758
 (157) 56,601
Instant tickets (2,920) (344) (3,264)
Lottery 53,838
 (501) 53,337
Machine Gaming 1,043
 (1,309) (266)
Commercial Services 629
 (147) 482
Sports Betting 5,458
 (114) 5,344
Interactive Gaming (1,064) (174) (1,238)
  59,904
 (2,245) 57,659
The constant currency movements in service revenue for each of the core activities within the Italy segment are discussed below.

Lottery service revenue in the Italy segment increased by $53.3 million, or 6.8% compared to 2015, principally driven by an increase in service revenue from Lotto. The following table sets forth an analysis of Lottery service revenue in the Italy segment:

Lotto
At constant currency, Lotto service revenue in 2016 increased by $56.8 million or 6.8% compared to 2015, due to an increase in 10eLotto wagers and wagers for late numbers as detailed below: 
  For the year ended    
  December 31, Change
(€ millions) 2016 2015 Wagers %
10eLotto wagers 4,716
 4,287
 429
 10.0
Core wagers 2,227
 2,447
 (220) (9.0)
Wagers for late numbers 1,150
 343
 807
 235.3
  8,093
 7,077
 1,016
 14.4
Instant tickets
At constant currency, Instant ticket service revenue in 2016 decreased by $2.9 million, or 1.0%, compared to 2015, principally due to a 1.2% decrease in the number of tickets sold which was partially offset by a 0.2% increase in the average price point (the average value of the ticket sold), as detailed below: 
 For the year ended    
 December 31, Change
 2016 2015 Amount %
Total sales (in millions)€8,935
 €9,016
 €(81) (0.9)
Total tickets sold (in millions)1,766
 1,787
 (21) (1.2)
Average price point€5.06
 €5.05
 €0.01
 0.2

Machine Gaming
At constant currency, Machine Gaming service revenue in 2016 increased by $1.0 million, or 0.2% compared to 2015. Total machine gaming wagers decreased by 1.8% as detailed below. The 1.8% decrease in wagers did not result in a proportional impact on service revenue principally as a result of a decrease in the AWP payout in 2016. 
  For the year ended    
  December 31, Change
(€ millions) 2016 2015 Amount %
VLT wagers 5,460
 5,433
 27
 0.5
AWP wagers 4,188
 4,388
 (200) (4.6)
Total wagers 9,648
 9,821
 (173) (1.8)
         
(Installed at the end of December)  
  
  
  
VLTs installed (B2C) 11,036
 11,115
 (79) (0.7)
VLTs installed (B2B) 8,840
 8,291
 549
 6.6
AWPs installed 58,937
 58,328
 609
 1.0
Total machines installed 78,813
 77,734
 1,079
 1.4
Total wagers and machines installed correspond to the management of VLTs and AWPs under the Company's concessions.
Commercial Services
At constant currency, Commercial Services service revenue in 2016 increased by $0.6 million, or 0.5%, compared to 2015, principally due to an increase in the number of transactions processed.

Sports Betting
At constant currency, Sports Betting service revenue in 2016 increased by $5.5 million, or 4.8% compared to 2015. The increase in service revenue was driven by lower taxes, which offset the lower wagers and higher payout. Sports Betting payout was 83.7% in 2015 and 84.0% in 2016. 
  For the year ended    
  December 31, Change
(€ millions) 2016 2015 Wagers %
Fixed odds sports betting and other wagers 855
 864
 (9) (1.0)
Interactive Gaming
At constant currency, Interactive Gaming service revenue in 2016 decreased by $1.1 million, or 2.1% compared to 2015, driven by a 2.4% decrease in interactive game wagers. 
  For the year ended    
  December 31, Change
(€ millions) 2016 2015 Wagers %
Interactive game wagers 1,659
 1,700
 (41) (2.4)
Segment operating income
Operating income in the Italy segment in 2016 increased by $28.3 million, or 5.1% compared to 2015, while segment operating margin amounted to 33.1% and 32.6% in 2016 and 2015, respectively. The increase in operating income in the Italy segment in 2016 compared to 2015 was principally driven by the increase in Lotto service revenue, partially offset by a decrease in operating income from Machine Gaming due to higher taxes on wagers, along with prior year VAT credits that did not recur in 2016.


B.Liquidity and Capital Resources


Overview

The Company'sCompany’s business is capital intensive and requires liquidity in order to meet its obligations and fund growth. Historically, the Company'sCompany’s primary sources of liquidity have been cash flows from operations and, to a lesser extent, cash proceeds from financing activities, including amounts available under the Revolving Credit Facilities due 2021.Facilities. In addition to general working capital and operational needs, the Company'sCompany’s liquidity requirements arise primarily from its need to meet debt service requirementsobligations and to fund capital expenditures.expenditures and upfront license fee payments. The Company also requires liquidity to fund any acquisitions and associated costs. The Company'sCompany’s cash flows generated from operating activities together with cash flows generated from financing activities have historically been sufficient to meet the Company's liquidity requirements.needs.

The Company believes its ability to generate cash from operations to reinvest in its business primarily due to the long-term nature of its contracts, is one of its fundamental financial strengths. Combined with funds currently available and committed borrowing capacity, the Company expects to have sufficient liquidity to meet its financial obligations and working capital requirements in the ordinary course of business for at least the next 12 months.months from the date of issuance of these Consolidated Financial Statements and for the longer-term period thereafter.

The cash management activities, funding of operations, and investment of excess liquidity are centrally coordinated by a dedicated treasury team with the objective of ensuring effective and efficient management of funds.
 
The Company's
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At December 31, 2023 and 2022, the Company’s total available liquidity was as follows: 
 December 31,
($ in millions)20232022
Revolving Credit Facilities1,234 1,822 
Cash and cash equivalents572 590 
Total Liquidity1,805 2,412 
  December 31,
($ thousands) 2017 2016
Revolving Credit Facilities due 2021 1,974,493
 2,367,151
Cash and cash equivalents 1,057,418
 294,094
Total Liquidity 3,031,911
 2,661,245


The Revolving Credit Facilities due 2021 are subject to customary covenants (including maintaining a minimum ratio of EBITDA to total net interest costs and a maximum ratio of total net debt to EBITDA) and events of default, none of which are expected to impact the Company'sCompany’s liquidity or capital resources. At December 31, 2017, the borrowers under the Revolving Credit Facilities due 2021 were in compliance with all covenants.

The Company completed severalmultiple debt transactions in 2017.2023 and 2022. Refer to the "Notes“Notes to the Consolidated Financial Statements—13. Debt"15. Debt” included in "Item“Item 18. Financial Statements"Statements” for further discussion of these transactions as well as information regarding the Company'sCompany’s other debt obligations.obligations, including the maturity profile of borrowings and committed borrowing facilities.

At December 31, 2023 and 2022, approximately 28% and 20% of the Company’s debt portfolio was exposed to interest rate fluctuations, respectively. The Company’s exposure to floating rates of interest primarily relates to the Revolving Credit Facilities and Euro Term Loan Facilities due January 2027.

The following table summarizes the Company'sCompany’s USD equivalent cash and cash equivalent balances by currency: 
December 31, 2023December 31, 2022
 December 31, 2017 December 31, 2016
($ thousands) $ % $ %
($ in millions)($ in millions)$%$%
Euros 625,143
 59.1 109,057
 37.1
U.S. dollars 362,760
 34.3 89,189
 30.3
Other currencies 69,515
 6.6 95,848
 32.6
Total Cash 1,057,418
 100.0 294,094
 100.0
Total Cash and cash equivalents
 
The Company maintains its cash deposits in a diversified portfolio of global banks, the majority of which are considered Global Systemically Important Banks. The Company holds insignificant amountsan immaterial amount of cash in countries where there may be legal or economic restrictions on the ability of subsidiaries to transfer due to regulatoryfunds in the form of cash dividends, loans, or governmental bodies. Based onadvances. As a result of the Company's reviewcontinued instability of such transfer restrictions and the cash balances held in such countries, it does not believe such transfer restrictions have an adverse impact on its ability to meet liquidity requirements at the dates represented above.

The Company has two agreements with major European financial institutions to sell certain trade receivables related to the Italy segment on a non-recourse basis. These receivables have been derecognized from the Company's consolidated balance sheet. The agreements have a three- and five-year duration, respectively, and are subject to early termination by either party. The aggregate amount of outstanding receivables is limited to a maximum amount of €300 million and €150 million for Scratch & Win and Commercial Services, respectively. At December 31, 2017 and 2016, the following receivables had been sold: 

  December 31, 2017 December 31, 2016
(in thousands) euro $ euro $
Scratch & Win 175,848
 210,894
 144,625
 152,449
Commercial services 45,417
 54,469
 59,334
 62,544
  221,265
 265,363
 203,959
 214,993
In addition, the Company sold trade receivables on a non-recourse basis and derecognized $18.6 million and $19.5 millionArgentine peso, at December 31, 20172023, after transferring $8 million in November 2023 through the use of a blue-chip swap mechanism, $2.8 billion in Argentine Pesos ($3 million USD equivalent) of the Company’s remaining cash in Argentina was held in a money market fund and December 31, 2016, respectively, primarily$1.9 billion in Argentine Pesos ($2 million USD equivalent) was held in a fixed income fund in an effort to offset the North America Gaming and Interactive segment.negative impact of further continued devaluation. Argentina’s economy remains highly inflationary for accounting purposes.


The Company also sold $34.2 million and $29.2 million of certain outstanding customer financing receivables on a non-recourse basis at December 31, 2017 and December 31, 2016, respectively.

On March 29, 2017, the Company sold its Reno, Nevada facility for gross proceeds of $156.0 million and entered into an operating lease agreement with the buyer for a term of 15.5 years with optional renewals.

Cash Flow Summary

The following table summarizestables summarize the statementsConsolidated Statements of cash flows.Cash Flows. A complete statement of cash flows is provided in the Consolidated Financial Statements included herein.

  For the year ended December 31,
($ thousands) 2017 2016 2015
    Restated  
Net cash provided by operating activities 685,928
 281,332
 769,568
Net cash provided by (used in) investing activities 298,665
 (315,985) (3,335,410)
Net cash (used in) provided by financing activities (246,972) (312,139) 2,920,166
Net cash flows 737,621
 (346,792) 354,324
Cash Flows - Operating Activities 

 For the year ended December 31,Change
($ in millions)20232022$%
Net cash provided by operating activities from continuing operations1,040 899 142 16 
The Company has restated the consolidated statement of cash flows
Non-cash adjustments to net income for the year ended December 31, 20162023 were $880 million, compared to correct$692 million for the misclassificationprior corresponding period. The principal drivers of the upfront payment from investing activitiesincrease in non-cash adjustments were related to $98 million in additional deferred incomes taxes primarily related to U.S. income, unfavorable changes in foreign exchange of $38 million, and an increase in depreciation and amortization of $37 million. The prior corresponding period gain on the sale of the Italian Commercial Services Business of $278 million was substantially offset by the DDI / Benson Matter provision recorded in the prior period of $270 million.

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Changes in operating activities. In addition to this correction, the statementsassets and liabilities resulted in cash outflows of cash flows$147 million and $207 million for the years ended December 31, 20162023 and 2015 have been correctedDecember 31, 2022, respectively, primarily decreasing due to reflect other immaterial misclassifications.a $179 million increase in accrued income taxes payable as well as a $70 million increase in accounts payable, partially offset by a $170 million increase in payments of the DDI / Benson Matter provision with $220 million paid in the current period and $50 million paid in the prior corresponding period.



The cash impact of payments on the DDI / Benson Matter provision, net of tax benefits, was $184 million and $50 million for the years ended December 31, 2023 and December 31, 2022, respectively.
Analysis of
Cash Flows - Investing Activities from Continuing Operations
For the year ended December 31,Change
($ in millions)20232022$%
Net cash (used in) provided by investing activities from continuing operations(393)42 (435)> 200.0
Net Cash Provided By Operating Activities
Comparison ofDuring the year ended December 31, 2017 and 2016

During 2017,2023, the Company generated $685.9used $393 million of net cash from operatingfor investing activities, an increase of $404.6$435 million compared tofrom the sameprior corresponding period, in 2016. The increase was principally due to:

Anto $476 million generated from the sale of the Italian Commercial Services Business in the prior corresponding period and an $82 million increase in capital expenditures primarily due to increased capitalization of $420.6software development activities and increased systems and equipment as a result of the growth in our install base. These increases were partially offset by a decrease of $142 million related to the decrease in upfront Italian license fee payments in 2017 compared to 2016;
An increaseacquisition of $127.7 million related to changes in inventories;
An increase of $33.5 million related to the decrease in interest paid;
An increase of $30.8 million in cash operating incomeiSoftBet in the International segment;prior period.
An increase of $17.9 million associated with the January 2017 sale of a pre-merger IGT receivable that was substantially fully reserved at the date of acquisition;
A decrease of $82.6 million in cash operating income in the North America Gaming and Interactive segment principally related to the June 2017 sale of DoubleDown; andCash Flows - Investing Activities from Discontinued Operations
A decrease of $113.1 million related to the increase in income taxes paid principally associated with the June 2017 sale of DoubleDown.

Comparison ofDuring the year ended December 31, 2016 and 2015

During 2016,2021, the Company generated $281.3 million of net cash from operating activities, a decrease of $488.2 million compared to the same period in 2015. The decrease was principally due to:

The payment of upfront Italian license fees of $665.3 million in 2016 (there were no similar upfront Italian license fee payments in 2015);
An increase in cash operating income of $113.5 million in the North America Lottery segment driven by the record Powerball Jackpot in the first quarter of 2016; and
An increase in cash operating income of $66.2 million in the North America Gaming and Interactive segment principally due to one additional quarter of revenue and operating income from the April 2015 acquisition of IGT.

Net Cash Provided by (Used In) Investing Activities
During 2017, 2016, and 2015, net cash provided by (used in) investing activities were $298.7 million, $(316.0) million, and $(3.335) billion, respectively.

Investing activities for 2017
Proceeds from the June 2017 sale of DoubleDown, net of cash divested of $823.8 million;
Proceeds fromcompleted the sale of assets of $167.5its Italian B2C businesses and received the €125 million principally relatedpayment due September 30, 2022 on July 13, 2022. Refer to “Notes to the sale of the Company's Reno, Nevada facility;Consolidated Financial Statements—3. Business Acquisitions and Divestitures”, included in “Item 18. Financial Statements”.
Capital expenditures of $698.0 million, including:
◦$257.6 million in the Italy segment principally for technological infrastructure supporting the new Lotto Concession;
◦$196.9 million in the North America Lottery segment principally for lottery contracts, including with customers in Florida, Virginia, Georgia and North Carolina;
◦$147.8 million in the North America Gaming and Interactive segment principally to upgrade the casino and VLT installed base to newer machines; and
◦$77.8 million in the International segment principally to upgrade the casino and VLT installed base to newer machines, and $11.9 million in cash consideration for the acquisition of the video bingo subsidiaries and related operating assets of Zest Gaming S.r.l. ("Zest").



Investing activities for 2016
The Company invested $541.9 million in capital expenditures, further details of which follow; and
The Company received $185.8 million, net from the sale of various assets including certain jackpot annuities and other assets. 
Investing activities for 2015
The Company invested $3.241 billion to acquire IGT;
The Company invested $376.5 million in capital expenditures, further details of which follow; and
The Company received $230.6 million, net from the sale of various assets including its Las Vegas facility, certain jackpot annuities, and other assets.
Net Cash (Used In) Provided ByFlows - Financing Activities
For the year ended December 31,Change
($ in millions)20232022$%
Net cash used in financing activities(638)(1,065)428 40 
During 2017, 2016, and 2015, net2023, cash (used in) provided byflows used in financing activities were $(247.0) million, $(312.1) million, and $2.920 billion, respectively.
Financing activities for 2017
The Company madeprimarily included principal payments on long-term debt of $1.754 billion composed of:
◦Principal payments of $938.2 million on the Term Loan Facilities due 2019;
◦Principal payments of $355.7 million pursuant to the June 2017 offer to purchase any and all of the outstanding principal amount of the 7.500% Senior Secured Notes due 2019; and
◦Principal payments of $461.8 million principally related to the Revolving Credit Facilities due 2021.
The Company$801 million, dividends paid to shareholders of $160 million, dividends paid to non-controlling interests of $162.5$158 million, to shareholders;
The Company paid $50.6$74 million of dividends and returned $52.4 millionin return of capital to non-controlling shareholders;interests, and payments on deferred license obligations of $22 million. These cash outflows were partially offset by net proceeds from Revolving Credit Facilities of $609 million.
The Company received capital increases of $107.5 million from redeemable non-controlling interests related to the new Lotto concession
During 2022, cash flows used in Italy; and
The Company received proceeds of $1.762 billion from the Term Loan Facility due 2023.
Financingfinancing activities for 2016
The Company madeprimarily included principal payments on long-term debt of $357.5 million;
The Company$597 million, dividends paid to non-controlling interests of $178 million, dividends paid to shareholders of $161.2$161 million, to shareholders;
The Company paid $32.7repurchases of common stock of $115 million, of dividends and returned $35.4$75 million in return of capital to non-controlling shareholders;interests, and
The Company received $40.8 net payments of short-term borrowings of $51 million. These cash outflows were partially offset by net receipts from financial liabilities of $75 million and $215.7 million in capital contributionsnet proceeds from non-controlling interests and redeemable non-controlling interests, respectively, principally related to the new Lotto concession in Italy.Revolving Credit Facilities of $72 million.

Financing activities for 2015
The Company borrowed $6.522 billion in connection with the acquisition of IGT;
The Company paid $29.2 million of dividends and returned $30.6 million of capital to non-controlling shareholders;
The Company paid $51.4 million in fees related to its 364-day senior bridge term loan credit facility commitment it entered into in July 2014 in connection with the acquisition of IGT;
The Company paid a tender premium and fees totaling $79.5 million in connection with the redemption of a portion of the Capital Securities;
The Company paid $84.9 million in debt issuance costs in connection with Senior Secured Notes issued in connection with the acquisition of IGT;
The Company paid dividends of $209.6 million to shareholders;
The Company made payments to withdrawing shareholders of $407.8 million; and
The Company made principal payments on long-term debt of $2.715 billion, principally composed of the following:

◦Early redemption of $796.4 million of Capital Securities;
◦Net payments of $716.7 million on the Revolving Credit Facilities due 2021;
◦Payment of $585.0 million on a pre-IGT acquisition revolving credit facility;
◦Early redemption of $439.0 million of 5.350% Senior Secured Notes due October 2023; and
◦Early redemption of $175.9 million of 5.50% Senior Secured Notes due June 2020.

Capital Expenditures
 
Capital expenditures are principally composed of:


•Systems, equipment and other assets related to contracts;
•Intangible assets; and
•Property, plant and equipment;equipment.
Intangible assets; and
Investments in associates. 
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The table below details total capital expenditures by operatingbusiness segment:
  For the year ended December 31,
($ thousands) 2017 2016 2015
North America Gaming and Interactive (147,804) (154,627) (92,673)
North America Lottery (196,930) (153,606) (107,854)
International (89,700) (82,662) (104,790)
Italy (257,586) (145,854) (62,186)
Operating Segments (692,020) (536,749) (367,503)
Corporate Support (5,990) (5,194) (9,018)
  (698,010) (541,943) (376,521)
 For the year ended December 31,
($ in millions)202320222021
Global Lottery(138)(157)(152)
Global Gaming(243)(147)(68)
PlayDigital(10)(6)(13)
Business Segment Total(391)(310)(232)
Corporate and Other(8)(6)(6)
 (399)(317)(238)

North America Gaming and InteractiveGlobal Lottery
 
Capital expenditures for 20172023 of $147.8$138 million principally consist of:consisted of $116 million for investments in systems, equipment and other assets related to contracts, including systems and equipment deployed in Georgia, Connecticut, Texas, California, and New York; investments in property, plant and equipment of $8 million; and investments in intangible assets of $14 million.
Capital expenditures for 2022 of $157 million principally consisted of $124 million for investments in systems, equipment and other assets related to contracts, including systems and equipment deployed in Michigan, Connecticut, California, Rhode Island, and New Jersey; investments in intangible assets of $16 million; and investments in property, plant and equipment of $17 million.
Investments
Capital expenditures for 2021 of $152 million principally consisted of $115 million for investments in systems, equipment and other assets related to contracts, including systems and equipment deployed in Michigan, Nebraska, New York, New Jersey, and Georgia; investments in intangible assets of $29 million; and investments in property, plant and equipment of $8 million.

Global Gaming

Capital expenditures for 2023 of $243 million principally consisted of investments in systems, equipment and other assets in North America of $123 million and outside of North America of $47 million; investments in property, plant and equipment of $11 million; and investments in intangible assets of $55 million.
Capital expenditures for 2022 of $147 million principally consisted of investments in systems, equipment and other assets in North America of $100 million and outside of North America of $28 million.
Capital expenditures for 2021 of $68 million principally consisted of investments in systems, equipment and other assets in North America of $49 million.

PlayDigital
Capital expenditures for 2023 of $10 million principally consisted of investments in systems, equipment and other assets related to contracts with PlaySports customers of $4 million and investments in North Americaintangible assets related to iGaming of $125.1 million; and
Investments in property, plant and equipment of $22.0$5 million.
Capital expenditures for 20162022 of $154.6$6 million principally consist of:

Investmentsconsisted of investments in systems, equipment and other assets related to contracts with PlaySports customers in North America of $106.8 million;
Investments in property, plant and equipment of $25.5 million; and
Investments in intangible assets of $22.3 million related to interactive offerings.
$6 million.
Capital expenditures for 20152021 of $92.7$13 million principally consist of:
Investmentsconsisted of investments in systems, equipment and other assets related to contracts with PlaySports customers in North America of $74.4 million;$11 million and iGaming customers of $2 million.
Investments in property, plant and equipment
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Investments in intangible assetsTabular Disclosure of $9.8 million related to interactive offerings.

North America LotteryCash Requirements
 
Capital expenditures for 2017At December 31, 2023, the Company’s material cash requirements are as follows: 
 Payments due by period
($ in millions)TotalLess than 1 year1-3 years3-5 yearsMore than 5 years
Long-term debt (1)
5,699 — 2,521 2,428 750 
Jackpot liabilities (2)
188 38 38 25 88 
Operating leases (3)
324 56 95 70 104 
Licenses of Intellectual Property(4)
367 29 150 36 151 
Total6,578 122 2,803 2,559 1,093 
(1) Long-term debt consists of $196.9 million principally consist of:
Investmentsthe principal amount of long-term debt, including current portion, as included in systems, equipment and other assets related“Notes to contracts of $194.8 million, including systems and equipment deployedthe Consolidated Financial Statements—15. Debt” included in Florida, Virginia, Georgia and North Carolina.


Capital expenditures for 2016 of $153.6 million principally consist of:
Investments in systems, equipment and other assets related to contracts of $140.3 million, including systems and equipment deployed in North Carolina, Washington, Wisconsin and Indiana; and

The July 2016 acquisition of Hudson Alley Software, Inc., a provider of lottery sales force automation and lottery retailer engagement applications, of $4.9 million.
Capital expenditures for 2015 of $107.9 million principally consist of:
Investments in systems, equipment and other assets related to contracts of $86.9 million, including systems and equipment deployed in Missouri, Minnesota and Tennessee.

International
Capital expenditures for 2017 of $89.7 million principally consist of:
Investment in systems, equipment and other assets related to contracts of $73.2 million including systems and equipment deployed in Greece, Sweden, Colombia and Poland.
Capital expenditures for 2016 of $82.7 million principally consist of:

Investment in systems, equipment and other assets related to contracts of $75.2 million including systems and equipment deployed in Argentina, Colombia, Africa and Mexico.
Capital expenditures for 2015 of $104.8 million principally consist of:
Investment in systems, equipment and other assets related to contracts of $97.1 million including systems and equipment deployed in Mexico, Belgium, Greece, Colombia, the Czech Republic and Jamaica.

Italy
Capital expenditures for 2017 of $257.6 million principally consist of:
Investments in systems, equipment and other assets related to contracts of $188.0 million principally for Lotto and Machine Gaming;
Investments in intangible assets of $58.0 million principally related to software and concessions and licenses; and
Acquisitions of $11.6 million.
Capital expenditures for 2016 of $145.9 million principally consist of:
Investments in systems, equipment and other assets related to contracts of $91.8 million principally for Machine Gaming and Lotto;
Investments in intangible assets of $46.1 million principally related to software, customer contracts and concessions and licenses; and
Acquisitions of $7.9 million.

Capital expenditures for 2015 of $62.2 million principally consist of:
Investments in intangible assets of $28.1 million principally related to software, and concessions and licenses;
Investments in systems, equipment and other assets related to contracts of $22.4 million principally for Machine Gaming, Lotto and Sports Betting; and
Acquisitions of $9.8 million. 


C.Research and Development, Patents and Licenses, etc.

R&D costs are expensed as incurred. R&D costs include salaries and benefits, stock-based compensation, consultants' fees, facilities-related costs, material costs, depreciation and travel.
Costs incurred in the development“Item 18. Financial Statements.” Certain of the Company’s externally-sold software productslong-term debt is denominated in euros.
(2) Jackpot liabilities are expensed as incurred, except certain software development costs eligiblecomposed of payments due to previous winners and future winners.
(3) Operating leases principally relate to leases for capitalization. Material software development costs incurred subsequentfacilities and equipment used in the Company’s business. The amounts presented include the imputed interest to establishing technological feasibility and through the general releasecounterparties.
(4) Licenses of Intellectual Property principally consist of the software products are capitalized. Technological feasibility is demonstrated by the completion of a detailed program design or working model, if no program design is completed. Capitalized costs are amortizedmulti-year license agreement with minimum guaranteed payments due to cost of product sales over the products’ estimated economic life.

Costs incurredSony and other brands for content used in the development of software to be used only for services provided to customers are capitalized as internal-use software and amortized over the useful life to cost of services. Costs incurred in the development of software to be used only for internal use are capitalized as internal-use software and amortized over the useful life to selling, general and administrative expenses. Company’s business.

The Company devotes substantial resources on R&D and incurred $313.1 million, $343.5 million and $277.4 million of related expenses in 2017, 2016 and 2015, respectively.

D.Trend Information
See “Item 5. Operating and Financial Review and Prospects — A. Operating Results” and “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources.”

E.Off-Balance Sheet Arrangements

The Company has the following off-balance sheet arrangements:
 
Performance and other bonds
 
In connection with certainCertain contracts and procurements, the Company has deliveredrequire us to provide a surety bond as a guarantee of performance bonds for the benefit of customers andcustomers; bid and litigation bonds for the benefit of potential customers. customers; and WAP bonds that are used to secure our financial liability when a player elects to have their WAP jackpot winnings paid over an extended period of time.

These bonds give the beneficiarybeneficiaries the right to obtain payment and/or performance from the issuer of the bond if certain specified events occur. In the case of performance bonds, which generally have a term of one year, such events include the Company’sour failure to perform itsour obligations under the applicable contract.contract(s). In general, we would only be liable for these guarantees in the event of default in our performance of our obligations under each contract, the probability of which we believe is remote.
Letters of Credit
The Parent and certain of its subsidiaries obtain letters of credit under the Revolving Credit Facilities and under senior unsecured uncommitted demand credit facilities. These letters of credit secure various obligations, including obligations arising under customer contracts and real estate leases. The following table provides information related to potential commitments for bondssummarizes the letters of credit outstanding at December 31, 2017:  2023 and 2022 and the weighted-average annual cost of such letters of credit:
($ in millions)
Letters of Credit Outstanding (1)
Weighted- 
Average
Annual Cost
December 31, 2023121 1.11 %
December 31, 2022118 1.26 %
($ thousands)Total bonds
Performance bonds447,014
Wide Area Progressive bonds266,218
Bid and litigation bonds8,600
All other bonds24,827
746,659
Loxley GTECH Technology Co., LTD Guarantee
The Company has a 49% interest in Loxley GTECH Technology Co., LTD (“LGT”). LGT is a joint venture that was formed to provide an online lottery system in Thailand.
The Company has guaranteed, along with the 51% shareholder in LGT, performance bonds provided on behalf(1) There were no letters of LGT by an unrelated commercial lender. The performance bonds relate to LGT’s performancecredit outstanding under the July 2005 contract between the Government Lottery Office of ThailandRevolving Credit Facilities.

C.        Research and LGT should such contract become operational. The Company is jointlyDevelopment, Patents and severally liable with the other shareholder in LGT for this guarantee. There is no scheduled termination date for the Company’s guarantee obligation. At December 31, 2017, the maximum liability under the guarantee was Baht 375 million ($11.5 million), andLicenses, etc.

To remain competitive, the Company does not have any obligation relatedinvests resources toward its R&D efforts to this guarantee because the July 2005 contract to provide the online lottery system is not in operation due to continuing political instability in Thailand.


Zest Gaming Contingent Consideration

On July 25, 2017, the Company acquired the video bingo subsidiariesintroduce new and related operating assets of Zest, a leading supplier of multi-card video bingo solutions headquartered in Italy. The acquisition consideration included a fair value estimate of contingent consideration related to existing operations for the twelve month period ending June 30, 2018. At December 31, 2017, contingent consideration was €6.5 million ($7.8 million), and is capped at €17.2 million ($20.6 million at the December 31, 2017 exchange rate) for existing operations.

F.Tabular Disclosure of Contractual Obligations
The following table summarizes payments due under the Company's significant contractual commitments at December 31, 2017: 
  Payments by calendar year
Description 2018 2019 2020 2021 2022 2023 and
thereafter		 Total
6.250% Senior Secured Notes due 2022 —
 —
 —
 —
 1,500,000
 —
 1,500,000
6.500% Senior Secured Notes due 2025 —
 —
 —
 —
 —
 1,100,000
 1,100,000
4.750% Senior Secured Notes due 2023 —
 —
 —
 —
 —
 1,019,405
 1,019,405
4.125% Senior Secured Notes due 2020 —
 —
 839,510
 —
 —
 —
 839,510
5.625% Senior Secured Notes due 2020 —
 —
 600,000
 —
 —
 —
 600,000
4.750% Senior Secured Notes due 2020 —
 —
 599,650
 —
 —
 —
 599,650
7.500% Senior Secured Notes due 2019 —
 144,303
 —
 —
 —
 —
 144,303
5.500% Senior Secured Notes due 2020 —
 —
 124,143
 —
 —
 —
 124,143
5.350% Senior Secured Notes due 2023 —
 —
 —
 —
 —
 60,567
 60,567
Senior Secured Notes, long-term —
 144,303
 2,163,303
 —
 1,500,000
 2,179,972
 5,987,578
               
Term Loan Facility due 2023 —
 —
 383,776
 383,776
 383,776
 647,622
 1,798,950
Revolving Credit Facilities due 2021 —
 —
 —
 95,000
 —
 —
 95,000
6.625% Senior Secured Notes due 2018 599,650
 —
 —
 —
 —
 —
 599,650
Total Debt (1)
 599,650
 144,303
 2,547,079
 478,776
 1,883,776
 2,827,594
 8,481,178
               
Capital Leases (2)
 7,999
 7,643
 6,844
 6,039
 4,348
 5,078
 37,951
Operating Leases (3)
 76,779
 61,258
 55,782
 49,881
 48,485
 248,389
 540,574
Total 684,428
 213,204
 2,609,705
 534,696
 1,936,609
 3,081,061
 9,059,703
 _________________________________________________________________
1Amounts presented relate to the principal amount of long-term debt and exclude the related interest expense that will be paid when due, fair value adjustments, discounts, premiums and debt issuance costs.

2Capital leases consist principally of the Company's facility in Providence, Rhode Island and communications equipment used in its business. The amounts presented include the interest component of the payments to the counterparties.

3Operating lease obligations principally relate to leases for facilities and equipment used in the Company's business. The amounts reported above include the minimum rental and payment commitments due under such leases.




G.Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This annual report on Form 20-F includes forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning the Company and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,” “shall,” “continue,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project” or the negative or other variations of them. These forward-looking statements speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company’s control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance, or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to):

Ÿthe possibility that the Parent will be unable to pay future dividends to shareholders or that the amount of such dividends may be less than anticipated;
Ÿ    the possibility that the Company may not achieve its anticipated financial results in one or more future periods;
Ÿ    reductions in customer spending;
Ÿ    a slowdown in customer payments and changes in customer demand for products and services as a result of changing
economic conditions or otherwise;
Ÿ    unanticipated changes relating to competitive factors in the industries in which the Company operates;
Ÿ    the Company’s ability to hire and retain key personnel;
Ÿ    the Company’s abilityinnovative games with dynamic features to attract new customers and retain existing customerscustomers. The Company’s R&D efforts cover multiple creative and engineering disciplines, including game content, hardware, electrical, systems, and software for lottery, land-based, online social, and digital real-money applications.

R&D costs, which principally include employee compensation costs, are expensed as incurred, with the exception of certain costs incurred in the manner anticipated;development of our externally-sold software products, software for services provided to customers, and software for internal use. Once technological feasibility is established, all software development costs are capitalized until the
Ÿ    reliance
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externally-sold software product is available for general release to customers, while software for services provided to customers and software for internal use are capitalized during the application development phase.

The Company devotes substantial resources to R&D and incurred $234 million, $255 million, and $238 million of related expenses in 2023, 2022, and 2021, respectively, which represented approximately 5% of total revenue in 2023 and approximately 6% of revenue in 2022 and 2021.

See “Item 4. Information on and integration of information technology systems;
Ÿ    changes in legislation or governmental regulations affecting the Company;
Ÿ    international, national, or local economic, social or political conditions that could adversely affect the Company or its
customers;
Ÿ    conditions in the credit markets; risks associated with assumptions— B. Business Overview — Intellectual Property” and “Item 4. Information on the Company makes in connection with its critical— B. Business Overview — Regulatory Framework” for further information on our material intellectual property and licenses.
accounting estimates;
Ÿ    the resolution of pending
D.        Trend Information
See “Item 5. Operating and potential future legal, regulatory or tax proceedingsFinancial Review and investigations;Prospects — A. Operating Results” and “Item 5. Operating and Financial Review and Prospects — B. Liquidity and Capital Resources.”
Ÿ    the Company’s international operations, which are subject to the risks of currency fluctuations and foreign
exchange controls.
E.    Critical Accounting Estimates
 
The foregoing listCompany’s Consolidated Financial Statements are prepared in conformity with GAAP which require the use of factors is not exhaustive. You should carefully consider the foregoing factorsestimates, judgments, and the other risks and uncertaintiesassumptions that affect the carrying amount of assets and liabilities and the amounts of income and expenses recognized. The estimates and underlying assumptions are based on information available at the date that the financial statements are prepared, on historical experience, judgments, and assumptions considered to be reasonable and realistic.
The Company periodically reviews estimates and assumptions. Actual results for those areas requiring management judgment or estimates may differ from those recorded in the Consolidated Financial Statements due to the occurrence of events and the uncertainties which characterize the assumptions and conditions on which the estimates are based.

The areas that require greater subjectivity of management in making estimates and judgments and where a change in such underlying assumptions could have a significant impact on the Company’s business, including thoseConsolidated Financial Statements are fully described in “Notes to the Consolidated Financial Statements—2. Summary of Significant Accounting Policies” included in “Item 3. Key Information—D. Risk Factors”18. Financial Statements.” Certain critical accounting estimates are discussed below.    

Revenue Recognition
Application of GAAP related to the measurement and other documents filed byrecognition of revenue requires us to make judgments and estimates. Specifically, complex arrangements with nonstandard terms and conditions may require significant contract interpretation to determine the Parent from time to time with the SEC. Except as required under applicable law,appropriate accounting, including whether promised goods and services specified in an arrangement are distinct performance obligations. Other significant judgments include determining whether the Company does not assume any obligationis acting as the principal in a transaction and whether separate contracts should be combined and considered part of one arrangement.

Revenue recognition is also impacted by our ability to updatedetermine when a contract is probable of collection and to estimate variable consideration, including, for example, rebates, volume discounts, service-level penalties, and performance bonuses. We consider various factors when making these forward-looking statements. Nothing in this annual report is intended, or isjudgments, including a review of specific transactions, historical experience, and market and economic conditions. Evaluations are conducted each quarter to be construed, as a profit forecast or to be interpreted to mean that earnings per shareassess the adequacy of the Parentestimates.

The Company recognized service and product revenues of $3.3 billion and $963 million, respectively, for the currentyear ended December 31, 2023. The Company often enters into contracts with customers that consist of a combination of services and products that are accounted for as one or any futuremore distinct performance obligations. Management applies judgment in identifying and evaluating the contractual terms and conditions that impact the identification of performance obligations and the pattern of revenue recognition. The Company’s revenue recognition policy, which requires significant judgments and estimates, is fully described in “Notes to the Consolidated Financial Statements—2. Summary of Significant Accounting Policies” included in “Item 18. Financial Statements.”

Goodwill Valuation

The process of evaluating potential impairments related to goodwill requires the application of significant judgment. Goodwill is tested for impairment annually, in the fourth quarter, or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. If an event occurs that would cause revisions to the estimates and assumptions used in
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analyzing the fair value of goodwill, the revision could result in a non-cash impairment loss that could have a material impact on financial years will necessarily match or exceedresults.

The Company estimates the historical published earnings per sharefair value of the Parent,reporting units using either the income approach, the market approach, or a combination of both. The income approach estimates fair value based on projected discounted cash flows, while the market approach considers comparable market data based on multiples of earnings before interest, taxes, depreciation, and amortization. Application of the goodwill impairment test and estimating the fair value of reporting units requires the Company’s management to use its judgment in making estimates and making forecasts that are based on a number of factors including forecasted revenue, forecasted operating profits, terminal growth rates, and weighted-average costs of capital.

The Company completed the annual impairment testing in the fourth quarter, where we assessed our Global Lottery, Global Gaming, and PlayDigital units using Step 1. Based on the analysis completed, we determined that no adjustment to the carrying value of goodwill was necessary as applicable. All forward-looking statements containedthere was sufficient cushion of fair value over carrying value.

Additional details surrounding goodwill can be found in this annual report on Form 20-F are qualifiedthe “Notes to the Consolidated Financial Statements—13. Goodwill” included in their entirety by this cautionary statement.“Item 18. Financial Statements”.



Item 6.Directors, Senior Management, and Employees


A.Directors and Senior Management

TheAs of March 7, 2024, the Board currently consists of 12 directors, 11 of whom were elected upon effectiveness of the Mergers on April 7, 2015.  Heather J. McGregor was appointed to the Board effective March 8, 2017.directors. Seven (7) of the current directors were determined by the Board to be independent under the listing standards and rules of the NYSE, as required by the Articles.Articles of Association of the Parent (the “Articles”). For a director to be independent under the listing standards of the NYSE, the Board must affirmatively determine that the director has no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). The Board has made an affirmative determination that the members of the Board so designated in the table below meet the standards for “independence” set forth in the Parent'sParent’s Corporate Governance Guidelines and applicable NYSE rules. The Articles require that for as long as the Parent’s ordinary shares are listed on the NYSE, the Parent will comply with all NYSE corporate governance standards set forth in Section 3 of the NYSE Listed Company Manual applicable to non-controlled domestic U.S. issuers, regardless of whether the Parent is a foreign private issuer.

On May 16, 2018, the Board approved the observer agreement (the “Observer Agreement”) between De Agostini and the Company permitting De Agostini to appoint an observer to attend meetings of the Parent’s directors. Effective November 8, 2023, the Observer Agreement was renewed for a new two-year term and Alessandro Vergottini, the Chief Financial Officer of De Agostini, acknowledged and agreed to his renewed appointment by De Agostini as an observer pursuant to the terms of the Observer Agreement. The Observer Agreement expires following the meeting of the Parent’s directors at which the financial results for the third quarter of 2025 are reviewed.

At March 1, 2018,7, 2024, the Parent's directors, and certain senior managers, and senior consultants are as set forth below:

Directors
NameAgePosition
Marco Sala64Executive Chair of the Board; Executive Director
Professional Experience
–Notable Roles
•Executive Chair of the Board since January 2022.
•CEO of De Agostini S.p.A., IGT’s controlling shareholder, since June 2022.
•Chairman and CEO of DeA Capital S.p.A. since April 2022 and April 2023, respectively.
•Previously served as CEO of the Company from April 2015 to January 2022.
•Previously served as a director of Opap from 2003 to 2019.

–38 total years of professional experience.

Education and Professional Credentials
Bocconi University, Milan, Italy
Bachelor of Science, Major in Business and Economics
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NameAge
NamePosition with the Parent
Philip G. SatreChairman of the Board; Director (Independent)
Patti S. HartVice-Chairman of the Board; Director
Lorenzo PellicioliVice-Chairman of the Board; Director
Paget L. AlvesDirector (Independent)
Paolo CerettiDirector
Alberto DessyDirector (Independent)
Marco DragoDirector
James F. McCann72Vice-Chairperson of the Board; Lead Independent Director; Non-executive Director (Independent)
Professional Experience
–Notable Roles
•Chair of the Nominating and Corporate Governance Committee of the Board.
•Chairman of 1-800-Flowers.com, Inc., a position held since June 2016 upon stepping down as Chief Executive Officer.
•Chairman of Worth Media Group, a publishing and event company.
•Director of Amyris Inc., a position held since 2019, where he chairs the Leadership Development, Inclusion and Compensation Committee and sits as a member of the Nominating and Corporate Governance Committee.
•Previously served as Chair and CEO of Clarim Acquisition Corporation, a blank-check company targeting consumer-facing e-commerce, from 2020-2022.
•Previously served as Chairman of the Board of Directors of Willis Watson Towers from January 2016 to January 2019, as well as Chairman of the Nominating and Governance Committee until his retirement in May 2019.

–52 total years of professional experience.

Education and Professional Credentials
John Jay College, New York City, New York
Bachelor of Arts, Psychology
NameAgePosition
Heather J. McGregorMassimiliano Chiara55Director (Independent)
Vincent L. SaduskyDirector (Independent)
Marco SalaDirector and Chief Executive Officer
Gianmario Tondato da RuosDirector (Independent)
Renato AscoliChief Executive Officer, North America Gaming and Interactive
Walter BugnoChief Executive Officer, International
Fabio CairoliChief Executive Officer, Italy
Fabio CeladonSenior Vice President, Gaming Portfolio
Mario Di LoretoExecutive Vice President, People & Transformation
Alberto FornaroExecutive Vice President and Chief Financial Officer
Donald R. Sweitzer (1)
Chairman, IGT Global Solutions Corporation
Robert VincentOfficer; Executive Vice President for Administrative Services and External RelationsDirector
 __________________________________________________Professional Experience
1.    Mr. Sweitzer is a consultant–Notable Roles
•Executive Vice President, Chief Financial Officer and Executive Director since April 2020.
•Previously served as Chief Financial Officer of CNH Industrial from September 2013 to April 2020, where he was also named Chief Sustainability Officer in 2016 and Head of Mergers & Acquisitions in 2017.

–31 total years of professional experience.

Education and Professional Credentials
Bocconi University, Milan, Italy
CEMS Master’s Degree in International Management, with Univesität zu Koln in Cologne, Germany as host school
Bachelor of Science, Major in Business Administration cum laude
Directorship Certified by the Company.


National Association of Corporate Directors
NameAge
NameAgeBiography
Philip G. Satre68
Philip G. Satre has served as Chairman of the Board since the effective time of the Mergers and is a member of the Nominating and Corporate Governance Committee. Prior to the effective time of the Mergers, Mr. Satre served on the International Game Technology board of directors since January 2009 and as independent Chairman since December 2009. Mr. Satre has been a private investor since 2005. Mr. Satre has extensive gaming industry experience having served on the board of directors of Harrah’s Entertainment, Inc. (now Caesars Entertainment Corporation), a provider of branded casino entertainment (“Harrah’s”), from 1988 to 2004 and as Chairman from 1997 to 2004. Between 1980 and 2002, Mr. Satre held various executive management positions at Harrah’s, including Chief Executive Officer, President and Chief Executive Officer of Harrah’s gaming division and Vice President, General Counsel and Secretary. Mr. Satre currently serves on the board of directors of Nordstrom, Inc., where he has served as a director since 2006 and as Chairman since May 2016, the National Automobile Museum, the National World War II Museum and as President of the National Center for Responsible Gaming. Mr. Satre previously served on the board of directors of the Stanford University Board of Trustees (2005-2010), Rite Aid Corporation (2005-2011) and NV Energy, Inc. (2005-2013), where he served as Chairman from 2008 to 2013.
Mr. Satre holds a Bachelor of Arts degree in Psychology from Stanford University and a Juris Doctor degree from the University of California at Davis.
Patti S. Hart61
Patti S. Hart has served as Vice-Chairman of the Board since the effective time of the Mergers. Prior to the effective time of the Mergers, Ms. Hart served as Chief Executive Officer of International Game Technology since April 2009 and on the International Game Technology board of directors since June 2006. Ms. Hart also served as President of International Game Technology from April 2009 until July 2011. Prior to joining International Game Technology, Ms. Hart served as the Chairman and Chief Executive Officer of each of Pinnacle Systems Inc. from 2004 to 2005, Excite@Home Inc. from 2001 to 2002, and Telocity Inc. from 1999 to 2001. Ms. Hart also held various positions at Sprint Corporation, including President and Chief Operating Officer, Long Distance Division. Ms. Hart has served on numerous public company boards, including Yahoo! Inc. (2010-2012), LIN TV Corp. (2006-2009), Spansion Inc. (2005-2008), and Korn/Ferry International Inc. (2000-2009). She currently serves on the board of the American Gaming Association.
Ms. Hart earned a Bachelor of Science degree in Business Administration with an emphasis in Marketing and Economics from Illinois State University.
Lorenzo Pellicioli66
Lorenzo Pellicioli has served as Vice-Chairman of the Board since the effective time of the Mergers. Prior to the effective time of the Mergers, Mr. Pellicioli served on the GTECH S.p.A. (formerly Lottomatica Group) board of directors as Chairman from August 2006 to April 2015. Mr. Pellicioli has served as Chief Executive Officer of DeAgostini S.p.A. since November 2005. Previously, he served as the first President and Chief Executive Officer of Costa Cruise Lines in Miami, a division of the Costa Crociere Group that operates in North America. He was then promoted to Worldwide General Manager of Costa Crociere S.p.A. In the past (2011 and 2010) he served as a director of IDeA Alternative Investments S.p.A. and as Managing Director of DeA Factor S.p.A.
Mr. Pellicioli was also appointed President and Chief Executive Officer of the Compagnie Française de Croisières (Costa-Paquet), a subsidiary of Costa Crociere. He took part in the privatization of SEAT Pagine Gialle and, after the acquisition, he was appointed Chief Executive Officer. Following the sale of SEAT, Pellicioli worked for the Telecom Italia Group as head of the Internet Business Unit. Earlier in his career, he served as General Manager of Advertising Sales and Vice General Manager of Mondadori Periodici (magazines) for the Gruppo Mondadori Espresso, the first Italian publishing group. He was promoted to President and Chief Executive Officer of Manzoni & C. S.p.A, an advertising division of the Group. He has also held various positions in the private sector of Italian television for Manzoni Pubblicità, Publikompass and he was appointed president of Bergamo TV Programmes after starting his career as a journalist for the newspaper Giornale Di Bergamo. Since 2006, he has been a member of the Clinton Global Initiative. He is also a member of the advisory boards of Investitori Associati IV, Wisequity II e Macchine Italia and Palamon Capital Partners. Mr. Pellicioli serves as Chairman of the board of directors of DeA Capital, as a director of Banijay Group SAS and LDH SAS, De Agostini Editore S.p.A. He is also a director of the board of directors of Assicurazioni Generali S.p.A. and a member of both the Appointments and Remuneration Committee and the Investments and Strategic Operations Committee thereof.

NameAgeBiography
Paget L. Alves63
Paget L. Alves has served on the Board since the effective time of the Mergers and is a member of the Audit Committee and the Compensation Committee. Prior to the effective time of the Mergers, Mr. Alves served on the International Game Technology board of directors since January 2010. He served as Chief Sales Officer of Sprint Corporation, a wireless and wireline communications services provider (“Sprint”), from January 2012 to September 2013 after serving as President of the Business Markets Group since 2009. From 2003 to 2009, Mr. Alves held various positions at Sprint, including President, Sales and Distribution from 2008 to 2009; President, South Region, from 2006 to 2008; Senior Vice President, Enterprise Markets, from 2005 to 2006; and President, Strategic Markets from 2003 to 2005. Between 2000 and 2003, Mr. Alves served as President and Chief Executive Officer of PointOne Telecommunications Inc., and President and Chief Operating Officer of Centennial Communications. He currently serves on the board of directors of YUM! Brands, Ariel Investments, LLC and Synchrony Financial. Mr. Alves previously served on the board of directors of GTECH Holdings Corporation (2005-2006), and Herman Miller, Inc. (2008-2010).
Mr. Alves earned a Bachelor of Science degree in Industrial and Labor Relations and a Juris Doctor degree from Cornell University.
Paolo Ceretti63
Paolo Ceretti has served on the Board since the effective time of the Mergers. Prior to the effective time of the Mergers, Mr. Ceretti served on the GTECH S.p.A. (formerly Lottomatica Group) board of directors since 2004. Mr. Ceretti has been General Manager of De Agostini since 2004.
He is also Chief Executive Officer of DeA Capital (De Agostini’s arm in private equity investments and alternative asset management, listed at the Milan Stock Exchange), and De Agostini Editore (Publishing). Mr. Ceretti gained most of his professional experience at Fiat Group, where he held positions of increasing importance at the corporate level (Internal Auditing, Finance) and then in the Financial Services Sector. He then became the Head of Strategic Planning and Development of IFIL (currently EXOR, listed holding company of the Italian Agnelli Group). After assuming responsibility for the Internet B2C sector of Fiat/IFIL in 1999, Mr. Ceretti was appointed Chief Executive Officer of Global Value S.p.A., a Fiat/IBM joint venture in the Information Technology sector. He is currently a member of the board of directors of Banijay Group (TV and multimedia content production) and DeA Capital Alternative Funds (asset management), among other companies.
Position
Alberto Dessy6571
Alberto Dessy has served on the Board since the effective time of the Mergers and is a member of the Compensation Committee and the Nominating and Corporate Governance Committee. Prior to the effective time of the Mergers, Mr. Dessy served on the GTECH S.p.A. (formerly Lottomatica Group) board of directors since 2011. He is currently a Professor at Bocconi University. Mr. Dessy is a Chartered Accountant specialized in corporate finance, particularly the evaluation of companies, trademarks, equity and investments, financial structure, channels and loan instruments, funding for development and in acquisitions and disposals of companies. He has been an expert witness for parties to lawsuits and as an independent expert appointed by the court in various legal disputes. He is currently on the board of directors of Chiorino S.p.A. and has been on the boards of many companies, both listed and unlisted, including Redaelli Tecna S.p.A., Laika Caravans S.p.A., Premuda S.p.A., I.M.A., Milano Centro S.p.A., and DeA Capital S.p.A.
Independent Non-executive Director
Professional Experience
–Notable Roles
•Independent Non-executive Director since the formation of the Company in April 2015, and a member of the Audit Committee and Compensation Committee.
•Professor of corporate finance at the SDA Bocconi School of Management of the Bocconi University in Milan, Italy.

–45 total years of professional experience.

Education and Professional Credentials
Bocconi University, Milan, Italy
Bachelor of Science, Economic Sciences
Mr. Dessy graduated from Bocconi University.
NameAgePosition
Marco Drago7278
Marco Drago has served on the Board since the effective time of the Mergers. Prior to the effective time of the Mergers, Mr. Drago served on the GTECH S.p.A. (formerly Lottomatica Group) board of directors since 2002. Since 1997, Mr. Drago has been the Chairman of De Agostini, one of Italy’s largest family-run groups. Since October 2006, he has also been Chairman of the Board of Partners of B&D, a family limited partnership created to ensure cohesion in share ownership, consistency of intent and continuity in decision-making over the long term. Mr. Drago is Vice President of De Agostini Planeta Group and director of Atresmedia, DeA Capital, De Agostini Editore, Zodiak Media and S. Faustin (Techint Group) and a member of the Assonime’s board of governors.
Mr. Drago graduated in Economics and Business from Bocconi University and achieved important awards such as “Bocconiano dell’anno” in 2001 and was appointed “Cavaliere del Lavoro” in 2003.
Non-executive Director

Professional Experience
–Notable Roles
•Non-executive Director since the formation of the Company in April 2015.
•President of the Board of Directors of B&D Holding S.P.A., a position held since 2018.
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•Chairman Emeritus of De Agostini, S.p.A., the holding company of the De Agostini Group, a position held since June 2022, following service as Chairman from 1997 to 2022.
•Deputy Chairman for Grupo Planeta-De Agostini SL, a position held since 2003, and as Chairman ad honorem of De Agostini Editore S.p.A., a position assumed following service as a board member from 1999 to 2020.
•Additionally, serves as: (i) a board member of Atresmedia SA. (since 2003); (ii) sole director of Blu Acquario Prima S.p.A. and Investendo Tre S.r.l., (since 2012 and 2022, respectively).
•Previously served as a: (i) director and member of the Supervisory Board of San Faustin SA from 1996 to 2023; and (ii) director of Crescita Holding Srl from 2016 to 2021.

–55 total years of professional experience.

Education and Professional Credentials
Bocconi University, Milan, Italy
Bachelor of Science in Economics and Business

Other
Mr. Drago is the father of Enrico Drago, CEO, PlayDigital, and parent-in-law with Lorenzo Pellicioli, Non-executive Director.
NameAgePosition
Ashley M. Hunter44Independent Non-executive Director
Professional Experience
–Notable Roles
•Independent Non-executive Director since January 2022, including a member of the Nominating and Corporate Governance Committee.
•Founding partner of A. Hunter & Company, a leading risk management advisory firm.
•Lecturer at the University of Texas at Austin School of Information since 2015.

–23 total years of professional experience.

Education and Professional Credentials
Texas A&M University, College Station, Texas
Masters in Business Administration
Centenary College of Louisiana, Shreveport, Louisiana
Bachelor of Music in Music Theory and Composition

Other
Ms. Hunter is an active member of the Professional Liability Underwriting Society, Women in Private Equity and The Waters Street Club. She also serves as a director for Affordable Central Texas, as a trustee for Zach Theatre, on the Zoning Board of Adjustment in Fredericksburg, Texas and as a gubernatorial appointee to the Motor Vehicle Crime Prevention Authority of the Texas Department of Motor Vehicles.
NameAgeBiography
James F. McCann66James F. McCann has served on the Board since the effective time of the Mergers and is Chair of the Nominating and Corporate Governance Committee. He is the Chairman of 1-800-Flowers.com, Inc., and previously served as Chief Executive Officer, a position he held since 1976. Mr. McCann has served as the Chairman of the Board of Directors of Willis Towers Watson since January 4, 2016. Previously he served as Director (2004-2015) and non-executive Chairman (2013-2015) of Willis Group Holdings PLC (“Willis Group”). Prior to serving as the non-executive Chairman of the board of Willis Group, he served as the company’s presiding independent director. Mr. McCann also serves as a director for Scott’s Miracle-Gro. He previously served as a director and compensation committee member of Lottomatica S.p.A. (from August 2006 to April 2011), and as a director of Gateway, Inc. and The Boyds Collection, Ltd.Position
Heather J. McGregor5561Heather J. McGregor was appointed to the Board in March of 2017 and is a member of the Audit Committee. She is the Executive Dean of the Edinburgh Business School, the graduate school of business of Heriot Watt University in the U.K. Professor McGregor is also the principal shareholder and non-executive chairman of the executive search firm Taylor Bennett. In addition, Professor McGregor is a director of Non-Standard Finance PLC, a company specializing in offering consumer loans in the U.K. Professor McGregor has a Ph.D. from the University of Hong Kong in Structured Finance and is an experienced writer and broadcaster, including writing for the Financial Times for 17 years. Professor McGregor is also the founder of the Taylor Bennett Foundation, which works to promote diversity in the communications industry, and a founding member of the steering committee of the 30% Club, which is working to raise the representation of women at senior levels within the U.K.’s publicly listed companies. In June 2015, Professor McGregor was made a Commander of the British Empire for her services to diversity and employment. In February 2017, she was appointed by the U.K. Government to be a member of the Honours Committee for the Economy.Independent Non-executive Director
Professional Experience
–Notable Roles
•Independent Non-executive Director since March 2017, including a member of the Audit Committee.
•Vice President and Provost of Heriot-Watt University in Dubai, previously serving as the Executive Dean in Scotland.
•Previously served as a director of Non-Standard Finance Plc from 2014 to 2022 and Fundsmith Emerging Equities Trust from 2021 to 2022.
•Founder of the Taylor Bennett Foundation, which works to promote diversity in the communications industry.
•Founding member of the Steering Committee of the 30% Club, which is working to raise the representation of women at senior levels within U.K. publicly listed companies.

–40 total years of professional experience.

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Education and Professional Credentials
University of Hong Kong, Pokfulam, Hong Kong
PhD in Structured Finance
London Business School, London, U.K.
Masters in Business Administration
Newcastle University, Newcastle upon Tyne, U.K.
Bachelor of Science in Agricultural Economics & Marketing
Chartered Institute of Management Accountants, U.K.
Chartered Global Management Accountant

Other
Professor McGregor was one of the first two people at Heriot-Watt University to be named a Principal Fellow of the Higher Education Academy, and she was elected in 2021 as a Fellow of the Royal Society of Edinburgh, Scotland. She was made a Dame Commander of the Order of the British Empire in King Charles III’s 2023 New Year Honours List for her services to education, to business and to heritage in Scotland.
NameAgePosition
Lorenzo Pellicioli72Non-executive Director
Professional Experience
–Notable Roles
•Non-executive Director since the formation of the Company in April 2015, having served as Chair of the Board from November 2018 to January 2022 and Vice Chair of the Board from April 2015 to November 2018.
•Chairman of De Agostini S.p.A., a role he assumed following his retirement as Chief Executive Officer in June 2022.
•Board member of Assicurazioni Generali S.p.A. since 2007, where he sits on the Appointments and Remuneration Committee and Investments and Strategic Operations Committee.
•Serves as: (i) a board member of B&D Holding S.p.A. (since 2012); (ii) the sole director of Flavus S.r.l. (since 2014); (iii) a member of the Advisory Board of Palamon Capital Partners (since 2008); and (iv) Chairman of Xantos Sasu, St. Remy de Provence (since 2002).
•Previously served as: (i) a director of DeA Capital S.p.A (2007 to 2022); (ii) a member of the Supervisory Board of Banijay Group (2016 to 2022); (iii) a board member of L.D.H. S.a.S (2016 to 2022); and (iv) a director of De Agostini Editorie S.p.A. (2003 to 2020).

–51 total years of professional experience.

Education and Professional Credentials
ITIS Chimici (Paleocapa), Bergamo, Italy
Industrial Chemicals

Other
Mr. Pellicioli is step-father-in-law to Enrico Drago, CEO, PlayDigital, and parent-in-law with Marco Drago, Non-Executive Director.
NameAgePosition
Maria Pinelli61Independent Non-executive Director
Professional Experience
–Notable Roles
•Independent Non-executive Director since January 2022, including Chair of the Audit Committee.
•Member of the Board of Directors and Audit Committee for Globant S.A., a publicly traded company headquartered in Luxembourg and listed on the NYSE.
•Member of the Board of Directors, Chair of the Audit Committee and member of the Compensation Committee for Archer Aviation, Inc., a publicly traded company headquartered in San Jose, CA and listed on the NYSE.
•Chief Executive Officer of Strategic Growth Advisors, LLC since December 2020.
•Previously served as a director and Chair of the Audit Committee of Clarim Acquisition Corporation from 2020-2022, which was publicly listed on the Nasdaq.
•From 1986-2020, held a variety of leadership roles for Ernst & Young, including Consumer Products and Retail Leader, Technology Leader, Global Vice Chair of Strategic Growth Markets, Global IPO Leader and Americas Leader for Strategic Growth Markets.

–37 total years of professional experience.
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Education and Professional Credentials
McMaster University, Hamilton, Ontario, Canada
Bachelor of Commerce
Canadian Institute of Chartered Public Accountants
Fellow, Chartered Public Accountant
Institute of Chartered Accountants in England and Wales
Chartered Accountant
Executive education completed at Harvard Business School in Cambridge, Massachusetts, and The Kellogg School of Management at Northwestern University, Evanston, Illinois

Other
Ms. Pinelli was recognized as one of the Square Mile’s most inspiring Power 100 Women (London, UK)
NameAgePosition
Samantha F. Ravich57Independent Non-executive Director
Professional Experience
–Notable Roles
•Independent Non-executive Director since July 2019, including a member of the Compensation Committee and the Nominating and Corporate Governance Committee.
•Chair of the Center on Cyber and Technology Innovation at the Foundation for Defense of Democracies and its Transformative Cyber Innovation Lab since 2016.
•Managing Partner at A2P, LLC, a technology company that focuses on advanced advertising techniques.
•Board Governor at the Gemological Institute of America, where she sits on the Audit Committee and the R&D/Lab Committee.
•Member of the Board of NDX Management, LLC since 2022.
•Previously served as the Vice Chair of the President’s Intelligence Advisory Board, as a Commissioner on the Congressionally mandated Cyberspace Solarium Commission and as a member of the Secretary of Energy’s Advisory Board at the U.S. Department of Energy.

–30 total years of professional experience.

Education and Professional Credentials
Pardee RAND Graduate School, Santa Monica, California
Ph.D. in Policy Analysis
Stuart Weitzman School of Design, University of Pennsylvania, Philadelphia, Pennsylvania
Master of City Planning
The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania
Bachelor of Science in Engineering
NameAgePosition
Vincent L. Sadusky5258
Vincent L. Sadusky has served on the Board since the effective time of the Mergers and is Chair of the Audit Committee. Prior to the effective time of the Mergers, Mr. Sadusky served on the International Game Technology board of directors since July 2010. He served as President and
Chief Executive Officer of Media General, Inc., one of the nation’s largest multimedia companies, from December 2014 until January 2017, following the company’s merger with LIN Media LLC. Prior to the effective time of the Mergers, Mr. Sadusky served as President and ChiefOfficer; Executive Officer of LIN Media LLC from 2006 to 2014 and was Chief Financial Officer from 2004 to 2006. Prior to joining LIN Media LLC, he held several management positions, including Chief Financial Officer and Treasurer, at Telemundo Communications, Inc. from 1994 to 2004, and from 1987 to 1994, he performed attestation and consulting services with Ernst & Young, LLP. Mr. Sadusky currently serves on the board of directors of Hemisphere Media Group, Inc. Previously, he served on the Open Mobile Video Coalition, to which he served as President from 2011 until its integration into the National Association of Broadcasters in January 2013. He formerly served on the boards of directors of JVB Financial Group, LLC, Maximum Service Television, Inc., Media General, Inc. and NBC Affiliates.
Mr. Sadusky earned a Bachelor of Science degree in Accounting from Pennsylvania State University where he was a University Scholar. He earned a Master of Business Administration degree from the New York Institute of Technology.
Marco Sala58
Marco Sala has served on the Board and as Chief Executive Officer of the Parent since the effective time of the Mergers. Prior to the effective time of the Mergers, Mr. Sala served as Chief Executive Officer of GTECH S.p.A. (formerly Lottomatica Group) since April 2009. Since joining GTECH S.p.A. as Co-General Manager in 2003, Mr. Sala has been a member of the board of directors. In August 2006, he was appointed Managing Director with responsibility for the Company’s Italian Operations and other European activities. He was named Chief Executive Officer of GTECH S.p.A. in April 2009 with responsibility for overseeing all of the Company’s segments, including the Americas, International, Italy, and Products and Services. Mr. Sala is also a member of the board of directors of OPAP S.A., a Greek gaming and sports betting operator.
Before joining the Company, he served as Chief Executive Officer of Buffetti, Italy’s leading office equipment and supply retail chain. Prior to Buffetti, Mr. Sala served as Head of the Italian Business Directories Division for SEAT Pagine Gialle. He was later promoted to Head of Business Directories with responsibility for a number of international companies, such as Thomson (Great Britain), Euredit (France), and Kompass (Italy). Earlier in his career, he worked as Head of the Spare Parts Divisions at Magneti Marelli (a Fiat Group company) and soon after he became Head of the Lubricants Divisions. Additionally, he held various marketing positions at Kraft Foods. Mr. Sala graduated from Bocconi University in Milan, majoring in Business and Economics.

Professional Experience
–Notable Roles
•Chief Executive Officer of the Company since 2022 and Executive Director on the Board; served as Interim Chief Executive Officer, Global Lottery from July 2023 to February 2024.
•Formerly an Independent Non-executive Director and Chair of the Audit Committee from the formation of the Company until 2022.
•Previously served as Chief Executive Officer and member of the Board of Directors of Univision Communications Inc., the largest Hispanic media company in the U.S., from 2018 to 2021.

–37 total years of professional experience.

Education and Professional Credentials
New York Institute of Technology, New York City, New York
Master of Business Administration
Pennsylvania State University, State College, Pennsylvania
Bachelor of Science, Accounting
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NameAge
NameAgeBiographyPosition
Gianmario Tondato daDa Ruos5864
Gianmario Tondato da Ruos has served on the Board since the effective time of the Mergers and is Chair of the Compensation Committee. Prior to the effective time of the Mergers, Mr. Tondato da Ruos served as a Lead
Independent Non-executive Director of GTECH S.p.A. (formerly Lottomatica Group) from 2006 to April 2014. Mr. Tondato da Ruos has served as the Chief Executive Officer of Autogrill S.p.A. since April 2003. He joined Autogrill Group in 2000, and moved to the United States to manage the integration of the North American subsidiary HMSHost and successfully implemented a strategic refocusing on concessions and diversification into new business sectors, distribution channels and geographies.
Mr. Tondato da Ruos is Chairman of HMSHost Corporation. He has been a director of Autogrill since March 2003, and sits on the advisory board of Rabo Bank (Hollande). He was formerly Chairman of World Duty Free S.p.A. and a director of World Duty Free Group S.A.U.
Mr. Tondato da Ruos graduated with a degree in economics from Ca’Foscari University of Venice.

Professional Experience

–Notable Roles

•Independent Non-executive Director of the Company, including Chair of the Compensation Committee.

•A member of the Advisory Board of Rabobank in Holland and the Strategic Advisory Board of Planet Farms Holding S.p.A in Italy.

•Previously served as the Chief Executive Officer of Autogrill S.p.A. from 2003 to 2023.
•Previously served as Chairman of HMSHost Corporation, Autogrill Italia S.p.A. and Autogrill Europe S.p.A, as well as director of Autogrill S.p.A. from 2003 to February 2023.

•Previously served as Chairman of World Duty Free S.p.A. and a director of World Duty Free Group S.A.U.

–44 total years of professional experience.

Education and Professional Credentials
Ca’Foscari University, Venice, Italy
Bachelor of Science, Economics

Senior Management
NameAgePosition
NameAgeBiography
Renato Ascoli5662
As
Chief Executive Officer, North America Gaming and Interactive, Renato Ascoli is responsible for product development, manufacturing, marketing, and delivery of all of the Company’s gaming offerings.
Prior to the effective time of the Mergers, Mr. Ascoli served as General Manager of GTECH S.p.A. (formerly known as Lottomatica Group) and President of GTECH Products and Services, where he was responsible for overseeing the design, development, and delivery of state-of-the-art platforms, products, and services. He supported all stages of the sales process, and provided marketing and technology leadership to optimize investment decisions.
Prior to this role, Mr. Ascoli served as Head of Italian Operations. In this position, he was responsible for the strategic direction and operations of the Company’s Italian businesses. He joined GTECH S.p.A. in 2006 as Director of the Gaming division.
From 1992 to 2005, Mr. Ascoli worked for the national railway system Ferrovie dello Stato/Trenitalia, where he held roles of increasing responsibility including head of Administration, Budget, and Control of the Local Transport Division; head of Strategies, Planning, and Control of the Transport Area; and head of the Passengers Commercial Unit. In 2000, he was appointed Marketing Director of the Passengers Division, and later served as Director of Operations and Passengers Division. He also was head of International Development for Trenitalia.
Earlier in his career, he led international marketing efforts for Fincentro Group - Armando Curcio Editore, where he was responsible for commercial development of the publishing assets of Fincentro Group. He was also responsible for defining the strategic and management assets of the many companies comprising Fincentro Group.
Mr. Ascoli also served as a consultant to Ambrosetti Group, supporting the internationalization process (Spain, England, and U.S.A.). He graduated from Bocconi University in Milan, majoring in Economics and Social Studies.
Walter Bugno58
As Chief Executive Officer, International, Walter Bugno is responsible for the management and strategic development of the International region. He works directly with the Parent’s management teams to implement the Company’s vision through the ongoing delivery of value to customers, shareholders, and employees.
Mr. Bugno leads the Company’s lottery, gaming, and interactive businesses throughout Europe (except Italy), as well as in the Middle East, Latin America and the Caribbean, Africa, and the Asia-Pacific region. He also oversees private manager agreement opportunities across these regions.
He joined GTECH S.p.A. (formerly known as Lottomatica Group) in July 2010 as President and CEO of SPIELO International. He led the business by capitalizing on the many growth opportunities in the gaming industry, and overseeing the Company’s long-term strategic direction. In 2012, Mr. Bugno’s portfolio expanded to include the Company’s interactive business. Under his leadership, SPIELO experienced substantial growth and became a major contributor to the Company’s total earnings.
From 2006 to 2009, Mr. Bugno was the CEO of Casinos for Tabcorp Holdings Limited, Australia’s premier gambling and entertainment group. During his tenure with Tabcorp, Mr. Bugno transformed the business from being product-driven to customer-driven by revitalizing the customer casino experience with new loyalty programs, products, and customer service. Some of his successes included a new 12-year exclusive casino license with the New South Wales government, expansion of gaming products, and increases in market share.
Prior to Tabcorp, Mr. Bugno was President of Campbell Soup Company in Asia Pacific from 2002 to 2006. He was responsible for Campbell’s food products, manufacturing, and distribution. He was previously Managing Director of Lion Nathan Australia, a division of Lion, one of Australasia’s leading beverage and food companies.
Mr. Bugno grew up in Australia and Italy, and has Bachelor of Commerce and Master of Commerce degrees from the University of New South Wales, Australia.
Global Lottery

Professional Experience
–Notable Roles
•Named Chief Executive Officer, Global Lottery in February 2024.
•Previously responsible for leading the IGT Gaming business since 2015, including Italy Gaming, Global Gaming Sales, Global Gaming Product Management, Global Gaming Studios, Global Manufacturing, Operations and services including Global Gaming Technology.

–36 total years of professional experience.

Education and Professional Credentials
Bocconi University, Milan Italy
Bachelor of Science, Economics and Social Studies
NameAgePosition
Fabio Celadon52
NameAgeBiography
Fabio Cairoli52
As Chief Executive Officer, Italy, Fabio Cairoli is responsible for managing all business lines, marketing services, and sales for the Company’s Italian operations. Through his leadership of the largest lottery operator in the world, Mr. Cairoli shares insights and best practices with other organizations in the Company.
Mr. Cairoli joined the Company in 2012 as Senior Vice President, of Business. He has more than 20 years of experience in consumer goods for multinational organizations, with both local and international expertise. He served as Group General Manager and Board Member of Bialetti Industrie, a world-renowned Italian manufacturer and retailer of stovetop coffee (espresso) makers and small household electrical appliances. During his tenure at Bialetti, he was responsible for turning around the business by refocusing strategy, streamlining costs, and optimizing the product portfolio and retail presence.
Prior to Bialetti, Mr. Cairoli served as General Manager of Star Alimentare, a major Italian food company, and successfully relaunched an historical brand. Additionally, he spent part of his career with Julius Meinl Italia and with Motorola Mobile Devices Italy. He also spent 10 years with Kraft Foods in Italy and the U.K. in various capacities.
Mr. Cairoli holds a Bachelor’s degree in Economics from the Catholic University in Milan.
Fabio Celadon46
As Senior Vice President, Gaming Portfolio, Fabio Celadon is responsible for the management of the Company’s Gaming Portfolio organization. Under his direction, the organization ensures the monitoring of relevant technological advancements and market and competitive trends; the consolidation of the Company's global research and development plan and related allocation of budgets and resources; the evolution of the Company’s content portfolio; the consolidation of hardware and content roadmaps; and, the monitoring of hardware and content roadmaps execution as well as product performance and results. 

Mr. Celadon most recently served as Managing Director, IGT Greater China and Senior Vice President, IGT International. In this role, he was responsible for managing IGT’s business and operations across lotteries, video lotteries, sports betting and interactive, and mobile gaming in Greater China. He was also responsible for the strategic development of IGT’s business in Greater China, India, and Japan. 

Prior to April 2015, Mr. Celadon served as Senior Vice President of Group Strategy and Corporate Development for GTECH S.p.A., where he was responsible for developing GTECH’s overall corporate strategy, identifying and evaluating key strategic growth initiatives, and executing the corporate development strategy through mergers, acquisitions, joint ventures, and divestitures. 

Mr. Celadon has also held several strategy, corporate development, and finance positions since he joined Lottomatica Group, GTECH’s predecessor-company, in 2002.  Mr. Celadon served as CFO of Lottomatica from 2002 to 2004. Following the acquisition of GTECH by Lottomatica, he relocated to the U.S. where he held the position of GTECH Vice President of New Market Development before being promoted to Senior Vice President of Strategic Planning in 2008. Prior to joining Lottomatica, he was a partner with Atlantis Capital Partners, a private equity firm, and prior to that, he worked for Morgan Stanley in London in the mergers and acquisitions department.

Mr. Celadon holds a Law Degree from LUISS Guido Carli University in Rome and an MBA from Columbia Business School in New York.

Professional Experience
–Notable Roles
•Responsible for IGT’s Strategy, Strategic Market Development, Mergers & Acquisitions and Competitive Intelligence functions.
•Previously served as Senior Vice President, Gaming Portfolio, with responsibility for monitoring relevant technological advancements and market and competitive trends, consolidating the Company’s global research and development plan and related allocation of budgets and resources, evolving the Company’s content portfolio and consolidating hardware and content roadmaps, and monitoring product performance and results.

–28 total years of professional experience.

Education and Professional Credentials
LUISS Guido Carli University, Rome, Italy
Law Degree
Columbia Business School, New York City, New York
Masters in Business Administration


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NameAgePosition
Dorothy Costa52
NameAgeBiography
Mario Di Loreto54
As ExecutiveSenior Vice President, People & Transformation Mario Di Loreto is responsible for providing the overall HR leadership
Professional Experience
–Notable Roles
•Leads the IGT People and Transformation function, including oversight of all senior strategic business partners and the total rewards, diversity & inclusion, organization transformation and global services and talent management centers of excellence, a role she has held since 2015.

–27 total years of professional experience.

Education and Professional Credentials
Johnson & Wales University, Providence, Rhode Island
Master in Business Administration
Rhode Island College, Providence, Rhode Island
Bachelor of Science, Business Management
University of Michigan, Ross School of Business Executive Education, Ann Arbor, Michigan
Certificate in Advanced Human Resource Executive Program
NameAgePosition
Enrico Drago46Chief Executive Officer, PlayDigital
Professional Experience
–Notable Roles
•Chief Executive Officer of the PlayDigital business, a role he has held since September 2021.
•Previously served as the Company’s Senior Vice President of PlayDigital from 2018 until assuming his current role.
•Since June 2021, he has served as the Vice Chairman of De Agostini S.p.A.

–25 total years of professional experience.

Education and Professional Credentials
IESE Business School, University of Navarra, Barcelona, Spain
Master in Business Administration
Bocconi University, Milan, Italy
Bachelor of Science, Business Administration

Other
Mr. Drago is son of Marco Drago, Non-executive Director, and step son-in-law to Lorenzo Pellicioli, Non-Executive Director.
NameAgePosition
Scott Gunn57Senior Vice President, Corporate Public Affairs
Professional Experience
–Notable Roles
•Leads the Company’s public policy development and government relations efforts, directing and facilitating government relationships and public engagement.
•Previously served as the Company’s Senior Vice President of Global Government Relations and North America Business Development from 2015 until assuming his current role.

–35 total years of professional experience.

Education and Professional Credentials
Tulane University, New Orleans, Louisiana
Bachelor of Arts, Political Economics

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NameAgePosition
Wendy Montgomery61Senior Vice President, Marketing, Communications and strategy to further organizational development and ensure that IGT attracts, develops, and retains a talented, diverse, and engaged workforce.Sustainability

Professional Experience
–Notable Roles
•Oversees the strategy for the Company’s global brand, trade shows, product marketing and external communications, including community relations, responsible gaming and corporate social responsibility.
•Joined the Company in 2018 as Senior Vice President, Global Lottery Marketing before her promotion.

–40 total years of professional experience.

Education and Professional Credentials
Institute of Marketing Management, Johannesburg, South Africa
Diploma in Marketing Management
Greenwich University, London, United Kingdom
Higher National Diploma in Business Studies
Queen’s University, Kingston, Canada
Executive Leadership Program


NameAgePosition
David T. Morgan43Senior Vice President, Chief Accounting Officer
Professional Experience
–Notable Roles
•Oversees Accounting and Tax, including developing and maintaining systems and internal controls over financial reporting, and the preparation of the Company’s consolidated annual reporting in accordance with generally accepted accounting principles.
•Previously served as Vice President & Corporate Controller of the Company from 2017 to 2023.
•Prior to joining the Company, served as Senior Manager at PricewaterhouseCoopers LLP.
•Member of the American Institute of Certified Public Accountants.

–20 total years of professional experience.

–On December 14, 2023, the Company announced that Mr. Rishton would retire at the end of 2024 and that David Morgan would assume the role of Senior Vice President, Chief Accounting Officer effective on January 1, 2024. During 2024, Mr. Rishton will support this leadership transition.

Education and Professional Credentials
University of New Hampshire, Durham, New Hampshire
Bachelor of Science, Accounting

Massachusetts Board of Public Accountancy
Certified Public Accountant
Prior to joining IGT, Mr. Di Loreto was
NameAgePosition
Christopher Spears56Executive Vice President, for Human Resources and Organization at Telecom Italia Group and its 50,000 employees, where he led a complete re-engineering of the HR management core processes across the global organization as part of a three-year People Strategy Program.General Counsel
Professional Experience
–Notable Roles
•Leads the Company’s global legal strategy and function, including managing the internal legal team and outside legal advisors, providing counsel to the Board of Directors and executive leadership team and managing corporate governance, compliance, litigation, mergers and acquisitions, intellectual property licensing, commercial and operational issues and other global subject matter areas.
•Previously served in a series of roles of increasing responsibility at Caterpillar Inc., including as Deputy General Counsel with responsibility for global commercial law matters, corporate governance and mergers and acquisitions.

–30 total years of professional experience.

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Education and Professional Credentials
University of Kentucky, J. David Rosenberg College of Law, Lexington, Kentucky
Juris Doctor
University of Kentucky, Gatton College of Business and Economics, Lexington, Kentucky
Master of Business Administration
Berea College, Berea, Kentucky
Bachelor of Science, Business Administration


Previous to joining Telecom Italia, he spent four years as the Human Resources Group Director for Barilla, where he was responsible for 15,000 employees in 17 countries. In this role, Mr. Di Loreto participated in the re-organization of the international subsidiary companies to achieve cultural and business integration and alignment.

In addition, Mr. Di Loreto has held HR positions with increasing levels of responsibility and authority with Starwood Hotels, where he was part of a global innovation team that worked under Starwood’s CEO at its U.S. headquarters to help define the evolution of the company’s organizational and business models. He has also held senior HR positions with Air One and subsequently Alitalia, where he participated in the creation and development of two low-cost carriers, Alitalia Team and Alitalia Express.

Mr. Di Loreto graduated with a Ph.D. in the Philosophy of Science from the University of Rome, and for a time, pursued an academic career before beginning his career in business.
NameAgePosition
Alberto FornaroTimothy M. Rishton5358
As Executive
Senior Vice President, and Chief Financial Officer, Alberto Fornaro is responsible for managing and developing the financial strategy for the Company globally. He oversees the Finance Accounting Control, Legal, Investor Relations, Compliance, Strategy and Mergers & Acquisitions, and ERP Organization, which includes making decisions and improving financial strategies to maximize shareholder value and cash flow; providing high-quality financial and management reporting; and ensuring compliance of all fiscal and statutory reporting, and legal matters.Strategic Projects
Professional Experience
–Notable Roles
•Previously served as Senior Vice President, Chief Accounting Officer where he oversaw Accounting and Tax, including developing and maintaining systems and internal controls over financial reporting, and the preparation of the Company’s consolidated annual reporting in accordance with generally accepted accounting principles.
•Served as the Company’s interim Chief Financial Officer from January 2020 through April 2020.
•Member of the American Institute of Certified Public Accountants and the Rhode Island Society of CPA’s.

–35 total years of professional experience.

–On December 14, 2023, the Company announced that Mr. Rishton would retire at the end of 2024 and that David Morgan would assume the role of Senior Vice President, Chief Accounting Office effective on January 1, 2024. During 2024, Mr. Rishton will support this leadership transition.

Education and Professional Credentials
University of Rhode Island, Kingston, Rhode Island
Bachelor of Science, Accounting

Senior Consultant

He brings more than 20 years of strong financial expertise to the Company and has an extensive record of significant international exposure.
Prior to the effective time of the Mergers, Mr. Fornaro served as Executive Vice President and Chief Financial Officer for GTECH S.p.A. He was previously Group CFO and President of the EMEA (Europe, Middle East, and Africa) division at Doosan Infracore Construction Equipment (DICE), a world leader in the construction equipment industry formed by Bobcat and Doosan Infracore. During his tenure at DICE, he led numerous integration programs and several cost-saving initiatives, helping DICE to weather the recent economic downturn and emerge as an even stronger player in a highly competitive industry.
Mr. Fornaro also served as General Manager and CFO of Technogym, the second-largest worldwide manufacturer of fitness equipment. Additionally, he spent 12 years in finance at Case New Holland (CNH) Global/Fiat Group in Italy and the U.S. At CNH, he served in many different financial capacities at the vice president level.
He holds a bachelor’s degree in Economics and Banking Sciences from the University of Siena, Italy; a master’s degree in Banking Disciplines from the University of Siena’s Post Graduate School, Italy; and was a Visiting Scholar at the Ph.D. Program in Economics at Columbia University, New York. Mr. Fornaro is licensed as a Certified Public Accountant in Illinois. Mr. Fornaro holds dual citizenship in the U.S. and Italy.
NameAgePosition
Donald R. SweitzerRobert Vincent70
As ChairmanChairperson of IGT Global Solutions Corporation Donald R. Sweitzer is an ambassador for the Company when interacting with global customers, current and potential partners, and government officials. Additionally, Mr. Sweitzer advises the Parent’s CEO on government affairs and general business matters.
Prior to becoming Chairman, Mr. Sweitzer served as Senior Vice President of Global Business Development and Public Affairs of GTECH, and was responsible for leading the Company’s efforts to identify and develop new business opportunities in targeted markets, support the expansion of GTECH’s products and services in existing jurisdictions, and continually enhance the Company’s communications and services to its worldwide government and commercial clients.
When Mr. Sweitzer joined GTECH in 1998, he brought more than 20 years of experience in government and public affairs. A recognized authority on national politics and public affairs, Mr. Sweitzer has advised numerous national, statewide, and congressional candidates throughout his career, and has worked at every level of government.(1)

Professional Experience
–Notable Roles
NameAgeBiography
Robert Vincent64
As Executive Vice President for Administrative Services and External Relations, Robert Vincent is responsible for overseeing global external and internal corporate communications, media relations, branding, and social responsibility programs. Additionally, he leads a centralized Administrative Services organization that includes information security, global procurement, real estate/facilities, food services, environmental health and safety, and facility security and monitoring. He is also involved in selected business development projects, as well as support activities in compliance, investor relations, marketing communications, and government relations. Previously, he served as Senior Vice President of Human Resources and Public Affairs for the Parent.

Prior to the effective time of the Mergers, Mr. Vincent had been affiliated with GTECH S.p.A. for more than 20 years, having served as an external consultant; as Vice President of Business Development for Dreamport, GTECH’s former gaming and entertainment subsidiary; and as Senior Vice President of Human Resources and Public Affairs for GTECH S.p.A.

Before joining the Company, he was a senior partner at RDW Group, a regional advertising and public relations company in Rhode Island. He also held senior policy and administrative positions with Rhode Island-based governments, including the Governor’s Office, Secretary of State’s Office, and the Providence Mayor’s Office. In addition, he has staffed community and government affairs efforts at Brown University in Providence.

Active in the community, Mr. Vincent serves on the Family Service of Rhode Island Board of Directors, Hasbro Children’s Hospital Advisory Board, the URI Foundation Executive Committee, and the URI Harrington School of Advisory Board. He is an Emeritus Trustee of Trinity Repertory Company.

Mr. Vincent received his bachelor’s degree in Political Science from the University of Rhode Island.


In relation•Assumed honorary role in 2019 as: Chairperson for the primary operating subsidiary of the U.S. lottery business and represents the Company when interacting with global customers, current and potential partners, and government officials; and senior counselor to the Mergers,Chief Executive Officer and the Parent’s controlling shareholder, De Agostini entered into a voting agreement withCompany’s senior leadership team.
•Previously served as the Parent pursuant to which De Agostini has agreed to vote,Company’s Executive Vice President for a period of three years followingAdministrative Services and External Relations, overseeing global external and internal corporate communications, media relations, branding, social responsibility programs, information security, global procurement, real estate/facilities, food services, environmental health and safety and facility security and monitoring.
•Serves on the effectivenessBoards of the Mergers, allUniversity of Rhode Island Foundation, Rhode Island Hospital Foundation, Family Services of Rhode Island, the Parent's ordinary shares then owned in favorUniversity of any proposal or action so as to effectRhode Island Foundation 2004-2023, the Greater Providence Chamber of Commerce, the Providence Performing Arts Center, and preserve the boardUniversity of Rhode Island Harrington School of Communication.

–48 total years of professional experience.

Education and executive officer compositionProfessional Credentials
University of Rhode Island, Kingston, Rhode Island
Bachelor of Arts, Political Science

Except for the Parent in place immediately following the Mergers.  For more information, see "Item 10.C. Material Contracts—Voting Agreement." Thererelationship between Marco Drago, Enrico Drago, and Lorenzo Pellicioli described above, there are no familial relationships among any of the Parent'sParent’s directors, or senior managers, set forth above.or the senior consultant.



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Separation & Divestiture

In connection with the Separation & Divestiture, Marco Sala will continue to serve as Executive Chair of the Board. Vincent Sadusky will continue to serve as Chief Executive Officer until the Closing, and the Board will conduct a search for the Parent’s next Chief Executive Officer. Massimiliano Chiara will continue in his role as Chief Financial Officer of the Parent, and the Parent’s remaining executive leadership will remain unchanged with the exception that Renato Ascoli will serve as Chief Executive Officer of the Parent’s Global Lottery business.

After Closing, the Parent’s Chief Executive Officer, Vincent Sadusky, will serve as Chief Executive Officer of the Combined Company, with Fabio Celadon, the Parent’s Executive Vice President, Strategy and Corporate Development, assuming the role of Chief Financial Officer of the Combined Company. The Parent will appoint Vincent Sadusky, James McCann and one other to the Board of Directors of the Combined Company while De Agostini will appoint Marco Sala, Enrico Drago and a third individual to be named later. The balance of the directors of the Combined Company will be appointed by Everi.

B.        Compensation
 
Non-Executive Director Compensation
 
The Parent’s compensation policy for Non-Executive Directorsnon-executive directors is to provide an annual cash retainer payable in quarterly tranches as well as equity awards typically in the form of a stockrestricted share unit (“RSU”) award vesting on a yearly basis.
an annual basis, or such other form of equity awards under the Company’s 2021 Equity Incentive Plan (the “Equity Incentive Plan”). Additional cash retainers are provided for the Non-Executive Directorsnon-executive directors serving as Chairpersons of the Board, Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee.Committee as well as the Lead Independent Director.

Awards to Non-Executive Directors under the Long Term Incentive Plan (“LTIP”) vest on the basis of time rather than on the basis of performance conditions.
LTIP - Annual Equity Awards for Continuing Non-Executive Directors

OnAn RSU award is normally granted to each existing non-executive director annually, and to a new non-executive director at the datetime of each annual meeting of the Parent’s shareholders each Non-Executive Director continuing to serve after that date will automatically be granted an award of restricted share units (“RSUs”). appointment.

The number of RSUs covered by each such award will beis generally determined by dividing (1) the Annual Equity Award ($250,000 forGrant Value (see table below in the role of Chairman and $200,000 for other Non-Executive Director roles) grant value“Annual Compensation” section) by (2) the closing price of an ordinary share as of the date of grant, (rounded downprorated accordingly in respect of grants made to new non-executive directors. Awarded RSUs normally vest at the next annual general meeting (“AGM”) of the Parent after grant date, subject to continued service of the non-executive director as a director of the Parent. Where a non-executive director resigns from their directorship prior to the nearest whole unit). normal vesting date, the Parent will consider the non-executive director to have retired from the Board if such director has completed at least eight years of service, and any outstanding RSUs held by the non-executive director will become fully vested as of the date of their termination of service. Further, any outstanding RSUs held by a non-executive director will automatically vest in full in the event of their death or disability.

Annual equity awards grantedCompensation
($ in thousands)
Fees ($)(1)
RSUs ($)(2)
Non-executive Director100 200 
Chairperson additional compensation(3)
50 50 
Lead Independent Director additional compensation20 20 
Committee Chairpersons additional compensation:
Audit Committee40 — 
Compensation Committee30 — 
Nominating and Corporate Governance Committee20 — 
(1) All fees are established in USD but paid quarterly in GBP, with the amount paid converted from USD to Non-Executive Directors will vestGBP based on the exchange rate in effect on the date of processing the annual meetingpayment.
(2) The number of RSUs granted is calculated by dividing the Parent’s shareholders that occursgrant value listed in this column by the Company’s financial year after the financial year in whichclosing price of an ordinary share as of the date of grant occurs.grant.

LTIP - Initial Equity Awards for New Non-Executive Directors

Each new Non-Executive Director will be granted an award of RSUs determined by dividing (1)(3) This compensation is not paid to a pro-rata portionnon-executive director since Marco Sala serves as the Executive Chair of the "Initial Equity Award" ($250,000 for the roleBoard.
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Table of Chairman and $200,000 for other Non-Executive Director roles) value by (2) the closing share price as of that date (rounded down to the nearest whole unit). The pro-rata portion of the Initial Equity Award value will equal the Initial Equity Award value multiplied by the fraction which results from the following formula:
X - Y
   X

where:
X is the number of days in the period beginning with (and including) the date of the AGM immediately preceding the appointment date (the Previous AGM) and ending on (and including) the date of the AGM immediately after the appointment date (the Next AGM);
Y is the number of days in the period beginning with (and including) the date of the Previous AGM and ending on (and including) the appointment date; and
"AGM" means the Company’s last annual meeting of shareholders at which annual equity awards were granted by the Company to the Non-Executive Directors. The RSUs granted at the previous AGM vest following the approval of financial statements by shareholders at each annual general meeting of the Company.

Contents
 Chairman 
Non-
executive
director
basic fee
 
Vice
Chairpersons
 
Compensation
Committee
Chairman
 
Nominating
and
Corporate
Governance
Committee
Chairman
 
Audit
Committee
Chairman
Fees$150,000
 $100,000
 $100,000
 $130,000
 $120,000
 $140,000
LTIP$250,000
 $200,000
 $200,000
 $200,000
 $200,000
 $200,000


Executive Officer2023 Plan Year Actual Compensation
Total Compensation

The following table sets forth the approximate compensation paidreceived or earned, calculated in accordance with the CA 2006 and relevant regulations, as applicable, by the Company’s non-executive directors during the year ended December 31, 2023. Amounts are presented in $ thousands.
Name & Position(s)Fees ($)Taxable Benefits
RSUs ($)(1)
Total
James F. McCann
Non-executive Director
Vice-Chairperson of the Board
Lead Independent Director
Chairperson of the Nominating and Corporate Governance Committee
140 15 228 383 
Alberto Dessy(2)
Non-executive Director
124 — 208 332 
Marco Drago
Non-executive Director
100 — 208 308 
Ashley M. Hunter
Non-executive Director
100 — 208 308 
Heather J. McGregor
Non-executive Director
100 — 208 308 
Lorenzo Pellicioli
Non-executive Director
100 — 208 308 
Maria Pinelli
Non-executive Director
Chairperson of the Audit Committee
140 15 208 363 
Dr. Samantha Ravich
Non-executive Director
100 — 208 308 
Gianmario Tondato da Ruos
Non-executive Director
Chairperson of the Compensation Committee
130 — 208 338 
(1) Amount reflects the number of RSUs granted on May 9, 2023, multiplied by $28.00, the three-month ending share price as of December 31, 2023. The RSUs are scheduled to vest on the Company'sdate of the 2024 AGM.
(2) Includes a 4% stipend related to Italian regulatory requirements.

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Executive Officer Compensation
Total Executive Officer Compensation

The following table sets forth the approximate 2023 compensation received or earned, calculated in accordance with the CA 2006 and relevant regulations, as applicable, by the Company’s executive officers during 2017,as of December 31, 2023, including Marco Sala, Chief Executive Officer;Chair of the Board; Vincent Sadusky, CEO and Executive Director of the Board; Renato Ascoli, CEO, of North America Gaming & Interactive; Fabio Cairoli, CEO Italy;Global Gaming; Fabio Celadon, SVP, Gaming Portfolio; Walter Bugno,Executive Vice President of Strategy and Corporate Development; Massimiliano Chiara, Executive Vice President, CFO and Executive Director of the Board; Dorothy Costa, Senior Vice President, People & Transformation; Enrico Drago, CEO, International; Alberto Fornaro, EVPPlayDigital; Scott Gunn, Senior Vice President of Corporate Public Affairs; Wendy Montgomery, Senior Vice President, Marketing, Communications and CFO;Sustainability; Timothy Rishton, Senior Vice President and Chief Accounting Officer; and Christopher Spears, Executive Vice President and General Counsel. Also included is compensation paid to Robert Vincent, EVPChairperson of External Relations & Administrative Services;IGT Global Solutions Corporation who provides consulting services to the Company, the fees for which are included as “Other” compensation in the table below.
($ in thousands)Salary
2023 Bonus(3)
Equity
Awards(4)(5)
Other(6)
Total
Marco Sala,
Executive Chair(1)
1,0061,96515,1581,71519,844
Vincent Sadusky,
Chief Executive Officer(2)
1,6812,5053,4803147,980
Massimiliano Chiara,
Chief Financial Officer		8001,2435,0986497,790
Other Executive Officers &
Senior Consultant		3,8474,9799,4035,38323,612

(1) Effective March 1, 2023, Mr. Sala’s annual salary as Executive Chair of the Board was increased 20% to $900,000 paid monthly, of which 70% is paid in GBP and Mario Di Loreto, EVP30% in EUR, both of Peoplewhich are converted using fiscal year-to-date exchange rates. In addition to base salary, the amount includes true-up payments related to foreign currency fluctuations and Transformation.tax equalization, per his employment contract.
(2) In addition to base salary, the amount includes true-up payments related to tax equalization.
Officer Compensation
Name
Salary
($) (3)
 
Bonus
($)
 
Equity
Awards
($)(1)
 
Other
($)(2)
 
Total
($)
Marco Sala,
Chief Executive Officer
887,588
 1,832,250
 4,446,893
 3,973,998
 11,140,729
Other Executive Officers4,663,248
 5,043,969
 5,716,884
 4,457,755
 19,881,856
 _____________________________________________________________________________________________________
1(3) Represents the GAAP grant date fair value of equityshort-term incentive compensation vested duringearned for the 2023 fiscal year, 2017.
2
Represents the value of health and welfare benefits received by the executive officers during 2017 (including medical, dental, disability, life insurance, relocation, tax preparation, and retirement benefits). Also includes car allowances, housing allowances, and perquisites. 2017 benefits payment includes an increase in UK/Foreign Tax Allowance/Payments due to a higher STI payout made in the UK during the calendar year of 2017, a higher LTI vesting value in calendar year 2017 and exchange rate fluctuation. The Foreign Tax Allow/Payments for Marco Sala is $3,368,281 grossed up.

3Marco Sala’s salary is $1,000,000. He is paid 70% in the U.K. in pounds sterling (converted at an FX rate 1.2882) and 30% in Italy in euros (converted at an exchange rate of 1.1295). This payment arrangement will require periodic true up to ensure he is paid $1,000,000.
Equity Compensation
The table below sets forth the shares granted pursuantexpected to compensation plans, other than stock options,be paid in March 2024. In addition to the Company's executive officers during 2017.annual bonus, Mr. Sala’s amount includes an estimated true-up payment related to foreign currency fluctuations and tax equalization, per his employment contract.
Grants(4) Mr. Sala’s, Mr. Sadusky’s, and Mr. Chiara’s equity awards compensation represents 145% achievement of Shares
Name
No. of
Shares
 
Fair Value at
Date of
Allocation
 
Vesting
Period
 
Allocation
Date
 
Share’s
Market Price
upon
Allocation
Marco Sala184,576
 $17.19
 2020-2021 May 23, 2017 $20.63
Other Executive Officers308,233
 $17.19
 2020-2021 May 23, 2017 $20.63

Note: Awardsthe 2021-2023 performance conditions for performance share units (“PSUs”) granted in 20172021 and 2022, which will vest 50% in 20202024 and 2025, respectively, based on their continued service. Other executive officers’ equity awards compensation represents a weighted-average 95% achievement of the 2021-2023 performance conditions for PSUs granted in 2021, which will vest 50% in 20212024 and 2025, respectively, based on 2017, 2018their continued service. The amount of compensation reflects the total number of shares expected to vest multiplied by IGT’s three-month average closing share price as of December 31, 2023, which was $28.00.
(5) Mr. Sala’s equity awards compensation also includes 100% achievement of the Co-investment Plan performance conditions for certain PSUs and 2019 performance.stock options granted in 2021, which will vest 100% upon shareholders’ approval of the Company’s 2023 financial statements at the 2024 AGM. The amount of compensation reflects the total number of shares expected to vest multiplied by IGT’s three-month average closing share price as of December 31, 2023, which was $28.00. Equity compensation for stock options also considers a grant date strike price of $20.37.
(6) Represents the value of certain health, welfare, and other benefits received by the executive officers during 2023 (including tax preparation, employer contributions to post-retirement plans, relocation benefits, taxable life insurance premiums paid, car allowances, housing allowances, private air travel, and perquisites.) Mr. Sala’s other compensation also includes tax equalization related to benefits received in 2023. Mr. Chiara’s other compensation also includes $500,000, the fourth installment of a $2.0 million bonus to be paid in four equal installments, provided to compensate Mr. Chiara for his forfeited compensation at his previous employer.

Short-Term Incentive Compensation Plans
 
The Company's 2023 short-term incentive compensation (“STI”) compensation plans during 2017 wereare performance-based and designed to encourage employees to achieveachievement of both short-term financial results and longer-term strategic objectives. The STI plans recognize growth achievement with an opportunity to earn an incentive on the upside, as well as limit the downside potential. Payments under the STI plans were based on the Company's 2023 financial performance and individual Management by Objectives (“MBOs”). The Company's executive officers participated in the same STI plans as other employees during 2017. The primary focus of the STI plans was to motivate and reward executive officers and employees for the achievement of annual objectives. The STI plans were designed to recognize growth achievement with an opportunity to earn a bonus on the upside, as well as to limit the downside potential. Payments under the STI plans were based on group and individual Management by Objectives (“MBOs”).2023. 


Senior ManagementExecutive Officers STI
LevelFinancial Individual MBO Financial Metric Mix
Corporate80% 20% 
50% Operating Income
30% Net Debt
Business Unit80% 20% 
25% Operating Income 35% Business Unit Operating Income
20% Net Debt

For purposes of the STI plans, financial performance was measured based on CorporateConsolidated Adjusted EBITDA (“AEBITDA”), Consolidated Adjusted Operating Income ("OI"AOI") as Consolidated OI Excluding, excluding Purchase Price Accounting, at the Company level and Adjusted Consolidated Net Debt at the Company level. Senior ManagementDebt. Executive officers focused on a specific Business Unit alsobusiness unit will have other targeted metrics, such as a Business Unit AOI or Business Unit AEBITDA metric, where appropriate. The table below sets forth the minimum, target, and maximum performance thresholds for OI and Net Debt under the STI plans.

OI and Performance
Percent of OI Achieved 
IGT OI
(millions)
 Payout Curve (%)
90% $946
 —
100% $1,051
 100
110% $1,156
 200
Net Debt (in thousands)  
  
       
Measure Threshold Target Max
Net Debt $7,833
 $7,662
 $7,436
Payout Curve —% 100% 200%

All financial objectives were established by the Compensation Committeein lieu of the BoardConsolidated AOI metrics. STI targets as a percentage of Directorsbase salary are 100% for the CEO, and by the Board of Directors150% for the Executive Chair, and between 70% and 100% for the Company's other executive officers, in each case upon recommendation of the Compensation Committee.
All STI objectives had an appropriate mix of financial and individual metrics. The STI component of compensation was subject to a maximum award limit equal to 200% of the target STI award of the plan participant and was paid upon achievement of maximum financial performance as shown above.officers. STI payouts could be adjusted to account for unusually negative or positive financial results due to events outside of the control of the
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Company's executive officers. All STI objectives had a mix of financial and individual metrics, which is presented in the table below.
LevelFinancial PerformanceIndividual MBOFinancial Metric Mix
Corporate80%20%25% Consolidated AEBITDA25% Consolidated AOI30% Net DebtN/A
Global Gaming80%20%20% Consolidated AEBITDA30% Gaming AEBITDA10% Net Debt20% Gaming Gross Margin
Global Lottery80%20%20% Consolidated AEBITDA50% Lottery AOI10% Net DebtN/A
PlayDigital80%20%N/A40% PlayDigital AEBITDAN/A40% PlayDigital Revenue Growth
STI Targets as a %
All financial objectives were established by the Compensation Committee of base salary:the Board for the Executive Chair of the Board and the CEO, and by the Board for the other executive officers, upon recommendation of the Compensation Committee.

CEO — 150%
Senior Management — 87.5% to 100%
Long-Term Incentive Compensation Plans

The Company’s long-term incentive compensation (“LTI”) compensation plan provides for manyseveral different types of stockstock-based awards including stock options, performance-based restricted stock and restrictedRSUs, both time and performance-based. No stock awards. Annual awards to employeesoptions were granted under the Company's LTI plans are 100% performance-based restricted stock.plan in 2023.


The principal purposepurposes of granting LTI awards isare to assist the Company in attracting and retaining employees,executive officers, to provide a market-competitive total compensation package, and to motivate employeesrecipients to increase shareholder value by enabling them to participate in the value that was created, thus aligning their interests with those of itsthe Company’s shareholders. LTI payouts could be adjusted to account

Grants of PSUs

PSUs were granted in 2023 that will vest 50% in 2026 and 2027, respectively, based on cumulative performance over the 2023-2025 period and continued service through the applicable vesting date. The awards provide for unusually negative or positive financial results due to events outsidefull vesting in the event of the controlparticipant’s death, and pro rata vesting in the event of disability.

The vesting of the recipients. The LTI plans for 2017 are based upon threePSUs granted in 2023 is tied to the following performance metrics: Three-Year
–Cumulative Consolidated Adjusted EBITDA (profitability measure), Net Debt (use of cash),Free Cash Flow;
–Cumulative Consolidated AEBITDA, Cumulative Global Lottery AEBITDA less Capital Expenditures, or Cumulative Global Gaming AEBITDA less Capital Expenditures, depending on the employee’s respective business unit; and
–Relative Total Shareholder Return (performance(“TSR”) performance against peers).the Russell 3000 Mid Cap Market Index.

AEBITDA and TSR were selected as performance measures to provide a strong focus on profit and alignment to shareholder returns, respectively. Adjusted Free Cash Flow is designed to focus on deleveraging and reducing the Net Debt. AEBITDA and Adjusted Free Cash Flow performance are independently scored using separate payout curves; the outcomes of which could result in vested shares that are greater than, equal to, or less than the original amount of total target shares. The performance factor is the product of the individual AEBITDA and Adjusted Free Cash Flow payout curves, multiplied by the relative TSR performance factor.

Actual vesting under the award can range from 0% to 145% of target if all maximum performance targets are met. Financial objectives were established by the Compensation Committee and reviewed by the Board, consistent with the authorization provided by the Company’s shareholders.

The table below sets forth the PSUs granted pursuant to the Company’s compensation plans to its shareholders. Company-related LTI targets throughout individual LTIexecutive officers during 2023.
Name
No. of Target
Shares
Grant Date Fair ValueVesting
Period		Grant
Date		Per Share Market Price on Date of Grant
Marco Sala, Executive Chair73,260 $28.36 2023-202705/05/23$27.49 
Vincent Sadusky, Chief Executive Officer164,835 $28.36 2023-202705/05/23$27.49 
Massimiliano Chiara, Chief Financial Officer73,260 $28.36 2023-202705/05/23$27.49 
Other executive officers174,910 $28.36 2023-202705/05/23$27.49 
18,498$33.30 2023-202707/27/23$33.30 
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Vesting of RSUs and PSUs

The table below sets forth the PSUs that vested pursuant to the Company’s compensation plans for 2017 are based on economic consolidated performance as follows:its executive officers during 2023.
NameGrant
Date		Vest DateNo. of
Shares		Per Share Market Price on Vest Date
Marco Sala, Executive ChairMay 18, 2021May 1, 2023102,201 $28.66 
Massimiliano Chiara, Chief Financial OfficerMay 18, 2021May 1, 202360,693 $28.66 
Other executive officersMay 18, 2021May 1, 2023135,371 $28.66 
a total consolidated EBITDA of at least 90%
PSU Performance Results

A portion of the targeted total consolidated EBITDA;

a ratio calculated betweencompensation included in the consolidated net debt and consolidated EBITDA; and

Total ShareHolder Return (“TSR”) againstequity awards section of the Russell Mid Cap Market Index.

Awardsexecutive compensation table reflects PSUs granted in 2017 will vest2021 where the measurement period for the performance conditions was completed in 2023. Vesting was dependent on cumulative performance over the three financial years ended on December 31, 2023 and continued service until May 2024 for 50% in 2020of the PSUs earned and May 2025 for the remaining 50% in 2021 based on 2017, 2018,of PSUs earned.
WeightingPerformance % of TargetPayout %
Corporate
Adjusted Free Cash Flow75%134%116%
Consolidated AEBITDA25%110%116%
Relative TSR Modifier154%125%
Corporate performance results (% of target)(1)
145%
Corporate total units earned (% of maximum)(2)
100%
Global Lottery
Adjusted Free Cash Flow35%134%116%
Global Lottery AEBITDA less Capital Expenditures65%120%116%
Relative TSR Modifier154%125%
Global Lottery performance results (% of target)(1)
145%
Global Lottery total units earned (% of maximum)(2)
100%
Global Gaming (3)
Adjusted Free Cash Flow35%134%116%
Global Gaming AEBITDA less Capital Expenditures65%75%—%
Relative TSR Modifier154%125%
Global Gaming performance results (% of target)(1)
51%
Global Gaming total units earned (% of maximum)(2)
35%
(1) The performance results calculated as the sum of (a) the weighted performance of Adjusted Free Cash Flow Payment Matrix (116%) and 2019 performance.(b) either the weighted performance of Consolidated AEBITDA, Global Lottery AEBITDA less Capital Expenditures, or .Global Gaming AEBITDA less Capital Expenditures. This calculated payout % is then multiplied by the relative Total Shareholder Return percentile payout (125%).
Part 1: Vesting Based on 2017 – 2019 Performance in 2019 and 2020
Step 1:
Net Debt /EBITDA Ratio>3.91 
Greater than
3.80 but less
than or equal
to 3.91
 
Greater than
3.69 but less
than or equal
to 3.80
 
Less than or
equal to 3.69
% Vesting—% 50% 75% 100%
Step 2: 
Adjusted EBITDA Target $5.699 billion<90% 90% 100% 105%
% Vesting—% 33.5% 100% 110%
Linear interpolation shall(2) The maximum number of shares to be used between the applicable Adjusted EBITDA targets set forth above. In no event will the Adjusted EBITDA Payment Factor exceed 1.100.
Step 3: 
TSR Modifier
<25th
 Percentile
 
60th Percentile
 
>75th
 Percentile
% Vesting75% 100% 125%
 Actual vestingearned under the plan can range from 0% to 137.5% if all maximum targetsis 145% of target.
(3) PlayDigital executive officers are met.included in the Global Gaming LTI plan.

The LTI plans permit
Marco Sala’s Co-Investment Plan

In 2021, the Company entered into a Co-Investment Plan with Marco Sala. Mr. Sala’s appointment to clawback or to make other, similar adjustments to the plans following vesting of the applicable awards in the event of erroneous financial statements or incorrect data contained therein.

Executive Stock Ownership Requirements
On July 28, 2015, the Board approved share ownership guidelines for Senior Vice Presidents and above. Below is a summary of the guidelines.
Policy Effective Date:July 28, 2015
Stock Ownership Guidelines (SOG) apply to:Share plans starting in 2015
Any award vesting after the policy date
Options not vested as of Effective Date (2013 and 2014)
Covered Executives:
CEO
Business Unit CEOs and Executive Vice Presidents
Senior Vice Presidents
Ownership Requirement Multiple of Base Salary:
CEO - 5X
Business Unit CEOs and Executive Vice Presidents - 3X
Senior Vice Presidents - 1X
Shares Included in Ownership:
All shares beneficially owned regardless of whether they are from a plan of the Parent or purchased on the market
Vested shares held in a trust to benefit the executive or family members
Shares under the legacy GTECH plans where vesting has been determined (earned) but shares have not been released
Note that Unearned Performance Shares do not count towards the Stock Ownership Guidelines until earned. (i.e., Performance Factor has not been determined/applied)
Legacy GTECH Holding Requirements:Holding requirements stated in legacy GTECH Plans are still in effect, in addition to the new Stock Ownership Guidelines
Additional Holding Requirement - Not in Compliance with Stock Ownership Requirements:50% of after tax options or shares that vest or are exercised after the effective date of the Stock Ownership Guidelines
Additional Holding Requirement - In Compliance with Stock Ownership Requirements:20% of after tax options or shares that are exercised or vest for a period of 3 years following the exercise or vest date
Director Stock Ownership Requirements
Beginning November 10, 2020 (or five years after joining the Board if such date is subsequent to November 10, 2020), each non-employee memberexecutive chair of the Board, effective January 24, 2022, did not impact any of the vesting conditions for awards granted under the plan.The Co-Investment Plan is expectedintended to align Mr. Sala’s interests with those of the Company’s shareholders. Under the Co-Investment Plan, the Company matched Mr. Sala’s commitment to hold for as long as they remain on the Board,his ordinary shares on a 1:1 basis (up to 470,000 shares), comprising a matching grant of up to 345,000 shares, awarded half in PSUs and half in stock options on May 11, 2021, and a matching grant of up to 125,000 shares awarded in PSUs on July 28, 2021.

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The vesting of certain PSUs and options awarded under the Co-Investment Plan is dependent upon achievement of certain performance conditions for the measurement period ended December 31, 2023 and continued service until May 2024. Upon shareholders’ approval of the Parent that have a fair market value equalCompany’s 2023 financial statements at the AGM in May 2024, these shares will vest at target:
Metric(1)
Type of ConditionPerformance % of TargetTarget Performance Shares Subject to MetricTarget Performance Options Subject to Metric
Consolidated Adjusted Free Cash FlowPerformance134%64,688 64,688 
Consolidated Adjusted EBITDAPerformance110%21,562 21,562 
Deleverage AchievementPerformance
88%(2)
62,500 — 
Portfolio Analysis AchievementPerformanceN/A31,250 — 
Diversity and InclusionPerformanceN/A31,250 — 
211,250 86,250 
(1) The PSUs and stock options subject to the Absolute TSR financial metric were excluded since the measurement period ends upon approval of the Company’s 2023 financial statements at least three times the base annual retainer amount then in effect for non-employee directors.2024 AGM.
(2) The current base annual retainer amountdeleverage achievement metric is $100,000.above target at 88% of the Company’s target Leverage Ratio at December 31, 2023.


Amounts accrued for pensions and similar benefits
 
At December 31, 2017,2023, the total amount accrued by the Company to provide pension, retirement, or similar benefits was $16.3for its executive officers is $0.2 million.

Severance Arrangements

Certain executive officers of the Company are entitled to severance payments and benefits if such executive officer’s employment is terminated other than for cause under either individual employment agreements or pursuant to provisions of national collective agreements for executives of the industry.

United States Executive Officers

The employment agreements with United States-based executive officers (i.e., Messrs. Fornaro, VincentCeladon, Chiara, Gunn, Rishton, Sadusky, and Celadon)Spears and Mses. Costa and Montgomery) generally provide for the following benefits upon a termination other than for “cause.”“cause”:
•18 months of base salary, bonussalary;
•18 months of STI (based upon a three-year average), and perquisites;
•18 months tax preparation;
•any accrued but unpaid bonusSTI earned for the prior fiscal year;
•a prorated bonusSTI for the current fiscal year;year based on actual performance;
•18 months of health and welfare benefitbenefits continuation; and
•18 months following termination of employment to exercise vested stock options.options, unless the options otherwise expire under the original terms and conditions of the award during such 18-month period.



In addition, upon the United StatesStates-based executive officer’s death or disability, the executive officer will be entitled to the following benefits under the employment agreements:
•18 months of base salary;
•18 months of bonusSTI compensation (based upon a three-year average) and perquisites;
•18 months of tax preparation;
•any accrued but unpaid bonusSTI earned for the prior fiscal year;
•a prorated bonusSTI for the current fiscal year;year based on actual performance;
•24 months of health and welfare benefitbenefits continuation; and
•18 months following termination of employment to exercise vested stock options.options, unless the options otherwise expire under the original terms and conditions of the award during such 18-month period.
 
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Upon anUnited States-based executive officer’s retirement from the Company, thesethe employment agreements also provide for accelerated vesting of a portion of an executive officer’s outstanding performance share awardsRSUs and PSUs and an ability to exercise vested options until the expiration date.

Italian Executive Officers
Pursuant to the terms of the Italian national collective agreement for executives of the industry (Contratto(Contratto Collettivo Nazionale di Lavoro per i Dirigenti di Aziende produttrici di beni e servizi), Messrs. Sala (30% of employment)servizi), Ascoli Cairoli, and Di LoretoDrago are generally entitled, unless ad hoc agreements provide differently, to the following severance payments and benefits upon a termination of employment by LottomaticaIGT Lottery S.p.A. for Messrs. Sala, Ascoli and Di Loreto and by(formerly Lottomatica Holding s.r.l. for Mr. CairoliS.r.l.) other than for “cause,” a resignation for “good reason,” or due to the executive officer’s death or disability:
•severance pay determined under the collective agreement;
•any accrued but unpaid bonusSTI earned for the prior fiscal year; and
•a notice indemnity equal to a minimum of six and a maximum of 12 months of total base salary and STI compensation.
 
Under the Lottomatica service agreement, Executive Chair Service and Severance Arrangements

Mr. Sala’s base salary as Executive Chair of the Board is EUR 272,003.55 split£523,732 ($630,000) and €252,720 ($270,000) under his service agreements with the Parent (70%) and IGT Lottery S.p.A. (30%), respectively. In connection with his appointment as Executive Chair, certain arrangements in 13 equal gross installments, plus additional benefits, including a company car. Mr. Sala also receives an integrative pension fund in accordanceSala’s service agreement with Italian law.the Parent were restructured.

Mr. Sala also has anSala’s service agreement with the Parent (70% of employment). The CEO’s service agreement with the Parent can be terminated by either party on the giving of threesix months’ notice, if not, immediately for cause. If terminated other than for cause, Mr. Sala is entitled to a severance payment worth three years of base salary and short-term incentive assumed at top level as of the termination date. The CEO cannot resign without prior approval from the Board. Following termination of employment, for a period of 24 months thereafter, Mr. Sala is subject to certain restrictive covenants, including restrictions on soliciting or providing goods or services to certain customers, employing or enticing away from the group certain persons employed by any group company or being involved with any business in competition with any group company, among others. As consideration for compliance with the post-employment restrictive covenants, Mr. Sala is entitled to a fixed payment amount upon termination of employment equal to the GBP equivalent of $7.5 million.

According to a severance agreement entered into between the Company and Mr. Sala, subject to Mr. Sala continuing to work during his notice period, he is entitled to a severance payment equal to one year’s base salary (plus any amounts owed to Mr. Sala) and a pro-rated STI payment as of the date of termination based on the projection of the Company’s full year business and financial results. The severance payment is subject to the Company determining that Mr. Sala is a good leaver which includes, but is not limited to, circumstances involving redundancy, permanent incapacity, or retirement with the agreement of the Company. No severance payment will be made if Mr. Sala’s employment is terminated for cause.
Under thisMr. Sala’s IGT Lottery S.p.A. service agreement (30% of employment), he is entitled to the CEO shall be paid a salary of £450,520 per annumseverance payments and this salary shall be reviewed by the Board annually, but the Parent is under no obligation to award an increase in salary. The Parent will also fully reimburse the CEO for any expenses incurred as a result of his appointment.

CEO Co-Investment Award

Asbenefits described in the Company's Form 20-F filed on April 29, 2016,“Italian Executive Officers” section above.
Change in 2015Control

In the Company matched Mr. Sala’s commitment 1:1 (upevent of a change in control, the Equity Incentive Plan provides for full accelerated vesting of all outstanding share options, share appreciation rights and full-value awards (other than performance-based awards), when a replacement award is not provided. In addition, any performance-based award for which a replacement award is not issued will be deemed to 500,000 shares), half in additional sharesbe earned and half in additional stock options,payable with all applicable performance metrics deemed achieved at the greater of: (a) the applicable target level; or (b) the level of achievement as long asdetermined by the conditions below were met:

Mr. Sala’s continued service with the Company in his current role until the date of approval of the Company's 2017 financial statements;
Mr. Sala’s continued ownership of 500,000 ordinary shares during the service period noted above;
The Parent’s ordinary share price being equal to or greaterCompensation Committee not later than $16.83 with the final price based on an average three months stock price ending on the date of approval of the Company's 2017 financial statements; and
Re-investment of 50% of the total committed and awarded shares (considering also cash proceeds for exercised stock options) (after tax) in the next 3-years co-investment plan if in 2018 confirmed in the role for another three year mandate.
According to the terms of Mr. Sala's co-investment award, if all conditions are met, all shares and all options will fully vest on the date of approval of the Company's 2017 financial statements, and options will then be subject to an additional four year exercise period (option strike price based on closing price on the day of grant). Because re-investment cannot be made prior to confirmation by shareholders of Mr. Sala's role, the Company expects vesting to occur on or about the date of the general shareholder meetingchange in 2018.control, taking into account performance through the latest date preceding the change in control as to which performance can practically be determined, but in no case, later than the end of the applicable performance period. In the event of the termination of service of a participant other than for cause within 24 months following a change in control, all replacement awards held by such participant will fully vest and be deemed to be earned in full, with all applicable performance metrics deemed achieved at the greater of: (a) the applicable target level; or (b) the level of achievement as determined by the Compensation Committee taking into account performance through the latest date preceding the termination of service as to which performance can, as a practical matter, be determined (but not later than the applicable performance period).


The CEO does not receive any other benefits under his employment contract with the Parent.
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C.Board Practices
 
Pursuant to the Articles, the numberAs of directors is set at 12, unless and until otherwise decided byMarch 7, 2024, the Board (where, for the periodconsists of three years from the date of adoption of the Articles, not less than three-quarters of the directors present shall have voted in favor of such decision). The current directors, with the exception of Heather J. McGregor,12 members who were elected upon effectiveness of the Mergers. Heather J. McGregor was appointed to the Board effective March 8, 2017.by shareholder vote on May 9, 2023. See “Item 6.A. Directors and Senior Management and Employees”” above. The term of office of the current Board will expire three years fromat the dateconclusion of the Mergers.next annual general meeting of the Company. Each director may be re-elected at any subsequent general meeting of shareholders. None of the Parent'sParent’s directors have service contracts with the Parent (or any subsidiary) providing for benefits upon termination of employment as a director.
 
The directors are responsible for the management of the Company’s business, for which purpose they may exercise all of the powers of the Parent whether relating to the management of the business or not. As described above in section “Item 6.A. Directors and Senior Management and Employees,,” as of March 7, 2024, the Board currently comprisesis comprised of: (i) seven (7) independent directors including James F. McCann, the Vice Chairperson of the Board and Lead Independent Director; and (ii) five (5) non-independent directors, including the Parent’s CEO, Vincent Sadusky, the Parent’s CFO, Massimiliano Chiara, the Board’s Executive Chair, Marco Sala;Sala, Lorenzo Pellicioli, and Marco Drago. Messrs. Drago and Pellicioli are the former CEOChair Emeritus and Chair of IGT, Patti S. Hart; three directors appointed bythe Board, respectively, of De Agostini, the Parent’s controlling shareholder,shareholder. Mr. Sala also serves on the board as CEO of De Agostini; and (ii) seven independent directors.Agostini.
 
On April 7, 2015, the Board appointed Philip G. Satre as non-executive chairman of the Board. The Board also appointedmaintains the following committees: (1)(i) an Audit Committee, (2)Committee; (ii) a Nominating and Corporate Governance Committee,Committee; and (3)(iii) a Compensation Committee. The membership of each committee is composed of not less than three independent members, as determined by the Board, and meets the independence and eligibility requirements of the NYSE and applicable law. The members of each committee are appointed by and serve at the discretion of the Board until such member’s successor is duly elected and qualified or until such member’s earlier resignation or removal. The chairperson of each committee is appointed by the Board.


The Audit Committee
 
The Parent’s Audit Committee is primarily responsible for, among other things, assisting the Board'sBoard’s oversight of:


Ÿ•the integrity of the Parent’s financial statements;statements and forecasts;
Ÿ•the Parent’s compliance with legal and regulatory requirements;
Ÿ•the independent registered public accounting firm’s qualifications and independence; and
Ÿ•the performance of the Parent’s internal audit function and independent registered public accounting firm.firm; and
•the Parent’s internal controls over financial reporting and systems of disclosure controls and procedures, including the review of related party transactions and other accounting and treasury matters.
 
The Audit Committee oversees risk assessment and risk management, including financial, compliance, strategic and operational risk exposures, including sustainability and climate-related risk, cybersecurity, and information security. The Audit Committee and managementmaymake recommendations to the Board for any changes, amendments, and modifications to the Parent’s ethical codes of practice, such as the Code of Conduct and the Code of Ethics, and promptly disclosing any waivers for directors or executive officers, as required by applicable law.

The Board reviews the adequacy and effectiveness of the Company’s enterprise risk management program, including the approval of risk appetites for the Company’s key risks. The Audit Committee receives periodic reports from management, reviews updates to the Company’s principal and emerging risks, and conducts deep dive reviews of risk management activities.

Since 2022, the Audit Committee also holds dedicated sessions to receive and discuss updates and demonstrations on data protection and cybersecurity and engages with management on the Company’s incident prevention plans and policies, threat-detection measures and prompt response to malicious activity and attacks to ensure the Company is well placed to meet the evolving risks and external threats in this area.

The Audit Committee currentlyregularly meets with the external auditor, the CFO, the General Counsel, the CAO, the Chief Compliance Officer and Internal Audit in separate, closed sessions. The Audit Committee regularly reports to the Board on the matters for which it has oversight responsibility.

As of March 7, 2024, the Audit Committee consists of Vincent L. Sadusky (chairman)Maria Pinelli (chairperson), Paget L. Alves,Alberto Dessy, and Heather J. McGregor. Each member of the Audit Committee must meet the financial literacy requirement, as such qualification is interpreted by the Board in its business judgment, or must become financially literate within a reasonable period of time after his or her appointment to the Audit Committee. In addition, at least one (1) member of the Audit Committee must have accounting or related financial management expertise, as the Board interprets such qualification in its business judgment. See “Item 16.A. 16A.
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Audit Committee Financial Expert”Expert” of this annual report on Form 20-F for additional information regarding Audit Committee financial experts.
 
The Compensation Committee
 
The purpose of the Compensation Committee is to dischargedischarges the responsibilities of the Board relating to compensation of the Parent’s executives and directors. The Compensation Committee is responsible for, amongdirectors and other things:human capital management matters, which include:


Ÿ•ensuring that provisions regarding disclosure of information, including pensions, as set out in the Large and Medium-
sizedMedium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (U.K.), are fulfilled;
Ÿproducing a report of the Parent’s remuneration policy and practices to be included in the Parent’s U.K. annual report and ensure that it is approved by the Board and put to shareholders for approval at the annual general meeting in accordance with the Companies Act 2006;
Ÿ•producing a report of the Parent’s remuneration policy and practices to be included in the Parent’s U.K. Annual Report and Accounts and ensuring that it is approved by the Board and put to shareholders for approval at the annual general meeting in accordance with the CA 2006;
•reviewing management recommendations and advising management on broad compensation policies, such as salary
ranges, deferred compensation, incentive programs, pension, and executive stock plans;
Ÿ•reviewing and approving goals and objectives relevant to the CEO’s compensation, evaluating the CEO’s performance
in light of those goals and objectives and reviewing the results of such evaluations with the Board, and setting the CEO’s compensation level;level based on this evaluation;
•reviewing and approving the compensation, incentive compensation plans and equity-based plans of the Company’s Executive Chair (if any);
Ÿ•making recommendations to the Board with respect to non-CEO executive officer (excluding the Executive Chair) compensation, incentive compensation plans and equity-based plans that are subject to Board approval;
•monitoring issues associated with CEO succession (in non-emergencies) and management development.development of the CEO and other senior executives;

•monitoring and assessing performance conditions applicable to any long- and short-term incentive plans adopted by the Company;
•reviewing and recommending the amount of compensation paid to directors for Board and committee service and for serving as the Chairperson of a committee or Chairperson of the Board;
•creating, modifying, amending, terminating, and monitoring compliance with share ownership guidelines for directors and executives of the Company;
•overseeing, reviewing, monitoring, and, where appropriate or required, making recommendations to the Board on human capital management matters, including culture and employee engagement and diversity, equity and inclusion.
•overseeing the design, review, and amendment of the Company’s policies relating to anti-harassment and coercion, as appropriate, and providing oversight of the enforcement of such policies by People & Transformation;
•exercising any discretion or judgment on compensation issues in accordance with the remuneration policies of the Company, including any clawback and malus policies adopted by the Company;
•overseeing, in conjunction with other Board committees delegated with such authority (if any), engagement with investors/shareholders and proxy advisory firms on executive compensation matters; and
•together with the Audit Committee, evaluating risks associated with the Company’s employees and employee-benefit related risks, including the Company’s compensation and benefits policies, plans, and programs and discussing with management procedures to identify and mitigate such risks.
The Compensation Committee currentlyalso reviews, monitors, and makes recommendations to the Board on talent tracking, development, and retention through customized training and career progression plans, and succession planning. Workplace safety and employee health and well-being ranked to the level of the Compensation Committee’s attention.

As of March 7, 2024, the Compensation Committee consists of Gianmario Tondato da Ruos (chairman)(chairperson), Alberto Dessy, and Paget L. Alves.Samantha Ravich.


The Nominating and Corporate Governance Committee
 
The Nominating and Corporate Governance Committee is responsible for, among other things:


Ÿ•recommending to the Board, consistent with criteria approved by the Board, the names of qualified persons to be
nominated for election or re-election as directors (including, in consultation with the Compensation Committee, the CEO’s successor) and the membership and chairmanchairperson of each Board committee;
Ÿ
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•reviewing each director’s character and integrity prior to appointment and in connection with re-nomination decisions and Board evaluations;
•reviewing, at least annually, the appropriate skills and characteristics required of Board members in the context of the current composition of the Board and its committees;
•periodically reviewing the size, composition (including diversity), and leadership of the Board and committees thereof and recommending any proposed changes to the Board;
•reviewing directorships in other public companies held by or offered to directors and senior officers of the Parent;Parent with a view to ensuring that such external positions do not have a negative impact on the performance of such director;
Ÿmaking recommendations to the Board for any changes, amendments and modifications to the Parent's code of conduct and promptly disclosing any waivers for directors or executive officers, as required by applicable law;
Ÿ    monitoring•reviewing and reassessing from time to time the Parent'sParent’s Corporate Governance Guidelines and recommending any
changes to the Board;
Ÿ•determining, at least annually, the independence of each director under the independence requirements of the NYSE
and any other regulatory requirements and report such findings to the Board;
Ÿ•overseeing, at least annually, the evaluation of the performance of the Board and each Board committee; andcommittee, as well as individual directors where appropriate;
Ÿ•assisting the Parent in making the periodic disclosures related to the Nominating and Corporate Governance
Committee and required by rules issued or enforced by the SEC.SEC, the CA 2006, and any other rules and regulations of applicable law;
•periodically reviewing and making recommendations to the Board concerning CEO emergency succession plans;
•giving due consideration to the Parent’s legal obligations in the context of nominations and corporate governance, including any changes in applicable law and to recommendations and associated guidance from advisors, professional bodies, and proxy advisory firms;
•overseeing the Company’s strategy on sustainability and monitoring implementation of the Company’s sustainability program, including review of the Company’s public disclosures regarding ESG matters; and
•overseeing, in conjunction with other Board committees delegated with such authority (if any), engagement with investors/shareholders and proxy advisory firms on ESG matters.

The Nominating and Corporate Governance Committee currentlyperiodically reviews: (i) the size, composition (including from a personal and professional diversity standpoint), working and leadership of the Board and its committees; and (ii) key attributes of directors (including eligibility, independence, and Audit Committee members’ financial literacy/expertise) to detect any gaps against market benchmarks — including the U.S. Spencer Stuart Board Index and S&P MidCap 400 Index — and suggest adjustments, where appropriate. The Nominating and Corporate Governance Committee also reviews proposed shareholder resolutions, proxy advisor guidelines and voting recommendations, as well as voting results, and oversees IGT’s global sustainability plan and its integration into business plans.
As of March 7, 2024, the Nominating and Corporate Governance Committee consists of James F. McCann (chairman)(chairperson), Alberto Dessy,Ashley M. Hunter, and Philip G. Satre.Samantha Ravich.
 
The charters for each of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee are available at www.igt.com; information contained thereon, including each committee charter, is not included in, or incorporated by reference into, this annual report on Form 20-F.

Indemnification of Members of the Board
 
The Parent has committed, to the fullest extent permitted under applicable law, to indemnify and hold harmless (and advance any expenses incurred, provided that the person receiving such advancement undertakes to repay such advances if it is ultimately determined such person was not entitled to indemnification), each of the Parent’s and IGT’s and theirits subsidiaries’ present and former directors, officers, and employees against all costs and expenses (including attorneys’ fees), judgments, fines, losses, claims, damages, liabilities, and settlement amounts paid in connection with any claim, action, suit, proceeding, or investigation arising out of or related to such person’s service as a director, officer, or employee of the Parent or International Game Technology or any of their subsidiaries at or prior to the completion of the Mergers.its subsidiaries.

The Articles and IGT’s certificate of incorporation and bylaws provide, and will continue to provide for the six years following the completion of the Mergers, for the exculpation and indemnification of, and advancement of expenses to, the Parent's and IGT's directors, officers and employees.


D.        Employees
 
AtAs of December 31, 2017,2023, IGT conducted business in more than 100 jurisdictions around the world and had 11,016 employees. The Company believes that its relationship with its employees is generally satisfactory. Most of IGT’s employees are not represented by any labor union. However, labor agreements are common in some countries around the world, and the Company conducted business in approximately 100 countries on six continentsrecognizes such arrangements and had 12,278 employees.works closely with the applicable work councils. Relations with the Company’s mid-level employees and production workers in Italy are subject to Italy’s national collective bargaining agreement for the metalworks industry. On December 1, 2000, a predecessortertiary sector,
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distribution, and production workers supplementing the terms of the relevant national collective bargaining agreement.services (CCNL Terziario, della Distribuzione e dei Servizi). Relations with the Company’s executives in Italy are subject to the national collective bargaining agreement for executives in the metalworks industry. Mostindustry companies producing services (CCNL Dirigenti Industria). Since inception of the Company’s employees are not represented by any labor union. The Company believes that its relationship with its employees is generally satisfactory. During the last four years, the Companythese agreements, IGT has not experienced any strike that significantly influenced its business activities. In the United States, three organizational(3) bargaining units, totaling less than 100 employees, have elected representation by third-party union organizations. Collective bargaining agreements are in place with two of the organizational units and the Company is currently negotiating in good faith a collective bargaining agreement with the third organizational unit.


Human Capital

IGT recognizes human capital development as a critical strategic process and actively builds employee skills and capabilities in an agile and outcome-focused way. In addition to offering well-structured and competitive reward and benefit packages designed to attract and retain the employees, the Company invests in training and career development opportunities to support its employees in their careers and strives to create a fair and inclusive culture that values unity, diversity, and belonging in its people, players, customers, and communities.

Career development is a partnership between each employee, their manager, and the Company and requires a conscious choice to grow and stretch individual capabilities and further a professional career. Employees and managers have a responsibility to drive their individual growth and development, with IGT providing the resources necessary to achieve these goals. New capabilities are developed through learning experiences, specific trainings, coaching, mentoring, and feedback. Individual Development Plans, aligned to personal growth goals and business objectives, enable employees to develop the most needed skills to reach individual goals. To support development, IGT has designed upskilling and reskilling plans to ensure people’s employability and to keep the Company competitive in the market.

Diversity, Equity, and Inclusion

IGT understands that its employees’ unique backgrounds, experiences, and perspectives should reflect its global customers and the local communities where the Company operates. Diversity must be supported by a fair and inclusive culture that enables all employees to feel valued, respected, engaged, and empowered to contribute to the business.

The Company is operated under fourestablished the Office of Diversity, Equity, & Inclusion (“DE&I”) to guide strategic DE&I initiatives and ensure that these topics continue to stay in focus and are embedded throughout the Company’s business segmentsprocesses.

Employees by Segment
 At December 31,
202320222021
Global Lottery4,187 4,166 4,404 
Global Gaming4,601 4,410 4,258 
PlayDigital730 745 435 
Corporate and Other1,498 1,465 1,389 
 11,016 10,786 10,486 

The Company maintains three (3) primary business segments: Global Lottery; Global Gaming; and PlayDigital supported by central corporate support functions.

Employees by Segment
 At December 31,
 2017 2016 2015
North America Gaming and Interactive (1) (2)
4,777
 6,999
 6,533
North America Lottery2,608
 2,482
 2,514
International (2)
1,542
 813
 781
Italy (1) (2)
1,950
 1,057
 1,714
Corporate Support (1)
1,401
 1,262
 1,001
 12,278
 12,613
 12,543
1A shift in population from Italy in 2015 to North America Gaming•The Company had 60, 101, and 93 interns and Interactive and Corporate Support is attributable to a change in data collection methodology in how the organizational hierarchy is applied to the employee population. Headcount will be reported in line with 2016 methodology results on a going-forward basis.
2In 2017, a re-organization transferred employees from North America Gaming and Interactive to the International and Italy organizations.

The chart above includes 172, 151, and 167 temporary employees as at December 31, 2017, 20162023, 2022, and 2015,2021, respectively.

At•As of December 31, 2017, 31%2023, the proportion of women among permanent employees were femalewas 32% and 18%22% of employees with the title of vice president or higher were female.
•In 2017, 8402023, 874 employees left the Company voluntarily. The staff voluntary attrition rate was 6.74%8%, compared to 7.47%11% in 20162022 and 8.23% in 2015.2021. Additionally, 708235 employees had their employment involuntarily terminated, 4785 of which were workforce reductions.



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E.Share        Share Ownership
 
Executive Stock Ownership Requirements
On July 28, 2015, the Board approved share ownership guidelines for Senior Vice Presidents and above. These executive share ownership guidelines were most recently amended on October 25, 2023. Below is a summary of the guidelines.
Policy Effective Date:July 28, 2015
Stock Ownership Guidelines apply to:Share plans starting in 2015
Any award vesting after the Policy Effective Date
Unvested Options as of the Policy Effective Date
Covered Executives:Executive Chair
CEO
Business Unit CEOs and Executive Vice Presidents
Senior Vice Presidents
Ownership Requirement Multiple of Base Salary:Executive Chair 5x
CEO - 5x
Business Unit CEOs and Executive Vice Presidents - 3x
Senior Vice Presidents reporting to the CEO - 1x
Senior Vice Presidents not reporting to the CEO - 0.5x
Shares Included in Ownership:
All ordinary shares in the Company beneficially owned (regardless of whether such shares were acquired (i) on the market, (ii) through the exercise of share options, or (iii) through the vesting of other equity awards), including shares owned outright and shares held in trust for the benefit of the executive or their family members.

This includes any shares (i) allocated to an executive pursuant to a share allocation plan or other equity award plan of the Company or any of its predecessor companies that have vested, or (ii) resulting from the exercise of share options, but in either case where shares have not yet been delivered to the executive.

Note that Unearned Performance Shares do not count towards the Stock Ownership Guidelines until earned. (i.e., Performance Factor has not been determined/applied)
Legacy Plan Holding Requirements:Holding requirements stated in Legacy Plans are still in effect, in addition to the new Stock Ownership Guidelines
Additional Holding Requirement - Not in Compliance with Stock Ownership Requirements*:
Minimum number of shares equal to 50% of those resulting from each particular vesting of awards or from each exercise of share options (in either case net of any shares withheld or sold to cover tax withholding requirements, or exercise price relating to the vest or exercise, or broker fees (if any)) until that individual has met their applicable target level of share ownership defined under “Ownership Requirement Multiple of Base Salary”.
Additional Holding Requirement - In Compliance with Stock Ownership Requirements*:
Minimum number of shares equal to 20% of those resulting from each particular vesting of awards, or from the exercise of share options (in either case net of any shares withheld or sold to cover tax withholding requirements, or exercise price relating to the vest or exercise, or broker fees (if any)) for at least 3 years from the date of vest or exercise of such awards or share options.
Executive DirectorsEach Executive Director must hold all net settled shares received under a plan of the Parent for a period of at least five years from the date of grant. The period expires on the fifth anniversary of the date of grant, provided the relevant director meets their holding requirements under the Executive Share Ownership Guidelines.
Executive Director Post-Employment Holding RequirementEach Executive Director is required to hold: (i) for the period beginning upon cessation of their employment and ending on the first anniversary of such cessation, such number of shares equal to the target level defined in the Executive Share Ownership Guidelines (or if they hold a lower number of shares at the time of cessation of their employment, such lower number of shares); and (ii) for the period beginning upon the first anniversary of cessation of their employment and ending on the second anniversary of such cessation, such number of shares equal to 50% of the target level under these Executive Share Ownership Guidelines (or if they hold a lower number of shares at the first anniversary of cessation of their employment, such lower number of shares).
*Additional Holding Requirement only applicable to Covered Executives who are not Executive Directors.
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Director Stock Ownership Requirements
Beginning November 10, 2020 (or five years after joining the Board if such date is subsequent to November 10, 2020), each non-executive director is expected to hold, for as long as they remain on the Board, ordinary shares of the Parent that have a fair market value equal to at least three (3) times the base annual retainer amount then in effect for non-executive directors. The current base annual retainer amount is $100,000. Non-compliant non-executive directors are prohibited from selling shares of the Parent until they have met their applicable target level of share ownership, excluding any shares sold to cover any applicable tax withholding requirements, the exercise price of any share options, nominal value of shares, or broker fees (if any).

The following table sets forth information, as of March 15, 2018,7, 2024, regarding the beneficial ownership of the Parent'sParent’s ordinary shares, including:
 
•each member of the Board;
•each executive officer and senior consultant of the Parent; and
•all members of the Board, and executive officers, and senior consultant, taken together.

Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power over securities. Except in cases where community property laws apply or as indicated in the footnotes to this table, the Parent believes that each shareholder identified in the table possesses sole voting and investment power over all ordinary shares of the Parent shown as beneficially owned by that shareholder. Percentage of beneficial ownership is based on approximately 203.45200.5 million ordinary shares (excluding treasury shares) of the Parent outstanding as of March 12, 2018.7, 2024.
Name of Beneficial OwnerNumber of
Ordinary
Shares		Number of Ordinary Shares issuable upon vest within 60 days
Percentage(1)
Directors:  
Marco Sala1,186,884 — 0.59 
Vincent L. Sadusky82,468 — 0.04 
James F. McCann86,369 — 0.04 
Massimiliano Chiara82,781 — 0.04 
Alberto Dessy71,039 — 0.04 
Marco Drago85,017 — 0.04 
Ashley M. Hunter10,908 — 0.01 
Heather J. McGregor42,218 — 0.02 
Lorenzo Pellicioli165,796 — 0.08 
Maria Pinelli10,460 — 0.01 
Samantha F. Ravich38,869 — 0.02 
Gianmario Tondato Da Ruos62,784 — 0.03 
Non-Director Executive Officers:   
Renato Ascoli226,258 — 0.11 
Fabio Celadon50,529 — 0.03 
Dorothy Costa15,593 — 0.01 
Enrico Drago25,858 — 0.01 
Scott Gunn33,513 — 0.02 
Wendy Montgomery22,719 — 0.01 
David T. Morgan8,512 — Less than 0.005
Timothy M. Rishton27,779 — 0.01 
Christopher Spears38,074 — 0.02 
2,374,428 — 1.18 
(1) Any securities not outstanding that are subject to options or conversion privileges exercisable within 60 days of March 7, 2024 are deemed outstanding for the purpose of computing the percentage of outstanding securities of the class owned by any person holding such securities and by all Board members and executive officers as a group, but are not deemed outstanding for the purpose of computing the percentage of the class owned by any other individual person. Except where noted, percentages have been rounded to the nearest hundredth.
 
73
Name of Beneficial Owner
Number��of
Ordinary
Shares(1)
Number of Ordinary Shares issuable upon exercise within 60 days(2)
 
Percentage(3)
Directors: 
   
Philip G. Satre(4)
68,421
—
 0.03
Paget L. Alves20,241
—
 0.01
Paolo Ceretti24,046
—
 0.01
Alberto Dessy17,215
—
 0.01
Marco Drago20,986
—
 0.01
Patti S. Hart20,986
—
 0.01
James F. McCann89,496
—
 0.04
Heather J. McGregor1,102
—
 less than 0.005
Lorenzo Pellicioli18,164
—
 0.01
Vincent L. Sadusky29,293
—
 0.01
Marco Sala1,555,947
668,155
 0.76
Gianmario Tondato da Ruos15,951
—
 0.01
Non-Director Executive Officers: 
 
  
Renato Ascoli340,898
129,289
 0.17
Walter Bugno430,585
256,174
 0.21
Fabio Cairoli55,354
20,838
 0.03
Fabio Celadon41,319
25,263
 0.02
Mario Di Loreto—
—
 —
Alberto Fornaro365,747
243,274
 0.18
Robert Vincent72,237
41,550
 0.04
All Board members and executive officers as a group3,187,988
1,384,543
 1.56
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1.Includes shares issuable upon the exercise of options which are exercisable as of, or will become exercisable within 60 days after, March 15, 2018. For performance share units, fractional amounts have been rounded to the nearest whole number.
2.For performance share units, fractional amounts have been rounded to the nearest whole number.
3.Any securities not outstanding that are subject to options or conversion privileges exercisable within 60 days of March 15, 2018 are deemed outstanding for the purpose of computing the percentage of outstanding securities of the class owned by any person holding such securities and by all Board members and executive officers as a group, but are not deemed outstanding for the purpose of computing the percentage of the class owned by any other individual person. Except where noted, percentages have been rounded to the nearest hundredth.
4.Of the Number of Ordinary Shares listed for Philip G. Satre, 42,189 shares are held by the Philip G. Satre and Jennifer A. Satre Family Revocable Trust (of which Philip G. Satre is a trustee and beneficiary).

The table below sets forth the options on the Parent’s ordinary shares granted to each executive officerMr. Sala that were outstanding as of March 15, 2018.7, 2024. As of such date, no executive officer other than Mr. Sala held outstanding options. Further, none of the directors held outstanding options, other than MarcoMr. Sala.  In addition, neither Fabio Cairoli nor Mario Di Loreto held any outstanding options as of such date. For each of the option grants listed below, the options are exercisable for ordinary shares of the Parent, and there is no purchase price applicable to the options other than the exercise price indicated below.
NameGrant DateAmount of
Shares
Underlying
Grant		Amount
Exercisable (Vested)		Amount
Unexercisable (Unvested)		Exercise
Price		Expiration Date
Marco SalaMay 11, 2021172,500 —172,500 $20.37 (1)
(1) The options will expire on the fourth anniversary of the vesting date, which is the date on which the audited financial statements for the Company’s fiscal year ended December 31, 2023 are approved by the shareholders of the Company at its annual general meeting, which is expected to occur on May 14, 2024.
NameGrant Date 
Amount of
Shares
Underlying
Grant
 
Amount
Vested
 
Amount
Unvested
 
Exercise
Price
 Expiration Date
Marco SalaJuly 30, 2013 349,069
 251,329
 —
 $21.74
 May 27, 2019
 July 31, 2014 420,673
 328,124
 —
 $20.29
 May 26, 2020
 November 30, 2015 250,000
 —
 250,000
 $15.53
 (1)
Renato AscoliJuly 30, 2013 125,665
 90,478
 —
 $21.74
 May 27, 2019
Walter BugnoJuly 26, 2012 93,218
 72,710
 —
 $16.54
 April 9, 2018
 July 30, 2013 93,085
 67,021
 —
 $21.74
 May 27, 2019
 July 31, 2014 117,521
 91,666
 —
 $20.29
 May 26, 2020
Fabio CeladonJuly 30, 2013 10,704
 7,706
 —
 $21.74
 May 27, 2019
 July 31, 2014 17,094
 13,333
 —
 $20.29
 May 26, 2020
Alberto FornaroJuly 26, 2012 93,218
 72,710
 —
 $16.54
 April 9, 2018
 July 30, 2013 84,707
 60,989
 —
 $21.74
 May 27, 2019
 July 31, 2014 106,944
 83,416
 —
 $20.29
 May 26, 2020
Robert VincentJuly 30, 2013 12,101
 8,712
 —
 $21.74
 May 27, 2019
 July 31, 2014 32,051
 24,999
 —
 $20.29
 May 26, 2020

1.Expiration is four years after the vesting date, which is currently expected to be on or about the date of the general shareholder meeting in 2018.

For a further discussion of stock-based employee compensation, please see “Notes to the Consolidated Financial Statements—21. Stock-Based Compensation.Compensation”included in “Item 18. Financial Statements”.



F.    Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation

Not applicable.

Item 7.Major Shareholders and Related Party Transactions


A.
A.        Major Shareholders
Major Shareholders
 
At March 12, 2018,7, 2024, the Parent'sParent’s outstanding capital stock consisted of 203,460,707200,482,249 ordinary shares having a nominal value of $0.10 per share, 203,460,707 special voting shares207,355,445 Special Voting Shares of $0.000001 each, and 50,000 sterling non-voting shares of £1£1.00 each, held by ElianIntertrust Corporate Services (U.K.)(UK) Limited. Each ordinary share carries one (1) vote and each special voting share carries 0.9995 votes.
 
The following table sets forth information with respect to beneficial ownership of the Parent'sParent’s ordinary shares by persons known by the Parent to beneficially own 5% or more of voting powerrights as a result of their ownership of ordinary shares, including by election to exercise the votes of Special Voting Shares by placing the associated ordinary shares on the Loyalty Register as of March 12, 2018.7, 2024.

Name of Beneficial OwnerNumber of 
Ordinary
Shares Owned
Percent of 
Ordinary
Shares Owned(1)
Number of Ordinary Shares on the Loyalty Register
Percent of Total 
Voting Power(1)
De Agostini S.p.A.85,422,32442.61%85,422,32459.75%
The Bank of New York Mellon Corporation(2)
13,061,8216.52%——

(1) Excluding treasury shares.
(2) According to the information provided in a Schedule 13G report filed by The Bank of New York Mellon Corporation (“BNY Mellon”) on January 24, 2024, BNY Mellon has sole voting power over 12,902,834 ordinary shares, shared voting power over 34,422 ordinary shares, sole dispositive power over 9,914,257 ordinary shares and shared dispositive power over 3,147,564 ordinary shares.
Name of Beneficial Owner
Number of 
Ordinary
Shares Owned
 
Percent of 
Ordinary
Shares Owned
 
Percent of 
Voting Power
De Agostini S.p.A.103,422,324
 50.83% 50.83%

Immediately prior to effectivenessAt March 7, 2024, B&D Holding S.p.A. (“B&D Holding”) owned 59.80% of De Agostini. Marco Drago is the President and a director of B&D Holding, and Lorenzo Pellicioli is a director of B&D Holding. B&D Holding is in turn owned by members of the Mergers on April 7, 2015,Boroli and Drago families.

Significant Changes in Ownership

On May 22, 2018, De Agostini held 93,349,318 ordinary shares of GTECH, equalentered into a variable forward transaction (the “Variable Forward Transaction”) with Credit Suisse International (subsequently assigned to approximately 53.30% of GTECH’s then-outstanding ordinary share capital, and its wholly-owned subsidiary, DeA Partecipazioni S.p.A., held 10,073,006 shares of GTECH, equalCredit Suisse Bank (Europe) S.A. (formerly known as Credit Suisse Securities, Socieded de Valores, S.A.)) (“Credit Suisse”) relating to approximately 5.75% of GTECH’s then-outstanding ordinary share capital, resulting in a consolidated ownership of approximately 59.05% of GTECH's then-outstanding share capital. In connection with the Mergers, the Parent issued 198,526,804 ordinary shares, which was the primary cause18 million of the decrease in the percent ofCompany’s ordinary shares owned by De Agostini. Effective January 1, 2018, DeA Partecipazioni S.p.A. merged into De Agostini resulting in(the “Variable Forward Transaction Shares”). As part of the transferVariable Forward Transaction and to hedge its exposure, Credit Suisse (or its affiliates) borrowed approximately 13.2 million of ownership of 10,073,006the Company’s ordinary shares from DeA Partecipazioni S.pA.third-party stock lenders and subsequently sold such ordinary shares in an underwritten public offering through Credit Suisse Securities (USA) LLC, acting as the underwriter, pursuant to an automatically effective registration statement on Form F-3 (including a base prospectus) filed by the Company with the SEC on May 21, 2018.

De Agostini.Agostini elected, effective as of May 25, 2018, to place all of its owned ordinary shares, including the Variable Forward Transaction Shares, on the Loyalty Register, thereby gaining the power to exercise the votes of the related Special Voting
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Shares. In April 2020, De Agostini pledged the Variable Forward Transaction Shares to Credit Suisse as part of the Variable Forward Transaction and, as a result, removed the Variable Forward Transaction Shares from the Loyalty Register. As of March 7, 2024, no other shareholder has elected to place any ordinary shares on the Loyalty Register. For more information regarding the Special Voting Shares and the Loyalty Register, please see “Loyalty Plan” under “Item 10.B Memorandum and Articles of Association.”

Credit Suisse has, in the event of a De Agostini default of similar enforcement event under the pledge, the right to vote or direct the vote and dispose of or direct the disposition of the Variable Forward Transaction Shares, but not to direct the votes of the related Special Voting Shares unless Credit Suisse subsequently elects to place such shares on the Loyalty Register in accordance with the terms of the Loyalty Plan.

The Variable Forward Transaction is equally divided into four tranches, with each tranche settled at De Agostini’s election either: (i) in cash; or (ii) by physical delivery of shares, subject to certain conditions. To satisfy their obligations, De Agostini completed the final two settlement transactions with Credit Suisse by physically delivering 4,500,000 ordinary shares on May 25, 2023 and November 29, 2023, respectively.

Voting Rights 
 
De Agostini controls the Parent but does not have different voting rights from the Parent'sParent’s other shareholders.shareholders, aside from the election to exercise the votes of the Special Voting Shares related to the shares owned by De Agostini. However, through its voting power,rights, De Agostini has the ability to control the Company and significantly influence the decisions submitted to a vote of the Parent'sParent’s shareholders, including approval of annual dividends, the election and removal of directors, mergers or other business combinations, the acquisition or disposition of assets, and issuances of equity, and the incurrence of indebtedness. At March 13, 2018, B&D di Marco Drago e C. S.a.p.a. owned 69.54% of De Agostini.

Additional Share Information
 
The Parent'sParent’s ordinary shares are listed on the NYSE under the symbol “IGT” and can be traded on the NYSE in U.S. dollars. The Parent'sParent’s ordinary shares may be held in the following two ways:
 
•beneficial interests in the Parent'sParent’s ordinary shares that are traded on the NYSE are held through the book-entry system provided by The Depository Trust Company (“DTC”) and are registered in the register of shareholders in the name of Cede & Co., as DTC’s nominee; and

•in certificated formform.
 
At March 12, 2018, 203,459,350All of the Parent'sParent’s ordinary shares wereare held on the U.S. registry. At March 7, 2024, there were 155 record holders in the U.S. holding approximately 99.90% of the Parent’s outstanding ordinary share registry by 108 record holders. The U.S.shares, including ordinary share registry includes shares held through DTC and shares held by De Agostini. SharesCede & Co., the nominee for DTC. Ordinary shares held through DTC may be beneficially owned by holders within or outside of the U.S. The shares held by De Agostini are beneficially owned by an entity organized under the laws of Italy. At March 1, 2018,7, 2024, there were 203,460,707 special voting shares85,422,324 Special Voting Shares of the Parent outstanding, which are all held by Computershare Company Nominees Limited in its capacity as the nominee appointed by the Parent to hold the special voting sharesSpecial Voting Shares under the terms of the Parent’s loyalty share plan.Loyalty Plan.
 
The Parent's special voting sharesParent’s Special Voting Shares are not listed on the NYSE and will be transferable only in very limited circumstances. For more information regarding the Special Voting Shares, please see “Item 10.B Memorandum and Articles of Association—Association—Loyalty Plan.”



B.
Related Party Transactions

B.        Related Party Transactions

The Company engages in business transactions with certain related parties, , which includeinclude: (i) entities and individuals capable of exercising control, joint control, or significant influence over the Company,Company; (ii) De Agostini or entities directly or indirectly controlled by De AgostiniAgostini; and (iii) unconsolidated subsidiaries or joint ventures of the Company. Members of the Company’s Board, of Directors, executives with authority for planning, directing, and controlling the activities of the Company and such Directors'directors’ and executives'executives’ close family members are also considered related parties.

Amounts receivable from De Agostini and subsidiaries of De Agostini (together, the “De Agostini Group”) are non-interest bearing. Transactions with the De Agostini Group include payments for support services provided and office space rented pursuant to a lease entered into prior to the formation of the Company. In addition, certain of the Company’s Italian subsidiaries had a corporate income tax unit agreement, and in some cases a Group VAT (value-added tax) agreement, with De Agostini
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pursuant to which De Agostini consolidated certain Italian subsidiaries of De Agostini for the collection and payment of taxes to the Italian tax authority. The corporate income tax unit agreements terminated effective January 1, 2022 and the Group VAT agreements terminated on December 31, 2022. Tax-related receivables from De Agostini were $2 million and $0.4 million at December 31, 2023 and 2022, respectively. There were no tax-related payables to De Agostini at December 31, 2023 and $3 million at December 31, 2022.

The Company generally carries out transactions with related parties on commercial terms that are normal in their respective markets, considering the characteristics of the goods or services involved. For a further discussion of transactions with related parties, including transactions with De Agostini and companies in which we have strategic investments that develop software, hardware, and other technologies or provide services supporting the Company’s technologies, please see “Notes to the Consolidated Financial Statements - 24. Statements—25.Related Party Transactions.Transactions”included in “Item 18. Financial Statements”.


C.        Interests of Experts and Counsel
C.Interests of Experts and Counsel
 
Not applicable.



Item 8.Financial Information

A.Consolidated Statements and Other Financial Information
A.        Consolidated Statements and Other Financial Information
 
See “Item 18. Financial Statements” for the Company'sCompany’s Consolidated Financial Statements including the Notes thereto and reportsreport of its independent registered accounting firm. The Company has not yet implemented a formal policy on dividend distributions.

B.Significant Changes
B.        Significant Changes
 
Not applicable.Except as disclosed elsewhere in this annual report, no significant changes have occurred since December 31, 2023, the date of the financial statements included in this annual report on Form 20-F. On February 28, 2024, the Parent entered into definitive agreements for the Separation & Divestiture of the Global Gaming and PlayDigital businesses with Everi. Refer to “Notes to the Consolidated Financial Statements—26. Subsequent Events” for more information.


Item 9.The Offer and Listing
 
A.
A.        Offer and Listing Details
Offer and Listing Details
 
On April 7, 2015, the Parent'sThe Parent’s ordinary shares began tradingare listed on the NYSE under the symbol “IGT.”  The following tables set forth the high and low prices

B.        Plan of the Parent's ordinary shares as reported on the NYSE for each of the periods indicated:Distribution

Ordinary Share Price
 NYSE
Reference DateHigh Low
Year 
  
2017$29.36
 $17.25
2016$32.07
 $12.48
2015$21.23
 $14.34
  NYSE
Reference Date High Low
Quarter  
  
Fourth Quarter 2017 $29.36
 $22.34
Third Quarter 2017 $24.92
 $17.92
Second Quarter 2017 $23.98
 $17.25
First Quarter 2017 $28.15
 $23.01
Fourth Quarter 2016 $32.07
 $22.95
Third Quarter 2016 $24.95
 $17.83
Second Quarter 2016 $19.91
 $16.65
First Quarter 2016 $18.37
 $12.48
  NYSE
Reference Date High Low
Month  
  
March 2018 (up to and including March 14, 2018) $30.82
 $25.95
February 2018 $29.89
 $25.10
January 2018 $29.51
 $26.41
December 2017 $28.29
 $25.82
November 2017 $29.36
 $23.30
October 2017 $25.16
 $22.34
September 2017 $24.92
 $20.00
On March 14, 2018, the last reported daily closing price of the Parent's ordinary shares as reported was $30.74 per share on the NYSE.

B.Plan of Distribution
Not applicable.
C.Markets

C.        Markets

The Parent'sParent’s outstanding ordinary shares are listed on the NYSE under the symbol “IGT.”
D.Selling Shareholders
Not applicable.
E.Dilution
Not applicable.D.        Selling Shareholders
F.Expenses of the Issue

Not applicable.


E.        Dilution

Not applicable.

F.        Expenses of the Issue

Not applicable.

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Item10.Additional Information


A.Share Capital
A.    Share Capital
 
Not applicable.


B.    Memorandum and Articles of Association
 
The Parent is a public limited company registered in England and Wales under company number 09127533. Its objects are unrestricted, in line with the default position under the Companies Act 2006, as amended (“CA 2006”).2006. The following is a summary of certain provisions of the Articles and of the applicable laws of England. The following is a summary and, therefore, does not contain full details of the Articles, which are attached as Exhibit 1.1 to this annual report on Form 20-F. A description of the Company’s ordinary shares is attached as Exhibit 2.18 to this annual report on Form 20-F.
 
The Board of directors (the “Board”)
 
Directors’ interests
 
Except as otherwise provided in the Articles, a director may not vote on or be counted in the quorum in relation to a resolution of the directors or committee of the directors concerning a matter in which he haswhere they have a direct or indirect interest which is, to histheir knowledge, a material interest (otherwise than by virtue of histheir interest in shares or debentures or other securities of or otherwise in or through the Parent), including with respect to compensation, but this prohibition does not apply to any interest arising only because a resolution concerns any of the following matters:
 
•the giving of a guarantee, security, or indemnity in respect of money lent or obligations incurred by himthe director or any other person at the request of or for the benefit of the Parent or any of its subsidiary undertakings;

•the giving of a guarantee, security, or indemnity in respect of a debt or obligation of the Parent or any of its subsidiary undertakings for which the director has assumed responsibility in whole or in part, either alone or jointly with others, under a guarantee or indemnity or by the giving of security;

•a transaction or arrangement concerning an offer of shares, debentures, or other securities of the Parent or any of its subsidiary undertakings for subscription or purchase, in which offer hethe director is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which he is to participate;

•a transaction or arrangement to which the Parent is or is to be a party concerning another company (including a subsidiary undertaking of the Parent) in which hethe director or any person connected with himthem is interested (directly or indirectly) whether as an officer, shareholder, creditor, or otherwise (a “relevant company”“Relevant Company”), if hethe director and any persons connected with himthem do not to histheir knowledge hold an interest in shares (as that term is used in sectionsSections 820 to 825 of the CA 2006) representing 1% or more of either any class of the equity share capital (excluding any share of that class held as treasury shares) in the relevant companyRelevant Company or of the voting rights available to members of the relevant company;Relevant Company;


•a transaction or arrangement for the benefit of the employees of the Parent or any of its subsidiary undertakings (including any pension fund or retirement, death or disability scheme) which does not award himthe director a privilege or benefit not generally awarded to the employees to whom it relates; or

•a transaction or arrangement concerning the purchase or maintenance of any insurance policy for the benefit of directors or for the benefit of persons including directors.


Directors’ borrowing powers
 
The directors may exercise all the powers of the Parent to borrow money and to mortgage or charge all or part of the undertaking, property, and assets (present or future) and uncalled capital of the Parent and, subject to the CA 2006, to issue debentures and other securities, whether outright or as collateral security for a debt, liability, or obligation of the Parent or of a third party.
 
Directors’ shareholding requirements
 
A director need not hold shares in the Parent to qualify to serve as a director.
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Age limit
 
There is no age limit applicable to directors in the Articles.
 
Compliance with NYSE Rules
 
For as long as the Parent’s ordinary shares are listed on the NYSE, the Parent willintends to comply with all NYSE corporate governance standards set forth in Section 3 of the NYSE Listed Company Manual applicable to non-controlled domestic U.S. issuers, regardless of whether the Parent is a foreign private issuer.
 
Classes of shares
 
The Parent has three (3) classes of shares in issue. This includes (i) ordinary shares of U.S. $0.10 each; special voting shares(ii) Special Voting Shares of U.S. $0.000001 each (the “Special Voting Shares”);each; and (iii) sterling non-voting shares of £1.00 each (the “Sterling Non-Voting Shares”).
 
Dividends and distributions
 
Subject to the CA 2006, the Parent'sParent’s shareholders may declare a dividend on the Parent'sParent’s ordinary shares by ordinary resolution, and the Board may decide to pay an interim dividend to holders of the Parent'sParent’s ordinary shares in accordance with their respective rights and interests in the Parent, and may fix the time for payment of such dividend. Under English law, dividends may only be paid out of distributable reserves, defined as accumulated realized profits (so far as not previously utilized by distribution or capitalizationcapitalization) less accumulated realisedrealized losses to the extent(so far as not previously written off in a reduction or reorganization of capital duly made,made), and not out of share capital, which includes the share premium account.
The Special Voting Shares and Sterling Non-Voting Shares do not entitle their holders to dividends.
 
If 12twelve (12) years have passed from the date on which a dividend or other sum from the Parent became due for payment and the distribution recipient has not claimed it, the distribution recipient is no longer entitled to that dividend or other sum and it ceases to remain owing by the Parent.
 
The Articles also permit a scrip dividend scheme under which the directors may, with the prior authority of an ordinary resolution of the Parent, allot to those holders of a particular class of shares who have elected to receive them further shares of that class or ordinary shares in either case credited as fully paid instead of cash in respect of all or part of a dividend or dividends specified by the resolution.



Voting rights
 
Subject to any rights or restrictions as to voting attached to any class of shares and subject to disenfranchisement in the event of non-payment of any call or other sum due and payable in respect of any shares not fully paid, the voting rights of shareholders of the Parent in a general meeting are as follows:
 
1.On a show of hands,
a.the shareholder of the Parent who (being an individual) is present in person or (being a corporation) is present by a duly authorized corporate representative at a general meeting of the Parent will have one vote; and
b.every person present who has been appointed by a shareholder as a proxy will have one vote, except where:
i.that proxy has been appointed by more than one shareholder entitled to vote on the resolution; and
ii.the proxy has been instructed:
A.by one or more of those shareholders to vote for the resolution and by one or more of those shareholders to vote against the resolution; or
B.by one or more of those shareholders to vote in the same way on the resolution (whether for or against) and one or more of those shareholders has permitted the proxy discretion as to how to vote,
in which case, the proxy has one vote for and one vote against the resolution.
 
2.On a poll taken at a meeting, every qualifying shareholder present and entitled to vote on the resolution has one vote for every     ordinary share of the Parent of which he, she, or it iswhere they are the holder, and 0.9995 votes for every Special Voting Share for which he, she, or it iswhere they are entitled under the terms of the Parent’s loyalty voting structure to direct the exercise of the vote.
 
Under the Articles, a poll on a resolution may be demanded by the chairman,chairperson, the directors, five (5) or more people having the right to vote on the resolution, or a shareholder or shareholders (or their duly appointed proxies) having not less than 10% of
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either the total voting rights or the total paid up share capital. SuchOnce a resolution is declared, such persons may demand the poll both in advance of, and during, a general meeting, either before or immediately after a show of hands on asuch resolution.
 
In the case of joint holders, only the vote of the senior holder who votes (or any proxy duly appointed by him) may be counted by the Parent.

The necessary quorum for a general shareholder meeting is the shareholders who together represent at least a majority of the voting rights of all the shareholders entitled to vote at the meeting, present in person or by proxy, save that if the Parent only has one (1) shareholder entitled to attend and vote at the general meeting, one (1) shareholder present in person or by proxy at the meeting and entitled to vote is a quorum.

In case of a meeting requisitioned by the shareholders, where the quorum is not met the meeting is dissolved. In case of other meetings, where the quorum is not met, the meeting is adjourned. If a meeting is adjourned for lack of quorum, the quorum of the adjourned meeting will be one shareholder present in person or by proxy.
 
The Sterling Non-Voting Shares carry no voting rights (save where required by law).



Winding up

On a return of capital of the Parent on a winding up or otherwise, the holders of the Parent'sParent’s ordinary shares (and any other shares outstanding at the relevant time which rank equally with such shares) will share equally, on a share for share basis, in the Parent’s assets available for distribution, save that:after paying:

•the holders of the Special Voting Shares who will be entitled to receive out of the assets of the Parent available for distribution to its shareholders the sum of, in aggregate, U.S. $1.00;$1.00 but shall not be entitled to any further participation in the assets of the Parent; and

•the holders of the Sterling Non-Voting Shares who will be entitled to receive out of the assets of the Parent available for distribution to its shareholders the sum of, in aggregate, £1.00
but in no case will any of such holdersshall not be entitled to any further participation in the assets of the Parent.
 
Redemption provisions
 
The Parent'sParent’s ordinary shares are not redeemable.
 
The Special Voting Shares may be redeemed by the Parent for nil consideration in certain circumstances (as set out in the Articles).
 
The Sterling Non-Voting Shares may be redeemed by the Parent for nil consideration at any time.
 
Sinking fund provisions
 
None of the Parent'sParent’s shares are subject to any sinking fund provision under the Articles or as a matter of English law.
 
Liability to further calls
 
No holder of any share in the Parent is liable to make additional contributions of capital in respect of its shares.
 
Discriminating provisions
 
There are no provisions discriminating against a shareholder because of his or hertheir ownership of a particular number of shares.
 
Variation of class rights
 
The Articles treat the Parent’s ordinary shares and the Special Voting Shares as a single class for the purposes of voting. Any special rights attached to any shares in the Parent'sParent’s capital may (unless otherwise provided by the terms of issue of the shares of that class) be varied or abrogated, either while the Parent is a going concern or during or in contemplation of a winding up, with the consent in writing of those entitled to attend and vote at general meetings of the Parent representing 75% of the voting rights attaching to the Parent'sParent’s ordinary shares and the Special Voting Shares, in aggregate, which may be exercised at such meetings, or with the sanction of 75% of those votes attaching to the Parent'sParent’s ordinary shares and the Special Voting Shares, in aggregate,
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cast on a special resolution proposed at a separate general meeting of all those entitled to attend and vote at the Parent'sParent’s general meetings, but not otherwise. The CA 2006 allows an English company to have flexibility in its articles of association with respect to variation ofvary class rights butof shares by a resolution of 75% of the foregoing is typical and it broadly matchesshareholders of the default position under the CA 2006.class in question.
 
A resolution to vary any class rights relating to the giving, variation, revocation, or renewal of any authority of the directors to allot shares or relating to a reduction of the Parent’s capital may only be varied or abrogated in accordance with the CA 2006 but not otherwise.
 
The rights attached to a class of shares are not, unless otherwise expressly provided for in the rights attaching to those shares, deemed to be varied by the creation, allotment, or issue of further shares ranking pari passu with or subsequent to them or by the purchase or redemption by the Parent of its own shares in accordance with the CA 2006.


General meetings and notices
 
The Board has the power to call a general meeting of shareholders at any time. The Board shall determine whether a general meeting (including an annual general meeting) is to be held as a physical general meeting or an electronic general meeting (or a

combination thereof). In addition, the Board must convene such a meeting if it has received requests to do so from shareholders representing at least 5% of the paid uppaid-up share capital of the Parent as carries voting rights at general meetings in accordance with sectionSection 303 of the CA 2006.
 
An annual general meeting must be called by not less than 21 clear days’ notice (i.e., excluding the date of receipt or deemed receipt of the notice and the date of the meeting itself). All other general meetings will be called by not less than 14 clear days’ notice. A general meeting may be called by shorter notice if it is agreed to by a majority in number of the shareholders having the right to attend and vote at the meeting, being a majority who together hold not less than 95% in nominal value of the shares giving that right. At least seven (7) clear days’ notice is required for any meeting adjourned for 28 days or more or for an indefinite period.
 
The notice of a general meeting will be given to the shareholders (other than any who, under the provisions of the Articles or the terms of allotment or issue of shares, are not entitled to receive notice), to the Board, to the beneficial owners nominated to enjoy information rights under the CA 2006, and to the auditors. The shareholders entitled to receive notice of and attend a general meeting are those on the share register at the close of business on a day determined by the directors. Under English law, the Parent is required to hold an annual general meeting within six months from the day following the end of its fiscal year and, subject to the foregoing, the meeting may be held at a time and place (whether physical or electronic or a combination thereof) determined by the Board whether within or outside of the U.K.
 
The notice of general meeting must specify a time (which must not be more than 48 hours, excluding any part of a day that is not a working day, before the time fixed for the meeting) by which a person must be entered on the share register in order to have the right to attend or vote at the meeting. Only such persons or their duly appointed proxies have the right to attend and vote at the meeting of shareholders.
 
Limitations on rights to own shares
 
There are no limitations imposed by the Articles or the applicable laws of England & Wales on the rights to own shares, including the right of non-residents or foreign persons to hold or vote the Parent'sParent’s shares, other than limitations that would generally apply to all shareholders.
 
Change of control
 
There is no specific provision in the Articles that directly would have an effect of delaying, deferring, or preventing a change in control of the Parent and that would operate only with respect to a merger, acquisition, or corporate restructuring involving the Parent or any of its subsidiaries. However, the loyalty voting structure may make it more difficult for a third party to acquire, or attempt to acquire, control of the Parent. As a result of the loyalty voting structure, it is possible that a relatively large portion of the voting powerrights of the Parent could be concentrated in a relatively small number of holders who would have significant influence over the Parent. Such shareholders participating in the loyalty voting structure could reduce the likelihood of change of control transactions that may otherwise benefit holders of the Parent'sParent’s ordinary shares. For a discussion of this risk, see “Item 33. Key Information - D. Risk Factors."Factors.”
 
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Disclosure of ownership interests in shares
 
Under article 60 of the Articles, shareholders must comply with the notification obligations to the Parent contained in Chapter 5 (Vote Holder and Issuer Notification Rules) of the Disclosure Guidance and Transparency Rules (“DTR”) (including, without limitation, the provisions of DTR 5.1.2) as if the Parent were an issuer whose home member state is inDTR applies to the United Kingdom,Parent, save that the obligation arises if the percentage of voting rights reaches, exceeds, or falls below 1% and each one (1) percent threshold thereafter (up or down) up to 100%. In effect, this means that a shareholder must notify the Parent if the percentage of voting rights in the Parent it holds reaches 1% and crosses any one (1) percent threshold thereafter (up or down).
 
Section 793 of the CA 2006 gives the Parent the power to require persons whom it knows have, or whom it has reasonable cause to believe have, or within the previous three (3) years have had, any ownership interest in any shares of the Parent to disclose specified information regarding those shares. Failure to provide the information requested within the prescribed period (or knowingly or recklessly providing false information) after the date the notice is sent can result in criminal or civil sanctions being imposed against the person in default.

Under the Articles, if any shareholder, or any other person appearing to be interested in the Parent'sParent’s shares held by such shareholder, fails to give the Parent the information required by a sectionSection 793 notice, then the Board may withdraw voting rights and

certain other rights, place restrictions on the rights to receive dividends, and transfer of such shares (including any shares allotted or issued after the date of the Section 793 notice in respect of those shares).
 
Changes in share capital

The Articles authorize the Company to allot (with or without conferring rights of renunciation), issue, grant options over or otherwise deal with or dispose of shares in the capital of the Company and to grant rights to subscribe for, or to convert any security into, shares in the capital of the Company to such persons, at such times and upon such terms as the directors may decide, provided that no share may be issued at a discount. Pursuant to a shareholder resolution passed on May 9, 2023, for a period expiring (unless previously revoked, varied or renewed) at the end of the next annual general meeting of the Company or, if sooner, on August 8, 2024, directors are authorized to:

(i)     allot ordinary shares in the Parent, or to grant rights to subscribe for or to convert or exchange any security into shares in the Parent, up to five years froman aggregate nominal amount (i.e., par value) of U.S. $6,656,131.20 and up to a further aggregate nominal amount of U.S. $6,656,131.20 where the dateallotment is in connection with an offer by way of a rights issue;
(ii)     allot Special Voting Shares and to grant rights to subscribe for, or to convert any security into, Special Voting Shares, up to a maximum aggregate nominal amount of $133.20; and
(iii)    exclude pre-emption rights: first, in relation to offers of equity securities by way of rights issue; second, in relation to the allotment of equity securities for cash up to an aggregate nominal amount (i.e., par value) of U.S. $1,996,839.40; and third, in relation to an acquisition or other capital investment up to an aggregate nominal amount (i.e., par value) of U.S. $1,996,839.40.
These provisions are more restrictive than required under English law which does not prescribe a limit for the maximum amounts for allotment of shares or exclusion of pre-emption rights.

Pursuant to a shareholder resolution passed on May 9, 2023, for a period expiring (unless previously revoked, varied or renewed) at the end of the shareholder resolution granting them authority (which resolution was passednext annual general meeting of the Company or, if sooner, on March 13, 2015),November 8, 2024, the Parent is authorized to purchase its own ordinary shares of any class, on the terms of any buyback contractthe share repurchase contracts approved by the shareholders, (or otherwise as may be permitted by the CA 2006), provided that:

1.(i) the maximum aggregate number of the Parent'sParent’s ordinary shares authorized to be purchased equals 20%19,968,394, representing 10% of the total then issued ordinary sharesshares;
(ii) the minimum price (exclusive of expenses) which may be paid by the relevant class on April 7, 2015 (subject to adjustmentsCompany for consolidation or division);each ordinary share shall be U.S. $0.10; and
2.(iii) the maximum price that(exclusive of expenses) which may be paid to purchase an ordinary share of the Parent is 105% of the average market value of an ordinary share for the five business days prior to the day the purchase is made (subject to any further price restrictions contained in any buybackshare repurchase contract);.
3.the maximum aggregate number of Special Voting Shares authorized to be purchased will equal 20% of the total issued Special Voting Shares of the relevant class on April 7, 2015 (subject to adjustments for consolidation or division); and
4.the maximum price that may be paid to purchase a Special Voting Share is its nominal value.

These provisions are more restrictive than required under English law; an English company islaw which does not required to set limits in its articles onprescribe a limit for the maximum aggregate number or price paid for thean "off market" repurchase of its shares.

The Articles authorize the directors, for a period
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Table of up to five years from the date of the shareholder resolution granting them authority (which resolution was passed on March 13, 2015), to allot shares in the Parent, or to grant rights to subscribe for or to convert or exchange any security into shares in the Parent, up to an aggregate nominal amount (i.e., par value) of U.S. $185,000,000.Contents
The Articles authorize the directors, for a period of up to five years from the date of the shareholder resolution granting them authority (which resolution was passed on March 13, 2015), to exclude pre-emption rights in respect of such issuances up to an aggregate nominal amount (i.e., par value) of U.S. $185,000,000.
These provisions are more restrictive than required under English law; an English company is not required to set limits in its articles on the maximum amounts for allotment of shares or exclusion of pre-emption rights.

Loyalty Plan
 
Scope
 
The Parent has implemented a loyalty plan connected with its Special Voting Shares (the “Loyalty Plan”),Loyalty Plan, the purpose of which is to reward long-term ownership of the Parent'sParent’s ordinary shares and promote stability of the Parent'sParent’s shareholder base by granting long-term shareholders, subject to certain terms and conditions, with the equivalent of 1.9995 votes for each ordinary share that they hold. A copyThe Loyalty Plan is governed by the provisions of the Articles and the Loyalty Plan Terms and Conditions from time to time adopted by the Board, a copy of which is available on the Company'sCompany’s website, together with some Frequently Asked Questions.
 
Characteristics of Special Voting Shares
 
Each Special Voting Share carries 0.9995 votes. The Special Voting Shares and ordinary shares will be treated as if they are a single class of shares and not divided into separate classes for voting purposes (save upon a resolution in respect of any proposed termination of the Loyalty Plan).
 
The Special Voting Shares have only minimal economic entitlements. Such economic entitlements are designed to comply with English law but are immaterial for investors.

Issue
 
The number of Special Voting Shares on issue equals the number of ordinary shares on issue. A nominee appointed by the Parent (the “Nominee”), which is currently Computershare Company Nominees Limited, holds the Special Voting Shares on

behalf of the shareholders of the Parent as a whole, and will exercise the voting rights attached to those shares in accordance with the Articles.
 
Participation in the Loyalty Plan
 
In order to become entitled to elect to participate in the Loyalty Plan, a person must maintain ownership in accordance with the terms and conditions of the Loyalty Plan for a continuous period of three (3) years or more (an “Eligible Person”). This means that no person, other than the Nominee, will be entitled to exercise any rights in Special Voting Shares until at least April 7, 2018, the third anniversary of the Mergers.
 
An Eligible Person within the Loyalty Plan Terms and Conditions may elect to participate in the Loyalty Plan by submitting a validly completed and signed election form (the “Election Form”) and, if applicable, the requisite custodial documentation, to the Parent’s designated agent (the “Agent”). The Election Form is available on the Company'sCompany’s website. Upon receipt of a valid Election Form and, if applicable, custodial documentation, the Agent will register the relevant ordinary shares inon a separate register (the “Loyalty Register”). For so long asIn order for an Eligible Person’s ordinary shares to remain inon the Loyalty Register, they may not be sold, disposed of, transferred, pledged or subjected to any lien, fixed or floating charge or other encumbrance, except in very limited circumstances.
 
Voting arrangements
 
The Nominee will exercise the votes attaching to the Special Voting Shares held by it from time to time at a general meeting or a class meeting: (a) in respect of any Special Voting Shares associated with ordinary shares registered in the Loyalty Register,held by an Eligible Person, in the same manner as the Eligible Person exercises the votes attaching to those IGT PLC ordinary shares; and (b) in respect of all other Special Voting Shares, in the same percentage as the outcome of the vote of any general meeting (taking into account any votes exercised pursuant to (a) above).
 
The proxy or voting instruction form in respect of an Eligible Person’s ordinary shares entered in the Loyalty Register will contain an instruction and authorization in favor of the Nominee to exercise the votes attaching to the Special Voting Shares associated with those ordinary shares in the same manner as that Eligible Person exercises the votes attaching to those ordinary shares.
 
Transfer or withdrawal
 
If, at any time and for any reason, one (1) or more ordinary shares are de-registered from the Loyalty Register, , or any ordinary shares inheld by an Eligible Person on the Loyalty Register are sold, disposed of, transferred (other than with the benefit of a waiver in respect of certain permitted transfers), pledged or subjected to any lien, fixed or floating charge or other encumbrance, the Special Voting Shares associated with those ordinary shares will cease to confer on the Eligible Person any voting rights (or any other rights) in connection with those Special Voting Shares and such person will cease to be an Eligible Person in respect of those Special Voting Shares.
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A shareholder may request the de-registration of their ordinary shares from the Loyalty Register at any time by submitting a validly completed Withdrawal Form to the Agent. The Agent will release the ordinary shares from the Loyalty Register within three (3) business days thereafter. Upon de-registration from the Loyalty Register, such ordinary shares will be freely transferable. From the date on which the Withdrawal Form is processed by the Agent, the relevant shareholder will be considered to have waived their rights in respect of the relevant Special Voting Shares.
 
Termination of the Plan
 
The Loyalty Plan may be terminated at any time with immediate effect by a resolution passed on a poll taken at a general meeting with the approval of members representing 75% or more of the total voting rights attaching to the ordinary shares of members who, being entitled to vote on that resolution, do so in person or by proxy. For the avoidance of doubt, the votes attaching to the Special Voting Shares will not be exercisable upon such resolution.

Upon termination of the Loyalty Plan, the directors may elect to redeem or repurchase the Special Voting Shares from the Nominee for nil consideration and cancel them, or convert the Special Voting Share into deferred shares carrying no voting rights and no economic rights (or any other rights), save that on a return of capital or a winding up, the holder of the deferred shares shall be entitled to, in aggregate, $1.00.
 
Transfer
 
The Special Voting Shares may not be transferred, except in exceptional circumstances, e.g., for transfers between Loyalty Plan nominees.
 

Repurchase or redemption
 
Special Voting Shares may only be purchased or redeemed by the Parent in limited circumstances, including to reduce the number of Special Voting Shares held by the Nominee in order to align the aggregate number of ordinary shares and Special Voting Shares in issue from time to time or upon termination of the Loyalty Plan or pursuant to an off-market purchase arrangement.Plan. Special Voting Shares may be redeemed or repurchased for nil considerationconsideration.

C.        Material Contracts
Definitive Agreements for the Separation & Divestiture

The definitive agreements entered into by the Parent and/or SpinCo in connection with the Separation & Divestiture include: (i) a Separation and repurchasedDistribution Agreement by and among the Parent, SpinCo, Gaming HoldCo and Everi (the “Separation Agreement”);(ii) the Merger Agreement; (iii) an Employee Matters Agreement by and among the Parent, SpinCo, Gaming HoldCo and Everi (the “Employee Matters Agreement”); (iv) a Real Estate Matters Agreement by and among the Parent, SpinCo, Gaming HoldCo and Everi (the “Real Estate Matters Agreement”); (v) a Tax Matters Agreement by and among the Parent, SpinCo, Gaming HoldCo and Everi (the “Tax Matters Agreement”), and (vi) a Commitment Letter by and among Everi, SpinCo, Deutsche Bank AG New York Branch (together with its affiliates, “DB”) and Macquarie Capital (USA) Inc. (together with its affiliates, “Macquarie”) (the “Commitment Letter”) and (vii) a Voting and Support Agreement by and among the Parent, SpinCo, Everi and De Agostini (the “Voting Agreement”), each dated as of February 28, 2024. In addition, on February 28, 2024, Everi and De Agostini entered into an Investor Rights Agreement (the “Investor Rights Agreement”).

Separation Agreement

The Separation Agreement sets forth the terms and conditions regarding, among other things, the Separation, the SpinCo Contribution and the Distribution. The terms and conditions include, among other things, the restructuring and the transfer of assets and assumption of liabilities by the Parent and SpinCo and their respective subsidiaries in accordance with the separation plan as provided in the Separation Agreement to result in SpinCo owning substantially all of the assets and assuming substantially all of the liabilities of the SpinCo Business, and the Parent owning substantially all of the assets and assuming substantially all of the liabilities of the Parent’s business other than the SpinCo Business. In connection with such Separation, the Parent will effect the SpinCo Contribution in exchange for (dependingSpinCo issuing additional SpinCo Units such that the total number of SpinCo Units held by the Parent shall be equal to the number of the Parent’s ordinary shares outstanding as of the record date. The parties will procure satisfaction of SpinCo and the Parent’s existing credit support instrument release conditions at the Distribution, as applicable, and may be required to provide further cash or collateral to existing credit support beneficiaries.
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The Separation Agreement also governs the rights and obligations of the parties regarding the Distribution. Consummation of the Distribution is subject to various conditions under the Separation Agreement, including the completion of the Separation and satisfaction or waiver of certain conditions to the Closing under the Merger Agreement. Prior to the Distribution, Gaming HoldCo will issue to the Parent the Intercompany Note in an amount equal to the Cash Payment, and immediately following the effective time of the Second Step Merger, to the extent not paid with proceeds of the Financing, Everi will cause Gaming HoldCo to make the Cash Payment to the Parent in satisfaction of the Intercompany Note. The “Cash Payment” will be an amount equal to $2.6 billion, as adjusted by the pre-Distribution estimates of SpinCo’s and Everi’s respective cash, debt, working capital, and expenses, as more fully set forth in the Separation Agreement. SpinCo will incur $3.7 billion of indebtedness in connection with the Financing, the proceeds of which will be used to make the Cash Payment. At least one day prior to the Merger Effective Time, Everi may declare a dividend, payable as a cash dividend and/or a right to receive a cash dividend, with a payment date as specified in the Separation Agreement, payable to holders of outstanding Everi common stock as of such declaration in accordance with the terms specified in the Separation Agreement.

The Separation Agreement also governs certain aspects of the relationship between the Parent, SpinCo, and Everi after the Distribution, including, among other things, provisions with respect to the release of claims, indemnification, restrictive covenants, guarantees, insurance, access to information and record retention. Both the Parent and Everi will be subject to two years of mutual non-solicitation obligations. The parties will have ongoing indemnification obligations under the Separation Agreement from and after the Distribution with respect to the liabilities related to SpinCo assumed by Everi through SpinCo, and the liabilities related to the Parent agreed to be retained by the Parent, as applicable. The Separation Agreement provides that, following the effectiveness of the Distribution, Everi will guarantee to the Parent the obligations of SpinCo under the transaction documents which pursuant to their terms arise at or after the Closing with respect to obligations to be performed after the effectiveness of the Distribution.

This description is qualified in its entirety by reference to the Separation Agreement, which is filed as Exhibit 4.11 to this annual report on Form 20-F.

Merger Agreement

The Merger Agreement provides for, among other things, the merger of Merger Sub with and into SpinCo, with SpinCo as the surviving company, and the merger of SpinCo with and into Gaming HoldCo, with Gaming HoldCo as the surviving corporation. As a result of the Second Step Merger, Gaming HoldCo would become a direct wholly owned subsidiary of Everi. In addition, prior to the Closing, it is contemplated that the Parent will effect the Separation, SpinCo Contribution, and the Distribution pursuant to the Separation Agreement as further described below.

In the Merger, holders of SpinCo Units will be entitled to receive for each SpinCo Unit a number of shares of newly issued Everi common stock equal to the exchange ratio specified in the Merger Agreement. Prior to the adjustments provided in the Merger Agreement, the Merger Agreement provides that the exchange ratio is equal to the quotient of (A) 103,379,870 shares of Everi common stock by (B) the number of SpinCo Units issued and outstanding immediately prior to the effective time of the Merger (the “Merger Effective Time”). Prior to giving effect to any customary adjustments of the exchange ratio in the event of stock or interest splits, divisions or subdivisions of shares, stock dividends, reverse stock splits, combinations of shares, reclassifications, recapitalizations or other similar transactions with respect to Everi common stock, the exchange ratio is designed to result in the outstanding Everi common stock, immediately following the Merger, being owned approximately 54% by former holders of SpinCo Units and approximately 46% by the stockholders of Everi immediately prior to the Merger.

The Merger Agreement also provides that, effective as of immediately following the Merger Effective Time, Everi shall cause its board of directors (the “Everi Board”) to be comprised of 11 members, with (a) six nominated by the Parent (the “IGT Nominated Directors”), three of whom will be nominated by De Agostini pursuant to the Investor Rights Agreement and (b) five nominated by Everi (the “Everi Nominated Directors”). The directors will be appointed to the classes of the Everi Board as specified in the Investor Rights Agreement and the Merger Agreement, and at least three of each of the IGT Nominated Directors and the Everi Nominated Directors will be subject to independence and other qualifications.

Consummation of the Merger is subject to various and customary conditions, including, among other things: the accuracy of representations and warranties and compliance with covenants, subject to certain customary exceptions; the effectiveness of registration statements to be filed by SpinCo and Everi with the SEC in connection with the Separation & Divestiture; approval by the stockholders of Everi and the shareholders of the Parent; the consummation of the Separation, the SpinCo Contribution and the Distribution; the receipt of the Intercompany Note by the Parent and the receipt of the Cash Payment by the Parent concurrently with the receipt by Everi of proceeds of the Financing (as defined in the Merger Agreement); the receipt of regulatory approvals; and the approval of the NYSE of the listing on the circumstances) nil considerationNYSE of the newly issued shares of Everi common
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stock in the Merger. The Merger Agreement provides that the parties will use their reasonable best efforts and take other actions to obtain the specified regulatory approvals for the proposed transaction, subject to certain exceptions as set forth in the Merger Agreement.

The Parent, SpinCo, Everi, and Merger Sub each make certain customary representations, warranties and covenants, as applicable, in the Merger Agreement, including covenants with respect to the conduct of the SpinCo Business and the business of Everi and its subsidiaries, as applicable, during the period between signing and the earlier of the termination of the Merger Agreement and the Merger Effective Time. Each of the Parent and Everi also covenants, among other things, that neither party nor any of its subsidiaries will (i) solicit certain alternative transactions or (ii) enter into discussions concerning, or provide information or data in connection with, such alternative transactions (except under limited circumstances described in the Merger Agreement, including where such party’s board of directors has received an unsolicited proposal that could reasonably be expected to lead to a superior proposal and failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law, subject to certain notice conditions); provided that the Parent may solicit or enter into discussions concerning, or provide information or data in connection with, transactions with respect to the business of the Parent excluding the SpinCo Business. The Merger Agreement also provides for each of the Parent’s and Everi’s board of directors to recommend that its shareholders and stockholders, respectively, vote in favor of the Separation & Divestiture, subject to certain exceptions described in the Merger Agreement.

The Merger Agreement contains specified termination rights for the Parent and Everi, including, among other things, that either party may terminate the Merger Agreement if either the Parent’s or Everi’s board adopts, approves, endorses, declares advisable or recommends to its stockholders an acquisition proposal other than the contemplated transaction, and under other circumstances as set forth in the Merger Agreement. The Merger Agreement further provides that in connection with a termination of the Merger Agreement under specified circumstances, each of the Parent and Everi may be obligated to pay a termination fee of $80 million and/or reimburse the other party for Commitment Fees (as defined in the Merger Agreement) and expenses in connection with any securities offering in connection with the Financing paid by the other party.

This description is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit 4.10 to this annual report on Form 20-F.

Employee Matters Agreement

The Employee Matters Agreement, among other things, allocates among the parties the pre- and post-Closing liabilities in respect of the current and former employees of the SpinCo Business (including liabilities in respect of employee compensation and benefit plans covering such employees). Subject to various exceptions, SpinCo will generally assume liabilities in respect of the current and former employees of the SpinCo Business and any assets dedicated thereto, and the Parent will generally retain employee liabilities and assets related to the Parent.

This description is qualified in its entirety by reference to the Employee Matters Agreement, which is filed as Exhibit 4.12 to this annual report on Form 20-F.

Real Estate Matters Agreement

The Real Estate Matters Agreement governs the allocation and transfer of real estate between the Parent and SpinCo. Pursuant to the Real Estate Matters Agreement, the Parent may transfer to, or share with, SpinCo certain leased property associated with the SpinCo Business. The Real Estate Matters Agreement describes the manner in which the Parent will conduct an internal feasibility review to determine the suitability of certain leased property for a sublease or license to SpinCo. Following such review, the Parent and SpinCo may agree to (i) enter into a sublease or license of a portion of a leased property, or (ii) secure an alternative location and/or remote work arrangement for employees and operations which would otherwise have continued at such leased property.

This description is qualified in its entirety by reference to the Real Estate Matters Agreement, which is filed as Exhibit 4.13 to this annual report on Form 20-F.

Tax Matters Agreement

The Tax Matters Agreement sets forth, among other things, the parties’ respective rights, responsibilities and obligations with respect to taxes of SpinCo, the Parent, Everi and their nominal value.respective subsidiaries (including taxes arising in the ordinary course of business and taxes imposed in connection with the Separation & Divestiture), tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and assistance and cooperation in respect of tax matters. Generally, the

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C.Material Contracts
Parent will be responsible for taxes incurred by the SpinCo Business prior to the date of the Distribution, and SpinCo (and Everi through its ownership of SpinCo) will be responsible for taxes incurred by SpinCo following the date of the Distribution. The Parent will also be responsible for any taxes imposed on SpinCo in connection with the Separation & Divestiture.
Voting
This description is qualified in its entirety by reference to the Tax Matters Agreement, which is filed as Exhibit 4.14 to this annual report on Form 20-F.

Financing Arrangements

In connection with the Merger Agreement, on July 15, 2014,February 28, 2024, SpinCo entered into the Commitment Letter and related fee letters and engagement letter with DB, Macquarie, and Everi, pursuant to which, and subject to the terms and conditions set forth therein, DB and Macquarie committed to provide up to $4.22 billion in senior secured credit facilities consisting of (i) a $500 million revolving credit facility (the “Revolving Credit Facility”), (ii) a term loan facility (the “Term Loan Facility” and together with the Revolving Credit Facility, the “Credit Facilities”) and (iii) a bridge facility (the “Bridge Facility” and, collectively with the Credit Facilities, the “Facilities”). Pursuant to the engagement letter related to the Commitment Letter, SpinCo and Everi have engaged DB and Macquarie with respect to an issuance of “Rule 144A-for-life” senior secured notes that may be issued in lieu of all or a portion of the Bridge Facility. The proceeds of the loans under the Facilities may be used by Everi to (i) consummate the refinancing of certain existing third party debt for borrowed money of Everi and its subsidiaries, pursuant to which such debt will be repaid, redeemed, defeased, discharged, refinanced or terminated and all commitments to extend credit under such debt agreements will be terminated and any security interests and guarantees in connection therewith shall be terminated and/or released, (ii) repay the Intercompany Note and (iii) to pay fees and expenses in connection with the Separation & Divestiture and otherwise consummate the Separation & Divestiture. If the Separation & Divestiture is consummated, the indebtedness contemplated by the Commitment Letter will become indebtedness of Everi and/or a wholly-owned subsidiary of Everi.

This description is qualified in its entirety by reference to the Commitment Letter, which is filed as Exhibit 2.19 to this annual report on Form 20-F.

The Voting Agreement

The Voting Agreement contains, among other things, an agreement by De Agostini to vote or cause to be voted all shares of capital stock of the Parent owned or subsequently acquired by De Agostini (the “Covered Shares”) (i) for the approval of the Distribution, the transaction documents and the Separation & Divestiture, and (ii) against any alternative proposal to acquire SpinCo or actions that are intended to, or would reasonably be expected to, impede, interfere with or materially and adversely affect the consummation of the Separation & Divestiture. The Voting Agreement also contains certain restrictions on the transfer of the Covered Shares and a requirement to make and not withdraw certain regulatory filings and to provide information in support of the Financing and filings with the SEC necessary in connection with the consummation of the Separation & Divestiture. The Voting Agreement automatically terminates upon the earliest of the Closing, the valid termination of the Merger Agreement, a change in recommendation of the Separation & Divestiture by the Parent and IGT entered into a voting agreement (the “Voting Agreement”) withany amendment to the Merger Agreement that decreases the exchange ratio without the prior written consent of De Agostini.  The Voting Agreement requires that, from and after April 7, 2015 until April 7, 2018, De Agostini will vote all of the Parent's ordinary shares then owned

This description is qualified in favor of any proposal or action so as to effect and preserve the board and executive officer composition of the Parent in place immediately following the Mergers.  Pursuantits entirety by reference to the Voting Agreement, De Agostiniwhich is restricted from transferring any covered ordinary shares offiled as Exhibit 3.1 to this annual report on Form 20-F.

Exclusive License Agreement with Sony

On June 1, 2023, the Parent to any affiliate prior to April 7, 2018, unless the affiliate agrees to be bound by the Voting Agreement.
The Voting Agreement will expire on April 7, 2018.  All determinations regarding any dispute between the Parent, International Game Technology, and De Agostini following the effective times of the Mergers will be made by a committee of independent directors of the Parent who are not directors, officers, or employees of De Agostini.
Agreements Related to the Italian Lotto Concession

In March 2016, the Parent, through its subsidiary Lottomatica, Italian Gaming Holding a.s. ("IGH"), Arianna 2001, and Novomatic Italia (the "Consortium")Company entered into a consortiumten-year licensing agreement (the "Consortium Agreement")with Sony, which grants the Company the exclusive rights to bidthe Wheel of Fortune brand across gaming, lottery, iGaming and iLottery and includes the rights to distribute Wheel of Fortune content for free-to-play social casinos. The contract will run from January 1, 2025 to December 31, 2034, with minimum license fees of $312.5 million over the term, and extends the Company’s partnership with Sony dating back to 1996. This description is qualified in its entirety by reference to the licensing agreement, which is filed as Exhibit 4.9 to this annual report on Form 20-F.

Share Sale and Purchase Agreement with PostePay S.p.A. – Patrimonio Destinato IMEL

On September 14, 2022, the Company completed the sale of 100% of the share capital of Lis Holding S.p.A., a wholly owned subsidiary of IGT Lottery S.p.A. that conducted the Company’s Italian Gioco del Lotto service concession (the “Lotto Concession”)commercial services business, to PostePay S.p.A. – Patrimonio Destinato IMEL, for a purchase price of €700 million. The consideration received, net of €198 million cash and
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restricted cash transferred and €23 million of selling costs, was €479 million and resulted in a pre-tax gain on sale of $278 million, ($276 million net of tax).

Observer Agreement with De Agostini

On May 16, 2016,2018, the Consortium was awarded managementParent’s directors approved the observer agreement (the “Observer Agreement”) between De Agostini and the Company permitting De Agostini to appoint an observer to attend meetings of the Lotto ConcessionParent’s directors. On November 8, 2023, the Observer Agreement was renewed for a nine-year term. Undernew two (2) year term and Alessandro Vergottini, the Chief Financial Officer of De Agostini, acknowledged and agreed to his renewed appointment by De Agostini as an observer pursuant to the terms of the ConsortiumObserver Agreement. The Observer Agreement Lottomatica iswill expire following the principal operating partner to fulfill the requirementsmeeting of the Lotto Concession. According toBoard at which the bid procedure and Consortium Agreement, a joint venture company called Lottoitalia s.r.l ("Lottoitalia") has been established with Lottomatica having 61.5% equity ownership interest, and the remainder of the equity ownership shared among the other three Consortium members. The Consortium Agreement provides that, in certain cases, IGH may exercise a put option to sell its entire interest in Lottoitalia to Lottomatica or Lottomatica may exercise a call option to acquire IGH's entire interest in Lottoitalia. For a further discussion of these call and put rights, please see “Notes to Consolidated Financial Statements—17. Redeemable Non-Controlling Interest.”

Illinois Contract Letter Agreement

Commencing in July 2011, the Company provided lottery management services in Illinois through Northstar Lottery Group, LLC (“Northstar”), a consortium in which a subsidiary of the Parent, IGT Global Solutions Corporation ("IGT Global") holds an 80% controlling interest.  IGT Global provided certain hardware, equipment, software, and support services to Northstar under a supply agreement (the "IGT Supply Agreement").  On December 9, 2014, the Illinois Department of Lottery and Northstar entered into an agreement (the “Termination Agreement”) to terminate their relationship under the private management agreement (the “PMA”) between them.

In 2015, the Illinois Attorney General questioned the validity of the Termination Agreement which resulted in Northstar, IGT Global, and Scientific Games International, Inc. entering into a Letter Agreement (the “Letter Agreement”) with the State of Illinois and the Illinois Department of Lottery, effective September 18, 2015, that superseded the Termination Agreement. The Letter Agreement sets forth the terms governing the termination of the PMA, the transition services to be provided by Northstar, and the amendment and expiration terms of the IGT Supply Agreement.  Under the terms of the Letter Agreement and extensions thereof, the PMA terminated effective as of January 1, 2018, the IGT Supply Agreement was assigned by Northstar to the new private manager of the Illinois Lottery, and the term of the IGT Supply Agreement was extended through April 1, 2019.  The new private manager can terminate the IGT Supply Agreement on thirty (30) days prior written notice to IGT Global.  The Letter Agreement also provides that as considerationfinancial results for the shortened IGT Supply Agreement (which was originally set to expire in June 2021), IGT Global will be paid a fee.third quarter of 2025 are reviewed.


Related Party Agreements
 
For a discussion of the Company'sCompany’s related party transactions, including additional transactions with De Agostini, please see “Notes to the Consolidated Financial Statements—24.  25. Related Party Transactions.Transactions”included in “Item 18. Financial Statements”.
 
Compensation Arrangements
 
For a description of compensation arrangements with the Parent'sParent’s directors and executive officers, please see “Item 6. Directors, Senior ManagementsManagement, and Employees — B. Compensation.Compensation.”
 
Financing
 
For a description of the Company'sCompany’s outstanding financing agreements, please see section “Item 3. Key Information—B. 5.B. Liquidity and Capital Resources—Credit Facilities and Indebtedness.Resources.”


D.Exchange Controls
D.        Exchange Controls
 
Other than applicable taxation, anti-money laundering, and counter-terrorist financing law and regulations and certain economic sanctions which may be in force from time to time, there are currently no English laws or regulations, or any provision of the Articles, which would prevent the transfer of capital or remittance of dividends, interest, and other payments to holders of the Parent’s securities who are not residents of the U.K. on a general basis.


E.Taxation
E.        Taxation
 
Material United States Federal Income Tax Considerations
 
This section summarizes certain material U.S. federal income tax considerations regarding the ownership and disposition of the Parent'sParent’s ordinary shares by a U.S. holder (as defined below)., and certain material U.S. federal income tax consequences of the
Distribution and Merger. This summary is based on U.S. federal income tax law, including the Internal Revenue Code of 1986, as amended (the “Code”), the Treasury regulations promulgated thereunder, administrative guidance and court decisions in effect on the date hereof, all of which are subject to change, possibly with retroactive effect, and to differing interpretations. No ruling from the Internal Revenue Service (the "IRS"“IRS”) has been sought with respect to any U.S. federal income tax considerations described below, and there can be no assurance that the IRS or a court will not take a contrary position. The discussion assumes that the Parent'sParent’s shareholders hold their ordinary shares, as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion further assumes that all items or transactions identified as debt will be respected as such for U.S. federal income tax purposes.


This summary does not constitute tax advice and does not address all aspects of U.S. federal income taxation that may be relevant to the Parent'sParent’s shareholders in light of their personal circumstances, including any tax consequences arising under the tax on certain investment income pursuant to the Health Care and Education Reconciliation Act of 2010 or arising under the the U.S. Foreign Account Tax Compliance Act (or any Treasury regulations or administrative guidance promulgated thereunder, any intergovernmental agreement entered into in connection therewith or any non-U.S. laws, rules or directives implementing or relating to any of the foregoing), or to shareholders subject to special treatment under the Code, including (but not limited to):
 
•banks, thrifts, mutual funds, and other financial institutions;

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•regulated investment companies;

•real estate investment trusts;

•traders in securities that elect to apply a mark-to-market method of accounting;

•broker-dealers;
broker-dealers;

•tax-exempt organizations and pension funds;

•U.S. holders that own (directly, indirectly, or constructively) 10% or more of the Company'sCompany’s stock (by vote or value);


•insurance companies;

•dealers or brokers in securities or foreign currency;

•individual retirement and other deferred accounts;
•U.S. holders whose functional currency is not the U.S. dollar;

•U.S. expatriates;

•“passive foreign investment companies” or “controlled foreign corporations”;

•persons subject to the alternative minimum tax;

•U.S. holders that hold their shares as part of a straddle, hedging, conversion, constructive sale or other risk reduction transaction; and

partnerships or other entities or other arrangements treated as partnerships for U.S. federal income tax purposes and their partners and investors; and

•U.S. holders that received their shares through the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan.

This discussion does not address any non-income tax considerations or any state, local or non-U.Snon-U.S. tax consequences. For purposes of this discussion, a "U.S. holder"“U.S. holder” means a beneficial owner of the Parent'sParent’s ordinary shares that is, for U.S. federal income tax purposes:
 
•an individual who is a citizen or resident of the United States;

•a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia;

•an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

•a trust ifif: (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust,trust; or (2) the trust has a valid election in effect to be treated as a U.S. person for U.S. federal income tax purposes.
 
This discussion does not purport to be a comprehensive analysis or description of all potential U.S. federal income tax considerations. Each of the Parent'sParent’s shareholders is urged to consult with such shareholder’s tax advisor with respect to the particular tax consequences of the ownership and disposition of the Parent'sParent’s ordinary shares to such shareholder.
 
If a partnership, including for this purpose any entity or arrangement that is treated as a partnership for U.S. federal income tax purposes, holds the Parent'sParent’s ordinary shares, the tax treatment of a partner therein will generally depend upon the status of such partner, the activities of the partnership and certain determinations made at the partner level. Any such holder that is a partnership and the partners in such partnership should consult their tax advisors about the U.S. federal income tax consequences of the ownership and disposition of their ordinary shares.
 
Ownership and Disposition of the Parent'sParent’s Ordinary Shares
 
The following discusses certain material U.S. federal income tax consequences of the ownership and disposition of the Parent's ordinary shares by U.S. holders and assumes that the Parent will be a resident exclusively of the U.K. for all tax purposes.
 
Taxation of Distributions
 
Subject to the discussion below under "Passive“Passive Foreign Investment Company Considerations",Considerations,” the gross amount of distributions with respect to the Parent'sParent’s ordinary shares (including the amount of any non-U.S. withholding taxes) will be taxable as dividends, to the extent that they are paid out of the Parent'sParent’s current or accumulated earnings and profits, as

determined under U.S. federal income tax principles. Such dividends will be includable in a U.S. holder’s gross income as ordinary dividend income on the day actually or constructively received by the U.S. holder. Such dividends will not be eligible for the dividends-received deduction allowed to corporations under the Code.


The gross amount of the dividends paid by the Parent to non-corporate U.S. holders may be eligible to be taxed at reduced rates of U.S. federal income tax applicable to “qualified dividend income.” Recipients of dividends from non-U.S. corporations will be taxed at this rate, provided that certain holding period requirements are satisfied and certain other requirements are met, if the dividends are received from “qualified foreign corporations,” which generally include corporations eligible for the benefits of an income tax treaty with the United States that the U.S. Secretary of the Treasury determines is satisfactory and includes an
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information exchange program. The U.S. Department of the Treasury and the IRS have determined that the U.K.- U.S. Income Tax Treaty is satisfactory for thisthese purposes and the Parent believes that it is eligible for benefits under such treaty. Dividends paid with respect to stock of a foreign corporation which stock is readily tradable on an established securities market in the United States will also be treated as having been received from a “qualified foreign corporation.” The U.S. Department of the Treasury and the IRS have determined that common stock is considered readily tradable on an established securities market if it is listed on an established securities market in the United States, such as the NYSE.


Non-corporate U.S. holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss, or that elect to treat the dividend income as "investment income"“investment income” pursuant to Section 163(d)(4) of the Code, will not be eligible for the reduced rates of taxation regardless of the Parent'sParent’s status as a qualified foreign corporation. In addition, even if the minimum holding period requirement has been met, the rate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. Each U.S. holder should consult its own tax advisors regarding the application of these rules given its particular circumstances.
 
To the extent that the amount of any distribution exceeds the Parent’s current and accumulated earnings and profits for a taxable year, as determined under U.S. federal income tax principles, the excess will first be treated as a tax-free return of capital to the extent of each U.S. holder’s adjusted tax basis in the Parent'sParent’s ordinary shares and will reduce such U.S. holder'sholder’s basis accordingly. The balance of the excess, if any, will be taxed as capital gain, which would be long-term capital gain if the holder has held the Parent'sParent’s ordinary shares for more than one year at the time the distribution is received. Long-term capital gain of certain non-corporate U.S. holders, including individuals, is generally taxed at reduced rates. The deduction of capital losses is subject to limitations.
 
The amount of any distribution paid in foreign currency will be the U.S. dollar value of the foreign currency distributed by the Parent, calculated by reference to the exchange rate in effect on the date the distribution is includibleincludable in the U.S. holder’s income, regardless of whether the payment is in fact converted into U.S. dollars on the date of receipt. Generally, a U.S. holder would not recognize any foreign currency gain or loss if the foreign currency is converted into U.S. dollars on the date the payment is received. However, any gain or loss resulting from currency exchange fluctuations during the period from the date the U.S. holder includes the distribution payment in income to the date such U.S. holder actually converts the payment into U.S. dollars will generally be treated as ordinary income or loss.
 
Sale, Exchange, or Other Taxable Disposition
 
Subject to the discussion below under "Passive“Passive Foreign Investment Company Considerations",Considerations,” a U.S. holder will generally recognize taxable gain or loss on the sale, exchange or other taxable disposition of the Parent'sParent’s ordinary shares in an amount equal to the difference, if any, between the amount realized on the sale, exchange, or other taxable disposition and the U.S. holder’s tax basis in such Parent'sParent’s ordinary shares. Such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if the ordinary shares have been held for more than one year. Long-term capital gain of certain non-corporate U.S. holders, including individuals, is generally taxed at reduced rates. The deduction of capital losses is subject to limitations.
 
Passive Foreign Investment Company Considerations
 
A Passive Foreign Investment Company ("PFIC"(“PFIC”) is any foreign corporation if, after the application of certain “look-through” rules, (a) at least 75% of its gross income is “passive income” as that term is defined in the relevant provisions of the Code, or (b) at least 50% of the average value of its assets produces “passive income” or is held for the production of “passive income.” The determination as to PFIC status is a fact-intensive determination that includes ascertaining the fair market value (or, in certain circumstances, tax basis) of all the Parent'sParent’s assets on a quarterly basis and the character of each item of income, and cannot be completed until the close of a taxable year. If a U.S. holder is treated as owning PFIC stock, such U.S. holder will be subject to special rules generally intended to reduce or eliminate the benefit of the deferral of U.S. federal income tax that

results from investing in a foreign corporation that does not distribute all of its earnings on a current basis. These rules may adversely affect the tax treatment to a U.S. holder of distributions paid by the Parent and of sales, exchanges, and other dispositions of the Parent'sParent’s ordinary shares, and may result in other adverse U.S. federal income tax consequences.
 
The Parent believes that the ordinary shares should not be treated as shares of a PFIC in the current taxable year, and the Parent does not expect that it will become a PFIC in the future. However, there can be no assurance that the IRS will not successfully challenge this position or that the Parent will not become a PFIC at some future time as a result of changes in the Parent'sParent’s assets, income, or business operations.
 
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Each U.S. holder is urged to consult its tax advisor concerning the U.S. federal income tax consequences of acquiring, owning or disposing of the Parent'sParent’s ordinary shares if the Parent is or becomes classified as a PFIC, including the possibility of making a mark-to-market election. The remainder of the discussion below assumes that the Parent is not a PFIC, has not been a PFIC and will not become a PFIC in the future.


Information Reporting
 
U.S. individuals and certain entities with interests in “specified foreign financial assets” (including, among other assets, the Parent'sParent’s ordinary shares, unless such shares were held on such U.S. holder’s behalf through certain financial institutions) with values in excess of certain thresholds are required to file an information report with the IRS. Taxpayers that fail to file the information report when required are subject to penalties. U.S. holders should consult their own tax advisors as to the possible obligation to file such information reports in light of their particular circumstances.


Special Voting Shares
 
NO STATUTORY, JUDICIAL OR ADMINISTRATIVE AUTHORITY DIRECTLY DISCUSSES HOW THE RECEIPT, OWNERSHIP, OR LOSS OF ENTITLEMENT TO INSTRUCT THE NOMINEE ON HOW TO VOTE IN RESPECT OF SPECIAL VOTING SHARES SHOULD BE TREATED FOR U.S. FEDERAL INCOME TAX PURPOSES AND AS A RESULT, THE U.S. FEDERAL INCOME TAX CONSEQUENCES THEREOF ARE UNCERTAIN. ACCORDINGLY, U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THE RECEIPT, OWNERSHIP, AND LOSS OF ENTITLEMENT TO INSTRUCT THE NOMINEE ON HOW TO VOTE IN RESPECT OF SPECIAL VOTING SHARES.
 
While the tax consequences of the receipt, ownership, and loss of special voting shares upon request fromentitlement to instruct the Nomineenominee on how to vote in respect of Special Voting Shares are unclear, such receipt, ownership, and loss is not expected to constitute a separate transaction from ownership of the ordinary shares for U.S. federal income tax purposes. As such, neither the receipt of the special voting sharesSpecial Voting Shares nor the loss of entitlement to instruct the nominee on how to vote the Special Voting Shares is not expected to give rise to a taxable event for U.S. federal income tax purposes.

U.S. Federal Income Tax Consequences of the Distribution and Merger

The following is a general discussion of certain material U.S. federal income tax consequences to U.S. holders (i) who receive SpinCo Units in the Distribution and (ii) whose SpinCo Units are exchanged for shares of Everi common stock pursuant to the Merger, assuming the Distribution and Merger are completed as set forth in the section above labeled “Separation & Divestiture of the Global Gaming and PlayDigital Businesses”. This discussion is subject to the discussion above under “Ownership and Disposition of the Parent’s Ordinary Shares—Passive Foreign Investment Company Considerations”.

No ruling from the IRS has been or will be sought with respect to any aspect of the Separation & Divestiture, and no opinion of counsel will be rendered in connection with the transactions comprising the Separation & Divestiture. Accordingly, the discussion below neither binds the IRS nor precludes it from adopting a contrary position. The tax treatment of the Separation & Divestiture to Parent’s shareholders will vary depending on their particular situations. This summary is for the general information of U.S. holders only and does not purport to be a complete analysis of all potential tax effects of the Separation & Divestiture. Accordingly, U.S. holders should consult their own tax advisors with respect to the particular tax consequences to them of the Separation & Divestiture.

Parent intends to report the Distribution as a taxable distribution of SpinCo Units for U.S. federal income tax purposes. Assuming such treatment is correct, the tax consequences described above in “Ownership and Disposition of the Parent’s Ordinary Shares—Taxation of Distributions” would generally apply to the Distribution.

Specifically, a U.S. holder will be required to include the fair market value of the SpinCo Units in gross income as a dividend to the extent of Parent’s current or accumulated earnings and profits (as increased to reflect any gain recognized by Parent on a taxable distribution). A dividend paid by Parent to non-corporate U.S. holders may be eligible to be taxed at reduced rates of U.S. federal income tax applicable to “qualified dividend income”. The amount of Parent’s current or accumulated earnings and profits as of the date of the Distribution will not be known until after the Distribution. Accordingly, Parent is not able to determine the portion of the Distribution that will be reported as a dividend as of the date hereof.

To the extent that the fair market value of the Distribution exceeds Parent’s current and accumulated earnings and profits, such excess will first be treated as a tax-free return of capital to the extent of a U.S. holder’s adjusted tax basis in Parent’s ordinary
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shares and will reduce such U.S. holder’s basis accordingly. The balance of the excess, if any, will be taxed as capital gain, which would be long-term capital gain if the U.S. holder has held Parent’s ordinary shares for more than one year at the time the SpinCo Units are received. Long-term capital gain of certain non-corporate U.S. holders, including individuals, is generally taxed at reduced rates. A U.S. holder’s basis in the SpinCo Units will be equal to the fair market value of the SpinCo Units received in the Distribution.

Based on the tax treatment of the Distribution described above, a U.S. holder would not recognize further gain or loss as a result of the Merger because even though the Merger is expected to be a taxable transaction, the fair market value of the Everi common stock received by such U.S. holder would equal the adjusted basis of the SpinCo Units exchanged by such U.S. holder in the Merger. A U.S. holder’s holding period for the Everi common stock received in the Merger will begin on the day after the Merger closes.

Notwithstanding Parent’s intended reporting of the Distribution, it is possible that the Distribution could alternatively be viewed as tax-free under Section 355 of the Code, in which case the U.S. federal income tax consequences of the Distribution would generally be the following:

•a U.S. holder would not recognize any gain or loss, and would not include any amount in income, upon receiving the SpinCo Units in the Distribution;
•each U.S. holder’s aggregate basis in Parent’s ordinary shares and the SpinCo Units received in the Distribution would equal the aggregate basis the U.S. holder had in Parent’s ordinary shares immediately prior to the Distribution, allocated in proportion to the fair market value of each; and
•each U.S. holder’s holding period in the SpinCo Units received in the Distribution would include the U.S. holder’s holding period in its Parent ordinary shares on which the Distribution was made.

In this circumstance, the Merger would still be expected to be a taxable transaction, however, and a U.S. holder would be expected to recognize capital gain or loss equal to the difference between the Everi common stock received in the Merger and such U.S. holder’s adjusted basis in the SpinCo Units received in the Distribution (as described above). Such capital gain or loss would be long-term capital gain or loss if the U.S. holder’s holding period for the SpinCo Units (as described above) is more than one year as of the effective time of the Merger.A U.S. holder’s holding period for the Everi common stock received in the Merger would begin on the day after the Merger closes.

In light of the foregoing, the Distribution and Merger, together, may result in materially different U.S. federal income tax consequences depending on whether only the Merger, or both the Distribution and the Merger are taxable for U.S. federal income tax purposes. U.S. holders should consult their own tax advisors as to the tax consequences to them of the Distribution and Merger.  

Material U.K. Tax Considerations
 
The following summary is intended to apply only as a general guide to certain United Kingdom (“U.K.”) tax considerations, and is based on current U.K. tax law and current published practice of HMHis Majesty’s Revenue and Customs (“HMRC”), both of which are subject to change at any time, possibly with retrospective effect. They relate only to certain limited aspects of the U.K. taxation treatment of investors who are resident and, in the case of individuals, domiciled or deemed domiciled in (and only in) the U.K. for U.K. tax purposes (except to the extent that the position of non-U.K. resident shareholders is expressly referred to), who will hold the Parent'sParent’s ordinary shares as investments (other than under an individual savings account or a self-invested personal pension) and who are the absolute beneficial owners of the Parent'sParent’s ordinary shares. The statements may not apply to certain classes of investors such as (but not limited to) persons acquiring their ordinary shares in connection with an office or employment, dealers in securities, insurance companies, and collective investment schemes.
 
Any shareholder or potential investor should obtain advice from his or her own investment or taxation advisor.
 
Dividends
 
The Parent will not be required to withhold U.K. tax at the source from dividend payments it makes.
 
U.K. resident individual shareholders
 
Individual shareholders are no longer entitled to credit in respect of any dividendAll dividends received by an individual shareholder from the Parent. Instead,Parent or from other sources will form part of that shareholder’s total income for income tax purposes and towill constitute the top slice of that income. For the tax year 2023/2024, the extent that
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the dividends they receive (whether from the Parent or other companies) exceed the tax free dividend allowance (£5,000 for the current tax year and £2,0001,000 for the tax year beginning on2023/2024, which (under current proposals) will decrease to £500 from April 6, 2018)2024), they are taxed on such dividends at

either 7.5% (for8.75% (to the extent shareholders who are liable to tax only at the basic rate), 32.5% (for33.75% (to the extent shareholders who are liable to pay tax at the higher rate) or 38.1% (for39.35% (to the extent shareholders who are liable to pay tax at the additional rate). It is expected that the dividend tax rate will remain at the current rates from April 6, 2024.
 
U.K. resident corporate shareholders
 
A corporate shareholder resident in the U.K. for tax purposes which is a “small company” for the purposes of Chapter 2 of Part 9A of the Corporation Tax Act 2009 will not be subject to U.K. corporation tax on any dividend received from the Parent provided that certain conditions are met (including an anti-avoidance condition).
 
Other corporate shareholders resident in the U.K. for tax purposes will not be subject to U.K. corporation tax on any dividend received from the Parent so long as the dividends fall within an exempt class and certain conditions are met. For example, (1)(i) dividends paid on ordinary shares that are not redeemable and do not carry any present or future preferential rights to dividends or to a company’s assets on its winding up,up; and (2)(ii) dividends paid to a person holding less than a 10% interest in the Parent should generally fall within an exempt class. However, the exemptions mentioned above are not comprehensive and are subject to anti-avoidance rules.

If the conditions for exemption are not met or cease to be satisfied, if anti-avoidance provisions apply, or if such a corporate shareholder elects an otherwise exempt dividend to be taxable, the shareholder will be subject to U.K. corporation tax on dividends received from the Parent, at the rate of corporation tax applicable to that corporate shareholder (currently, 19%25%).

Non-U.K. resident shareholders
 
A shareholder resident outside the U.K. for tax purposes and who holds the Parent'sParent’s ordinary shares as investments will not generally be liable to tax in the U.K. on any dividend received from the Parent.Parent unless he or she carries on (whether solely or in partnership) a trade, profession or vocation in the U.K. through a branch or agency (or, in the case of a corporate holder of ordinary shares where the dividend exemption does not apply, through a permanent establishment) to which the ordinary shares are attributable. There are certain exceptions for trading in the U.K. through independent agents, such as some brokers and investment managers.
 
A non-U.K. resident shareholder may also be subject to taxation on dividend income under local law. A shareholder who is not solely resident in the U.K. for tax purposes should consult his or her own tax advisersadvisors concerning his or her tax liabilities (in the U.K. and any other country) on dividends received from the Parent, whether he or she is entitled to claim any part of the tax credit and, if so, the procedure for doing so, and whether any double taxation relief is due in any country in which he or she is subject to tax.
 
Taxation of Capital Gains
 
Disposal of the Parent'sParent’s Ordinary Shares
 
A disposal or deemed disposal of the Parent's ordinary shares by a shareholder who is resident in the U.K. for tax purposes may, depending upon the shareholder’s circumstances and subject to any available exemptions and reliefs (such as the annual exempt amount for individuals and indexation allowance for corporate shareholders)individuals), give rise to a chargeable gain or an allowable loss for the purposes of U.K. taxation of capital gains.
 
If an individual shareholder who is subject to income tax at either the higher or the additional rate becomes liable to U.K. capital gains tax on the disposal of the Parent'sParent’s ordinary shares, the applicable rate (for the tax year 2023/2024) will be either 10% to the extent shareholders are liable to tax only at the basic rate or 20% (to the extent shareholders are liable to pay tax at the higher rate or the additional rate), respectively (save in some limited circumstances).


If a corporate shareholder becomes liable to U.K. corporation tax on the disposal (or deemed disposal) of ordinary shares, the main rate of U.K. corporation tax (currently at a rate of 25%) would apply, subject to any exemptions, reliefs and/or allowable losses. A shareholder whowhich is not resident in the U.K. for tax purposes should not normally be liable to U.K. taxation on chargeable gains on a disposal or deemed disposal of the Parent'sParent’s ordinary shares.shares unless the person is carrying on (whether solely or in a partnership) a trade, profession or vocation in the U.K. through a branch or agency (or, in the case of a corporate holder of ordinary shares, through a permanent establishment) to which the ordinary shares are attributable. However, an individual shareholder who has ceased to be resident in the U.K. for taxthe purposes of a double taxation treaty for a period of less than five (5) years (and had sole U.K. resident for at least four (4) out of the seven (7) tax years immediately prior to his year of
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departure) and who disposes of the Parent'sParent’s ordinary shares during that period of temporary non-residence may be liable on his return to the U.K. (or upon ceasing to be regarded as resident outside the U.K. for purposes of double taxation relief) to U.K. taxation on any capital gain realized (subject to any available exemption or relief).
 
Diverted Profits Tax

The U.K. diverted profits tax (“DPT”) is currently separate from U.K. corporation tax and is charged at a higher rate of 31% (subject to certain limited exceptions). It is an anti-avoidance measure aimed at protecting the U.K. tax base against the artificial diversion of profits that are being earned by activities carried out in the U.K. but which are not otherwise being taxed in the U.K., in particular as a result of arrangements amongst companies in the same multinational group. The U.K.’s network of double tax treaties does not currently offer protection from a DPT charge. In the event that the rules apply to certain arrangements, then upfront payment of HMRC’s estimate of the deemed tax liability may be required. If any of our U.K. or non-U.K. companies is liable for DPT as a result of intra-group arrangements, this could have a material adverse effect on the Company’s and/or the Parent’s results. HMRC’s response to the June 19, 2023 consultation to reform U.K. law in relation to transfer pricing, permanent establishment, and DPT, published on January 16, 2024, proposes to remove DPT’s status as a separate tax and bring in an equivalent charge to U.K. corporation tax. Broadly, the reform is intended to clarify the relationship between DPT and transfer pricing and will provide access to treaty benefits for DPT. The U.K. government will hold a technical consultation on draft legislation in 2024.

Inheritance Tax
 
The Parent'sParent’s ordinary shares will be assets situated in the U.K. for the purposes of U.K. inheritance tax. A gift or settlement of such assets by, or on the death of, an individual holder of such assets may (subject to certain exemptions and reliefs and depending upon the shareholder’s circumstances) give rise to a liability to U.K. inheritance tax even if the holder is not a resident of or domiciled in the U.K. for tax purposes. For inheritance tax purposes, a transfer of assets at less than market value may be treated as a gift and particular rules apply to gifts where the donor reserves or retains some benefit.
 

A charge to inheritance tax may arise in certain circumstances where the Parent'sParent’s ordinary shares are held by close companies and by trustees of settlements. Shareholders should consult an appropriate tax adviseradvisor as to any inheritance tax implications if they intend to make a gift or transfer at less than market value or intend to hold the Parent'sParent’s ordinary shares through a close company or trust arrangement.
 
Shareholders and/or potential investors who are in any doubt as to their tax position, or who are subject to tax in any jurisdiction other than the U.K., should consult a suitable professional advisor.


Material ItalianUK Tax Considerations
This section describes the material Italian tax consequencesConsequences of the ownership and transferDistribution

The Distribution by Parent of the Parent's ordinary shares. The following description does not purport toSpinCo Units will be treated as a comprehensive descriptiontaxable dividend in the hands of all the tax considerations that may be relevant to a decision to own or dispose of the shares (such as Italian inheritance and gift tax considerations, and transfer tax considerations) and, in particular does not discuss the treatment of shares that are held in connection with a permanent establishment or a fixed base through which a non-Italian resident shareholder carries on business or performs personal services in Italy.
For the purposes of this discussion, an “Italian Shareholder” is a beneficial owner of the Parent's ordinary shares that is:
an Italian resident individual; or

an Italian resident corporation.

This section does not apply toUK shareholders, subject to special rules, including:

non-profit organizations, foundations and associations that are not subjectcertain exemptions. Liability to tax;

Italian commercial partnerships and assimilated entities (società in nome collettivo, in accomandita semplice);

Italian noncommercial partnerships (società semplice);

individuals holding the shares in connection with the exercise of a business activity; and

Italian real estate investment funds (fondi comuni di investimento immobiliare) and Italian real estate SICAF (società di investimento a capitale fisso ).

In addition, where specified, this section also applies to Italian pension funds, Italian investment funds (fondi comuni di investimento mobiliare), Società di Investimento Collettivo A Capitale Variabile (“SICAVs”) and Societa di Investimento Collettivo A Capitale Fisso (“SICAFs”) other than real estate investment funds and SICAFs.
For the purposes of this discussion, a Non-Italian Shareholder means a beneficial owner of the Parent's ordinary shares that is neither an Italian Shareholder nor a permanent establishment or a fixed base through which a non-Italian resident shareholder carriestax on business or performs personal services in Italy nor a partnership.
This discussion is limited to Italian Shareholders and Non-Italian Shareholders that hold their shares directly and whose shares represent, and have represented in any 12-month period preceding each disposal: (i) a percentage of voting rights in the ordinary shareholders’ meeting not greater than 2% for listed shares, or (ii) a participation in the share capital not greater than 5% for listed shares.
This section is based upon tax laws and applicable tax treaties and what is understood to be the current practice in Italy in effect on the date of the filing of this Form 20-F which may be subject to changes in the future, even on a retroactive basis. Italian Shareholders and Non-Italian Shareholders should consult their own advisors as to the Italian tax consequences of the ownership and disposal of the Parent's ordinary shares in their particular circumstances.


Ownership of the Parent's Ordinary Shares
Italian Shareholders
Taxation of Dividends
The tax treatment applicable to dividend distributions dependsdividends will depend upon the natureindividual circumstances of the dividend recipient, as summarized below.

Italianthat shareholder. The Distribution received by a UK resident individual shareholders
Dividends paid by a non-Italian resident company, such asshareholder will form part of that shareholder’s total income for income tax purposes and will constitute the Parent, to Italiantop slice of that income. UK resident individual shareholders are subject to a 26% tax. Such tax (i) may be applied by the taxpayer in its tax return or (ii) if an Italian withholding agent intervenes in the collection of the dividends, may be withheld by such withholding agent.
In the event that a taxpayer elects to be taxed under the “Regime del Risparmio Gestito” (discussed below in the paragraph entitled “—Taxation of Capital Gains—Italian resident individual shareholders”), dividends are not subject to the 26% tax, but are subject to taxation under such “Regime del Risparmio Gestito.”

Subject to certain conditions and limitations, Italian resident individuals may be exempt from the 26% tax on dividends paid in relation toaccordance with their personal tax bands (as described above). A U.K. resident corporate shareholder which is a “small company” for the Parent's ordinary shares if such shares are included in a long-term savings account (piano di risparmio a lungo termine) meetingpurposes of Chapter 2 of Part 9A of the requirements set forth in Article 1(100-114) of Law No. 232 of 11 December 2016 (the “BudgetCorporation Tax Act 2017”).
Pursuant to Law Decree No. 167, dated June 28, 1990, as amended, Italian resident individual shareholders who hold (or are beneficial owners of) foreign financial activities2009 will not being deposited or otherwise held or traded through Italian resident financial intermediaries must, in certain circumstances, disclose the aforesaid to the Italian tax authorities in their income tax return.
Italian resident corporations
Subject to the paragraph below, Italian Shareholdersbe subject to ItalianU.K. corporation tax on the Distribution provided that certain conditions are met (including an anti-avoidance condition). Other UK resident corporate incomeshareholders will be liable to U.K. corporation tax (“IRES”(currently at a rate of 25%) should benefit from a 95% exemption on dividends ifthe Distribution unless the dividend falls within an exempt class and certain conditions are met. The remaining 5%U.K. resident corporate shareholders should seek advice from their own professional advisers in considering whether they are within the scope of dividends are treated as part of the taxable business income of such Italianan exempt class. A non-UK resident corporations, subject to tax in Italy under the IRES.
Dividends, however, are fully subjectshareholder will not generally be liable to tax in the following circumstances: (i) dividends paidU.K. on the Distribution unless he or she carries on (whether solely or in partnership) a trade, profession or vocation in the U.K. through a branch or agency (or, in the case of a corporate holder of ordinary shares where the dividend exemption does not apply, through a permanent establishment) to taxpayers using IAS/IFRS in relationwhich the ordinary shares are attributable. A non-U.K. resident shareholder may also be subject to shares deemedtaxation on dividend income under local law, and should consult his or her own tax advisors concerning his or her tax liabilities (in the U.K. and any other country) on the Distribution of SpinCo Units from Parent.

Parent is not required to withhold tax when distributing the Spinco Units.

The Distribution should otherwise be “heldtax neutral for trading” pursuant to art. 2Parent.

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UK Tax Consequences of the Ministerial Decree 10 January 2018; or (ii) dividends paid in relation toMerger

The Merger should be treated as a disposal of the Units of SpinCo shares acquired through repurchase transactions, stock lendingby the UK resident shareholders and similar transactions, unlessdepending upon the beneficial owner of such dividends would have benefited from the 95% exemption described in the above paragraph.
For certain companies operating in the financial fieldshareholder’s circumstances, and subject to certain conditions, dividendsany available exemptions and reliefs (such as the annual exempt amount for individuals), may give rise to a chargeable gain or an allowable loss for the purposes of U.K. taxation of capital gains. The UK resident shareholders are also includedexpected to have market value basis in the tax baseSpinCo Units following the Distribution such that, provided the Merger occurs shortly after the Distribution, any gain for the regionalUK shareholders on the deemed disposal of Units of SpinCo should be minimal. UK resident individual shareholders are subject to capital gains tax on productive activities (Imposta regionale sulle attività produttive —“IRAP”)the disposal of the Units of SpinCo in accordance with their personal tax bands (as described above).
Italian pension funds
Dividends paid ). A U.K. resident corporate shareholder will be liable to Italian pension funds (subject toU.K. corporation tax on the regime provided for by Article 17disposal at the main rate of Italian Legislative Decree No. 252 dated December 5, 2005) are notU.K. corporation tax (currently at a rate of 25%), subject to any withholding tax, but mustexemptions, reliefs and/or allowable losses. A non-U.K. resident shareholder should not normally be includedliable to U.K. taxation on chargeable gains on the disposal of SpinCo Units unless the person is carrying on (whether solely or in a partnership) a trade, profession or vocation in the resultU.K. through a branch or agency (or, in the case of a corporate holder of ordinary shares, through a permanent establishment) to which the relevant portfolio accrued at the end of the tax period, which is subject to substitute tax at the rate of 20%.
Italian investment funds (fondi comuni di investimento mobiliare), SICAVs and SICAFs.
Dividends paid to Italian investment funds, SICAVs and SICAFsordinary shares are neither subject to any withholding tax nor to any taxation at the level of the fund, SICAV or SICAF. A withholding taxattributable. Special rules may apply in certain circumstances at the rate of up to 26% on distributions made by the investment funds, SICAVs or SICAFs.


Taxation of Capital Gains
Italianindividual non-UK resident individual shareholders
Capital gains realized upon disposal of shares or rights by an Italian resident individual shareholder are subject who have ceased to Italian final substitute tax (imposta sostitutiva ) at a 26% rate.
Capital gains and capital losses realizedbe resident in the relevant tax year have to be declared in the annual income tax return (Regime di Tassazione in Sede di Dichiarazione dei Redditi). Losses in excess of gains may be carried forward against capital gains realized in the four subsequent tax years. While losses generated as of July 1, 2014 can be carried forward for their entire amount, losses realized until December 31, 2011 can be carried forward for 48.08% of their amount only, and losses realized between January 1, 2012 and June 30, 2014 for 76.92% of their amount.
As an alternative to the Regime di Tassazione in Sede di Dichiarazione dei Redditi described in the above paragraph, Italian resident individual shareholders may elect to be taxed under one of the two following regimes:
(i) Regime del Risparmio Amministrato: Under this regime, separate taxation of capital gains is allowed subject to (i) the shares and rights in respect of the shares being deposited with Italian banks, società di intermediazione mobiliare or certain authorized financial intermediaries resident in ItalyUK for tax purposes and (ii) an express election for the Regime del Risparmio Amministrato being timely made in writing by the relevant shareholder. Under the Regime del Risparmio Amministrato, the financial intermediary is responsible for accounting for the substitute tax in respectwho make a disposition of capital gains realized on each saletheir Units of the shares or rights on the shares, and is required to pay the relevant amount to the Italian tax authorities on behalf of the taxpayer, deducting a corresponding amount from the proceeds to be credited to the shareholder. Under the Regime del Risparmio Amministrato, where a sale of the shares or rights on the shares results in a capital loss, such loss may be deducted (up to 48.08% for capital losses realized until December 31, 2011 and up to 76.92% for capital losses realized between January 1, 2012 and June 30, 2014) from capital gains of the same kind subsequently realized under the same relationship of depositSpinCo whilst UK non-resident before becoming once again resident in the sameUK for tax year or inpurposes within five years from departure. UK resident and non-UK resident shareholders should consult their own tax advisors concerning their tax liabilities (in the four subsequent tax years. Under the Regime del Risparmio Amministrato, the shareholder is not required to declare the capital gains in its annual tax return.
(ii) Regime del Risparmio Gestito: Under this regime,U.K. and any capital gains accrued to Italian resident individual shareholders that have entrusted the management of their financial assets, including the shares and rights in respect of the shares, to an authorized Italian-based intermediary, and have elected for the Regime del Risparmio Gestito, are included in the computation of the annual increase in value of the managed assets accrued, even if not realized, at year-end, subject to the 26% substitute tax to be appliedother country) on behalf of the taxpayer by the managing authorized Italian-based intermediary. Under the Regime del Risparmio Gestito, any decline in value of the managed assets accrued at year-end may be carried forward (up to 48.08% if accrued until December 31, 2011 and up to 76.92% if accrued between January 1, 2012 and June 30, 2014) and set against increases in value of the managed assets which accrue in any of the four subsequent tax years. Under the Regime del Risparmio Gestito, the shareholder is not required to report capital gains realized in its annual tax declaration.

Subject to certain conditions and limitations, Italian resident individuals may be exempt from the 26% tax on capital gains related to the Parent's ordinary shares if such shares are included in a long-term savings account (piano di risparmio a lungo termine) meeting the requirements set forth in Article 1(100-114) of Budget Act 2017.

Italian resident corporations
Capital gains realized through the disposal of the Parent's ordinary shares by Italian Shareholders which are companies subject to IRES benefit from a 95% exemption (referred to as the “Participation Exemption Regime”), if the following conditions are met:Units of SpinCo.

i.the shares have been held continuously from the first day of the 12th month preceding the disposal;
F.        Dividends and Paying Agents
ii.the shares were accounted for as a long-term investment in the first balance sheet closed after the acquisition of the shares (for companies adopting IAS/IFRS, shares are considered to be a long-term investment if they are different from those deemed to be “held for trading” pursuant to art. 2 of the Ministerial Decree 10 January 2018).

Based on the assumption that the Parent is a resident of the U.K. for tax purposes, that its ordinary shares are listed on a regulated market, that its value will be predominantly composed of shareholdings in companies carrying on a business activity and not resident in a State with a preferential tax system, the two additional conditions set forth by Article 87 of the CTA in

order to enjoy the Participation Exemption Regime (i.e., the company is not resident in a State with a preferential tax system and carries on a business activity) are both met.
The remaining 5% of the amount of such capital gain is included in the aggregate taxable income of the Italian resident corporate shareholders and subject to taxation according to ordinary IRES rules and rates.
If the conditions for the Participation Exemption Regime are met, capital losses from the disposal of shareholdings realized by Italian resident corporate shareholders are not deductible from the taxable income of the Company.
Capital gains and capital losses realized through the disposal of shareholdings which do not meet at least one of the aforementioned conditions for the Participation Exemption Regime are, respectively, fully included in the aggregate taxable income and fully deductible from the same aggregate taxable income, subject to taxation according to ordinary rules and rates. However, if such capital gains are realized upon disposal of shares which have been accounted for as a long-term investment on the last three balance sheets, then if the taxpayer so chooses the gains can be taxed in equal parts in the year of realization and the four following tax years.
The ability to use capital losses to offset income is subject to significant limitations, including provisions against “dividend washing.”  In addition, Italian resident corporations that recognize capital losses exceeding €50,000 are subject to tax reporting requirements in their annual income tax return (also in case such capital losses are realized as a consequence of a number of transactions). Furthermore, for capital losses of more than €5,000,000, deriving from transactions on shares booked as fixed financial assets, the taxpayer must report the relevant information in its annual income tax return (also in case such capital losses are realized as a consequence of a number of transactions). Such an obligation does not apply to parties who prepare their financial statements in accordance with IAS/IFRS international accounting standards. Italian resident corporations that recognize capital losses should consult their tax advisors as to the tax consequences of such losses.
For certain types of companies operating in the financial field and subject to certain conditions, the capital gains are also included in the IRAP taxable base.
Italian pension funds
Capital gains realized by Italian pension funds are not subject to any withholding or substitute tax. Capital gains and capital losses must be included in the result of the relevant portfolio accrued at the end of the tax period, which is subject to a 20% substitute tax.

Italian investment funds (fondi comuni di investimento mobiliare), SICAVs and SICAFs.
Capital gains realized by Italian investment funds, SICAVs and SICAFs are not subject to any withholding or substitute tax. Capital gains and capital losses must be included in the investment funds, SICAV’s and SICAF’s annual results, which are not subject to tax. A withholding tax may apply in certain circumstances at the rate of up to 26% on distributions made by the funds, SICAVs and SICAFs.

Non-Italian Shareholders
Taxation of Dividends
According to Italian tax laws, the distribution of dividends by the Parent will not trigger any taxable event for Italian income tax purposes for Non-Italian Shareholders.
Taxation of Capital Gains
According to Italian tax laws, capital gains on the Parent's ordinary shares will not trigger any taxable event for Italian income tax purposes for Non-Italian Shareholders provided that the shares are not held in Italy.
Loyalty Voting Structure
NO STATUTORY, JUDICIAL, OR ADMINISTRATIVE AUTHORITY HAS PROVIDED PUBLISHED GUIDANCE ON THE ITALIAN TAX CONSEQUENCES OF THE RECEIPT, OWNERSHIP OR LOSS OF THE ENTITLEMENT TO INSTRUCT THE NOMINEE ON HOW TO VOTE IN RESPECT OF SPECIAL VOTING SHARES AND AS A RESULT, SUCH TAX CONSEQUENCES ARE UNCERTAIN. ACCORDINGLY, WE URGE ITALIAN SHAREHOLDERS TO

CONSULT THEIR TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THE RECEIPT, OWNERSHIP, AND LOSS OF THE ENTITLEMENT TO INSTRUCT THE NOMINEE ON HOW TO VOTE IN RESPECT OF SPECIAL VOTING SHARES.
Receipt of the entitlement to instruct the Nominee on how to vote in respect of special voting shares
An Italian Shareholder that receives the entitlement to instruct the Nominee on how to vote in respect of special voting shares issued by the Parent should in principle not recognize any taxable income upon the receipt of such entitlement.  Under a possible interpretation, the issue of special voting shares can be treated as the issue of bonus shares free of charge to the shareholders out of existing available reserves of the Parent. Such issue should not have any material effect on the allocation of the tax basis of an Italian Shareholder between its Parent's ordinary shares and the corresponding Parent's special voting shares.  Because the special voting shares are not transferable and their very limited economic rights (equal to a fraction of the aggregate sum of $1) can be enjoyed only at the time of a return of capital of the Company, of a winding up or otherwise, the Parent believes and intends to take the position that the tax basis and the fair market value of the special voting shares is minimal. However, because the determination of the tax basis and fair market value of the special voting shares is not governed by any guidance that directly addresses such a situation and is unclear, the Italian tax authorities could assert that the tax basis and fair market value of the special voting shares as determined by the Parent are incorrect.
Loss of the entitlement to instruct the Nominee on how to vote in respect of special voting shares
The tax treatment of an Italian Shareholder that loses its entitlement to instruct the Nominee on how to vote in respect of special voting shares for no consideration is uncertain. It is possible that an Italian Shareholder should recognize a loss to the extent of the Italian Shareholder’s tax basis (if any). The deductibility of such loss depends on individual circumstances and conditions required by Italian law. It is also possible that an Italian Shareholder would not be allowed to recognize a loss upon losing its entitlement to instruct the Nominee on how to vote in respect of special voting shares and instead should increase its basis in its Parent's ordinary shares by an amount equal to the tax basis (if any) in such Parent's special voting shares.

IVAFE (Imposta sul Valore delle Attività Finanziarie detenute all’Estero)

According to Article 19 of the Law Decree of December 6, 2011, No. 201 (“Decree No. 201/2011”), implemented by the Law dated December 22, 2011, No. 214, Italian resident individuals holding financial assets-including shares-outside the Italian territory are required to pay a special tax (“IVAFE”) at the rate of 0.20%. The tax applies on the market value (or, in the lack thereof, on the nominal value or the redemption value) at the end of the relevant year of such financial assets held outside the Italian territory.

Taxpayers may deduct from the tax due a tax credit equal to any wealth taxes paid in the State where the financial assets are held (up to the amount of the Italian tax due).

Stamp Duty (Imposta di bollo)
According to Article 19 of Decree No. 201/2011, a proportional stamp duty applies on a yearly basis on the market value (or, in the lack thereof, on the nominal value or the redemption value) of any financial product or financial instrument. The stamp duty applies at the rate of 0.20% and, in respect of Italian Shareholders or Non-Italian Shareholders other than individuals, it cannot exceed €14,000. The stamp duty applies with respect to any Italian Shareholders or Non-Italian Shareholders (other than banks, insurance companies, investments and pension funds and certain other financial intermediaries) to the extent that the shares are held through an Italian-based banking or financial intermediary or insurance company.

F.Dividends and Paying Agents
 
Not applicable.


G.Statement of Experts
G.        Statement by Experts
 
Not applicable.



H.Documents on Display
H.        Documents on Display
 
The Parent files reports, including annual reports on Form 20-F, furnishes current reports on Form 6-K, and discloses other information with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. These may be read without charge and copied, upon payment of prescribed rates, at the public reference facility maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549.  To obtain information on the operation of the public reference facility, the telephone number is 1-800-SEC-0330.  Any SEC filings may also be accessed by visiting the SEC’s website at www.sec.gov.


I.Subsidiary Information
I.        Subsidiary Information
 
Not applicable

J.        Annual Report to Security Holders

Not applicable.


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Item 11.  Quantitative and Qualitative Disclosures About Market Risk
Item 11.        Quantitative and Qualitative Disclosures About Market Risk

The Company'sCompany’s activities expose it to a variety of market risks including interest rate risk and foreign currency exchange rate risk, liquidity risk and credit risk. The Company'sCompany’s overall risk management strategy focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on its performance through ongoing operational and finance activities. The Company monitors and manages its exposure to such risks both centrally and at the local level, as appropriate, as part of its overall risk management program with the objective of seeking to reduce the potential adverse effects of such risks on its results of operations and financial position.

Depending upon the risk assessment, the Company uses selected derivative hedging instruments, including principally interest rate swaps and foreign currency forward contracts, for the purposes of managing interest rate risk and currency risks arising from its operations and sources of financing. The Company'sCompany’s policy is not to enter into such contracts for speculative purposes. The Company's accounting policies and disclosures regarding its derivatives are set out in Note 8 to the Consolidated Financial Statements.

The following section provides qualitative and quantitative disclosures on the effects that these risks may have. The quantitative data reported below does not have any predictive value and does not reflect the complexity of the markets or reactions which may result from any changes that are assumed to have taken place.


Interest Rate Risk

Indebtedness

The Company'sCompany’s exposure to changes in market interest rates relates primarily to its cash and financial liabilities which bear floating interest rates. The Company'sCompany’s policy is to manage interest cost using a mix of fixed and variable rate debt. The Company has historically used various techniques to mitigate the risks associated with future changes in interest rates, including entering into interest rate swap and treasury rate lock agreements.
In 2017 and 2016, the Company's exposure to floating rates of interest related primarily to the Revolving Credit Facilities due 2021, the Term Loan Facility due 2023 and the Term Loan Facilities due 2019.

At December 31, 20172023 and 2016, the Company held $625.0 million (notional amount) in interest rate swaps that effectively convert $625.0 million2022, approximately 28% and 20% of the 6.250% Senior Secured Notes due 2022 from fixed interest rate debt to variable rate debt. At December 31, 2017 and 2016, approximately 30% and 25% of the Company's netCompany’s Net debt portfolio was exposed to interest rate fluctuations, respectively. The Company’s exposure to floating rates of interest primarily relates to the Revolving Credit Facilities and Euro Term Loan Facilities due January 2027. At December 31, 2023 and December 31, 2022, the Company no longer held any interest rate swaps.

A hypothetical 10100 basis points increase in interest rates for 2017, 20162023 and 2015,2022, with all other variables held constant, would have resulted in incremental pre-tax losseslower income from continuing operations before provision for income taxes of approximately $2.5 million, $2.0$16 million and $2.4$11 million, respectively.

Costs to Fund Jackpot Liabilities

Fluctuations in prime, treasury, and agency rates due to changes in market and other economic conditions directly impact the Company'sCompany’s cost to fund jackpots and corresponding gaming operating income. If interest rates decline, jackpot cost increases and operating income decreases. The Company estimates a hypothetical decline of one percentage point in applicable interest rates would have reduced operating income by approximately $9.0 million and $10.2$4 million in 20172023 and 2016, respectively.$7 million in 2022. The Company does not manage this exposure with derivative financial instruments.



Foreign Currency Exchange Rate Risk

The Company operates on an international basis across a number of geographical locations. The Company is exposed to (i) transactional foreign exchange risk when an entity enters into transactions in a currency other than its functional currency, and (ii) translation foreign exchange risk which arises when the Company translates the financial statements of its foreign entities into U.S. dollars for the preparation of the consolidated financial statements.Consolidated Financial Statements.

Transactional Risk

The Company'sCompany’s subsidiaries generally execute their operating activities in their respective functional currencies. In circumstances where the Company enters into transactions in a currency other than the functional currency of the relevant entity, the Company seeks to minimize its exposure by (i) sharing risk with its customers (for example, in limited circumstances, but whenever possible, the Company negotiates clauses into its contracts that allows for price adjustments should a material change in foreign exchange rates occur), (ii) creating a natural hedge by netting receipts and payments, (iii) utilizing foreign currency borrowings, and (iv) where applicable, by entering into foreign currency forward and option contracts.
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The principal foreign currency to which the Company is exposed is the euro. A hypothetical 10% decrease in the year end U.S. dollar to euro exchange rate, with all other variables held constant, would have resulted in incremental pre-tax losseslower income from continuing operations before provision for income taxes of approximately $362.2 million, $337.0$110 million and $357.4$120 million for 2017, 2016December 31, 2023 and 2015,2022, respectively. Our euro exposure primarily arises from euro denominated long-term debt. Based on our long-term forecast, the Company undertakes to match and maintain the mix of euro denominated debt to the mix of euro sourced EBITDA.

From time to time, the Company enters into foreign currency forward and option contracts to reduce the exposure associated with certain firm commitments, variable service revenues, and certain assets and liabilities denominated in foreign currencies. These contracts generally have average maturities of 12 months or less, and are regularly renewed to provide continuing coverage throughout the year. It is the Company'sCompany’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged item to maximize hedge effectiveness.

At December 31, 2017,2023, the Company had forward contracts for the sale of approximately $333.9$238 million of foreign currency (primarily euroCanadian dollar, Peruvian sol, Australian dollar, and British pounds)Mexican peso) and the purchase of approximately $227.5$234 million of foreign currency (primarily U.S. dollars,dollar, British pounds, Canadian dollarsdollar, euro, and Swedish krona)Mexican peso).

At December 31, 2016,2022, the Company had forward contracts for the sale of approximately $339.3$103 million of foreign currency (primarily euroBritish pounds, Australian dollar, and British pounds)Colombian peso) and the purchase of approximately $146.2$204 million of foreign currency (primarily U.S. dollars, Canadian dollarsdollar, British pounds, Chilean peso, and Swedish krona)euro).

Translation Risk

Certain of the Company'sCompany’s subsidiaries are located in countries that are outside of the United States, in particular the Eurozone. As the Company'sCompany’s reporting currency is the U.S. dollar, the income statements of those entities are converted into U.S. dollars using the average exchange rate for the period, and while revenues and costs are unchanged in local currency, changes in exchange rates may lead to effects on the converted balances of revenues, costs, and the result in U.S. dollars. The monetary assets and liabilities of consolidated entities that have a reporting currency other than the U.S. dollar are translated into U.S. dollars at the period-end foreign exchange rate. The effects of these changes in foreign exchange rates are recognized directly in the consolidated statementsConsolidated Statements of changes in equityShareholders’ Equity within accumulated other reserves.comprehensive income.

The Company'sCompany’s foreign currency exposure primarily arises from changes between the U.S. dollar and the euro and the U.S. dollar and Swedish krona.euro. A hypothetical 10% decrease in the U.S. dollar to euro exchange rate, with all other variables held constant, would have reducedincreased equity by $94.2 million, $77.1$30 million and $42.1$29 million for 2017, 20162023 and 2015, respectively. A hypothetical 10% decrease in the U.S. dollar to Swedish krona exchange rate, with all other variables held constant, would have reduced equity by $21.9 million, $18.2 million and $18.6 million for 2017, 2016 and 2015,2022, respectively.


Liquidity Risk
Item 12.        Description of Securities Other than Equity Securities
Liquidity risk is the risk of not being able to fulfill present or future obligations if the Company does not have sufficient funds available to meet such obligations. Liquidity risk arises mostly in relation to cash flows generated and used in working capital and from financing activities, particularly by servicing the Company's debt, in terms of both interest and principal, and its payment obligations relating to its ordinary business activities. The Company believes that the cash which it generates from its operating activities, together with its committed borrowing capacity, will be sufficient to meet its financial obligations and

operating requirements in the foreseeable future. Therefore, the Company does not believe that it is exposed to a significant concentration of liquidity risk.
Credit Risk
The Company's credit risk primarily arises from cash, trade receivables and customer financing receivables. The Company has established risk management policies, where it holds cash deposits with major, financially sound counterparties with high credit ratings, and that limit exposure to any one credit party.
The Company enters into commercial transactions only with recognized, creditworthy third parties. A significant portion of trade receivables are from government lottery entities which the Company considers to pose insignificant credit risk. Additionally, the Company does not have significant credit risk to any one customer. Geographically, credit risk is concentrated as follows:
  December 31,
  2017 2016
(in thousands) $ % $ %
Italy 424,918
 37.0 398,688
 36.4
United States 291,729
 25.4 300,220
 27.4
Latin America 189,730
 16.5 189,518
 17.3
Europe and Africa 203,628
 17.7 141,898
 12.9
Other 38,781
 3.4 66,083
 6.0
  1,148,786
 100.0 1,096,407
 100.0
         
Reconciliation to Balance Sheet:  
    
  
Trade receivables, net (1)
 922,528
   932,672
  
Customer financing receivables, net - current (Note 6) 151,360
   109,773
  
Customer financing receivables, net - non-current (Note 6) 74,898
   53,962
  
  1,148,786
   1,096,407
  
 _________________________________________________________________
1Amount presented excludes trade receivables due from related parties.
Commodity Price Risk
The Company's exposure to commodity price changes is not considered material and is managed through its procurement and sales practices.

Item 12.Description of Securities Other than Equity Securities

Not applicable.


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PART II


Item 13.Defaults, Dividends Arrearages and Delinquencies
Item 13.        Defaults, Dividend Arrearages, and Delinquencies
 
None.
 
Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds
Item 14.        Material Modifications to the Rights of Security Holders and Use of Proceeds
 
See the discussion of the Mergers in “Item 4. Information on the Company - A. History and Development of the Company-Acquisition of International Game Technology” and the description of the loyalty schemeLoyalty Plan in “Item 10. Additional Information - Information—B. Memorandum and Articles of Association - —Loyalty Plan.”
 
Item 15.Controls and Procedures
Item 15.        Controls and Procedures
 
Restatement of previously issued financial statements

As reported in the Company's press release, furnished on Form 6-K to the SEC on February 13, 2018, management recommended to the Company's Audit Committee that the Company's consolidated financial statements for the year ended December 31, 2016, be restated to classify the upfront payment of $665.3 million, made in two installments in 2016 to the Italian governmental authority in connection with the Italian Gioco del Lotto service concession from an investing activity to an operating activity in the Company's consolidated Statements of Cash Flows.

As a result, the Company determined that there was a material weakness in internal control over financial reporting as of December 31, 2016.

Disclosure Controls and Procedures
 
ManagementIGT management maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Company’s reports that it files or submitsfurnishes under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within time periods specified in the Commission'sSEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive OfficerCEO and Chief Financial Officer,CFO, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating its disclosure controls and procedures, the CompanyIGT recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as the Company'sCompany’s are designed to do.

As required by Rule 13a-15(b) under the Exchange Act, an evaluation of the effectiveness of the Company'sIGT’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 20172023 was conducted under the supervision and with the participation of its management including its Chief Executive OfficerCEO and Chief Financial Officer.  Solely because of the material weakness in internal control over financial reporting described below,CFO. Based on this evaluation, its Chief Executive OfficerCEO and Chief Financial OfficerCFO concluded that its disclosure controls and procedures were not effective as of December 31, 2017.2023 at a reasonable assurance level.
 
Management’s Report on Internal Control over Financial Reporting
 
The Company'sIGT’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined by Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

The Company'sCompany’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.


The Company’sIGT’s internal control over financial reporting includes those policies and procedures that:

•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
•provide reasonable assurance that transactions are recorded, as necessary, to permit preparation of financial statements in accordance with generally accepted accounting principles;principles and that receipts and expenditures of the Company are made only in accordance with authorizations of the Company'sCompany’s management and directors; and
•provide reasonable assurance that unauthorized acquisition, use or disposition of the Company'sCompany’s assets, that could have a material effect on the financial statements, would be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in business conditions or that the degree of compliancedue to non-compliance with theapplicable policies or procedures may deteriorate.and procedures.

The Company'sIGT’s management assessed the effectiveness of internal control over financial reporting as of December 31, 20172023 based upon the framework presented in “InternalInternal Control-Integrated Framework”Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).Commission. Based on this assessment, management concluded that the Company'sCompany’s internal control over financial reporting was not effective as of December 31, 2017 due to the material weakness discussed below.2023.


A material weakness is a deficiency, or combination
97
Table of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. Contents

In connection with the restatement of its consolidated Statement of Cash Flows for the year ended December 31, 2016, the Company identified a material weakness in its internal control over financial reporting as the Company did not maintain effective internal controls related to the identification, evaluation, and documentation of significant judgments related to the classification on the Statement of Cash Flows of significant non-recurring transactions, such as the material upfront payments made in connection with the Italian Gioco del Lotto service concession. This control deficiency could result in a misstatement of the Statement of Cash Flows that would result in a material misstatement to the annual consolidated financial statements that would not be prevented or detected.

The Company'sIGT’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the effectiveness of the Company'sCompany’s internal control over financial reporting as of December 31, 20172023 as stated in their report appearing under Item 18 on page F-2.in “Report of Independent Registered Public Accounting Firm” included in “Item 18. Financial Statements.”
Remediation Plan
During the second half of the 2017 financial reporting process, management began a process to enhance the Company’s internal control over financial reporting to identify, evaluate, and document significant judgments related to the classification on the Statement of Cash Flows of significant non-recurring transactions, such as the material upfront payments made in 2016 to the Italian governmental authority. The enhancements included:

(i)expanding staffing and resources dedicated to technical accounting and financial reporting, 
(ii)formalization of the process to identify and document significant judgments related to the classification on the Statement of Cash Flows of significant non-recurring transactions, and
(iii)utilizing professional services from external advisers to supplement internal resources and provide the Company with access to additional technical resources that management uses in their evaluation of complex accounting matters related to the Statement of Cash Flows.
Since the remediation plan has been in place, there have not been enough opportunities to conclude, through testing, that the material weakness was remediated as of December 31, 2017.


Changes in Internal Control over Financial Reporting
 
The activities described underThere have been no changes in internal control over financial reporting during the heading Remediation Plan above are changesyear ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the effectiveness of the Company’s internal control over financial reporting during the annual period ended December 31, 2017.reporting.


Item 16.16A.        Audit Committee Financial Expert
A.Audit Committee Financial Expert
 
The Company'sParent’s Board of Directors has determined that Vincent L. Sadusky, chairmanMaria Pinelli, chairperson of the Audit Committee, isand Alberto Dessy and Heather McGregor, both members of the Audit Committee, are each an audit committee financial expert. HeEach of Ms. Pinelli, Mr. Dessy and Ms. McGregor is an independent director under the NYSE standards.
 
B.Code of Ethics
Item 16B.        Code of Ethics
 
The CompanyIGT has adopted a Code of Ethics for Principal Executive Officer and Senior Financial Officers (the “Code of Ethics” or “Code”), which is applicable to its principal executive officer, principal financial officer, the principal accounting officer and controller, and any persons performing similar functions.functions (each, a “Covered Officer”). The Code of Ethics was most recently reviewed and approved by the Board on October 26, 2023, with updates incorporated to: (i) impose a duty on each Covered Officer to escalate both actual or potential Code violations to the Audit Committee; and (ii) to expand “Confidentiality” and “Fair Dealing” provisions to include suppliers and other stakeholders, except when legally authorized or required to disclose. This codeCode of ethicsEthics is postedavailable on itsthe Company’s website, www.igt.com, and may be found as follows: from the main page, first click on “Explore IGT” and then on "Investor Relations"“Investor Relations” and then on “Management and Governance”“ESG” and then on “Documents.“Governance Documents.” The information contained on the Company'sCompany’s website is not included in, or incorporated by reference into, this annual reportAnnual Report on Form 20-F. To the extent that the Company amends any provision of the Code, or grants any waiver from a provision of the Code, to any Covered Officer, the Company intends to disclose such amendment or waiver on the “Governance Documents” page within the “ESG” section of the Company’s website at www.IGT.com.


C.Principal Accountant Fees and Services
Item 16C.        Principal Accountant Fees and Services
 
Beginning with the year ended December 31, 2015, PricewaterhouseCoopers LLP (“PwC US”) ishas been serving as the Company’s independent auditor.auditor since 2015.
“PwC Entities” means PricewaterhouseCoopers LLP, the auditor of the Company, as well as all of the foreign entities belonging to the PwC network.

Aggregate fees for professional services and other services rendered by PwC EntitiesUS and its foreign entities belonging to the PwC network in 20172023 and 20162022, all of which were approximately:approved by the Audit Committee pursuant to its policies and procedures, were as follows: 
For the year ended December 31,
 For the year ended December 31,
($ thousands)  2017 2016
($ in thousands) ($ in thousands) 20232022
Audit fees 14,582
 15,497
Audit-related fees 204
 1,660
Tax fees 552
 643
All other fees 134
 853
 15,472
 18,653
All other fees
All other fees
15
 
•Audit fees consist of fees billed for professional services performed in connection with the annual financial statements.
•Tax fees consist of professional services for tax planning and compliance. The 2023 tax fees include professional services incurred for our Separation & Divestiture activities, as defined in “Notes to the Consolidated Financial Statements—3. Business Acquisitions and Divestitures” included in “Item 18. Financial Statements.”
•Audit-related fees are fees charged forconsist of assurance and related services that are reasonably related to the performance of the audit or review of the financial statements and agreed upon procedures for certain financial statement areas and are not reported under “Audit fees.”areas. The 2023 audit-related fees include amounts incurred for our Separation & Divestiture activities.
Tax fees consist of fees billed for professional services for tax planning and compliance.
•All other fees, consist of fees billed for services other than those reported above, and mainly compriseconsist of services in relation to IP royalty audits.compliance-related services and access to online accounting research software applications.
 
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Audit Committee’s Pre-Approval Policies and Procedures
 
The Audit Committee pre-approves engagements of ourthe Company’s independent registered public accounting firm to audit its consolidated financial statements.the Company’s Consolidated Financial Statements. The Audit Committee has a policy requiring management to obtain the Audit Committee’s approval before engaging the Company'sCompany’s independent registered public accounting firm to provide any other audit or permitted non-audit services to the Company or its subsidiaries. Pursuant to this policy, which is designed to ensure that such engagements do not impair the independence of the Company'sCompany’s independent registered public accounting firm, the Audit Committee reviews and pre-approves, (if appropriate)if appropriate, specific audit and non-audit services in the categories Audit Services, Audit-Related Services, Tax Services,audit services, tax services, audit-related services, and any other services that may be performed by itsthe Company’s independent registered public accounting firm.
 
D.Exemptions from the Listing Standards for Audit Committees
Item 16D.        Exemptions from the Listing Standards for Audit Committees
 
None.



E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Item 16E.        Purchases of Equity Securities by the Issuer and Affiliated Purchasers
 
On November 15, 2021, the Parent’s Board of Directors authorized a share repurchase program pursuant to which the Company may repurchase up to $300 million of the Parent’s outstanding ordinary shares during a period of four years commencing on November 18, 2021. The share repurchase program was publicly announced on November 16, 2021. At the Parent’s 2023 annual general meeting, the Parent’s shareholders granted authority to repurchase, subject to a maximum repurchase price, up to 19,968,394 of the Parent’s ordinary shares. This authority remains valid until November 8, 2024, unless previously revoked, varied, or renewed at the Parent’s 2024 annual general meeting.

The Company currently has neither purchased any common shares of the Company nor announceddid not execute any share buyback plans.repurchase transactions during the year ended December 31, 2023.

F.Change in Registrant’s Certifying Accountant
Item 16F.        Change in Registrant’s Certifying Accountant
 
None.


G.Corporate Governance
Item 16G.        Corporate Governance
 
The Parent is a public limited company organizedincorporated under the laws of England and Wales and qualifies as a foreign private issuer under the rules and regulations of the SEC and the listing standards of the NYSE. In accordance with the NYSE listing rules related to corporate governance, listed companies that are foreign private issuers are permitted to follow home-country practice in some circumstances in lieu of the provisions of the corporate governance rules contained in Section 303A of the NYSE Listed Company Manual that are otherwise applicable to listed companies. However, for as long as the Parent’s ordinary shares are listed on the NYSE, the Company willintends to comply with all NYSE corporate governance standards set forth in Section 3 of the NYSE Listed Company Manual applicable to non-controlled domestic U.S. issuers, regardless of whether the Company is a foreign private issuer. The Board has adopted Corporate Governance Guidelines, a copy of which is available on the “Investor Relations” page of www.IGT.com.


H.Mine Safety Disclosure
Item 16H.        Mine Safety Disclosure
 
Not applicable.

Item 16I.    Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Item 16J.    Insider Trading Policies

Not applicable.

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Item 16K.    Cybersecurity

Cybersecurity Risk Management Processes

As discussed in Part I, Item 3D – Risk Factors, the Company faces an evolving cybersecurity and information security risk landscape that could impact the achievement of strategic, financial and operational objectives. While it is not possible to identify or anticipate every cybersecurity and information security risk, the Company has developed, implemented, and maintained cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. These include processes for assessing, identifying, and managing material risks from cyber and information security threats, which are incorporated into the Company’s enterprise risk management program, and we test, evaluate, and evolve our processes, security measures, and incident response, as appropriate.

To operate the business and provide products and services to our customers, the Company owns and maintains or works with third parties to employ various information systems, or electronic information resources. These information systems include physical or virtual infrastructure controlled by such information resources (or components thereof), organized and overseen by the Global Information Security (“GIS”) team in collaboration with the business to collect, process, maintain, use, share, disseminate or dispose of the Company’s information to maintain and support operations. The Chief Information Officer (the “CIO”) leads the GIS function of the Company.

GIS maintains information and cyber security risk management practices and processes designed to identify, analyze, evaluate and address various cybersecurity threats faced by the Company. Any potential cybersecurity incident could adversely affect the confidentiality, integrity or availability of our information systems or any information residing therein, and these threats include external attempts to breach and compromise systems, social engineering, insider threats, mishandling of or failure to comply with security policies and not adhering to published guidance on how to operate in accordance with cybersecurity practices. To mitigate our cybersecurity risk, GIS has designed various cybersecurity processes to prevent, detect, report, mitigate and remediate threats and vulnerabilities and protect the confidentiality, integrity and availability of information. As the functional lead of GIS, the Chief Information Security Officer (the “CISO”) oversees the Company’s information security programs maintained throughout the organization and ensures the integration of policies, procedures and controls into business processes.

GIS, including the Global Security Operations Center and Cyber Threat Intelligence Center (“CTIC”), performs certain operational aspects of the information and cyber security program by partnering with business units and senior management to conduct ongoing impact and risk assessment. The Global Security Operations Center serves as the Company’s first level of information and cyber security defense monitoring, with responsibility for identifying and escalating cybersecurity incidents pursuant to established internal procedures. When a cybersecurity incident occurs, the CTIC coordinates and provides timely, organized, and informed responses to mitigate the damage or loss to the Company’s IT systems, network and data and to minimize economic, reputational and other harms to the Company and its customers, employees and partners.

Cybersecurity Governance and Oversight Responsibilities

To support the effectiveness of the information and cyber security risk management practices, the Company has implemented a program and governance model that describes the roles, responsibilities and expectations for relevant segments and functions across the Company:

•Board and Audit Committee: The Board reviews the adequacy and effectiveness of the Company’s cyber and information security program, including the various policies, practices, and internal controls. The Audit Committee holds dedicated sessions to receive and discuss updates on data protection and cybersecurity and engages with management on the Company’s incident prevention plans and policies, threat-detection measures and prompt response to malicious activity and attacks. Through the Audit Committee, the Board receives periodic updates on cyber security risk oversight and related matters, including the receipt of annual reports on cyber and information security from the CIO, CISO, and Audit Committee.
•Information and Cyber Security Program Owners: The Senior Vice President, Chief Information Officer, and Vice President, CISO own the GIS Information and Cyber Security Program. The Company’s CISO has over 30 years of technical skills and experience designing, implementing, and maintaining global information security frameworks and communications networks for companies. The Company’s CIO has over 35 years of technical skills and experience developing global systems and processes. The CISO operates the Company’s cyber and information security program under the direct supervision of the CIO, and the CIO reports directly into the Company’s Chief Financial Officer.
•Information and Security Governance Committee (or the “ISGC”): The ISGC, comprised of senior management and led by the CISO, reviews GIS policies, standards and other governance documents at least annually, or upon need of a significant change. Decisions and recommendations from the committee are communicated to the Executive Management Team and Board, as appropriate, by the CISO.
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•Cybersecurity Incident Response Committee (or the “CIRC”): The Company has established a cross-functional CIRC charged with reviewing significant cybersecurity incidents escalated by the CISO to complete a materiality analysis to support the identification of appropriate steps, which may include disclosure in accordance with applicable SEC rules and regulation and other law.
•Senior Management: Senior management within Lottery, Gaming, PlayDigital and corporate services are responsible for collaborating with GIS to implement information and cyber security processes into their business segments or functional areas.

Cybersecurity and Our Gaming Products and Services

Customers entrust the Company to safeguard their data, and GIS ensures that trust with teams dedicated to maintaining that confidentiality, integrity, and availability of customer data. GIS identifies cybersecurity risks and tracks mitigation activities, testing and monitoring of the operational effectiveness of controls to ensure business commitments are achieved. In addition to internal management of data security controls, GIS undergoes third-party assessments each year to validate that controls are suitably designed and operating effectively. These independent assessments include: (i) internal risk assessments; (ii) System and Organizational Controls (“SOC”) 1, SOC 2, and SOC 3 audits; (iii) Payment Card Industry assessments; (iv) World Lottery Association assessments; and (v) ISO 27001 certification audits.

GIS has incorporated secure practices into the software development lifecycle, which includes risk assessments of projects, rigorous testing of application and network changes, issue tracking to resolution prior to deployment of changes, governance over our environment and providing a structured, measurable process to ensure solutions are managed and sustainable with a security focus.

IGT’s Global Information Security Management System (“ISMS”) addresses security concerns related to safeguarding customer data by guiding the management of the overall information security management framework and developing information security documentation, including security policies, security standards and protocols or procedures. The goals pursued by ISMS include:

•Complying with business, legal, and regulatory requirements to maintain the confidentiality, integrity and availability of IGT information assets and services;
•Implementing industry best practices at the program, process and system levels;
•Maintaining IGT’s ability to continue services in the face of events and major disruptions;
•Implementing controls to protect IGT information against theft, abuse and other forms of harm or loss; and
•Designing and implementing a system of internal controls designed to protect IGT and its stakeholders.

IGT’s CTIC focuses on early detection of risks, including cybersecurity threats, through a variety of testing methods that are selected and implemented to align with industry best practices, which include penetration and vulnerability scanning of systems and environments. Findings from these tests are tracked to remediation and reported to executive management (including the Chief Financial Officer, General Counsel, Chief Accounting Officer and Head of Internal Audit) and the Audit Committee.

In addition to CTIC’s monitoring capabilities, internal and external parties can also escalate a suspected information or cyber security threat to the CTIC through an automated reporting system. As needed, the CTIC coordinates a response with other departments (including the Legal department and executive team) by way of the CISO. If management deems a cybersecurity incident material, the Company will report the cybersecurity incident consistent with applicable rules and regulations, including those of the SEC. GIS also introduced the Third-Party Risk Assessments program to evaluate the potential impact of IGT vendors on the business from various security threat vectors and monitors the overall cyber security health of IGT’s critical vendors. Information security monitoring of vendors is managed through GIS, in collaboration with the Company’s procurement team.
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PART III
Item 17.
Item 17.        Financial Statements
The Company has responded to Item 18 in lieu of responding to this item.
 
Not applicable.
Item 18.Financial Statements
Item 18.        Financial Statements
 
The audited consolidated financial statementsConsolidated Financial Statements as required under Item 18 are attached hereto starting on page F-1 of this annual report on Form 20-F.
 
Item 19.Exhibits
Item 19.        Exhibits
 
A list of exhibits included as part of this annual report on Form 20-F is set forth in the Index to Exhibits immediately following this Item 19.



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INDEX TO EXHIBITS
 
ExhibitDescription
Exhibit1.1Description
1.1
Articles of Association of International Game Technology PLC, adopted April 7, 2015, and amended May 22, 2017June 25, 2020 (incorporated herein by reference to Exhibit 99.2 of the Company’s Form 6-K furnished to the SEC on June 1, 2017)29, 2020).
There have not been filed as exhibits to this Form 20-F certain long-term debt instruments, none of which relates to indebtedness that exceeds 10% of the consolidated assets of International Game Technology PLC. International Game Technology PLC agrees to furnish the Securities and Exchange Commission, upon its request, a copy of any instrument defining the rights of holders of long-term debt of International Game Technology PLC and its consolidated subsidiaries.
2.1
International Game Technology PLC Loyalty Plan Terms and Conditions, adopted April 7, 2015, and amended December 24, 2017 and March 7, 2018.
2.2
First Supplemental Trust Deed dated April 7, 2015 relating to the Trust Deed dated December 5, 2012 in respect of €500,000,000 3.500% Guaranteed Notes due March 5, 2020 among International Game Technology PLC, as the Issuer; certain subsidiaries of International Game Technology PLC, as the Initial Guarantors; certain subsidiaries of International Game Technology PLC, as the Additional Guarantors; and BNY Mellon Corporate Trustee Services Limited, as the Trustee2018 (incorporated herein by reference to Exhibit 4.7 to2.1 of the Current ReportCompany’s Form 20-F filed with the SEC on Form 8-K filed by International Game Technology on April 10, 2015)March 15, 2018).
2.32.2
Senior Facilities Agreement dated November 4, 2014, as amended April 2, 2015, October 29,28, 2015, June 26, 2016, July 31, 2017, December 17, 2018, July 24, 2019 and July 10, 2017May 7, 2020 for the US$1,800,000,0001,050,000,000 and €1,050,000,000€625,000,000 multicurrency revolving credit facilities among International Game Technology PLC (as successor to GTECH S.p.A.), as the Parent and a Borrower; GTECH Corporation, as a Borrower; J.P. Morgan Limited and Mediobanca — Banca di Credito Finanziario S.p.A., as the Global Coordinators, Bookrunners, and Mandated Lead Arrangers; the entities listed in Part III of Schedule I thereto, as the Bookrunners and Mandated Lead Arrangers, the entities listed in Part IV of Schedule I thereto, as the Mandated Lead Arrangers; the entities listed in Part V of Schedule I thereto, as the Arrangers, the financial institutions listed in Part IIA of Schedule I thereto, as the Original Lenders; The Royal Bank of Scotland plc, as the Agent; The Royal Bank of Scotland plc, as the Issuing Agent; KeyBank National Association, as the Swingline Agent; and the financial institutions listed in Part IIB of Schedule I thereto, as the Original US Dollar Swingline Lenders (incorporated herein by reference to Exhibit 99.499.3 of the Company’s Form 6-K furnished to the SEC on August 1, 2017)May 13, 2020).
2.42.3
Amendment and Restatement Agreement, dated July 21, 2021, relating to the Senior FacilitiesFacility Agreement dated July 25, 2017, as amended December 18, 2018, July 18, 2019 and May 8, 2020 for the €1,500,000,000 term loan facilitiesfacility among International Game Technology PLC, as the Borrower; Bank of America Merrill Lynch International Limited and Mediobanca - Banca di Credito Finanziario S.p.A. as Global Coordinators, Bookrunners, and Mandated Lead Arrangers; BNP Paribas, Italian Branch, Banca IMI S.p.A., and UniCredit Bank AG, Milan Branch, as Bookrunners and Mandated Lead Arrangers; Barclays Bank PLC, Credit Agricole Corporate & Investment Bank, Milan Branch, ING Bank N.V. - Milan Branch, National Westminster Bank PLC, Socgen Inversiones Financiers S.A.U., The Bank of Nova Scotia, and Credit Suisse AG, Milan Branch as Mandated Lead Arrangers; Mediobanca - Banca di Credito Finanziario S.p.A., as the Agent; and others (incorporated herein by reference to Exhibit 99.399.2 of the Company’s Form 6-K furnished to the SEC on August 1, 2017)July 26, 2021).
2.52.4
Indenture dated as of April 7, 2015 among International Game Technology PLC, as the Issuer; certain subsidiaries of International Game Technology PLC, as the Initial Guarantors; BNY Mellon Corporate Trustee Services Limited, as Trustee; The Royal Bank of Scotland plc, as Security Agent; The Bank of New York Mellon, London Branch, as Euro Paying Agent and Transfer Agent; The Bank of New York Mellon, as Dollar Paying Agent and Dollar Registrar; and The Bank of New York Mellon (Luxembourg) S.A., as Euro Registrar, with respect to $600,000,000 5.625% Senior Secured Notes due February 15, 2020, $1,500,000,000 6.250% Senior Secured Notes due February 15, 2022, $1,100,000,000 6.500% Senior Secured Notes due February 15, 2025, €700,000,000 4.125% Senior Secured Notes due February 15, 2020 and €850,000,000 4.750% Senior Secured Notes due February 15, 2023 (incorporated herein by reference to Exhibit 4.8 to the Current Report on Form 8-K filed by International Game Technology on April 10, 2015).
2.62.5
Indenture dated as of June 15, 2009 between International Game Technology, as the Company, and Wells Fargo Bank, National Association, as the Trustee (Senior Debt Securities) (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by International Game Technology on June 15, 2009)2009, Commission file number 001-36906).

2.6
ExhibitDescription
2.7
First Supplemental Indenture dated as of June 15, 2009 between International Game Technology, as the Company, and Wells Fargo Bank, National Association, as the Trustee (Creating a Series of Securities Designated 7.50% Notes due 2019) (incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K filed by International Game Technology on June 15, 2009).
2.8
Amendment No. 1 dated as of October 20, 2014 between International Game Technology, as the Company; and Wells Fargo Bank, National Association, as the Trustee, to the Indenture dated as of June 15, 2009, as supplemented by the First Supplemental Indenture dated as of June 15, 2009 (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by International Game Technology on October 22, 2014).
2.9
Amendment No. 2 dated as of April 7, 2015 among International Game Technology, as the Company; Wells Fargo Bank, National Association, as the Trustee; and The Royal Bank of Scotland plc, as the Security Agent, to the Indenture dated as of June 15, 2009, as supplemented by the First Supplemental Indenture dated as of June 15, 2009 (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by International Game Technology on April 10, 2015).
2.10
Amendment No. 3 dated as of April 22, 2015 among International Game Technology, as the Company; International Game Technology PLC and certain subsidiaries of International Game Technology PLC, as the Guarantors; and Wells Fargo Bank, National Association, as the Trustee, to the Indenture dated as of June 15, 2009, as supplemented by the First Supplemental Indenture dated as of June 15, 2009 (incorporated herein by reference to Exhibit 4.25 of the Company’s Annual Report on Form 20-F filed by International Game Technology PLC on May 15, 2015).
2.11
Amendment No. 4 dated as of February 28, 2018 among International Game Technology, as the Company; Wells Fargo Bank, National Association, as the Trustee; and The Royal Bank of Scotland PLC, as Security Agent, to the Indenture dated as of June 15, 2009, as supplemented by the First Supplemental Indenture dated as of June 15, 2009.
2.12
Second Supplemental Indenture dated as of June 8, 2010 between International Game Technology, as the Company, and Wells Fargo Bank, National Association, as the Trustee (Creating a Series of Securities Designated 5.500% Notes due 2020) (incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K filed by International Game Technology on June 8, 2010).
2.13
Amendment No. 1 dated as of April 7, 2015 among International Game Technology, as the Company; Wells Fargo Bank, National Association, as the Trustee; and The Royal Bank of Scotland plc, as the Security Agent, to the Indenture dated as of June 15, 2009, as supplemented by the Second Supplemental Indenture dated as of June 8, 2010 (incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K filed by International Game Technology on April 10, 2015).
2.14
Amendment No. 2 dated as of April 22, 2015 among International Game Technology, as the Company; International Game Technology PLC and certain subsidiaries of International Game Technology PLC, as the Guarantors; and Wells Fargo Bank, National Association, as the Trustee, to the Indenture dated as of June 15, 2009, as supplemented by the Second Supplemental Indenture dated as of June 8, 2010 (incorporated herein by reference to Exhibit 4.26 of the Company’s Annual Report on Form 20-F filed by International Game Technology PLC on May 15, 2015).
2.15
Amendment No. 3 dated as of April 23, 2015 between International Game Technology, as the Company; and Wells Fargo Bank, National Association, as the Trustee, to the Indenture dated as of June 15, 2009, as supplemented by the Second Supplemental Indenture dated as of June 8, 2010 (incorporated herein by reference to Exhibit 4.28 of the Company’s Annual Report on Form 20-F filed by International Game Technology PLC on May 15, 2015).
2.16
Third Supplemental Indenture dated as of September 19, 2013 between International Game Technology, as the Company, and Wells Fargo Bank, National Association, as the Trustee (Creating a Series of Securities Designated 5.350% Notes due 2023) (incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K filed by International Game Technology on September 19, 2013).

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ExhibitDescription
2.7
ExhibitDescription
2.17
Amendment No. 1 dated as of April 7, 2015 among International Game Technology, as the Company; Wells Fargo Bank, National Association, as the Trustee; and The Royal Bank of Scotland plc, as the Security Agent, to the Indenture dated as of June 15, 2009, as supplemented by the Third Supplemental Indenture dated as of September 19, 2013 (incorporated herein by reference to Exhibit 4.3 to the Current Report on Form 8-K filed by International Game Technology on April 10, 2015).
2.182.8
Amendment No. 2 dated as of April 22, 2015 among International Game Technology, as the Company; International Game Technology PLC and certain subsidiaries of International Game Technology PLC, as the Guarantors; and Wells Fargo Bank, National Association, as the Trustee, to the Indenture dated as of June 15, 2009, as supplemented by the Third Supplemental Indenture dated as of September 19, 2013 (incorporated herein by reference to Exhibit 4.27 of the Company’s Annual Report on Form 20-F filed by International Game Technology PLC on May 15, 2015).
2.192.9
Amendment No. 3 dated as of April 23, 2015 between International Game Technology, as the Company; and Wells Fargo Bank, National Association, as the Trustee, to the Indenture dated as of June 15, 2009, as supplemented by the Third Supplemental Indenture dated as of September 19, 2013 (incorporated herein by reference to Exhibit 4.29 of the Company’s Annual Report on Form 20-F filed by International Game Technology PLC on May 15, 2015).
2.10
Observer Agreement with an effective date of November 8, 2023, between the Company and De Agostini S.p.A. and filed herewith.
4.1
2.11
Voting Agreement,First Supplemental Indenture dated as of July 15, 2014,February 20, 2019, among International Game Technology International Game Technology PLC, (formerly known as Georgia Worldwide Limited), De Agostini S.p.A.Issuer, BNY Mellon Corporate Trustee Services Limited, as Trustee, and DeA Partecipazioni S.p.A. (incorporated herein by reference to Annex DNatWest Markets Plc, as Security Agent, to the Registration Statement on Form F-4 filed by International Game Technology PLC (f/k/a Georgia Worldwide PLC) on January 2, 2015).
4.2
Video Lottery Concession for the activation and operationIndenture dated as of the network for managing legalized gaming machines—including amusement with prize machines “AWP” and (video lottery terminals) “VLT” between Amministrazione Autonoma dei Monopoli di Stato (now known as Agenzia delle Dogane e dei Monopoli) and Lottomatica Videolot Rete S.p.A. issued March 20, 2013 expiring March 19, 2022June 27, 2018 (incorporated herein by reference to Exhibit 10.9 to2.17 of the Registration StatementCompany's Annual Report on Form F-4 filed by International Game Technology PLC (f/k/a Georgia Worldwide PLC) on January 2, 2015).
4.3
Lottomatica Group 2012-2018 Stock Option Plan (incorporated herein by reference to Exhibit 99.4 to the Post-Effective Amendment No. 1 on Form S-8 to Form F-420-F filed by International Game Technology PLC on April 6, 2015)March 3, 2020).
4.42.12
GTECH 2013-2019 Stock Option PlanIndenture dated as of September 26, 2018 among International Game Technology PLC, as Issuer; certain subsidiaries of International Game Technology PLC, as Guarantors; BNY Mellon Corporate Trustee Services Limited, as Trustee; The Bank of New York Mellon, London Branch, as Paying Agent and Transfer Agent; the Bank of New York Mellon SA/NV, Luxembourg Branch, as Registrar; and NatWest Markets Plc, as Security Agent with respect to $750,000,000 6.250% Senior Secured Notes due 2027 (incorporated herein by reference to Exhibit 99.5 to2.18 of the Post-Effective Amendment No. 1Company’s Annual Report on Form S-8 to Form F-420-F filed by International Game Technology PLC on April 6, 2015)March 3, 2020).
2.13
Underwriting Agreement, dated as of May 22, 2018, by and among International Game Technology PLC, International Game Technology, De Agostini S.p.A., Credit Suisse Securities (USA) LLC and Credit Suisse International (incorporated herein by reference to Exhibit 1.1 to the Company’s Form 6-K furnished to the SEC on May 25, 2018).
4.5
2.14
Indenture dated as of June 20, 2019 between International Game Technology PLC, as the Issuer, and BNY Mellon Corporate Trustee Services Limited, as the Trustee (incorporated herein by reference to Exhibit 2.20 to the Company's Annual Report on Form 20-F filed by International Game Technology PLC on March 3, 2020).
2.15
Indenture dated as of September 16, 2019 between International Game Technology PLC, as the Issuer, and BNY Mellon Corporate Trustee Services Limited, as the Trustee (incorporated herein by reference to Exhibit 2.21 to the Company's Annual Report on Form-20-F filed by International Game Technology PLC on March 3, 2020).
2.16
Indenture dated as of June 19, 2020 among International Game Technology PLC, as the Issuer, the Guarantors named therein, BNY Mellon Corporate Trustee Services Limited, as Trustee, The Bank of New York Mellon, London Branch as paying agent, The Bank of New York Mellon SA/NV, Luxembourg Branch, as registrar and transfer agent and NatWest Markets Plc as security agent (incorporated herein by reference to Exhibit No. 2.17 to the Company’s Annual Report on Form 20-F filed by International Game Technology PLC on March 2, 2021).
2.17
Indenture dated as of March 25, 2021 among International Game Technology PLC, as the Issuer, the Guarantors named therein BNY Mellon Corporate Trustee Services Limited, as Trustee, The Bank of New York Mellon, London Branch as paying agent, The Bank of New York Mellon SA/NV, Dublin Branch, as registrar and transfer agent and NatWest Markets Plc as security agent (incorporated herein by reference to Exhibit 2.18 to the Company's Annual Report on Form 20-F filed by International Game Technology PLC on March 3, 2022).
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ExhibitDescription
2.18
Description of the registrant’s securities registered pursuant to Section 12 of the Exchange Act.
2.19
Commitment Letter by and among Ignite Rotate LLC, Deutsche Bank AG New York Branch (and its affiliates), Macquarie Capital (USA) Inc. (and its affiliates) and Everi Holdings Inc., dated as of February 28, 2024 (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 6-K filed by International Game Technology PLC on February 29, 2024)
3.1
Voting and Support Agreement by and among International Game Technology PLC, Ignite Rotate LLC, Everi Holdings Inc. and De Agostini S.p.A., dated as of February 28, 2024 (incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 6-K filed by International Game Technology PLC on February 29, 2024)
4.1
GTECH 2014-2020 Stock Option Plan (incorporated herein by reference to Exhibit 99.6 to the Post-Effective Amendment No. 1 on Form S-8 to Form F-4 filed by International Game Technology PLC on April 6, 2015).
4.64.2
GTECH 2014-2018 Share Allocation Plan (incorporated herein by reference to Exhibit 99.10 to the Post-Effective Amendment No. 1 on Form S-8 to Form F-4 filed by International Game Technology PLC on April 6, 2015).
4.74.3
International Game Technology PLC 2015 Equity Incentive Plan, as amended (incorporated herein by reference to Exhibit 1.1 of the Company’s Annual Report on Form 20-F filed by International Game Technology PLC on April 29, 2016).
4.84.4
International Game Technology PLC 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.2 to the Form S-8 filed by International Game Technology PLC on May 18, 2021)
4.5
The Lotto Concession for the activation and operation of the network for the national lotto game between the Agenzia delle Dogane e dei Monopoli and Lottoitalia S.r.l., issued April 14, 2016, expiring November 30, 2025 (incorporated herein by reference to Exhibit 4.20 of the Company's Annual Report on Form 20-F filed by International Game Technology PLC on April 20, 2017).
4.94.6
Instant Ticket Concession for the operation of the national instant ticket lottery games between the Amministrazione Autonoma dei Monopoli di Stato (now known as Agenzia delle Dogane e dei Monopoli) and Lotterie Nazionali S.r.l., issued and effective from October 1, 2010, expiring September 30, 2019, extended to September 2028.2028 (incorporated herein by reference to Exhibit 4.9 of the Company’s Annual Report on Form 20-F filed by International Game Technology PLC on March 15, 2018).
4.7
Share Sale and Purchase Agreement relating to the sale and acquisition of Lottomatica Videolot Rete S.p.A. and Lottomatica Scommesse S.r.l., dated as of December 6, 2020, among Lottomatica Holding S.r.l. as the Seller, International Game Technology PLC as the Guarantor and Gamenet Group S.p.A. as the Buyer (incorporated herein by reference to Exhibit 4.8 of the Company’s Annual Report on Form 20-F filed by International Game Technology PLC on March 2, 2021).
4.8
Share Purchase Agreement (in respect of Lis Holding S.p.A.) between IGT Lottery S.p.A. and PostePay S.p.A. — Patrimonio Destinato IMEL, dated February 25, 2022 (incorporated herein by reference to Exhibit 4.8 of the Company's Annual Report on Form 20-F filed by International Game Technology PLC on March 3, 2022)
4.9*
Exclusive License Agreement between International Game Technology PLC and Califon Productions, Inc. dated June 1, 2023 and filed herewith.
4.10
Agreement and Plan of Merger by and among International Game Technology PLC, Ignite Rotate LLC, Everi Holdings Inc. and Ember Sub LLC, dated as of February 28, 2024 (incorporated herein by reference to Exhibit2.1 to the Company’s Current Report on Form 6-K filed by International Game Technology PLC on February 29, 2024)
4.11
Separation and Distribution Agreement by and among International Game Technology PLC, Ignite Rotate LLC, International Game Technology and Everi Holdings Inc., dated as of February 28, 2024 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 6-K filed by International Game Technology PLC on February 29, 2024)

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ExhibitDescription
4.12
Employee Matters Agreement by and among International Game Technology PLC, Ignite Rotate LLC, International Game Technology and Everi Holdings Inc., dated as of February 28, 2024 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 6-K filed by International Game Technology PLC on February 29, 2024)
Exhibit
4.13Description
Real Estate Matters Agreement by and among International Game Technology PLC, Ignite Rotate LLC, International Game Technology and Everi Holdings Inc., dated as of February 28, 2024 (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 6-K filed by International Game Technology PLC on February 29, 2024)
8.1
4.14
Tax Matters Agreement by and among International Game Technology PLC, Ignite Rotate LLC, International Game Technology and Everi Holdings Inc., dated as of February 28, 2024 (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 6-K filed by International Game Technology PLC on February 29, 2024)
8.1
List of subsidiariesSubsidiaries of the registrant.Registrant
12.1
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
12.2
Rule 13a-14(a)/15d-14(a) Certification of Executive Chair
12.2
12.3
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
13.1
Certification of the Chief Executive Officer and Executive Chair Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002
13.2
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002
15.1
Consent of PricewaterhouseCoopers LLP
101.INS97
IGT Executive Compensation Recoupment Policy
101.INSInline XBRL Instance Document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Labels Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Portions of this exhibit have been omitted.

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SIGNATURE
 
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this annual report on its behalf.
 
INTERNATIONAL GAME TECHNOLOGY PLC
/s/ Alberto FornaroMASSIMILIANO CHIARA
Name: Alberto FornaroMassimiliano Chiara
Title: Chief Financial Officer
 
Dated: March 15, 201812, 2024

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ITEM 18. FINANCIAL STATEMENTS
 
INTERNATIONAL GAME TECHNOLOGY PLC
 
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
F-F-22
Consolidated Balance Sheets atDecember 31, 20172023 and 20162022
F-F-44
F-F-55
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 20162023, 2022, and 20152021
F-F-66
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 (Restated)2023, 2022, and 20152021
F-F-77
F-F-99
F-F-1210



F-1
Table of Contents
Report of Independent Registered Public Accounting Firm


To theBoard of Directors and Shareholders of International Game Technology PLC


Opinions on the Financial Statements and Internal Control over Financial Reporting


We have audited the accompanying consolidated balance sheets of International Game Technology PLC and its subsidiaries (the “Company”) as of December 31, 20172023 and 2016,2022, and the related consolidated statements of operations, of comprehensive income, shareholders’of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2017,2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20172023 and 2016,2022, and the results of theirits operations and theirits cash flows for each of the three years in the period ended December 31, 20172023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain,maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to ineffective controls over the identification, evaluation, and documentation of significant judgments related to the classification of significant non-recurring transactions on the statement of cash flows.COSO.


A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness referred to above is described in Management's Report on Internal Control over Financial Reporting appearing under Item 15. We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2017 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidatedfinancial statements.

Restatement of Previously Issued Financial Statements

As discussed in Note 1 to the consolidated financial statements, the Company has restated its 2016 financial statements to correct misstatements.

Basis for Opinions


The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above.Management’s Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.


Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


Definition and Limitations of Internal Control over Financial Reporting


A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


F-2
Table of Contents
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



Critical Audit Matters


The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Identifying and Evaluating Contractual Terms and Conditions

As described in Notes 2 and 4 to the consolidated financial statements, the Company generated service and product revenues of $3,347 million and $963 million, respectively, for the year ended December 31, 2023. The Company often enters into contracts with customers that consist of a combination of services and products that are accounted for as one or more distinct performance obligations. As disclosed by management, judgment is applied in identifying and evaluating the contractual terms and conditions that impact the identification of performance obligations and the pattern of revenue recognition.

The principal considerations for our determination that performing procedures relating to revenue recognition, specifically identifying and evaluating contractual terms and conditions, is a critical audit matter are the significant judgment by management in identifying and evaluating contractual terms and conditions that impact the identification of performance obligations and the pattern of revenue recognition, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate whether terms and conditions in contracts were appropriately identified and evaluated by management.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to revenue recognition, including controls related to the identification and evaluation of contractual terms and conditions impacting the identification of performance obligations and the pattern of revenue recognition. These procedures also included, among others, (i) evaluating and testing management’s process for identifying performance obligations and assessing the pattern of revenue recognition, and (ii) evaluating, on a test basis, the completeness and accuracy of the contractual terms and conditions identified in contracts with customers.


/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
March 15, 201812, 2024


We have served as the Company’s auditor since 2015.



F-3


Table of Contents




International Game Technology PLC
Consolidated Balance Sheets
($ thousands,and shares in millions, except par value and number of shares)per share amounts)
 
 December 31,
 Notes20232022
Assets  
Current assets:  
Cash and cash equivalents572 590 
Restricted cash and cash equivalents167 150 
Trade and other receivables, net5685 670 
Inventories, net6317 254 
Other current assets7382 467 
Total current assets2,123 2,131 
Systems, equipment and other assets related to contracts, net10928 899 
Property, plant and equipment, net10119 118 
Operating lease right-of-use assets11230 254 
Goodwill134,507 4,482 
Intangible assets, net141,555 1,375 
Other non-current assets71,004 1,174 
Total non-current assets8,342 8,302 
Total assets10,465 10,433 
Liabilities and shareholders’ equity  
Current liabilities:  
Accounts payable797 731 
Current portion of long-term debt15— 61 
Short-term borrowings1516 — 
DDI / Benson Matter provision19— 220 
Other current liabilities16879 837 
Total current liabilities1,691 1,848 
Long-term debt, less current portion155,655 5,690 
Deferred income taxes18344 305 
Operating lease liabilities11214 239 
Other non-current liabilities16609 372 
Total non-current liabilities6,821 6,607 
Total liabilities8,513 8,454 
Commitments and contingencies19
Shareholders’ equity  
Common stock, par value $0.10 per share; 207 shares issued and 200 shares outstanding at December 31, 2023; 206 shares issued and 199 shares outstanding at December 31, 202221 21 
Additional paid-in capital2,065 2,199 
Retained deficit(1,008)(1,164)
Treasury stock, at cost; 7 shares at December 31, 2023 and December 31, 202220(156)(156)
Accumulated other comprehensive income20521 529 
Total IGT PLC’s shareholders’ equity1,443 1,429 
Non-controlling interests510 550 
Total shareholders’ equity1,952 1,979 
Total liabilities and shareholders’ equity10,465 10,433 
  December 31,
  2017 2016
Assets  
  
Current assets:  
  
Cash and cash equivalents 1,057,418
 294,094
Restricted cash and investments 248,012
 247,222
Trade and other receivables, net 937,854
 947,237
Inventories 319,545
 347,494
Other current assets 407,520
 424,727
Income taxes receivable 94,168
 28,792
Total current assets 3,064,517
 2,289,566
Systems, equipment and other assets related to contracts, net 1,434,194
 1,199,674
Property, plant and equipment, net 193,723
 357,841
Goodwill 5,723,815
 6,810,012
Intangible assets, net 2,273,460
 2,874,031
Other non-current assets 2,427,953
 1,497,662
Deferred income taxes 41,546
 31,376
Total non-current assets 12,094,691
 12,770,596
Total assets 15,159,208
 15,060,162
     
Liabilities, redeemable non-controlling interests, and shareholders' equity  
  
Current liabilities:  
  
Accounts payable 1,240,753
 1,216,079
Other current liabilities 1,780,875
 1,097,045
Current portion of long-term debt 599,114
 77
Income taxes payable 55,935
 28,590
Total current liabilities 3,676,677
 2,341,791
Long-term debt, less current portion 7,777,445
 7,863,085
Deferred income taxes 491,460
 761,924
Income taxes payable 55,665
 —
Other non-current liabilities 446,113
 444,556
Total non-current liabilities 8,770,683
 9,069,565
Total liabilities 12,447,360
 11,411,356
Commitments and contingencies (Note 16) 

 

Redeemable non-controlling interests 356,917
 223,141
Shareholders’ equity  
  
Common stock, par value $0.10 per share; 203,446,572 and 202,285,166 shares issued and outstanding at December 31, 2017 and 2016, respectively 20,344
 20,228
Additional paid-in capital 2,676,854
 2,849,761
Retained (deficit) earnings (1,032,372) 38,067
Accumulated other comprehensive income 340,169
 160,643
Total IGT PLC’s shareholders’ equity 2,004,995
 3,068,699
Non-controlling interests 349,936
 356,966
Total shareholders’ equity 2,354,931
 3,425,665
Total liabilities, redeemable non-controlling interests, and shareholders’ equity 15,159,208
 15,060,162


The accompanying notes are an integral part of these consolidated financial statements.Consolidated Financial Statements.


F-4
Table of Contents
International Game Technology PLC
Consolidated Statements of Operations
($ and shares in thousands,millions, except per share amounts)
 
 For the year ended December 31,
 2017 2016 2015
Service revenue4,136,556
 4,375,586
 3,977,693
Product sales802,403
 778,310
 711,363
Total revenue4,938,959
 5,153,896
 4,689,056
      
Cost of services2,553,083
 2,553,479
 2,417,315
Cost of product sales579,431
 582,358
 520,343
Selling, general and administrative816,093
 945,824
 795,252
Research and development313,088
 343,531
 277,401
Restructuring expense39,876
 27,934
 76,896
Impairment loss715,220
 37,744
 12,497
Transaction (income) expense, net(26,740) 2,590
 49,396
Total operating expenses4,990,051
 4,493,460
 4,149,100
      
Operating (loss) income(51,092) 660,436
 539,956
      
Interest income10,436
 12,840
 17,681
Interest expense(458,899) (469,268) (457,984)
Foreign exchange (loss) gain, net(443,977) 101,040
 5,611
Other (expense) income, net(33,393) 18,365
 (122,295)
Total non-operating expenses(925,833) (337,023) (556,987)
      
(Loss) income before (benefit from) provision for income taxes(976,925) 323,413
 (17,031)
      
(Benefit from) provision for income taxes(29,414) 59,206
 38,896
      
Net (loss) income(947,511) 264,207
 (55,927)
      
Less: Net income attributable to non-controlling interests55,400
 45,413
 19,647
Less: Net income attributable to redeemable non-controlling interests65,665
 7,457
 —
Net (loss) income attributable to IGT PLC(1,068,576) 211,337
 (75,574)
      
Net (loss) income attributable to IGT PLC per common share - basic(5.26) 1.05
 (0.39)
Net (loss) income attributable to IGT PLC per common share - diluted(5.26) 1.05
 (0.39)
      
Weighted-average shares - basic203,130
 201,511
 192,398
Weighted-average shares - diluted203,130
 202,214
 192,398
 For the year ended December 31,
 Notes202320222021
Service revenue4, 243,347 3,359 3,483 
Product sales4, 24963 866 606 
Total revenue4, 244,310 4,225 4,089 
Cost of services1,630 1,671 1,754 
Cost of product sales573 554 377 
Selling, general and administrative834 814 810 
Research and development234 255 238 
Separation and divestiture costs324 — — 
Restructuring1213 6 6 
Other operating expense, net— 4 1 
Total operating expenses3,309 3,303 3,187 
Operating income241,001 922 902 
Interest expense, net15285 289 341 
Foreign exchange loss (gain), net75 36 (66)
Other non-operating expense, net1712 7 98 
Total non-operating expenses372 333 373 
Income from continuing operations before provision for income taxes18629 589 529 
Provision for income taxes18322 175 274 
Income from continuing operations307 414 255 
Income from discontinued operations, net of tax— — 24 
Gain on sale of discontinued operations, net of tax— — 391 
Income from discontinued operations3— — 415 
Net income307 414 670 
Less: Net income attributable to non-controlling interests from continuing operations151 139 190 
Less: Net loss attributable to non-controlling interests from discontinued operations3— — (2)
Net income attributable to IGT PLC156 275 482 
Net income from continuing operations attributable to IGT PLC per common share - basic220.78 1.36 0.32 
Net income from continuing operations attributable to IGT PLC per common share - diluted220.77 1.35 0.31 
Net income attributable to IGT PLC per common share - basic220.78 1.36 2.35 
Net income attributable to IGT PLC per common share - diluted220.77 1.35 2.33 
Weighted-average shares - basic22200 202 205 
Weighted-average shares - diluted22203 203 207 
 
The accompanying notes are an integral part of these consolidated financial statements.Consolidated Financial Statements.

F-5

Table of Contents
International Game Technology PLC
Consolidated Statements of Comprehensive Income
($ thousands)in millions)
 
  For the year ended December 31,
  2017 2016 2015
Net (loss) income (947,511) 264,207
 (55,927)
       
Other comprehensive income (loss), before tax:  
  
  
       
Change in foreign currency translation:      
Foreign currency translation adjustments 182,791
 (49,881) 60,079
Reclassification of loss to net income —
 118
 —
Total foreign currency translation adjustments 182,791
 (49,763) 60,079
       
Change in unrealized (loss) gain on cash flow hedges:  
  
  
Unrealized (loss) gain on cash flow hedges (6,610) 8,351
 (594)
Reclassification of loss (gain) to net income 1,744
 (5,218) (244)
Total change in unrealized (loss) gain on cash flow hedges (4,866) 3,133
 (838)
       
Unrealized (loss) gain on available-for-sale securities (678) 8,772
 (3,046)
       
Unrealized (loss) gain on defined benefit plans (120) (682) 395
       
Other comprehensive income (loss), before tax 177,127
 (38,540) 56,590
       
Income tax benefit (provision) related to items of other comprehensive income 1,936
 4,548
 (17,259)
Other comprehensive income (loss) 179,063
 (33,992) 39,331
       
Total comprehensive (loss) income
 (768,448) 230,215
 (16,596)
       
Less: Total comprehensive income attributable to non-controlling interests 54,937
 45,616
 19,343
Less: Total comprehensive income attributable to redeemable
non-controlling interests		 65,665
 7,457
 —
Total comprehensive (loss) income attributable to IGT PLC (889,050) 177,142
 (35,939)
 For the year ended December 31,
 Notes202320222021
Net income307 414 670 
Foreign currency translation adjustments, net of tax204 90 28 
Unrealized gain (loss) on hedges, net of tax201 (1)3 
Unrealized (loss) gain on other, net of tax20— 1 (1)
Other comprehensive income, net of tax204 91 30 
Comprehensive income312 505 700 
Less: Comprehensive income attributable to non-controlling interests164 112 136 
Comprehensive income attributable to IGT PLC148 392 564 
 
The accompanying notes are an integral part of these consolidated financial statements.Consolidated Financial Statements



F-6
Table of Contents
International Game Technology PLC
Consolidated Statements of Cash Flows
($ thousands)in millions)
 For the year ended December 31,
 Notes202320222021
Cash flows from operating activities   
Net income307 414 670 
Less: Income from discontinued operations, net of tax3— — 415 
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities from continuing operations:   
Depreciation301 301 325 
Amortization222 191 201 
Amortization of upfront license fees200 193 216 
Foreign exchange loss (gain), net75 36 (66)
Stock-based compensation2141 41 35 
Deferred income taxes21 (77)38 
Loss on extinguishment of debt155 13 92 
DDI / Benson Matter provision17— 270 — 
Gain on sale of business17— (278)— 
Other non-cash items, net15 1 17 
Changes in operating assets and liabilities, excluding the effects of acquisitions and divestitures:   
Trade and other receivables(5)45 (95)
Inventories(59)(65)(13)
Accounts payable48 (22)(36)
DDI / Benson Matter provision19(220)(50)— 
Accrued interest payable4 (11)(33)
Accrued income taxes96 (83)47 
Other assets and liabilities(12)(20)27 
Net cash provided by operating activities from continuing operations1,040 899 1,010 
Net cash used in operating activities from discontinued operations— — (31)
Net cash provided by operating activities1,040 899 978 
Cash flows from investing activities   
Capital expenditures(399)(317)(238)
Business acquisitions, net of cash acquired3— (142)— 
Proceeds from sale of business, net of cash and restricted cash transferred3— 476 — 
Proceeds from sale of assets16 22 21 
Other(9)3 1 
Net cash (used in) provided by investing activities from continuing operations(393)42 (216)
Net cash provided by investing activities from discontinued operations— 126 852 
Net cash (used in) provided by investing activities(393)168 636 
Cash flows from financing activities   
Principal payments on long-term debt15(801)(597)(2,846)
Payments on license obligations14(22)— — 
Payments in connection with the extinguishment of debt(3)(9)(85)
Proceeds from long-term debt— — 1,339 
Net receipts from (payments on) financial liabilities1 75 (50)
Net proceeds from (payments of) short-term borrowings13 (51)51 
Net proceeds from Revolving Credit Facilities609 72 17 
Repurchases of common stock— (115)(41)
Dividends paid(160)(161)(41)
Dividends paid - non-controlling interests(158)(178)(91)
Return of capital - non-controlling interests(74)(75)(127)
Other(42)(27)(24)
Net cash used in financing activities(638)(1,065)(1,898)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents10 2 (284)
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents(11)(70)(37)
Cash and cash equivalents and restricted cash and cash equivalents at the beginning of the period740 808 1,129 
Cash and cash equivalents and restricted cash and cash equivalents at the end of the period739 740 808 
F-7
  For the year ended December 31,
  2017 2016 2015
    Restated  
Cash flows from operating activities  
  
  
Net (loss) income (947,511) 264,207
 (55,927)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:  
  
  
Impairment loss 715,220
 37,744
 12,497
Foreign exchange loss (gain), net 443,977
 (101,040) (5,611)
Amortization 401,355
 492,021
 410,264
Depreciation 401,085
 390,448
 369,564
Service revenue amortization 209,774
 116,980
 107,812
Loss on extinguishment of debt 25,733
 —
 73,806
Debt issuance cost amortization 23,217
 18,347
 40,366
Stock-based payment expense 4,704
 26,346
 36,067
Gain on sale of Double Down Interactive LLC (51,348) —
 —
Deferred income tax provision (296,265) (153,649) (149,241)
Other non-cash costs, net 25,768
 (142) 50,626
Changes in operating assets and liabilities, excluding the effects of disposition and acquisitions:  
  
  
Trade and other receivables 45,465
 (23,758) 83,218
Inventories 51,406
 (76,321) 10,219
Upfront Italian license fees (244,698) (665,260) —
Accounts payable (3,031) (22,855) (53,762)
Other assets and liabilities (118,923) (21,736) (160,330)
Net cash provided by operating activities 685,928
 281,332
 769,568
       
Cash flows from investing activities  
  
  
Proceeds from sale of Double Down Interactive LLC, net of cash divested 823,788
 —
 —
Proceeds from sale of assets 167,452
 185,798
 230,587
Capital expenditures (698,010) (541,943) (376,521)
Acquisition of IGT, net of cash acquired —
 —
 (3,241,415)
Other 5,435
 40,160
 51,939
Net cash provided by (used in) investing activities 298,665
 (315,985) (3,335,410)
       
Cash flows from financing activities  
  
  
Principal payments on long-term debt (1,754,259) (357,513) (2,714,867)
Dividends paid (162,528) (161,179) (209,589)
Return of capital - non-controlling interests (52,352) (35,407) (30,568)
Dividends paid - non-controlling interests (50,601) (32,717) (29,156)
Payments in connection with the early extinguishment of debt (38,832) —
 (79,526)
Return of capital - redeemable non-controlling interests (32,039) —
 —
Debt issuance costs paid (16,378) (10,825) (84,859)
Dividends paid - redeemable non-controlling interests (7,307) —
 —
Net (payments of) receipts from financial liabilities (150) 30,595
 (21,539)
Capital increase - non-controlling interests 41,011
 40,771
 9,049
Capital increase - redeemable non-controlling interests 107,457
 215,684
 —
Proceeds from long-term debt 1,762,270
 —
 6,521,991
Payments to withdrawing shareholders —
 —
 (407,759)
Payments on bridge facility —
 —
 (51,409)
Payments in connection with note consents —
 —
 (29,022)
Proceeds from interest rate swaps —
 —
 67,773
Other (43,264) (1,548) (20,353)
Net cash (used in) provided by financing activities (246,972) (312,139) 2,920,166
       
Net increase (decrease) in cash and cash equivalents 737,621
 (346,792) 354,324
Effect of exchange rate changes on cash 25,703
 13,402
 (34,262)
Cash and cash equivalents at the beginning of the period 294,094
 627,484
 307,422
Cash and cash equivalents at the end of the period 1,057,418
 294,094
 627,484
Table of Contents


International Game Technology PLC
Consolidated Statements of Cash Flows
($ thousands)in millions)

 For the year ended December 31,
 Notes202320222021
Supplemental disclosures of cash flow information   
Cash paid during the period for:
Interest294 298 369 
Income taxes205 335 188 
Non-cash investing and financing activities:
Capital expenditures23 24 26 
Licensing obligation payable14317 75 — 
  For the year ended December 31,
  2017 2016 2015
    Restated  
Supplemental Cash Flow Information  
  
  
Interest paid (417,110) (450,655) (365,479)
Income taxes paid (296,386) (183,278) (199,195)
       
Capital expenditures (62,858) (76,174) (32,879)
Equity consideration related to IGT acquisition —
 —
 (928,884)
Non-cash investing activities, net (62,858) (76,174) (961,763)
       
Dividends declared - non-controlling interests (12,588) (12,696) —
Non-cash financing activities, net (12,588) (12,696) —


The accompanying notes are an integral part of these consolidated financial statements.Consolidated Financial Statements.



F-8
Table of Contents
International Game Technology PLC
Consolidated StatementStatements of Shareholders’ Equity
($ thousands)in millions)
Common
Stock		Common
Stock		Additional
Paid-In
Capital		Retained
(Deficit) Earnings		Treasury
Stock		Accumulated
Other
Comprehensive
Income (Loss)		Total
IGT PLC
Equity		Non
Controlling
Interests		Total
Equity
Balance at December 31, 2020
Net income
Net income
Net income
Other comprehensive income (loss), net of tax
Total comprehensive income
Stock-based compensation
Stock-based compensation
Stock-based compensation
Capital increase
Shares issued under stock award plans
Divestiture of non-controlling interest
Repurchases of common stock
Return of capital
Dividends paid/declared
Other
Balance at December 31, 2021
Net income
Net income
Net income
Other comprehensive income (loss), net of tax
Total comprehensive income
Stock-based compensation
Stock-based compensation
Stock-based compensation
Capital increase
Shares issued under stock award plans
Shares issued upon exercise of stock options
Repurchases of common stock
Repurchases of common stock
Repurchases of common stock
Return of capital
Dividends paid/declared
Balance at December 31, 2022
Balance at December 31, 2022
Balance at December 31, 2022
Net income
Net income
Net income
Other comprehensive (loss) income, net of tax
Total comprehensive income (loss)
Stock-based compensation
Stock-based compensation
Stock-based compensation
Capital increase
Shares issued under stock award plans
Common
Stock
 
Additional
Paid-In
Capital
 Treasury Stock 
Retained
Earnings (Deficit)
 
Accumulated
Other
Comprehensive
Income
 
Total
IGT PLC
Equity
 
Non-
Controlling
Interests
 
Total
Equity
Balance at December 31, 201620,228
 2,849,761
 —
 38,067
 160,643
 3,068,699
 356,966
 3,425,665
Return of capital
               
Net (loss) income—
 —
 —
 (1,068,576) —
 (1,068,576) 55,400
 (1,013,176)
Other comprehensive income (loss), net of tax—
 —
 —
 —
 179,526
 179,526
 (463) 179,063
Total comprehensive (loss)
income
—
 —
 —
 (1,068,576) 179,526
 (889,050) 54,937
 (834,113)
               
Capital increase—
 —
 —
 —
 —
 —
 41,799
 41,799
Stock-based payment expense—
 4,704
 —
 —
 —
 4,704
 —
 4,704
Shares issued upon exercise of stock options21
 (3,566) —
 —
 —
 (3,545) —
 (3,545)
Shares issued under stock award plans95
 (11,514) —
 —
 —
 (11,419) —
 (11,419)
Return of capital—
 —
 —
 —
 —
 —
 (51,211) (51,211)
Dividends paid—
 (162,528) —
 —
 —
 (162,528) (49,777) (212,305)
Other—
 (3) —
 (1,863) —
 (1,866) (2,778) (4,644)
Balance at December 31, 201720,344
 2,676,854
 —
 (1,032,372) 340,169
 2,004,995
 349,936
 2,354,931
Return of capital
Dividends paid/declared
Balance at December 31, 2023
Balance at December 31, 2023
Balance at December 31, 2023
 
The accompanying notes are an integral part of these consolidated financial statements.


International Game Technology PLC
Consolidated Statement of Shareholders’ Equity
($ thousands)
Financial Statements.
F-9
 
Common
Stock
 
Additional
Paid-In
Capital
 Treasury Stock 
Retained (Deficit)
Earnings
 
Accumulated
Other
Comprehensive
Income
 
Total
IGT PLC
Equity
 
Non-
Controlling
Interests
 
Total
Equity
Balance at December 31, 201520,024
 2,816,057
 —
 (13,271) 194,838
 3,017,648
 348,494
 3,366,142
                
Net income—
 —
 —
 211,337
 —
 211,337
 45,413
 256,750
Other comprehensive (loss) income, net of tax—
 —
 —
 —
 (34,195) (34,195) 203
 (33,992)
Total comprehensive income (loss)—
 —
 —
 211,337
 (34,195) 177,142
 45,616
 222,758
                
Capital increase—
 —
 —
 —
 —
 —
 40,771
 40,771
Stock-based payment expense—
 26,346
 —
 —
 —
 26,346
 —
 26,346
Shares issued upon exercise of stock options96
 11,687
 —
 —
 —
 11,783
 —
 11,783
Shares issued under stock award plans108
 (1,448) —
 —
 —
 (1,340) —
 (1,340)
Payment for accelerated stock awards—
 (3,489) —
 —
 —
 (3,489) —
 (3,489)
Return of capital—
 —
 —
 —
 —
 —
 (36,197) (36,197)
Dividends paid—
 —
 —
 (161,179) —
 (161,179) (46,016) (207,195)
Other—
 608
 —
 1,180
 —
 1,788
 4,298
 6,086
Balance at December 31, 201620,228
 2,849,761
 —
 38,067
 160,643
 3,068,699
 356,966
 3,425,665
The accompanying notes are an integral partTable of these consolidated financial statements.Contents

International Game Technology PLC
Consolidated Statement of Shareholders’ Equity
($ thousands)
 
Common
Stock
 
Additional
Paid-In
Capital
 
Treasury
Stock
 
Retained
Earnings
(Deficit)
 
Accumulated
Other
Comprehensive
Income
 
Total
IGT PLC
Equity
 
Non-
Controlling
Interests
 
Total
Equity
Balance at December 31, 2014217,171
 2,204,246
 (53,160) 46,377
 155,203
 2,569,837
 377,883
 2,947,720
                
Net (loss) income—
 —
 —
 (75,574) —
 (75,574) 19,647
 (55,927)
Other comprehensive income (loss), net of tax—
 —
 —
 —
 39,635
 39,635
 (304) 39,331
Total comprehensive (loss) income—
 —
 —
 (75,574) 39,635
 (35,939) 19,343
 (16,596)
                
Shares issued to acquire IGT4,532
 912,725
 —
 —
 —
 917,257
 —
 917,257
Stock-based payment expense—
 36,067
 —
 —
 —
 36,067
 —
 36,067
Payment for accelerated stock awards—
 (14,867) —
 —
 —
 (14,867) —
 (14,867)
Escrow deposit returned-withdrawing shareholders—
 —
 —
 15,926
 —
 15,926
 —
 15,926
IGT stock awards attributable to purchase price—
 11,626
 —
 —
 —
 11,626
 —
 11,626
Shares issued upon exercise of stock options221
 10,610
 —
 —
 —
 10,831
 —
 10,831
Capital increase—
 —
 —
 —
 —
 —
 9,049
 9,049
Merger of GTECH S.p.A. into IGT PLC(217,332) (242,932) 460,264
 —
 —
 —
 —
 —
GTECH S.p.A. shares exchanged for IGT PLC shares15,320
 (15,320) —
 —
 —
 —
 —
 —
Share issuance costs—
 (3,034) —
 —
 —
 (3,034) —
 (3,034)
Shares issued under stock award plans112
 (3,195) —
 —
 —
 (3,083) —
 (3,083)
Return of capital—
 —
 —
 —
 —
 —
 (29,695) (29,695)
Dividends paid—
 (79,869) —
 —
 —
 (79,869) (28,086) (107,955)
Treasury stock purchases—
 —
 (407,104) —
 —
 (407,104) —
 (407,104)
Balance at December 31, 201520,024
 2,816,057
 —
 (13,271) 194,838
 3,017,648
 348,494
 3,366,142
The accompanying notes are an integral part of these consolidated financial statements.

International Game Technology PLC
Notes to the Consolidated Financial Statements


1.
Description of Business and Restatement and Revision of Consolidated Statements of Cash Flows
1.Description of Business

International Game Technology PLC a public limited company organized under the laws of England and Wales (the “Parent”), has its corporate headquarters in London, England. The Parent is the successor to GTECH S.p.A., a società per azioni incorporated under the laws of Italy (“GTECH”), and the sole stockholder of International Game Technology, a Nevada corporation (“IGT”). The Parent, together with its consolidated subsidiaries has principal operating facilities in Rome, Italy; Providence, Rhode Island; and Las Vegas, Nevada.
When used in these notes, unless otherwise specified(collectively referred to as “IGT PLC,” the “Company,” “we,” “our,” or the context otherwise indicates, all references to “IGT PLC” and the “Company” refer to the business and operations of the Parent and its consolidated subsidiaries.
The Company“us”), is a leading commercial operatorglobal leader in gaming that delivers entertaining and provider of technology in the regulated worldwideresponsible gaming markets that operates and provides a full range of services and leading-edge technology productsexperiences for players across all channels and regulated segments, from Lotteries and Gaming Machines to Digital Gaming and Sports Betting.

We report our financial performance based on three business segments: Global Lottery, Global Gaming, and PlayDigital. Through our three business segments, we operate and provide an integrated portfolio of innovative gaming markets, including lotteries, machine gaming, sports betting and interactive gaming. The Company also provides high-volume processing of commercial transactions. The Company’s state-of-the-art information technology platforms and software enable distribution of its products and services through land-basedincluding online and instant lottery systems, InternetiLottery, instant ticket printing, lottery management services, gaming systems, electronic gaming machines, iGaming, and mobile devices.sports betting.


Restatement and Revision
2.Summary of Consolidated Statements of Cash FlowsSignificant Accounting Policies


The Company has restated the consolidated statement of cash flows for the year ended December 31, 2016 to correct the misclassification of the upfront payment of $665.3 million made in two installments in 2016 to the Italian governmental authority in connection with the Italian Gioco del Lotto service concession (the "Upfront Payment") from investing activities to operating activities. The Company concluded that license fee payments made to a customer and amortized as a reduction of service revenue should be classified as a cash outflow from operating activities in accordance with Accounting Standards Codification (“ASC”) 230, Statement of Cash Flows. In addition to this correction, the consolidated statement of cash flows for the year ended December 31, 2016 has been corrected to reflect other immaterial misclassifications.

The impact of the restatement in the 2016 consolidated statement of cash flows is as follows ($ thousands):
 For the year ended December 31, 2016
 As Reported Adjustment As Restated
Inventories(61,026) (15,295) (76,321)
Upfront Italian license fees—
 (665,260) (665,260)
Net cash flows provided by operating activities961,887
 (680,555) 281,332
      
Upfront payments to customers(665,260) 665,260
 —
Capital expenditures(557,238) 15,295
 (541,943)
Net cash flows used in investing activities(996,540) 680,555
 (315,985)
      
Supplemental Cash Flow Information     
Upfront payments to customers

(179,197) 179,197
 —
Non-cash investing activities, net(255,371) 179,197
 (76,174)

The Company has revised the consolidated statement of cash flows for the year ended December 31, 2015 to correct the classification of other upfront payments made of a similar nature as the Upfront Payment as well as other immaterial misclassifications.


The impact of the revision in the 2015 consolidated statement of cash flows is as follows ($ thousands):
 For the year ended December 31, 2015
 As Reported Adjustment As Revised
Deferred income tax provision—
 (149,241) (149,241)
Inventories72
 10,147
 10,219
Other assets and liabilities(282,995) 122,665
 (160,330)
Net cash flows provided by operating activities785,997
 (16,429) 769,568
      
Capital expenditures(402,634) 26,113
 (376,521)
Net cash flows used in investing activities(3,361,523) 26,113
 (3,335,410)
      
Net increase in cash and cash equivalents

344,640
 9,684
 354,324
Cash and cash equivalents at the beginning of the period

317,106
 (9,684) 307,422


2.Summary of Significant Accounting Policies

Basis of PresentationPreparation


TheOur Consolidated Financial Statements and accompanying consolidated financial statements and notes of the Company have beenare prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Intercompany accountsThe Consolidated Financial Statements are stated in millions of United States (“U.S.”) dollars, except per share data or unless otherwise indicated, and transactionsare computed based on the amounts in thousands. Certain amounts in columns and rows within tables may not foot due to rounding. Percentages and earnings per share amounts presented are calculated from the underlying unrounded amounts.

On May 10, 2021, the Company completed the sale of its Italian B2C gaming machine, sports betting, and digital gaming businesses (“Italian B2C businesses”), which met the criteria to be reported as a discontinued operation during the fourth quarter of 2020. As a result, the historical results of the Italian B2C businesses have been eliminated. The consolidated financial statementsexcluded from both continuing operations and segment results for all periods presented. Unless otherwise indicated, amounts and activity throughout these Consolidated Financial Statements are presented in U.S. dollarson a continuing operations basis. Refer to Note 3 - Business Acquisitions and all amounts are rounded to the nearest thousand (except share and per share data) unless otherwise indicated. Certain reclassifications have been made to prior periods to conform to the current period presentation.Divestitures for further details.


Principles of Consolidation

The consolidated financial statementsConsolidated Financial Statements include the accounts of the Parent, and itsour majority-owned or controlled subsidiaries, and any variable interest entities in which we are primarily majority owned. Investments in other entities that the Company has the ability to control, through a majority voting interest or otherwise, or with respect to which the Company is the primary beneficiary, are consolidated.beneficiary. Intercompany accounts and transactions have been eliminated in consolidation. Earnings or losses attributable to any non-controlling interests or redeemable non-controlling interests in a subsidiary are included in net income (loss) in the consolidated statementsConsolidated Statements of operations. Any investmentsOperations.

Investments in affiliates over which the Company haswe have the ability to exertexercise significant influence, but do not control, and with respect to which the Company iswe are not the primary beneficiary, are accounted for using the equity method of accounting. InvestmentsEquity investments in affiliates for which the Company haswe have no ability to exertexercise significant influence that do not have a readily determinable fair value and do not have a Net Asset Value per share are measured at cost, less impairment, plus or minus changes resulting from observable price changes. Equity method investments and equity investments in which we have no ability to exercise significant influence are accounted for usingincluded within other non-current assets in the cost method of accounting.Consolidated Balance Sheets.


Use of Estimates

The preparation of financial statements in conformity with GAAPour Consolidated Financial Statements requires managementus to make estimates, judgments, and assumptions thatwhich affect the reported amounts of assets, liabilities, equity, revenues and expenses, and related disclosure of contingent liabilities. We evaluate our estimates, judgments, and methodologies on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities, and disclosures of contingencies at the date of the financial statementsequity, and the reported amountsamount of revenuerevenues and expense during the reporting periods. Actualexpenses. Accordingly, actual results and outcomes could differ from those estimates.


Foreign Currency Translation
New Accounting Standards - Recently Adopted

In March 2022, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). The amendments eliminate the
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troubled debt restructuring (“TDR”) recognition and measurement accounting model, and instead entities will evaluate the terms of a restructured financing agreement to determine whether it represents a new loan or a continuation of an existing loan. Although the TDR accounting model was eliminated, the financial difficulty criteria was retained to determine whether a restructuring should be disclosed under an expanded set of requirements about a creditor’s loan modification programs. In addition, the amendments will require entities to disclose current period gross write-offs by year of origination, also known as “vintage”. The TDR changes and vintage disclosure requirement apply to the Company’s customer financing receivables. We adopted ASU 2022-02 as of January 1, 2023 and applied the amendments prospectively. The adoption did not have a material impact on our consolidated financial statements or notes therein.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The amendments create an exception to the general recognition and measurement principal in ASC 805, Business Combinations to measure assets and liabilities acquired in a business combination at fair value. Instead, an acquirer in a business combination will be required to apply ASC 606 to recognize and measure contract assets and contract liabilities that result from contracts accounted for under ASC 606 on the acquisition date and will generally result in the acquirer recognizing amounts consistent with those recorded by the acquiree immediately before the acquisition date. We adopted ASU 2021-08 as of subsidiaries located outsideJanuary 1, 2023. The adoption did not have a material impact on our consolidated financial statements.

New Accounting Standards - Not Yet Adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The amendments create additional disclosure requirements with respect to segment financial information. In addition to disclosing the specific segment expenses already required by ASC 280, reporting entities will be required to disclose significant segment expense categories and amounts that are regularly provided to the chief operating decision maker (“CODM”). The name of the United Statesindividual or group serving as the CODM must be disclosed in addition to how the CODM uses each reported segment measure of profit or loss to assess performance and allocate resources. Nearly all numerical information must be reported during interim periods. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with early adoption permitted. We expect to adopt ASU 2023-07 upon the effective date and will apply the amendment retrospectively, unless it is impracticable to do so.

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures. The amendments create additional disclosure requirements with respect to income tax information. Entities must disclose certain categories in the income tax rate reconciliation of the effective and statutory tax rates along with explanations for reconciling items that have a local functional currency are translatednot otherwise evident. The disclosures also require disaggregation of income taxes paid by federal (national), state, or foreign as well as by individual jurisdiction. Additionally, the amendments codify certain disclosures related to U.S. dollars at exchange ratesincome (loss) before provision for income taxes and provision for income taxes that had been required by under the SEC’s Regulation S-X. The amendments remove disclosure requirements related to potential unrecognized tax benefit changes in effect at the balance sheet date. Incomenext twelve months. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and expense accounts for these subsidiariesearly adoption is permitted. We expect to adopt ASU 2023-09 upon the effective date and expect to apply the amendments prospectively.

There are translated at the average exchange ratesno additional new accounting standards not yet adopted for the periods. Resulting translation adjustmentsyear ended December 31, 2023 with a significant effect on the Consolidated Financial Statements.

Revenue

We account for a contract with a customer when: we have written approval; the parties are committed to perform their respective obligations; the rights of the parties, including payment terms, are identified; the contract has commercial substance; and collection of consideration is probable.

We report revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions.

We generally expense incremental costs of obtaining a contract (e.g., sales commissions) when incurred because the amortization period would have been one year or less. These costs are recorded aswithin selling, general and administrative expenses in our Consolidated Statements of Operations. For certain of our long-term contracts, recoverable costs are capitalized and amortized on a componentstraight-line basis over the expected customer relationship period.

In determining the transaction price, we adjust the promised amount of accumulated other comprehensive income (loss) within shareholders’ equity. The Company records gainsconsideration for the effects of the time value of money if the payment terms are not standard and losses from currency transactions denominated in currencies other than the functional currency in its consolidated statementtiming of operations.

Revenue Recognition
The Company has two categories of revenue: service revenue and product sales.
Service revenue is derived frompayments agreed to by the following sources:
Operating contracts predominantly relatedparties to Italian concessions and Lottery Management Agreements ("LMAs");the contract provide the customer
Gaming operations arrangements where
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or the Company provides customers with proprietary gaming equipment, systems, content licensing, and services;
Facilities Management Contracts ("FMCs");
Interactive contracts; and
Other professional services.
Product sales are derived froma significant benefit of financing, in which case the following sources:
Sale of lottery terminals and gaming machines, including game content; and
Sale of lottery and gaming systems, includingcontract contains a significant financing component. We do not account for significant financing components if the licensing of proprietary software, and implementation services.

Revenue is recognizedperiod between when all ofwe transfer the following conditions are met:
(i)Persuasive evidence of an arrangement exists;
(ii)Delivery has occurredpromised service or services have been rendered;
(iii)The priceproduct to the customer and when the customer pays for that service or product will be one year or less.

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) performance obligations for which we recognize variable revenue at the amount that we have the right to invoice for services performed, (iii) contracts for which variable consideration is fixedaccounted for in accordance with sales-based or determinable;usage-based royalty guidance, and (iv) wholly unperformed contracts.
(iv)Collectability
Additional information on revenue recognition is reasonably assured (orincluded in Note 4.- Revenue Recognition.

Significant Judgments and Estimates

Revenue recognition is impacted by our ability to determine when a contract is probable under ASC 985, Software). of collection and to estimate variable consideration, including, for example, rebates, volume discounts, service-level penalties, and performance bonuses. We consider various factors when making these judgments, including a review of specific transactions, historical experience and market and economic conditions. Evaluations are conducted each quarter to assess the adequacy of the estimates.

RevenuesOur contracts with customers often include promises to transfer multiple products and services to a customer. Specifically, complex arrangements with nonstandard terms and conditions may require significant contract interpretation to determine the appropriate accounting, including whether the promised products and services specified in the arrangement are reported net of incentives, rebates, discounts and amortization of upfront payments to customers for licenses. Sales taxes, gaming taxes and other taxesdistinct performance obligations. Contracts may consist of a similar nature are presented on a net basis (excluded from revenue). Amounts billed prior to completingcombination of products and services delivered at or over different time periods. We apply judgment in identifying and evaluating the earnings process are deferred until revenue recognition criteria is met.
Service revenue
Service revenue is derived fromcontractual terms and conditions that impact the following typesidentification of arrangements:
Operating contracts
Certain of the Company’s revenue, primarily revenue from the Italy segment and to a lesser extent the North America Lottery segment, is derived from concessions or LMAs (“operating contracts”). Under operating contracts, the Company manages all the activities along the lottery value chain including collecting wagers, paying out prizes, managing all accounting and other back-office functions, running advertising and promotions, operating data transmission networks and processing centers, training staff, providing retailers with assistance and supplying materials for the game. In arrangements where the Company is performing services on behalf of the governmentperformance obligations and the government is considered the Company’s customer,pattern of revenue is recognized net of prize payments, taxes, retailer commissions and remittances to state authorities, because the Company is acting as an agent to the authorities. In arrangements where the Company’s customers are the end players and/or retailers, the Company records revenue net of prizes and taxes only, and records the retailer commissions as a cost of service, because the Company is acting as the principal. recognition.

The Company also provides sports pools and sports betting services. Under sports pools arrangements, the Company manages the sports pool where the sports pool prizes are divided among those players who select the correct outcome. There are no odds involved in sports pools and each winner’s payoff depends on the number of players and the size of the pool. Under sports pools arrangements, the Company collects the wagers, pays prizes, pays a percentage fee to retailers, withholds its fee, and remits the balance to the respective regulatory agency. The Company assumes no risk associated with sports pool wagering. The Company records revenue net of prize payouts, gaming taxes, retailer commissions and remittances to state authorities, because the Company is acting as an agent to the authorities.

In sports betting contracts, the Company establishes and assumes the risks related to the odds. Under fixed odds betting, the potential payout is fixed at the time bets are placed and the Company bears the risk of odds setting. The Company is responsible for collecting the wagers, paying prizes, and paying fees to retailers. The Company retains the remaining cash as profits. Under these arrangements, the Company records revenue net, calculated as total wagers less the estimated payout for prizes, because the betting contract is considered a derivative andJudgment is required to be recordeddetermine the standalone selling price (“SSP”) for each distinct performance obligation. The SSP is the price at fair value. Taxes are recorded as contra revenue and retailer commissions are shown as expenses.
Fees earned under operating contracts are recognized as revenue in the period earned and are classified aswhich we would sell a promised product or service revenue in the consolidated statement of operations when all of the criteria outlined above are met.
Under operating contracts, the Company is generally required to pay an upfront license fee. When such upfront payments are made to the Company’s customers, the payment is recorded as a non-current asset and amortized as a reduction of service revenue over the license term.
Gaming Operations
Gaming operations revenues are generated by providing customers with proprietary land-based gaming equipment, systems, content licensing, and services under a variety of recurring revenue arrangements, including a percentage of coin-in (amounts wagered), a percentage of net win, or a fixed daily/monthly fee.
Included in gaming operations are Wide Area Progressive (“WAP”) systems. WAP systems consist of linked slot machines located in multiple casino properties, connectedseparately to a central computer system. WAP games differ from all other games in that a Company-sponsored progressive jackpot increases with every wager until a player wins the top award combination. Casinos with WAP machines pay a percentage of the coin-in (amounts wagered) for services relatedcustomer. In some instances, we are able to the design, assembly, installation, operation, maintenance, and marketing of the WAP systems, as well as funding and administration of Company-sponsored progressive jackpots. A portion of the total fee collected is allocated to the WAP jackpot and is recorded as a component of the cost of providing the WAP service.
Fees earned under gaming operations are recognized as revenue in the period earned and are classified as service revenue in the consolidated statement of operations when all of the criteria outlined above are met.
Facilities Management Contracts
Under FMCs, the Company constructs, installs, and operates the online system. Under a typical FMC, the Company maintains ownership of the technology and facilities, and is responsible for capital investments throughout the duration of the contract. The FMCs may also include a wide range of support services. These contracts, principally in the North America Lottery segment, generally provide for a variable amount of monthly or weekly service fees paid to the Company directly from the customerestablish SSP based on the observable prices of services or products sold separately in comparable circumstances to a percentage of sales.
Fees earned under FMCs are recognized as revenue in the period earned, throughout the service period, and are classified as service revenue in the consolidated statement of operations when all of the criteria outlined above are met.
Interactive Contracts
Interactive revenues are principally generated from online social gaming and online real-moneysimilar customer. We typically establish an SSP range for our products and services (“IGTi”).
Social gaming revenuesthat are generated from the sale of virtual casino chipsreassessed on a periodic basis or when facts and circumstances change. In other instances, we may not be able to players in the online DoubleDown Casino that can be used for additional play or game enhancements. Revenues from player purchases are recognized ratably over the estimated average service period in which the chips are consumedestablish an SSP range based on historical data analysis. Because DoubleDown isobservable prices, and we estimate the principal, responsible for substantially all aspects of the casino services and sale of virtual goods to the player, revenues are recorded on a gross basis. Payment processing fees paid to Facebook, Apple and Google on a revenue participation basis are recorded within cost of services.
IGTi revenues are generated from online real-money gaming solutions offerings, which encompass gaming systems infrastructure, applications, content licensing, and back office operational support services, including WAP jackpot funding and administration. IGTi solutions are generally provided under revenue sharing arrangements based on a percentage of net win similar to gaming operations discussed above.

Other Professional Services
Product sales contracts generally include other professional services, which includes telephone support, software maintenance, hardware maintenance, the right to receive unspecified upgrades/enhancements on a when-and-if-available basis, and other professional services. Fees earned for these professional services are generally recognized as revenue in the period earned (i.e., over the support period) and are classified as service revenue in the consolidated statement of operations when all of the criteria outlined above are met.
Product Sales
Product sales are derived from the following types of arrangements:
Sale of Lottery Terminals and Sale of Gaming Machines, including Game Content
These arrangements include the sale of gaming machines including game content, non-machine gaming related equipment, licensing and royalty fees, and component parts (including game themes and electronics conversion kits). The Company’s credit terms are predominantly short-term in nature. The Company also grants extended payment terms under contracts where the sale is securedSSP by the related equipment sold. Revenue from the sale of lottery terminals and gaming machines is recognized based upon the contractual terms of each arrangement, but predominantly upon delivery or acceptance. If the sale of lottery terminals and gaming machines include multiple elements, these arrangements are accounted for under Multiple Element Accounting, discussed below.

System Sales (Lottery and Gaming)
System sale arrangements typically include multiple elements, where the Company constructs, sells, delivers and installs a turnkey system (inclusive of point-of-sale terminals, if applicable) or delivers equipment and licenses the computer software for a fixed price, and the customer subsequently operates the system. System sale arrangements generally include customer acceptance provisions and general rights to terminate the contract if the Company is in breach of the contract. Such arrangements include non-software elements, software, and other professional services. Amounts due to the Company and costs incurred by the Company in implementing the system prior to customer acceptance are deferred. Revenue attributable to the system is classified as product sales in the consolidated statement of operations and is recognized upon customer acceptance as long as there are no substantial doubts regarding collectability. Revenues attributable to other professional services provided subsequent to customer acceptance are classified as service revenue in the consolidated statement of operations in the period earned.

Shipping and Handling

Shipping and handling reimbursements from customers are included in product sales revenue with the associated costs included in cost of product sales.
Multiple Element Arrangements
The Company enters into multiple element arrangements in which a customer may purchase both products and services. In some scenarios, all deliverables are considered one element, while other arrangements contain multiple elements. When arrangements contain multiple elements, the Company allocates revenue to each element based on a relative selling price hierarchy. The relative selling price for each element is determined using vendor-specific objective evidence (“VSOE”) if available, third-party evidence (“TPE”) if VSOE is not available, or best estimate of selling price (“BESP”) if neither VSOE nor TPE is available.
VSOE of selling price is based on the price charged when the element is sold separately. Establishing VSOE requires judgment to determine if there is a sufficient quantity of items sold on a stand-alone basis or if there are substantive contractual renewal rates and whether these prices demonstrate an appropriate level of concentration to conclude that VSOE exists.

TPE of selling price is established by evaluating largely interchangeable competitor products or services in stand-alone sales to similar customers. However, as the Company’s products contain a significant element of proprietary technology and the Company’s solutions offer different features and functionality, the comparable pricing of third-party products with similar functionality typically cannot be obtained.


BESP is established considering multiple factors including, but not limited to, overall market conditions, including geographic or regional specific factors, competitive landscape,positioning, competitor actions, internal costs, profit objectives, and pricing practices.

Determining whether we are acting as a principal or an agent for subcontractor services or third-party vendor services requires judgment. In certain arrangements, revenue from sales of third-party vendor products or services are recorded net of costs when we are acting as an agent between the customer and the vendor, and gross profit objectives. In some scenarios, contractual pricing may serve aswhen we are the best estimate givenprincipal for the variability among jurisdictions and customers, while in other scenarios the cost for each deliverable plus a reasonable margin is used as management’s best estimate of selling price.
In scenarios where the Company’s products include hardware containing required software that function together to provide the essential functionalitytransaction. To determine whether we are an agent or principal, we consider whether we obtain control of the product, the Company considers both the hardware and required software as “non-software deliverables” and has therefore concluded that such arrangementsservices or products before they are not subjecttransferred to the industry-specificcustomer. In making this evaluation, several factors are considered, most notably whether we have primary responsibility for fulfillment to the customer, as well as inventory risk and pricing discretion.

Contract Costs

Certain eligible, non-recurring costs incurred in the initial phases of service contracts are capitalized and amortized ratably over the expected period of benefit, which includes anticipated contract renewals or extensions. Recurring operating costs in these contracts are recognized as incurred.

Advertising

Advertising costs are expensed as incurred. Advertising expense was $28 million, $28 million, and $33 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Research and Development Costs

Research and development costs (“R&D”), which principally include employee compensation costs, are expensed as incurred, except certain costs incurred related to capitalized software revenue recognition guidance.development as described below in the Capitalized Software Development Costs policy.

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Cash and Cash Equivalents

Cash and cash equivalents consist primarily of highly liquid investments purchased with an original maturity of three months or less at the date of acquisition, such as bank deposits, money market funds, and interest bearing bank accounts with insignificant interest rate risk. The Company recognizes revenue for these arrangements based on ASC 605, Revenue Recognition,fair value of cash and allocatescash equivalents approximates the arrangement considerationcarrying amount.

Restricted Cash and Cash Equivalents

Under our Italian Lotto and Italian Scratch & Win contracts, we deposit wagers, net of prizes paid and retailer commissions retained by the retailer at point of sale, into bank accounts, the use of which is restricted based on the relative selling pricecontract with our customer. Restricted cash is also maintained for interactive digital player deposits and in certain jurisdictions where we are required by gaming regulations to maintain sufficient reserves in restricted cash accounts to be used for the purpose of funding payments to WAP jackpot winners. These amounts are restricted based on the contracts with our customers or local regulations.

Allowance for Expected Credit Losses

We maintain an allowance for expected credit losses on receivables resulting from the expected failure or inability of our customers to make required payments. The allowance is regularly reviewed by considering factors such as the creditworthiness of our customers, historical experience, aging of receivables, current market and economic conditions, as well as management’s expectations of future conditions. The allowance is deducted from the amortized cost basis of the deliverables. In scenarios wherereceivable to present the Company’s products include hardware wherenet amount expected to be collected.

We estimate expected credit losses on receivables on a collective (pool) basis when similar risk characteristics exist. Trade and other receivables and customer financing receivables represent the softwareinitial pools which are segregated further by business segment, geography, internal risk rating, and aging. The risk of loss is not considered essentialassessed over the contractual life of the receivables and we adjust historical loss rates for current and future conditions based on qualitative considerations. The expected loss rate for each receivable pool is applied to the functionality ofaggregate receivable balance to determine the hardware,allowance requirement. Receivables are written off against the hardware revenue is recognizedallowance in the period they are determined to be uncollectible.

We determine delinquency based on when the revenue recognition criteria is met (i.e., shipment, delivery and/or acceptance)contractual payment terms. An account may be considered delinquent if there are unpaid balances remaining on the account the day after the contractual due date.

For amounts due from certain government customers in the Global Lottery business segment, we have not established an allowance as we have no expectation of loss based on a long history of no credit losses and the software revenue is recognized underexplicit guarantee of a sovereign entity.

Inventories

Inventories are stated at the software revenue recognition guidance provided under ASC 985, Software. lower of cost (applying the first in, first out method) and net realizable value. Allowances are made for defective, obsolete, or excess inventory.


Upfront License Fees

The CompanyWe periodically makesmake long-term investments in contracts with customers and obtainsobtain licenses to supply products and services to theour customers. As consideration, the Company payswe pay license fees, which are classified as other non-current assets in the consolidated balance sheets. Consistent with the guidance in ASC Subtopic 605-50, Customer Payments and Incentives, the Company recognizesConsolidated Balance Sheets. We recognize the amortization of the license fees as a reduction of service revenue over the estimated usefuleconomic life of the contract.license term. This method reflects the pattern in which economic benefits are expected to be realized. The recoverability of each payment is subject to significant estimates about future revenues related to the contracts'contracts’ future cash flows. The Company evaluatesWe evaluate these assets for impairment and updatesupdate amortization rates on an agreement by agreement basis. The assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. In periods in which payments are made to the customer, the Company classifieswe classify the payment as a cash outflow from operating activities in accordance with ASC 230, Statementthe Consolidated Statements of Cash Flows.

Fair Value Measurements

We account for certain financial assets and liabilities at fair value. Financial assets and liabilities are categorized, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to the use of observable inputs and the lowest priority to the use of unobservable inputs. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest
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level input that is significant to the fair value measurement. These levels are as follows:
•Level 1 - inputs are based upon unadjusted quoted prices for identical instruments in active markets
•Level 2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the instruments
•Level 3 - inputs are unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability 

Derivative Financial Instruments

We use derivative financial instruments for the management of foreign currency risks. We do not enter into derivatives for speculative purposes. Derivatives are recognized as either assets or liabilities in the Consolidated Balance Sheets at fair value. All derivatives are recorded gross, except netting of foreign exchange contracts and counterparty netting of interest receivable and payable related to interest rate swaps, as applicable. The accounting for changes in the fair value of a derivative depends on the nature of the hedge and the hedge effectiveness. Derivative gains and losses are reported in the Consolidated Statements of Cash Flows. consistent with the classification of the cash flows from the underlying hedged items.


For derivative instruments designated as cash flow hedges, gains and losses are recorded in other comprehensive income (loss) and are subsequently reclassified when the hedged item affects earnings. At that time, the amount is reclassified from other comprehensive income (loss) to the same income statement line as the earnings effect of the hedged item.

Derivative instruments not designated as hedges are recognized in the Consolidated Balance Sheets at fair value with the changes in fair value recorded in foreign exchange loss (gain), net in the Consolidated Statements of Operations.

Systems, Equipment and Other Assets Related to Contracts, Net and Property, Plant and Equipment, Net

We have two categories of fixed assets: systems, equipment and other assets related to contracts (“Systems & Equipment”) and property, plant and equipment (“PPE”).

Systems & Equipment are assets that primarily support our operating contracts, FMCs, and WAP systems (collectively, the “Contracts”) and are principally composed of lottery and gaming assets, including those that are accounted for as operating leases with our customers. PPE are assets we use internally, not associated with Contracts, primarily related to production and assembly, selling, general and administration, and R&D.

Systems & Equipment and PPE are stated at cost, net of accumulated depreciation and accumulated impairment loss, if any. Costs incurred for Systems & Equipment and PPE not yet placed into service are classified as construction in progress and are not depreciated until placed in service. Depreciation is recognized on a straight-line basis over the estimated useful lives of the assets. Repair and maintenance costs are expensed as incurred, whereas major improvements that increase asset values and extend useful lives are capitalized. 

Systems & Equipment and PPE are tested for impairment whenever events or changes in circumstances indicate the carrying amount of those assets may not be recoverable. An impairment loss is recognized only if the carrying amount is not recoverable and exceeds its fair value. The carrying amount is not recoverable if it exceeds the sum of the undiscounted forecasted cash flows resulting from the use and eventual disposition of such asset. An impairment loss is measured as the amount by which the carrying amount exceeds its fair value.

Leases

We determine whether a contract is or contains a lease at inception. As a lessee, we recognize right-of-use (“ROU”) assets and lease liabilities on the lease commencement date based on the present value of lease payments over the lease term. ROU assets also include any upfront lease payments or initial direct costs and are adjusted for lease incentives received.

We consider renewal and termination options, including whether they are reasonably certain to be exercised, in determining the lease term and establishing the ROU assets and lease liabilities. ROU assets and lease liabilities are calculated using our incremental borrowing rate, which is based on the lease currency and length of the lease, unless the implicit rate is determinable.

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Most of our lease contracts contain both lease and non-lease components. As a lessee, we combine lease and non-lease components into a single lease component for all classes of underlying assets except certain communication equipment. For certain communication equipment, we allocate the consideration between lease and non-lease components based on relative standalone price. Lease expense is recognized on a straight-line basis over the lease term.

Variable lease payments are generally expensed as incurred except for certain rent payments that depend on an index, which are included in lease payments using the index rate in effect as of the lease commencement date.

Short-term leases, which are leases with an initial term of 12 months or less with no purchase options that are reasonably certain of exercise, are not recognized on the balance sheet. The rental payments are recognized as lease expense on a straight-line basis over the lease term.

Certain of our long term lottery and commercial gaming service arrangements include leases for equipment installed at customer locations. As the lessor, we combine lease and non-lease components for all classes of underlying assets in arrangements that involve operating leases. The single combined component is accounted for under ASC 842, Leases, or ASC 606, Revenue from Contracts with Customers (“ASC 606”), depending on which component is the predominant component in the arrangement. If a component cannot be combined, the consideration is allocated between the lease component and the non-lease component based on relative standalone selling price.

Goodwill

The assets and liabilities of acquired businesses are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying identifiable net assets of acquired businesses, and is stated at cost less accumulated impairment losses.

Goodwill is tested for impairment annually, in the fourth quarter, or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. The goodwill impairment test compares the fair value of a reporting unit with its carrying amount and an impairment loss is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value.

Goodwill has been allocated to and is tested for impairment at the reporting unit level, which is the same level as our operating segments. We evaluate our reporting units annually and if necessary, reassign goodwill using a relative fair value approach. We have three reporting units: Global Lottery, Global Gaming, and PlayDigital.

Capitalized Software Development Costs

Costs incurred in the development of our externally-sold software products are expensed as incurred, except certain costs incurred subsequent to establishing technological feasibility and through the general release of the software products which are capitalized. Capitalized costs are amortized over the products’ estimated useful life to cost of product sales in the Consolidated Statements of Operations.

Costs incurred during the application development phase of software for services provided to customers are capitalized as internal-use software and amortized over the useful life to cost of services in the Consolidated Statements of Operations.

Costs incurred during the application development of software for internal use, and not for use in services provided to customers, are capitalized and amortized over the useful life to selling, general and administrative expenses in the Consolidated Statements of Operations.

Intangible Assets

Intangible assets, which include indefinite-lived and definite-lived intangible assets, are stated at cost, less accumulated amortization and accumulated impairment losses.

Indefinite-lived intangible assets are composed of trademarks for which there is no foreseeable limit of the period over which they are expected to generate net cash inflows. Definite-lived intangible assets, which are primarily composed of customer relationships, licenses, and computer software and game library, are capitalized and amortized on a straight-line basis over their estimated useful lives. Estimated useful lives are determined considering the period the assets are expected to contribute to future cash flows. Amortization of intangibles is included in cost of services, cost of product sales, or selling, general and administrative expenses in the Consolidated Statements of Operations depending on the use and nature of the asset.
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Indefinite-lived intangible assets, other than goodwill, are tested for impairment annually, in the fourth quarter, or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of indefinite-lived intangible assets are less than their carrying amount and whether the quantitative analysis is necessary. The quantitative analysis compares the fair value of indefinite-lived intangible assets to their carrying amount and an impairment loss is recognized when the carrying amount exceeds the fair value.

Income Taxes

Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their reported amounts using the enacted tax rates in effect for the year in which the differences are expected to reverse. Tax credits are generally recognized as reductions of income tax provisions in the year in which the credits arise. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enacted or substantively enacted date.

Accounting for uncertainty in income taxes recognized in the Consolidated Financial Statements is in accordance with accounting authoritative guidance, which prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more likely than not” to be sustained, the tax position is then assessed to determine the amount of the benefit to recognize in the Consolidated Financial Statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement.

We recognize interest and penalties related to unrecognized tax benefits in provision for income taxes in the consolidated statement of operations. Accrued interest and penalties are included within other non-current liabilities in the Consolidated Balance Sheets.

We use the period cost method for global intangible low-taxed income (“GILTI”) provisions and therefore have not recorded deferred taxes for basis differences expected to reverse in future periods.

A provision for foreign withholding taxes has not been recorded on undistributed profits of the company’s subsidiaries that are determined to be indefinitely reinvested. If management intentions change in the future, there may be a significant impact on the provision for income taxes in the period the change occurs.

WAP Jackpot Accounting

The Company incurs jackpot expenseWe incur costs to fund jackpots and accruesaccrue jackpot liabilities with every wager on devices connected to a WAP system. Only WAP games include Company-sponsored jackpots for whichJackpot liabilities are estimated based on the Company incurs jackpot expense. A portionsize of the fees paid tojackpot, the Company is used for the funding and administration of Company-sponsored WAP jackpot payments.
Jackpot expense represents the estimated cost to fund jackpots and is recorded to cost of services in the consolidated statement of operations. Changes in estimates for WAP jackpot liabilities and expenses are attributable to regular analysis and evaluation of the following factors: variations in slot play; number of WAP units in service, variations and volume of play;play, and interest rate movements; and the size of WAP jackpots at initial setup or after a WAP jackpot is won.
The Company’s WAP jackpotsmovements. Jackpots are generally payable in equal annual installments over 20 to 26 years, orwinners immediately, in the case of instant wins.wins, or in equal annual installments over 19 to 25 years. Winners may elect to receive a lump sum payment for the present value of the jackpot discounted at applicable interest rates in lieu of periodic annual installments. Discount rates eligible for use in the lump sum payment calculation vary by jurisdiction and are impacted by market forces and other economic conditions.

Jackpot liabilities are composed of payments due to previous winners, as well asand amounts due to future winners of WAP jackpots not yet won. Liabilities due to previous winners for periodic payments are carried at the accreted cost of a qualifying U.S. government or agency annuity investment that may be purchasedfor those in which purchases were made at the time of the WAP jackpot win. If an annuity is subsequently sold and theAll other periodic liability is instead guaranteed by surety bonds or letters of credit, the liability initially funded by an annuity continues to accrete at the same rate. If the periodic liability is not initially funded with an annuity investment, it isliabilities are discounted and accreted using the risk-free rate (i.e. treasury rate) at the time of the WAP jackpot win.

Liabilities due to future winners are recorded at the present value of the estimated amount of WAP jackpots not yet won. The Company estimatesWe estimate the present value of future winnerthese liabilities using current market rates, (prime, treasury, or agency, as applicable), weighted with historical lump sum payout election ratios. TheBased on the most recent historical patterns, indicate that approximately 90%80% of winners will elect the lump sum payment option. Additionally, the Company estimates theThe current portion of future winnerthese liabilities are estimated based on historical experience with winner payment elections, in conjunction with the theoretical projected number of WAP jackpots.



Restricted CashProcess for Disclosure and InvestmentsRecording of Liabilities Related to Legal Proceedings

Many lawsuits and claims involve highly complex legal and related issues, including issues relating to causation, evidence, and alleged actual damages, all of which are otherwise subject to substantial uncertainties. Assessments of lawsuits and claims can
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involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. When making determinations about recording liabilities related to legal proceedings, the Company complies with the requirements of ASC 450, Contingencies, and related guidance, and records liabilities in those instances where it can reasonably estimate the amount of the loss and when the loss is probable. Where the reasonable estimate of the probable loss is a range, the Company records as an accrual in its financial statements the most likely estimate of the loss, or the low end of the range if there is no one best estimate. The Company is required by gaming regulation to maintain sufficient reserves in restricted cash accounts to be used for the purpose of funding payments to WAP jackpot winners. In certain cases, regulators have allowed for surety bonds or letters of credit in lieu of restricted cash. Restricted amounts are based primarily on the WAP jackpot amount displayed to slot players and vary by jurisdiction. Compliance with restricted cash and investment or assurance requirements for jackpot funding is reported to gaming authorities in various jurisdictions. Additionally, restricted cash is maintained for interactive online player deposits, as well as collections on factored and serviced receivables not yet paid through to the third-party owner.

Cash and Cash Equivalents
Cash and cash equivalents are composed of cash at banks and on-hand, and short-term highly liquid investments with a maturity of ninety days or less. Cash equivalents are stated at fair value.
Allowance for Credit Losses
The Company maintains an allowance for credit losses for the estimated probable losses on uncollectible trade and customer financing receivables. The allowance is estimated based upon the credit-worthiness of the Company’s customers, historical experience, aging analysis, as well as current market and economic conditions. Receivables are written off against these allowances in the period they are determined to be uncollectible.
The Company determines its allowances for credit losses on customer financing receivables based on two classes: contracts and notes. Contracts include extended payment terms granted to qualifying customers for periods from one to five years and are typically secured by the related products sold. Notes consist of development financing loans granted to select customers to assist in the funding of new or expanding gaming facilities, generally under terms of one to seven years, and are secured by the developed property and/or other customer assets. Customer financing interest income is recognized based on market rates prevailing at issuance.

Legal and Other Contingencies

Loss contingency provisions arising from a legal proceeding or claim are recorded for probable and estimable losses at the best estimate of a loss, or when a best estimate cannot be made, at the minimum estimated loss, the determination of which requires significant judgment. If it is reasonably possible but not probable that a liability has been incurred, or ifeither discloses the amount of a probablepossible loss cannot be reasonably estimated, the amount or range of estimated loss in excess of established accruals if estimable, or states that such an estimate cannot be made. The Company discloses significant legal proceedings even where liability is disclosed,not probable or the amount of the liability is not estimable, or both, if material. Legalthe Company believes there is at least a reasonable possibility that a loss may be incurred. All legal costs are expensed as incurred.


Redeemable Non-Controlling Interests

Upon issuance, redeemable non-controlling interestsBecause legal proceedings are generally recorded at fair value. Subsequent to issuance, redeemable non-controlling interests are reported at their redemption value no later than the date they become redeemable by the holder.
Income Taxes
The Company records a tax provision for the anticipated tax consequences of its reported operating results. The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to the taxable income in effect for the years in which those assets and liabilities are expected to be realized and settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based upon the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
Management believes it is more likely than not that forecasted income, including income that may be generated as a result of certain tax planning strategies, together with future reversals of existing taxable temporary differences, will be sufficient to fully recover the deferred tax assets not otherwise subject to a valuation allowance. In the eventinherent uncertainties, and unfavorable rulings or developments could occur, there can be no certainty that the Company determines

all or partmay not ultimately incur charges in excess of presently recorded liabilities. Many of the deferred tax assetsmatters described are at preliminary stages or seek an indeterminate amount of damages. It is not realizable in the future, the Company will record an adjustment to the valuation allowance that would be charged to earnings in the period such determination is made. In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of GAAP and complex tax laws.
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted into law in the United States and the new legislation contains several key tax provisions that affected the Company, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. The Company is required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, re-measuring U.S. deferred tax assets and liabilities as well as reassessing the net realizability of deferred tax assets and liabilities. In December 2017, the United States Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), which allows the Company to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation is expected over the next 12 months, the Company considers the accounting of the transition tax, deferred tax re-measurements, global intangible low-taxed income ("GILTI") and other itemsuncommon for claims to be incomplete due to the forthcoming guidance and the Company's ongoing analysisresolved over many years. A future adverse ruling, settlement, unfavorable development, or increase in accruals for one or more of final year-end data and tax positions. The Company expects to complete its analysis within the measurement period in accordance with SAB 118. Refer to Note 14, Income Taxes, for additional information.

Acquisitions and Intangible Assets Including Goodwill
The Company accounts for acquired businesses using the acquisition method and accordingly, the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree are recorded at their acquisition date fair values. Goodwill represents the excess of the purchase price, including the fair value of any contingent consideration, over the fair value of the net assets acquired, including the amount assigned to identifiable intangible assets. The primary drivers that generate goodwill are the value of synergies between the acquired businesses and the Company and the acquired assembled workforce, neither of which qualifies as a separately identifiable intangible asset. Acquisition and disposition related costs are included in transaction (income) expense, net in the consolidated statements of operations. Transaction (income) expense, net is composed of transaction costs on significant business combinations and significant gains and losses incurred on disposals of group entities or businesses. The results of operations of acquired businesses are included in the consolidated financial statements from the date control is obtained.
The fair value of identifiable intangible assets is based on significant judgments made by the Company, including the selection of the appropriate valuation methodologies and the determination of the economic lives of the assets acquired. These estimates and assumptions are based on historical and industry experience, information obtained from management of the acquired business, and also include, but are not limited to, future expected cash flows earned from the identified intangible assets and discount rates applied in determining the present value of those cash flows. Unanticipated events and circumstances may occur that could affect the accuracy or validity of such assumptions, estimates or actual results. Acquired identifiable intangible assets are amortized on a straight-line basis over their estimated economic lives. Amortization of acquired software-related intangibles is included in cost of services and cost of product sales and amortization of other acquired intangible assets is included in selling, general and administrative expenses in the consolidated statement of operations.

Impairment
Goodwill and other indefinite-lived intangible assets are tested at least annually, in the fourth quarter, for impairment and whenever changes in circumstances indicate an impairment may exist. Goodwill is tested at the reporting unit level, which is one level below or the same level as an operating segment.

The process of evaluating the potential impairment related to goodwill and other indefinite-lived intangible assets requires the application of significant judgment. If an event occurs that would cause revisions to the estimates and assumptions used in analyzing the value of goodwill and other indefinite-lived intangible assets, the revisionthese matters could result in a non-cash impairment lossfuture charges that could have a material adverse effect on the Company’s results of operations or cash flows in the period in which they are recorded. Based on experience and developments, the Company reexamines its estimates of probable liabilities and associated expenses and receivables each quarterly period, and whether it is able to estimate a liability previously determined to be not estimable and/or not probable. Where appropriate, the Company makes additions to or adjustments of its estimated liabilities. As a result, the current estimates of the potential impact on the Company’s consolidated financial results.position, results of operations, and cash flows for the legal proceedings and claims pending against the Company could change in the future.


Long-lived assets,
Treasury Stock

We account for treasury stock acquisitions using the cost method. We account for the retirement of treasury stock by deducting its par value from common stock and reflecting any excess of cost over par value as a deduction from additional paid-in capital in the Consolidated Balance Sheets.

Foreign Currency Translation and Foreign Currency Transactions

The financial statements of subsidiaries with functional currencies other than goodwillthe U.S. dollar are translated into U.S. dollars, with the resulting translation adjustments recorded as a component of accumulated other comprehensive income (“AOCI”) within shareholders’ equity. Assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet date, while income and expense items are translated using the average exchange rates during the period.

Subsidiaries with monetary assets and liabilities denominated in a currency other indefinite-lived intangible assets, are tested for impairment whenever events or changes in circumstances indicate thatthan the carrying amountfunctional currency of the assets may not be recoverable. The impairment testsubsidiary are subject to remeasurement, the impact of which is based on discounted cash flows and, if impaired, the asset is written down to fair value. If an event occurs that requires revised estimates and assumptions previously usedrecorded in analyzing the value of long-lived assets, other than goodwill and indefinite-lived intangible assets, that revision could result in a non-cash impairmentforeign exchange loss that could have a material impact on the Company’s financial results.
Depreciation and Amortization

Systems, equipment and other assets relating to contracts and property, plant and equipment are stated at cost,(gain), net of accumulated depreciation and accumulated impairment loss, if any. Depreciation commences when the asset is placed in service and is recognized on a straight-line basis over the estimated useful lives of the assets. Repair and maintenance costs, including planned maintenance, are expensed as incurred. Definite-lived intangible assets are carried at cost and amortized over their estimated useful lives on a straight-line basis.

Research and Development and Capitalized Software Development Costs
Research and development (“R&D”) costs are expensed as incurred. R&D costs include salaries and benefits, stock-based compensation, consultants' fees, facilities-related costs, material costs, depreciation and travel.
Costs incurred in the developmentConsolidated Statements of the Company’s externally-sold software products are expensed as incurred, except certain software development costs eligible for capitalization. Material software development costs incurred subsequent to establishing technological feasibility and through the general release of the software products are capitalized. Technological feasibility is demonstrated by the completion of a detailed program design or working model, if no program design is completed. Capitalized costs are amortized to cost of product sales over the products’ estimated economic life.Operations.


Costs incurred in the development of software to be used only for services provided to customers are capitalized as internal-use software and amortized over the useful life to cost of services. Costs incurred in the development of software to be used only for internal use are capitalized as internal-use software and amortized over the useful life to selling, general and administrative expenses.
Stock-Based Compensation

Stock-based compensation expense represents the cost related to stock-based awards granted to directors and employees. Stock-based compensation cost is measured at the grant date or modification date, based on the estimated fair value of the award and recognized as expense, net of estimated forfeitures, over the vesting period.periods. For awards that contain only a servicesubject to cliff vesting, feature, compensation cost is recognized onby way of a straight-line basismethod over the awards’award’s expected vesting period. For awards with a performance condition, when achievement of the performance condition is deemed probable,subject to graded vesting, compensation cost is recognized on a graded-vesting basisby way of an accelerated attribution method over the entire awards’ expected vesting period.periods.


Advertising
3.Business Acquisitions and Divestitures
Advertising
Business Acquisitions

On July 1, 2022, the Company completed the acquisition of iSoftBet by purchasing 100% of the equity interests in certain entities of the iSoftBet group for cash consideration of €162 million (inclusive of €20 million deposited into an escrow account) and contingent consideration of up to €4 million. The Company funded the acquisition through a combination of cash on hand and utilization of its revolving credit facility. The acquisition of iSoftBet provides market-tested proprietary digital content, advanced game aggregation capabilities, scalable promotional tools, analytics, and creative talent to the PlayDigital segment. The financial results of iSoftBet have been included within our PlayDigital segment in our Consolidated Financial Statements since the date of purchase.
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The major classes of assets and liabilities to which the Company has allocated the purchase price based on information as of the acquisition date and available at December 31, 2022 were as follows:
(€ millions)NotesJuly 1, 2022
Current assets18 
Intangible assets1459 
Non-current assets3 
Total identifiable assets acquired80 
Current liabilities(10)
Non-current liabilities(22)
Total liabilities assumed(31)
Net identifiable assets acquired49 
Goodwill13117 
Total purchase price166 

Divestitures

There were no divestitures that closed during the year ended December 31, 2023.

On September 14, 2022, the Company completed the sale of 100% of the share capital of Lis Holding S.p.A., a wholly owned subsidiary of IGT Lottery S.p.A. that conducted the Company’s Italian commercial services business, to PostePay S.p.A. – Patrimonio Destinato IMEL, for a purchase price of €700 million. The consideration received, net of €198 million cash and restricted cash transferred and €23 million of selling costs, was €479 million and resulted in a pre-tax gain on sale of $278 million, ($276 million net of tax) which is classified within Other non-operating (income) expense, net. The disposal group was a component of continuing operations within our Global Lottery segment through the closing date.

The funds received at closing were used to pay transaction expenses and fund the partial tenders of the 3.500% Senior Secured Euro Notes due July 2024 (which were subsequently redeemed in full on October 27, 2023) and 6.500% Senior Secured U.S. Dollar Notes due February 2025. Refer to Note 15 - Debt for further information.

The Company has continuing involvement with the business sold via a transition services agreement (“TSA”). As part of the TSA, the Company provides various telecommunications, information technology, and back-office services for which the Company receives compensation. These services generally expire after no more than four (4) years.

Announced Divestitures

On February 29, 2024, the Company announced that IGT PLC entered into definitive agreements with Everi for the Separation & Divestiture of the Global Gaming and PlayDigital segments. Refer to Note 26. - Subsequent Events for further information.

Separation and Divestiture Costs

Separation and divestiture costs, are expenseda type of transaction cost, that consist primarily of financial advisory, legal, accounting, tax, consulting, and other professional advisory fees associated with the activities required to perform the review of strategic alternatives for the Company’s Global Gaming and PlayDigital segments announced on June 8, 2023 and preparing the Global Gaming and PlayDigital segments for spin-off. Total Separation and divestiture costs for the year ended December 31, 2023 were $24 million.

Discontinued Operations

On May 10, 2021, the Company completed the sale of its Italian B2C businesses, which were previously reported under the Global Gaming segment and met the criteria to be reported as incurred. Advertising expensea discontinued operation during the fourth quarter of 2020, for a cash purchase price of €950 million (of which the final €125 million payment was $111.9received on July 13, 2022). The sale resulted in a pre-tax gain on sale of $396 million $151.6($391 million net of tax) in the year ended December 31, 2021.

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Summarized financial information for discontinued operations is shown below (there are no discontinued operations during 2023 and $130.1 million2022):
For the year ended December 31,
($ in millions)2021
Total revenue74 
Operating income (1)
24 
Income from discontinued operations before benefit from income taxes23 
Benefit from income taxes on discontinued operations(1)
Gain on sale of discontinued operations before provision for income taxes396 
Provision for income taxes on sale of discontinued operations5 
Gain on sale of discontinued operations, net of tax391 
Income from discontinued operations415 
Less: Net loss attributable to non-controlling interests from discontinued operations(2)
Income from discontinued operations attributable to IGT PLC417 
(1) There was no depreciation and amortization in 2021.

The Company has continuing involvement with the businesses via a TSA. As part of the TSA, the Company provides various telecommunications and information technology for which the Company receives compensation. These services generally expired after one year.

4.    Revenue Recognition

Disaggregation of Revenue

The following tables summarize revenue disaggregated by business segment and the source of the revenue for the years ended December 31, 2017, 20162023, 2022, and 2015, respectively.2021:

For the year ended December 31, 2023
($ in millions)Global LotteryGlobal GamingPlayDigitalTotal
Operating and facilities management contracts2,306 — — 2,306 
Gaming terminal services— 520 — 520 
PlayDigital services— — 227 227 
Systems, software, and other53 242 — 295 
Service revenue2,359 762 227 3,347 
Lottery products171 — — 171 
Gaming terminals— 571 — 571 
Other— 220 1 221 
Product sales171 791 1 963 
Total revenue2,530 1,552 228 4,310 
New Accounting Standards - Recently Adopted
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In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2017-09, Compensation-Stock Compensation (Topic 718) - Scope
For the year ended December 31, 2022
($ in millions)Global LotteryGlobal GamingPlayDigitalTotal
Operating and facilities management contracts2,181 — — 2,181 
Gaming terminal services— 483 — 483 
PlayDigital services— — 209 209 
Systems, software, and other255 232 — 487 
Service revenue2,436 714 209 3,359 
Lottery products157 — — 157 
Gaming terminals— 501 — 501 
Other— 208 1 209 
Product sales157 709 1 866 
Total revenue2,593 1,423 209 4,225 

For the year ended December 31, 2021
($ in millions)Global LotteryGlobal GamingPlayDigitalTotal
Operating and facilities management contracts2,363 — — 2,363 
Gaming terminal services— 424 — 424 
PlayDigital services— — 163 163 
Systems, software, and other327 206 — 534 
Service revenue2,690 630 163 3,483 
Lottery products123 — — 123 
Gaming terminals— 339 — 339 
Other— 143 1 144 
Product sales123 482 1 606 
Total revenue2,812 1,112 165 4,089 

Sources of Modification Accounting. The amended guidance clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. The amended guidanceRevenue

Service Revenue

Service revenue is effective prospectively for annual periods beginning on or after December 15, 2017, including interim periods within those annual periods, with early adoption permitted. The Company adopted the new standard prospectively on May 10, 2017. The adoption did not have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amended guidance simplifies how an entity is required to test goodwill for impairment by eliminating Step 2derived from the goodwill impairment test. In accordancefollowing sources:

•Operating and facilities management contracts;
•Gaming terminal services;
•PlayDigital services; and
•Systems, software, and other

Operating and facilities management contracts – Global Lottery

Our revenue from operating contracts is derived primarily from long-term exclusive operating licenses in Italy. Under operating contracts, we manage all the activities along the lottery value chain including collecting wagers, paying out prizes, managing all accounting and other back-office functions, running advertising and promotions, operating data transmission networks and processing centers, training staff, providing retailers with the amended guidance, the Company will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying value,assistance, and an

impairment loss will be recognizedsupplying materials for the amount by whichgame. In most cases, the carrying value exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit. The amended guidancearrangement is effective for the Company in the first quarter of 2020 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017, and must be applied prospectively. Given the simplified nature of the new standard, the Company adopted it prospectively on January 1, 2017 and applied the guidance to its interim goodwill impairment test as discussed in Note 10, Goodwill.

New Accounting Standards - Not Yet Adopted

In November 2017, the FASB issued ASU No. 2017-14, Income Statement - Reporting Comprehensive Income (Topic 22), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606). The new guidance amends portions of Topics 22, 605 and 606 to refer to guidance within ASC 606. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact and timing of adopting this guidance.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815). The new guidance expands and refines hedge accounting for both financial and non-financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The new guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact and timing of adopting this guidance.

In February 2017, the FASB issued ASU No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets. The new guidance clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in-substance non-financial asset. The new guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new guidance clarifies the definition of a business in order to allow for the evaluation of whether transactions should be accounted for as acquisitions or disposalsa single performance obligation composed of assets or businesses.a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service).

Under operating contracts, we typically satisfy the performance obligation and recognize revenue over time because the customer simultaneously receives and consumes the benefits provided as we perform the services. The new guidanceamount of consideration to which we are typically entitled is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, with early adoption permitted. The Companyvariable based on a percentage of sales. Revenue is currently evaluating the impact of adopting this guidance.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The amended guidance requires that a statement of cash flows explain the change during the periodtypically recognized in the totalamount that we have the right to invoice the customer as this corresponds directly with the value to the customer of cash, cash equivalents,our performance completed to date. In arrangements where we are performing services on behalf of the government and amountsthe government is
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considered our customer, revenue is recognized net of prize payments, taxes, retailer commissions, and remittances to state authorities. Under operating contracts, we are generally describedrequired to pay an upfront license fee. Refer to the Upfront License Fees policy above for further details.

Our revenue from FMCs is generated by assembling, installing, and operating the online lottery system and related point-of-sale equipment. Under a typical FMC, we maintain ownership of the technology and are responsible for capital investments throughout the duration of the contract. FMCs typically include a wide range of support services that are provided throughout the contract and are part of the integrated solution that the customer has contracted to obtain. In most cases, the arrangement is accounted for as restricted cash or restricted cash equivalents. As a result, amounts generally describedsingle performance obligation composed of a series of distinct services that are substantially the same and that have the same pattern of transfer. Under FMCs, we typically satisfy the performance obligation and recognize revenue over time because the customer simultaneously receives and consumes the benefits provided as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconcilingwe perform the beginning-of-period and end-of-period total amounts shownservices. The amount of transaction price to which we are entitled is typically variable based on the statementa percentage of cash flows. The amended guidance is effective forsales, although under certain of its agreements, the Company receives fees based on a fixed fee arrangement. Revenue is typically recognized in the first quarteramount that we have the right to invoice the customer, as this corresponds directly with the value to the customer of 2018our completed performance.

Gaming terminal services – Global Gaming

Our revenue from gaming terminal services is generated by providing customers with early adoption permitted. The Company is currently evaluatingproprietary land-based gaming systems and equipment under a variety of recurring revenue or lease arrangements, including a percentage of amounts wagered, a percentage of net win, or a fixed daily/monthly fee.

Included in gaming terminal services are WAP systems. WAP systems consist of linked slot machines located in multiple casino properties, connected to a central computer system. WAP systems include a Company-sponsored progressive jackpot that increases with every wager until a player wins the impacttop award combination. Casinos with WAP machines pay a percentage of adopting this guidance.

In August 2016,amounts wagered for services related to the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receiptsdesign, assembly, installation, operation, maintenance, and Cash Payments. The new guidance reduces diversity in practice in financial reporting by clarifying certain existing principles in the Statement of Cash Flows. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). The new guidance replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receivables, loans and other financial instruments, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. The new guidance will be effective for the Company beginning January 1, 2020, with early adoption permitted beginning January 1, 2018. Applicationmarketing of the amendments is through a cumulative-effect adjustment to retained earningsWAP systems, as well as funding and administration of the effective date. The Company is currently evaluating the impact and timing of adopting this guidance.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amended guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. The adoption of this guidance is expected to result in a significant

Company-sponsored progressive jackpots. A portion of the Company's operating leases,total fee collected is allocated to the WAP jackpot. Since the jackpot is a payment to the customer, the portion allocated to the jackpot is classified as a reduction of revenue.

In some arrangements, there is a single performance obligation composed of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The amount of transaction price to which we are entitled typically is variable based on a percentage of wagers. This results in revenue recognition that corresponds with the value to the customer for the services transferred in the amount that we have the right to invoice. In other arrangements where the Companyend customer is the lessee,player, we record revenue net of prize payouts once the wagering outcome has been determined.

PlayDigital services – PlayDigital

We generate revenue from our iGaming solutions by providing gaming operators a license to offer IGT remote game server games on the operator websites and mobile applications. We typically offer customers a usage-based license under which we receive a fee based on the net gaming revenue derived by the operator attributable to the IGT remote game server games. Revenue is typically recognized when the usage occurs.

We provide sports betting technology and services to commercial and tribal operators and lotteries in regulated markets, primarily in the U.S. In the service contracts to our U.S. licensed sportsbook operators, we host a sports betting platform and a variety of services including installation, configuration and integration services where we generally recognize a percentage of net sports revenue over the contractual term. For customers who want to have an outsourcing model, we also offer trading services with the inclusion of odds setting and risk management. Under these contracts, we generally recognize a percentage of net sports revenue as the services are provided.

Systems, software, and other – Global Lottery

Our lottery contracts generally include other services, including telephone support, software maintenance, hardware maintenance, and the right to receive unspecified upgrades or enhancements on a when-and-if-available basis, and other professional services including software development. Fees earned for other services are generally recognized as service revenue in the period the service is performed (i.e., over the support period).

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We also develop technology to enable lotteries to offer commercial services over their existing lottery infrastructure or over standalone networks separate from the lottery. Leveraging our distribution network and secure transaction processing, we offer high-volume processing of commercial transactions including prepaid cellular telephone recharges, bill payments, e-vouchers and retail-based programs, electronic tax payments, stamp duty services, prepaid card recharges, and money transfers. These services are primarily offered outside of North America. In most cases, these arrangements are considered to be short in duration. The amount of transaction price that we are typically entitled to is variable based on the number of transactions processed. Revenue is typically recognized in the amount that we have the right to invoice the customer as this corresponds directly with the value to the customer of our completed performance.

Systems, software, and other – Global Gaming

Our gaming contracts generally include other services, including telephone support, software maintenance, content licensing, royalty fees, hardware maintenance, and the right to receive unspecified updates or enhancements on its consolidateda when-and-if-available basis, and other professional services. We also generate revenue from other services, including video central system monitoring, system support, and sales or usage-based licensing of intellectual property. Fees earned for other services are generally recognized as service revenue in the period the service is performed (i.e., over the support period).

Product Sales

Product sales are derived from the following sources:

•Lottery products;
•Gaming terminals; and
•Other

Lottery products – Global Lottery

Lottery products revenue primarily includes the sale of lottery equipment, lottery systems and printed products.

Our revenue from the sale or sales-type lease of lottery systems and equipment typically includes multiple performance obligations, where we assemble, sell, deliver, and install a turnkey system (inclusive of point-of-sale terminals, if applicable) or deliver equipment and license the computer software for a fixed price, and the customer subsequently operates the system or equipment. Our credit terms are predominantly short-term in nature. We also grant extended payment terms under contracts where the sale is typically secured by the related equipment sold. Revenue from the sale of lottery systems and equipment is recognized based upon the contractual terms of each arrangement. These arrangements generally include customer acceptance provisions and general rights to terminate the contract if we are in breach of the contract or at the convenience of the customer. In some arrangements, the performance obligation is satisfied over time if the customer controls the asset as it is created (i.e., when the asset is built at the customer site) or if our performance does not create an asset with an alternative use and we have an enforceable right to payment plus a reasonable profit for performance completed to date. If revenue is not recognized over time, it is generally recognized upon transfer of physical possession of the goods or the satisfaction of customer acceptance provisions. If the transaction includes multiple performance obligations, it is accounted for under arrangements with multiple performance obligations, discussed below.

Our other lottery product sales are primarily derived from the production and sales of instant ticket games under multi-year contracts. In these arrangements, the performance obligation is generally satisfied at a point in time (i.e., upon transfer of control of the game tickets to the customer) based on the contractual terms of each arrangement.

Gaming terminals – Global Gaming

Our revenue from the sale or sales-type lease of gaming terminals includes embedded game content, machine related equipment, licensing and royalty fees, and component parts. Our credit terms are predominantly short-term in nature. We also grant extended payment terms under contracts where the sale is typically secured by the related equipment sold. Revenue from the sale of gaming machines is recognized based upon the contractual terms of each arrangement, but predominantly upon transfer of physical possession of the goods or the lapse of customer acceptance provisions. If the sale of gaming machines includes multiple performance obligations, these arrangements are accounted for under arrangements with multiple performance obligations, discussed below.

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Other – Global Gaming

Other gaming product revenue is primarily comprised of gaming system sales, content licensing, perpetual or long-term software licenses, non-machine related equipment and component parts (including game themes and electronic conversion kits). Our revenue from the sale of gaming systems typically includes multiple performance obligations, where we sell, deliver, and install a turnkey system or deliver equipment and license the computer software for a fixed price, and the customer subsequently operates the system. These arrangements generally include customer acceptance provisions and general rights to terminate the contract if we are in breach of the contract. Such arrangements include hardware, software, and professional services. In these arrangements, the performance obligation is generally satisfied upon transfer of physical possession of the goods or the satisfaction of customer acceptance provisions.

Other – PlayDigital

Other PlayDigital product revenue is primarily comprised of perpetual software licenses, the sale of equipment, and component parts.

Contract Balances

Contract assets reflect revenue recognized in advance of invoicing our customer. The amount of contract assets, which is included within Other current assets and Other non-current assets in the Consolidated Balance Sheets, was $152 million and $150 million at December 31, 2023 and December 31, 2022, respectively.

Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. The amount of contract liabilities, which is included within Other current liabilities and Other non-current liabilities in the Consolidated Balance Sheets, was $112 million and $139 million at December 31, 2023 and December 31, 2022, respectively.

The amount of revenue recognized during the years ended December 31, 2023, 2022, and 2021 that was included in the contract liabilities balance sheet. The guidance requires lessees and lessors to recognize and measure leases at the beginning of each period was $62 million, $98 million, and$107 million, respectively.

Transaction Price Allocated to Remaining Performance Obligations

At December 31, 2023, the earliest period presented using a modified retrospective approach. The amended guidance is effectivetransaction price allocated to unsatisfied performance obligations for the Company in the first quarter of 2019 with early adoption permitted. The Company is currently evaluating the impact and timing of adopting this guidance.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance makes improvements specifically around recognition and measurement of financial assets and liabilities. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance.

In May 2014, the FASB issued ASU No. 2014-09 (Topic 606), Revenue from Contracts with Customers. The amended guidance, combined with all subsequent amendments (collectively "ASU 2014-09"), outlines a single comprehensive revenue model in accounting for revenue from contracts with customers. ASU 2014-09 supersedes existing revenue recognition guidance under GAAP, including industry-specific guidance, and replaces it with a five-step revenue model with a core principle to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be receivedgreater than one year, or performance obligations for those goodswhich we do not have a right to consideration from the customer in the amount that corresponds to the value to the customer for our performance completed to date, variable consideration which is not accounted for in accordance with the sales-based or services. Under ASU 2014-09, more judgment and estimates will be requiredusage-based royalties guidance, or contracts which are not wholly unperformed, is approximately $1.1 billion. Of this amount, we expect to recognize as revenue approximately 30% within the revenue recognition process than required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price,next 12 months, approximately 28% between 13 and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the Company in the first quarter of 2018. The Company will adopt this guidance using a modified retrospective application approach which results in a cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application36 months, approximately 18% between 37 and providing certain additional disclosures as defined per ASU 2014-09.

The Company is currently evaluating the impact of adopting this guidance by operating segment and revenue type. Given the comprehensive nature of the standard, the Company has already taken significant steps to identify the impact on its consolidated financial results. The Company has completed an evaluation by revenue type to identify potential differences between current accounting policies and ASU 2014-09. Additionally, the Company has engaged a third-party to assist in its evaluation of customer contracts, based on inherent complexity, to identify the attributes that could result in a different accounting treatment under ASU 2014-09. Based on the evaluations completed, ASU 2014-09 is not expected to change the revenue recognition practices for most of the Company’s service revenue; however, it is expected to result in some differences regarding the timing of revenue recognition for the Company’s product sales. Additionally, the new standard is expected to result in the reclassification of the Company’s jackpot expense from cost of services to a reduction of service revenue on the consolidated statements of operations. For 2017, such amounts were approximately $64.0 million. The Company does not currently anticipate significant changes to its business processes and systems to support the adoption of the new guidance,60 months, and the Company is currently assessing the impact on its internal controls. The Company will continue to monitorremaining balance through July 9, 2036.

5.    Trade and assess the impact of any changes to the standard and interpretations as they become available.Other Receivables, net

The Company does not currently expect that any other recently issued accounting guidance will have a significant effect on its consolidated financial statements.



3.Dispositions and Acquisitions
Sale of Double Down Interactive LLC

On June 1, 2017, the Company sold Double Down Interactive LLC ("DoubleDown") to DoubleU Games Co., Ltd. Details of the transaction are summarized in the table below. 
($ thousands)For the year ended
December 31, 2017
Cash proceeds825,751
Less: Cash divested(1,963)
Net cash proceeds823,788
Net book value(772,440)
Gain on sale51,348
Selling costs(24,116)
Gain on sale, net of selling costs27,232

The $27.2 million gain on sale of DoubleDown, net of selling costs, is classified within transaction (income) expense, net on the consolidated statement of operations.

Acquisition of IGT

The acquisition of IGT was completed on April 7, 2015 (the “Acquisition Date”). IGT was a global gaming company specializing in the design, development, manufacturing and marketing of casino-style gaming equipment, systems technology and game content across multiple platforms — land-based, online real money and social gaming. The acquisition of IGT established the Company as the world’s leading end-to-end gaming company, uniquely positioned to capitalize on opportunities in global gaming markets. The Company combines best-in-class content, operator capabilities, and interactive solutions, joining IGT’s leading game library and manufacturing and operating capabilities with GTECH’s gaming operations, lottery technology and services.
Total acquisition consideration of $4.545 billion consisted of $3.616 billion cash consideration and $0.929 billion equity consideration. Consistent with the terms of the transaction, equity consideration was determined based on the average of the volume-weighted average prices of GTECH common shares on the Italian Stock Exchange, converted to the U.S. dollar equivalent, for 10 randomly selected days within the period of 20 consecutive trading days ending on the second full trading day prior to the Acquisition Date. Under the terms of the transaction, IGT shareholders received 45.3 million common shares of the Parent, and IGT employees received 1.4 million restricted stock units. The Company utilized the closing stock price immediately prior to the merger and the number of shares issued to determine the fair value of the consideration.
Equity consideration included the fair value of shares vested and outstanding immediately prior to the Acquisition Date of $917.3 million and the portion of outstanding restricted stock units deemed to have been earned as of the Acquisition Date of $11.6 million. The portion of outstanding restricted stock units deemed not to have been earned as of the Acquisition Date of $16.2 million were expensed over the remaining future vesting period.

The transaction was accounted for as a business combination using the acquisition method of accounting. This method requires that the assets acquired and liabilities assumed be recognized at their fair values as of the Acquisition Date. In 2016, adjustments were made to finalize the fair value of tax assets and liabilities. The following table summarizes the final allocation of the consideration to the fair values of the assets acquired and liabilities assumed at the Acquisition Date.


($ thousands)
Purchase Price Allocation:
Cash consideration3,616,410
Equity consideration928,884
Total purchase price4,545,294

Fair value of assets acquired and liabilities assumed:
Cash and cash equivalents374,995
Restricted cash56,656
Trade and other receivables237,488
Inventories95,562
Other current assets361,003
Systems, equipment and other assets related to contracts126,524
Property, plant and equipment336,044
Intangible assets2,960,000
Other non-current assets628,620
Deferred income tax assets246,953
Accounts payable(75,814)
Other current liabilities(379,968)
Long-term debt, less current portion(1,937,942)
Deferred income tax liabilities(1,069,833)
Other non-current liabilities(360,335)
1,599,953
Goodwill2,945,341
Goodwill recognized as a result of the acquisition is not deductible for tax purposes.

The cash outflow associated with the IGT acquisition is summarized as follows:
($ thousands)
Cash payment for IGT shares outstanding3,572,968
Cash payment for IGT employee stock awards43,442
3,616,410
Less cash acquired(374,995)
Net cash outflow3,241,415

The fair values of acquired intangible assets as of the Acquisition Date along with the weighted-average useful lives over which the finite-lived intangibles are being amortized on a straight-line basis (which approximates their economic use) are as follows:
($ thousands) Fair Value Weighted
Average
Useful Life in Years
Customer relationships 1,715,000
 14.8
Game library 360,000
 2.5
Corporate trademarks 340,000
 Indefinite
Computer software 275,000
 9.4
Developed technologies 180,000
 3.8
Product trademarks 90,000
 7.3
  2,960,000
  

In 2017, the Company recorded a $714.0 million non-cash goodwill impairment loss with no income tax benefit, and in 2016 recorded an impairment loss of $30.0 million related to certain of the acquired corporate trademarks.

The Company incurred $1.7 million and $49.4 million of legal, accounting and other professional fees and expenses in 2016 and 2015, respectively, related to the IGT acquisition. These expenses are classified within transaction (income) expense, net on the consolidated statements of operations.
The Company’s consolidated financial statements for the year ended December 31, 2015 include IGT’s results of operations from April 7, 2015 through December 31, 2015. Revenue and operating loss attributable to IGT during this period total $1.346 billion and $45.4 million, respectively. The $45.4 million operating loss includes $276.0 million of acquired intangible assets amortization, which are a direct result of the IGT acquisition.
The following unaudited, pro forma financial information presents the combined results of operations as if the acquisition had been completed on January 1, 2014, the beginning of the comparable prior annual period. This pro forma information is provided for illustrative purposes only and is not necessarily indicative of the results that would have been obtained if the acquisition had occurred on the date assumed or that may occur in the future, and does not reflect synergies, integration costs, or other such costs or savings.
($ thousands)
For the year ended
December 31, 2015
Revenue5,105,159
Net loss(61,946)
This pro forma financial information is based on historical results of operations adjusted for:
(i)amortization of the fair value of intangible assets acquired;
(ii)interest expense reflecting the changes to the Company’s debt structure directly attributable to the acquisition;
(iii)non-recurring transaction expenses and debt extinguishment costs directly attributable to the acquisition; and
(iv)the associated tax impact of these pro forma adjustments at an average rate of 32.0%.
The pro forma results for 2015 presented above exclude $49.4 million of pre-tax transaction expenses and $36.5 million of pre-tax debt extinguishment costs recognized on the consolidated statement of operations.

4.Trade and Other Receivables, net

Trade and other receivables net are recorded at cost.amortized cost, net of allowance for credit losses, and represent a contractual right to receive money on demand or on fixed or determinable dates that are typically short-term with payment due within 90 days or less.
 December 31,
($ in millions)20232022
Trade and other receivables, gross692 680 
Allowance for credit losses(7)(11)
Trade and other receivables, net685 670 
  December 31,
  2017 2016
Gross 991,177
 1,006,121
Allowance for credit losses (53,323) (58,884)
Net 937,854
 947,237

The following table presents the activity in the allowance for credit losses related to trade receivables: losses:
 December 31,
($ in millions)202320222021
Balance at beginning of year(11)(15)(16)
Benefits (provisions), net2 — (2)
Amounts written off as uncollectible1 3 2 
Balance at end of year(7)(11)(15)
F-23
  December 31,
($ thousands) 2017 2016 2015
Balance at beginning of year (58,884) (76,137) (91,819)
Provisions, net (12,255) (13,594) (18,883)
Amounts written off as uncollectible 17,826
 29,289
 25,703
Foreign currency translation (5,885) 1,558
 9,263
Other 5,875
 —
 (401)
Balance at end of year (53,323) (58,884) (76,137)
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The Company has twoWe enter into various factoring agreements with major Europeanthird-party financial institutions to sell certain of our trade receivables. We factored trade receivables of $373 million and $266 million during the years ended December 31, 2023 and 2022, respectively, under these factoring arrangements, which reduced trade receivables. The cash received from these arrangements is reflected as net cash provided by operating activities in the Consolidated Statements of Cash Flows. In certain of these factoring arrangements, for ease of administration, we will collect customer payments related to the Italy segment on a non-recourse basis. Thesefactored gross receivables, have been derecognized fromincluding our trade receivables, which we then remit to the Company’s consolidated balance sheet. The agreements have a three- and five-year duration, respectively, and are subject to early termination by either party. The aggregate amount of outstanding receivables is limited to a maximum amount of €300 million and €150 million for Scratch & Win and Commercial Services, respectively.financial institutions. At December 31, 20172023 and 2016,2022, we had $133 million and $126 million, respectively, that was collected on behalf of the following receivables had been sold:financial institutions and recorded as other current liabilities in the Consolidated Balance Sheets. The net cash flows relating to these collections are reported as financing activities in the Consolidated Statements of Cash Flows.


  December 31, 2017 December 31, 2016
(in thousands) euro $ euro $
Scratch & Win 175,848
 210,894
 144,625
 152,449
Commercial services 45,417
 54,469
 59,334
 62,544
  221,265
 265,363
 203,959
 214,993
6.    Inventories, net

December 31,
($ in millions)20232022
Raw materials208 165 
Work in progress38 24 
Finished goods90 87 
Inventories, gross335 276 
Obsolescence reserve(18)(22)
Inventories, net317 254 

The Company also sold trade receivables on a non-recourse basis and derecognized $18.6 million and $19.5 million at December 31, 2017 and 2016, respectively, primarilyfollowing table presents the activity in the North America Gaming and Interactive segment.obsolescence reserve:

 December 31,
($ in millions)202320222021
Balance at beginning of year(22)(28)(43)
Provisions, net(10)(2)(1)
Amounts written off14 7 11 
Other— 1 4 
Balance at end of year(18)(22)(28)
5.Inventories


Inventories are stated at the lower of cost (under the first in, first out method) or net realizable value. Inventories primarily consist of gaming machines, lottery terminals, and lottery and gaming systems for sale.
  December 31,
($ thousands) 2017 2016
Raw materials 156,336
 161,911
Work in progress 33,588
 39,744
Finished goods 129,621
 145,839
  319,545
 347,494

6.7.    Other Assets
Other current assets
  December 31,
($ thousands) 2017 2016
Customer financing receivables, net 151,360
 109,773
Other receivables 65,891
 104,689
Prepaid royalties 59,596
 65,375
Value added tax receivable 49,962
 37,623
Prepaid expenses 30,977
 36,838
Other 49,734
 70,429
  407,520
 424,727
 

Other Current Assets
 December 31,
($ in millions)Notes20232022
Customer financing receivables, net147 143 
Contract assets456 69 
Prepaid expenses46 44 
Income taxes receivable34 98 
Deferred costs26 23 
Other tax receivables22 28 
Value-added tax receivable21 25 
Other30 37 
 382 467 
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Other non- current assetsNon-Current Assets
December 31,
($ in millions)Notes20232022
Upfront license fees, net:
Italian Scratch & Win467 545 
Italian Lotto181 266 
New Jersey48 57 
Rhode Island26 27 
Indiana7 8 
729 903 
Contract assets496 81 
Customer financing receivables, net70 76 
Deferred income taxes1850 38 
Other59 75 
 1,004 1,174 
  December 31,
($ thousands) 2017 2016
Upfront license fees, net:    
Italian Scratch & Win 1,145,998
 257,669
Italian Lotto 812,304
 804,142
New Jersey 100,730
 109,490
Indiana 14,642
 16,038
  2,073,674
 1,187,339
     
Prepaid royalties 103,322
 138,314
Customer financing receivables, net 74,898
 53,962
Prepaid income taxes 72,176
 14,309
Other 103,883
 103,738
  2,427,953
 1,497,662


Upfront License Fees

Italian Scratch & Win

In December 2017, Lotterie Nazionali S.r.l., a majority-owned subsidiary of the Company, was awarded a nine-year contract extension for the Italian Scratch & Win concession (the "Italian Scratch & Win extension") that required an upfront license fee of €800 million ($959.4 million at the December 31, 2017 exchange rate), of which €50 million ($59.3 million) was paid in 2017.


The upfront license fees are being amortized on a straight-line basis as follows:
Upfront License FeeLicense TermAmortization Start Date
Rhode Island20 years, 6 monthsJanuary 2023
Italian Scratch & Win9 yearsOctober 20102019
Italian Scratch & Win extensionLotto9 yearsOctober 2019December 2016
Italian Lotto9 yearsDecember 2016
New Jersey15 years, 9 monthsOctober 2013
Indiana16 years, 1 month15 yearsJuly 2013June 2015


Customer Financing Receivables


Customers' payment terms for customer financing receivables are confirmed with a written financing contract, lease contract, or promissory note and a security agreement is typically signed by the parties granting the Company a security interest in the related products sold or leased. Customer financing interest income is recognized based on market rates prevailing at issuance.

Customer financing receivables net are recorded at cost. At December 31, 2017 and 2016, $34.2 million and $29.2 million, respectively,amortized cost, net of certain outstanding customer financing receivables were sold on a non-recourse basis.

Theany allowance for customer financing receivables, netcredit losses, and are classified in the Consolidated Balance Sheets as follows:
 December 31, 2023
($ in millions)Current AssetsNon-Current AssetsTotal
Customer financing receivables, gross178 76 254 
Allowance for credit losses(31)(6)(37)
Customer financing receivables, net147 70 217 
  December 31, 2017
    Allowance for  
($ thousands) Gross credit losses Net
Current 167,985
 (16,625) 151,360
Non-current 77,847
 (2,949) 74,898
  245,832
 (19,574) 226,258


 December 31, 2022
($ in millions)Current AssetsNon-Current AssetsTotal
Customer financing receivables, gross184 87 271 
Allowance for credit losses(42)(11)(52)
Customer financing receivables, net143 76 219 

F-25
  December 31, 2016
    Allowance for  
($ thousands) Gross credit losses Net
Current 114,677
 (4,904) 109,773
Non-current 56,914
 (2,952) 53,962
  171,591
 (7,856) 163,735
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The following table presents the activity in the allowance for credit losses related tolosses: 
December 31,
($ in millions)202320222021
Balance at beginning of year(52)(71)(50)
Benefits (provisions), net4 8 (29)
Amounts written off as uncollectible11 10 8 
Balance at end of year(37)(52)(71)

The Company’s customer financing receivable portfolio is composed of customers primarily within the Global Gaming segment. We internally assess the credit quality of customer financing receivables net:
  December 31,
($ thousands) 2017 2016 2015
Balance at beginning of year (7,856) (3,888) —
Provisions, net (5,236) (4,481) (3,706)
Amounts written off as uncollectible —
 —
 20
Foreign currency translation (159) 513
 (59)
Other (6,323) —
 (143)
Balance at end of year (19,574) (7,856) (3,888)

7.Fair Value of Financial Assets and Liabilities

Accounting guidance defines fair value as the price that would be receivedusing a number of factors, including, but not limited to, sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the Company is required to classify certain assetscredit scores obtained from external providers, trade references, bank references, and liabilitieshistorical experience. Risk profiles differ based on customer location and are pooled as: (i) North America; (ii) Latin America and the following fair value hierarchy:Caribbean (“LAC”); and (iii) Europe, Middle East and Africa and Asia Pacific (“EMEA & APAC”).

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that can be accessedThe customer financing receivables at amortized cost by year of origination and the measurement date;geography credit quality indicator at December 31, 2023 are as follows:
Year of Origination
($ in millions)2023202220212020PriorTotal
North America51 15 1 6 3 77 
LAC47 10 6 2 49 114 
EMEA & APAC28 18 10 3 4 64 
125 44 18 11 57 254 
Level 2: Inputs other than quoted prices included within Level 1
The past due balance, which represents installments that are observable for the assetsone day or liabilities, either directly or indirectly; and
Level 3: Unobservable inputs for the assets or liabilities.
The guidance requires the usemore past their contractual due date, of observable market data if such data is available without unduecustomer financing receivables at amortized cost and effort.the geography credit quality indicator at December 31, 2023 is as follows:

($ in millions)North AmericaLACEMEA & APACTotal
Past due2 34 11 47 
Short-term portion not yet due48 51 31 131 
Long-term portion not yet due27 28 21 76 
77 114 64 254 
Valuation methods
8.    Fair Value Measurements

Financial Assets and assumptions used to estimate fair value, when quoted market prices are not available, are subject to judgments and changes in these factors can materially affect fair value estimates.
For financial assets and financial liabilities that are recognizedLiabilities Measured at fair valueFair Value on a recurring basis,Recurring Basis

As of December 31, 2023, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash and investments, accounts receivable, other current assets, accounts payable, and other current liabilities approximate fair value due to relatively short periods to maturity.

Financial assets and liabilities carried at fair value
The following tables represent the fair value hierarchy forof financial assets and liabilities measured at fair value atincluded derivative assets, equity investments, and derivative liabilities of $2 million, $6 million, and $5 million, respectively. As of December 31, 20172022, there were derivative assets, equity investments, derivative liabilities, and 2016:
  December 31, 2017
($ thousands) Level 1 Level 2 Level 3 Total Fair Value
Restricted Investments 57,465
 —
 —
 57,465
         
Derivative Assets:  
  
  
  
Foreign Currency Forward Contracts —
 501
 —
 501
Interest Rate Swaps —
 479
 —
 479
Call Option —
 —
 2,638
 2,638
         
Jackpot Investments 459
 —
 —
 459
Available-for-Sale Investments 11,991
 —
 —
 11,991
         
Contingent Consideration —
 —
 7,755
 7,755
         
Derivative Liabilities:  
  
  
  
Foreign Currency Forward Contracts —
 4,399
 —
 4,399
Interest Rate Swaps —
 14,953
 —
 14,953
  December 31, 2016
($ thousands) Level 1 Level 2 Level 3 Total
Restricted Investments 46,718
 —
 —
 46,718
         
Derivative Assets:  
  
  
  
Foreign Currency Forward Contracts —
 8,339
 —
 8,339
Interest Rate Swaps —
 1,079
 —
 1,079
         
Jackpot Investments 4,184
 —
 —
 4,184
Available-for-Sale Investments 12,666
 —
 —
 12,666
         
Contingent Consideration —
 —
 2,241
 2,241
         
Derivative Liabilities:  
  
  
  
Foreign Currency Forward Contracts —
 126
 —
 126
Interest Rate Swaps —
 13,709
 —
 13,709

For the contingent consideration liability, a net gain was recognized for approximately $2.2of $1 million, within selling, general$6 million, $3 million, and administrative expense on the consolidated statement of operations for the year ended December 31, 2017.$4 million, respectively.


Valuation TechniquesFinancial Assets and Balance Sheet PresentationLiabilities Not Carried at Fair Value
Restricted investments are primarily composed of publicly-traded foreign government and corporate bonds and mutual funds, and were valued using quoted market prices. Restricted investments are presented in restricted cash and investments in the consolidated balance sheets.
Foreign currency forward contracts were calculated by reference to current forward exchange rates for contracts with similar maturity profiles. Foreign currency forward contracts are presented as other current assets and other current liabilities in the consolidated balance sheets.
Interest rate swaps were calculated by discounting future cash flows using LIBOR rates with an appropriate adjustment for credit risk. Interest rate swaps are presented as other current assets and other non-current liabilities in the consolidated balance sheets.


The call option contract was valued based upon a free cash flow forecastcarrying amounts and is presented as other non-currentfair value hierarchy classification of our significant financial assets in the consolidated balance sheets.
Jackpot investments were valued using quoted market prices. Jackpot investments are presented as other current and other non-current assets in the consolidated balance sheets.
Available-for-sale investments were valued using quoted market prices. Available-for-sale investments are presented as other non-current assets in the consolidated balance sheets.

Contingent consideration was valued using a multiple of earnings before interest, taxes, depreciation and amortization ("EBITDA") and is presented as other current liabilities in the consolidated balance sheets.

Assets and liabilities not carried at fair value as of December 31, 2023 and 2022 are as follows:
December 31, 2023
($ in millions)Carrying 
Amount		Level 1Level 2Level 3Total Fair Value
Assets:
Customer financing receivables, net217 — — 217 217 
Equity investments11 — — 11 11 
Liabilities:
Jackpot liabilities155 — — 135 135 
Debt (1)
5,655 — 5,620 — 5,620 
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Table of Contents
December 31, 2022
($ in millions)Carrying 
Amount		Level 1Level 2Level 3Total Fair Value
Assets:
Customer financing receivables, net219 — — 211 211 
Equity investments9 — — 9 9 
Liabilities:
Jackpot liabilities170 — — 135 135 
Debt (1)
5,750 — 5,576 — 5,576 
(1) Excludes short-term borrowings.

Level 3 equity investments are measured at cost, less impairment, plus or minus changes resulting from observable price changes, which approximates fair value.

9.    Derivative Financial Instruments

We use derivative hedging instruments, principally foreign currency forward contracts and interest rate swaps, for the purpose of managing currency risks and interest rate risk arising from our operations and sources of financing.

Cash Flow Hedges
 
The following tables represent the fair value hierarchy for assets and liabilities not measured at fair value at December 31, 2017 and 2016:
  December 31, 2017
($ thousands) Carrying 
Value		 Level 1 Level 2 Level 3 Total Fair Value Unrealized 
Gain (Loss)		 Realized Loss
Customer financing receivables, net 226,258
 —
 —
 225,718
 225,718
 (540) —
Available-for-sale investments 12,409
 —
 —
 12,409
 12,409
 —
 —
Goodwill 1,439,867
 —
 —
 1,439,867
 1,439,867
 —
 (714,000)
Jackpot liabilities 275,626
 —
 —
 268,581
 268,581
 7,045
 —
Debt 8,391,647
 —
 8,974,126
 —
 8,974,126
 (582,479) —
  December 31, 2016
($ thousands) Carrying 
Value		 Level 1 Level 2 Level 3 Total Fair Value Unrealized 
Gain (Loss)
Customer financing receivables, net 163,735
 —
 —
 165,241
 165,241
 1,506
Available-for-sale investments 14,838
 —
 —
 14,838
 14,838
 —
Jackpot liabilities 299,042
 —
 —
 291,026
 291,026
 8,016
Debt 7,872,285
 —
 8,415,890
 —
 8,415,890
 (543,605)

Valuation Techniques and Balance Sheet Presentation
Customer financing receivables, net are recorded and valued based on expected payments and market interest rates (ranging from 4.30% to 10.05%) relative to the credit risk of each customer region. Credit risk is determined on a number of factors, including customer size, type, financial condition, historical collection experience, account aging, and credit ratings derived from credit reporting agencies and other industry trade reports. Contracts are typically secured by the underlying assets sold and notes are secured by the developed property and/or other assets. The higher risk rate categories include most of the Company’s development financing loans in new markets and customers in regions with a history of currency or economic instability, such as Latin America. Customer financing receivables, net are presented as other current and other non-current assets in the consolidated balance sheets.
Available-for-sale investments are carried at cost (which approximates fair value) and are presented as other non-current assets in the consolidated balance sheets.

During the third quarter of 2017, the Company recorded a $714.0 million non-cash impairment charge with no income tax benefit to reduce the carrying value of the North America Gaming and Interactive reporting unit to its implied fair value. The Company's assessment of goodwill for impairment includes various inputs, such as cash flow projections. In calculating the fair value of the North America Gaming and Interactive reporting unit using the income approach, the Company used projections of revenues, operating costs and capital expenditures. The projected cash flows considered historical and estimated future results and general economic and market conditions, as well as the impact of planned business and operational strategies. As a result, the Company classifies the North America Gaming and Interactive reporting unit's goodwill measured at fair value on a non-recurring basis within Level 3 of the fair value hierarchy.
Jackpot liabilities were primarily valued using discounted cash flows, incorporating expected future payment timing, estimated funding rates based on the treasury yield curve, and nonperformance credit risk. Expected annuity payments over one to 25 years (average 10 years) were discounted using the 10-year treasury yield curve rate (2.40%) for the estimated funding rate and the 10-year credit default swap rate (1.87%) for nonperformance risk. The present value (carrying value) of the expected lump sum payments were discounted using the 1-year treasury yield curve rate (1.76%) with the 1-year credit default swap rate (0.17%) for the current amounts and the 2-year treasury yield curve rate (1.89%) with the 2-year credit default swap rate (0.28%) for non-current amounts. Significant increases (decreases) in any of these inputs in isolation would result in a lower (higher) fair value measurement. Generally, changes in the estimated funding rates do not correlate with changes in non-performance credit risk. Jackpot liabilities are presented as other current and other non-current liabilities in the consolidated balance sheets.
Debt is categorized within Level 2 of the fair value hierarchy. Senior Secured Notes are valued using quoted market prices or dealer quotes for the identical financial instrument when traded as an asset in markets that are not active. Revolving credit facilities and term loans with variable interest rates are valued using current interest rates, excluding the effect of debt issuance costs. Carrying values in the table exclude swap adjustments.

8.Derivatives
The Company uses derivatives to manage the impact of foreign currency exchange and interest rate changes on earnings and cash flows. The Company does not enter into derivatives for speculative purposes. Derivatives are recognized as either assets or liabilities in the consolidated balance sheet at fair value. The accounting for changes in the fair value of a derivative depends on the nature of the hedge and the hedge effectiveness. The Company’s policy is to negotiate the terms of the derivative to match the terms of the hedged item to maximize hedge effectiveness. Derivative gains and losses are reported in the consolidated statements of cash flows consistent with the classification of cash flows from the underlying hedged items.

The Company uses foreign currency forward and option contracts to hedge its exposure on certain forecasted foreign currency revenue and expense transactions. The terms of the contracts are typically matched with the forecasted foreign currency transactions to be derived from operations up to a period of 12 months. These derivatives are designated as cash flow hedges. All outstanding cash flow hedges are recognized in the consolidated balance sheets at fair value with the effective portion of the gain or loss recorded in accumulated other comprehensive income (loss). When the underlying hedged transaction is recognized, the effective portion of the gain or loss on the derivative is reclassified from accumulated other comprehensive income (loss) to the consolidated statement of operations. Any ineffectiveness is recognized immediately into earnings.

The Company also uses foreign currency forward and option contracts to offset its exposure to the change in value of certain foreign currency denominated monetary assets and liabilities. Because these derivatives hedge existing exposures that are denominated in foreign currencies, the contracts do not qualify for hedge accounting. Accordingly, these outstanding non-

designated derivatives are recognized in the consolidated balance sheet at fair value with the changes in fair value recorded in foreign exchange gain (loss), net, in the consolidated statements of operations. These derivative contracts mature in less than one year.

The Company uses interest rate derivatives designated as fair value hedges to manage the exposure to interest rate movements and to reduce borrowing costs by converting fixed-rate debt into floating-rate debt. Under these derivatives, the Company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to agreed-upon notional principal amounts. Changes in the fair value of the derivative are recorded in other income (expense), net and are offset by changes in the fair value of the underlying debt instrument due to changes in the benchmark interest rate. The cash flows from these contracts are reported as operating activities in the consolidated statements of cash flows. The gains (losses) from expired interest rate swaps ("swaps") are recorded in long-term debt, increasing or decreasing the outstanding balances of the debt, and amortized as a reduction or addition of interest expense over the remaining life of the related debt. The cash flows from the termination of the swaps are reported as operating activities in the consolidated statements of cash flows.

Cash flow hedges
The gross notional amount of foreign currency forward contracts, designated as cash flow hedges, outstanding at December 31, 20172023 and 2016 was $100.82022 were $78 million and $120.9$94 million, respectively.

The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges isamount recorded in accumulatedwithin other comprehensive income and is subsequently reclassified into earnings in the period in which the hedged forecasted transaction affects earnings. Refer to Note 18, Shareholders' Equity for more details on the reclassification of amounts from accumulated other comprehensive income into earnings. The ineffective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recognized directly in earnings. The amount retained in other comprehensive income(loss) at December 31, 20172023 is expected to mature and affectimpact the consolidated statement of operations in 2018.2024.


Fair value hedges
In September 2015, the Company executed $625 million notional amount of swaps that effectively convert $625 million of the 6.250% Senior Secured Notes due 2022 from fixed interest rate debt to variable rate debt. Under the terms of these swaps, the Company is required to make variable rate interest payments based on six-month LIBOR plus a fixed spread, ranging between 5.90% and 6.02% at December 31, 2017, and will receive fixed rate interest payments from its counterparties based on a fixed rate of 6.25%. The LIBOR rate resets semiannually on February 15 and August 15. Settlement of the net amount of interest receivable or payable under the swaps occurs semiannually on February 15 and August 15. The swaps expire in February 2022.

During 2015, the Company held swaps exchanging fixed rate interest payments for variable rate interest payments on a portion of the 7.500% Senior Secured Notes due 2019 and a portion of the 5.500% Senior Secured Notes due 2020. These swaps were canceled in 2015 and the Company received cash proceeds of $67.8 million from the swap counterparties upon settlement.

Derivatives not designatedNot Designated as hedging instrumentsHedging Instruments

The notional amount of foreign currency forward contracts, not designated as hedging instruments, outstanding at December 31, 20172023 and 20162022 was $460.6$394 million and $364.5$212 million, respectively.


Presentation of Derivative AmountsRefer to Note 20 - Shareholders’ Equity- Accumulated Other Comprehensive Income for further information.

All derivatives are recorded gross, except netting of foreign exchange contracts
10.    Systems, Equipment and counterparty netting of swaps’ interest receivableOther Assets Related to Contracts, net and payable, as applicable.Property, Plant and Equipment, net

Balance Sheet Location and Fair Value
  At December 31,
  2017 2016
($ thousands) Assets Liabilities Assets Liabilities
Fair Value Hedges: Interest Rate Swaps  
  
  
  
Non-current financial liabilities —
 14,953
 —
 13,709
Long-term debt —
 (15,088) —
 (9,123)
Gross Derivatives —
 (135) —
 4,586
         
Non-Designated Hedges: Foreign Currency Contracts, net  
  
  
  
Current financial assets 501
 —
 4,965
 —
Current financial liabilities —
 2,037
 —
 126
         
Cash Flow Hedges: Foreign Currency Contracts, net  
  
  
  
Current financial assets —
 —
 3,374
 —
Current financial liabilities —
 2,362
 —
 —
         
Counterparty Netting: Swap Interest  
  
  
  
Current financial assets:  
  
  
  
Interest due from counterparty 479
 —
 1,079
 —
Net Derivatives 980
 4,264
 9,418
 4,712
Income Statement Location and Income (Expense)
  For the year ended December 31,
($ thousands) 2017 2016 2015
Fair Value Hedges: Interest Rate Swaps      
Effectiveness - Other (expense) income, net (605) (540) 1,646
Ineffectiveness - Other (expense) income, net 1,032
 (1,280) 232
       
Non-Designated Hedges: Foreign Currency Contracts, net      
Realized (losses) gains - Foreign exchange (loss) gain, net (21,870) 16,873
 (16,651)
       
Cash Flow Hedges: Foreign Currency Contracts, net  
  
  
Realized (losses) gains - Service revenue (1,744) 5,218
 244
       


9.Systems, Equipment and Other Assets Related to Contracts, net and Property, Plant and Equipment, net
The Company has two categories of fixed assets: systems, equipment and other assets related to contracts ("Systems & Equipment"); and property, plant and equipment ("PPE").
Systems & Equipment are assets that primarily support the Company’s operating contracts and facilities management contracts (collectively, the "Contracts") and are principally composed of lottery and gaming assets. The estimated useful lives for Systems & Equipment depends on the type of cost as follows:

Lottery hard costs (such as terminals, mainframe computers, communications equipment);
Lottery soft costs (such as software development costs represented by internal personnel costs); and
Commercial gaming machines.

Lottery hard and soft costs are typically depreciated over the base term of the Contracts the asset relates to, generally not to exceed 10 years, and commercial gaming machines over three to five years.

PPE are assets the Company uses internally, primarily in manufacturing, selling, general and administration, research and development, and commercial service applications not associated with contracts. Buildings are depreciated over 40 years, furniture and equipment over five to ten years, and leasehold improvements are amortized over the shorter of the lease term or estimated useful life. 

Systems & Equipment and PPE, net consist of the following:
Systems & Equipment, netPPE, net
 December 31,December 31,
($ in millions)2023202220232022
Land— — 1 1 
Buildings— — 67 60 
Terminals and systems2,843 2,720 — — 
Furniture and equipment131 127 306 315 
Construction in progress86 97 28 21 
 3,059 2,944 401 398 
Accumulated depreciation(2,131)(2,045)(282)(281)
 928 899 119 118 

F-27
  Systems & Equipment, net PPE, net
  December 31, December 31,
($ thousands) 2017 2016 2017 2016
Land 547
 574
 2,542
 18,787
Buildings 151,962
 121,572
 70,389
 219,416
Terminals and systems 2,969,848
 2,652,742
 —
 —
Furniture and equipment 197,610
 172,666
 241,632
 234,458
Contracts in progress 149,245
 169,367
 —
 —
Construction in progress —
 —
 20,603
 36,353
  3,469,212
 3,116,921
 335,166
 509,014
Accumulated depreciation (2,035,018) (1,917,247) (141,443) (151,173)
  1,434,194
 1,199,674
 193,723
 357,841
Table of Contents
Borrowing costsThe estimated useful lives of $4.2 million and $1.5 million were capitalized to Systems & Equipment and PPE are as follows:
AssetEstimated life in years
Systems & Equipment
Terminals and systems - lotteryGenerally do not exceed 10 years
Terminals and systems - gaming3-5
Furniture and equipmentGenerally do not exceed 10 years
PPE
Buildings40
Furniture and equipment5-10

Leasehold improvements are amortized over the shorter of the corresponding lease term or estimated useful life.

11.     Leases

Lessee

We have operating and finance leases for real estate (warehouses, office space, data centers), vehicles, communication equipment, and other equipment. Many of our real estate leases include one or more options to renew, while some include termination options. Certain vehicle and equipment leases include residual value guarantees and options to purchase the leased asset. Many of our real estate leases include variable payments for maintenance, real estate taxes, and insurance that are determined based on the actual costs incurred by the landlord.

The classification of our operating and finance leases in 2017the Consolidated Balance Sheets is as follows:
December 31,
($ in millions)Balance Sheet Classification20232022
Assets:
Operating ROU assetOperating lease right-of-use assets230 254 
Finance ROU asset, net (1)
Other non-current assets16 23 
Total lease assets246 277 
Liabilities:
Operating lease liability, currentOther current liabilities40 37 
Finance lease liability, currentOther current liabilities7 8 
Operating lease liability, non-currentOperating lease liabilities214 239 
Finance lease liability, non-currentOther non-current liabilities16 22 
Total lease liabilities276 307 
(1) Finance ROU assets are recorded net of accumulated amortization of $16 million and 2016,$15 million at December 31, 2023 and 2022, respectively.

Weighted-average lease terms and discount rates are as follows:
December 31,
202320222021
Weighted-Average Remaining Lease Term (in years)
Operating leases7.097.728.47
Finance leases3.604.314.73
Weighted-Average Discount Rate
Operating leases6.98 %6.88 %6.71 %
Finance leases5.34 %5.12 %4.98 %

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Table of Contents
Components of lease expense are as follows:
For the year ended December 31,
($ in millions)202320222021
Operating lease costs59 62 71 
Finance lease costs (1)
9 11 13 
Short-term lease costs22 13 1 
Variable lease costs (2)
25 23 23 
(1) Includes amortization of ROU assets of $8 million, $10 million, and $11 million for the years ended December 31, 2023, 2022, and 2021, respectively.
(2) Includes immaterial amounts related to sublease income.

Maturities of operating and finance lease liabilities at December 31, 2023 are as follows ($ in millions):
YearOperating LeasesFinance Leases
Total (1)
202456 8 64 
202551 7 58 
202644 6 50 
202737 3 40 
202833 — 33 
Thereafter104 1 104 
Total lease payments324 25 349 
Less: Imputed interest(71)(2)(73)
Present value of lease liabilities253 23 276 
(1) The maturities above exclude leases that have not yet commenced. We have committed rental payments of $4 million for a lease that will commence in 2024 with a lease term of 10 years.

Cash flow information and non-cash activity related to leases is as follows:
For the year ended December 31,
($ in millions)202320222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating and finance leases59 60 67 
Finance cash flows from finance leases8 10 13 
Non-cash activity:
ROU assets obtained in exchange for lease obligations (net of early terminations)
Operating leases13 19 5 
Finance leases1 4 7 

Lessor

We have various arrangements for lottery and gaming equipment under which we are the lessor.

Our lease arrangements typically have lease terms ranging from one month to 4 years. These leases generally meet the criteria for operating lease classification, as the lease payments are typically variable based on a percentage of sales, a percentage of amounts wagered, net win, or a daily fee per active gaming terminal. Our leases generally do not contain variable payments that are dependent on an index or rate used(such as the Consumer Price Index or a market interest rate). We provide lessees with the option to determineextend the amountlease, which is considered when evaluating lease classification. Lease income from operating leases is included within service revenue in the Consolidated Statements of borrowing costs eligible for capitalizationOperations. Operating lease income was approximately 5.8%8% of total revenue for the year ended December 31, 2023. Operating lease income was approximately 6% of total revenue for each of the years ended December 31, 2022 and 5.6%2021.

Our sales-type lease arrangements typically have lease terms ranging from one year to 10 years. We provide lessees with the option to extend the lease, which is considered when evaluating lease classification. Lease income from sales-type leases is included within product sales in the Consolidated Statements of Operations. Total sales-type lease income was approximately 1% of total revenue for 2017each of the years ended December 31, 2023, 2022, and 2016,2021. Sales-type lease receivables are included within customer financing receivables, net, which are a component of other current assets and other non-current assets within
F-29
Table of Contents
the Consolidated Balance Sheets. Additional information on customer financing receivables is included in Note 7 – Other Assets.

12.    Restructuring

During 2021, we initiated a multi-year plan to eliminate certain redundancies in our Italian workforce. No restructuring plans were initiated during 2023 or 2022.

2021 Italian Workforce Redundancies

In connection with the sale of our Italian B2C businesses, management agreed to provide to the buyer information technology and back-office services for a period of one to three years via a TSA. As certain of these services were concluding, during the fourth quarter of 2021 management performed a detailed review of redundant roles and created a plan to eliminate certain redundancies as TSA services lapse, by commencing voluntary early retirement programs. Since the plan’s inception, we incurred approximately $31 million in severance and related employee costs associated with these early retirement programs through December 31, 2023, primarily within our Global Lottery and Corporate and Other segments, as management and the identified employees reached a mutual understanding of the separation benefits. Cash payments associated with these programs are expected to be made through 2030. During the years ended December 31, 2023, 2022 and 2021 we incurred $13 million, $7 million, and $11 million, respectively, whichof severance and related employee costs under the plan.

Rollforward of Restructuring Liability

The following table presents the activity in the restructuring liabilities for the above plan for the years ended December 31, 2023 and December 31, 2022:
($ in millions)Severance and Related Employee CostsOtherTotal
Balance at December 31, 202112 1 13 
2021 Italian workforce redundancies plan expense, net7 — 7 
Payments(4)(1)(4)
Reversals of expense and other(2)— (2)
Balance at December 31, 202214 — 14 
2021 Italian workforce redundancies plan expense, net13 — 13 
Payments(5)— (5)
Reversals of expense and other1 — 1 
Balance at December 31, 202322 — 22 

Restructuring Expense

The following table summarizes consolidated restructuring expense by segment and type of cost:
For the year ended December 31, 2023
($ in millions)Severance and Related Employee CostsOtherTotal
Global Lottery9 — 9 
Global Gaming— — — 
PlayDigital— — — 
Corporate and Other4 — 4 
Total13 — 13 
For the year ended December 31, 2022
($ in millions)Severance and Related Employee CostsOtherTotal
Global Lottery6 — 6 
Global Gaming(1)— (1)
PlayDigital— — — 
Corporate and Other1 — 1 
Total6 — 6 
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Table of Contents
For the year ended December 31, 2021
($ in millions)Severance and Related Employee CostsOtherTotal
Global Lottery8 — 8 
Global Gaming(3)(1)(4)
PlayDigital(1)— (1)
Corporate and Other2 — 2 
Total6 (1)6 
13.Goodwill

In connection with the acquisition of iSoftBet, previously discussed in Note 3 - Business Acquisitions and Divestitures, the Company recognized $121 million (€117 million) of goodwill in our PlayDigital reporting unit. The goodwill was the effective interest rate of all borrowings.

Impairment lossesprimarily related to Systems & Equipmentexpected synergies from combining operations and the value of $1.2 million, $7.7 millionthe existing workforce. The goodwill generated as a result of the acquisition of iSoftBet is nondeductible for income tax purposes.

In connection with the divestiture of our Italian commercial services business previously discussed in Note 3 - Business Acquisitions and $2.8 million were recordedDivestitures, goodwill in 2017, 2016 and 2015, respectively.our Global Lottery reporting unit was reduced by $250 million.




10.Goodwill
Changes in the carrying amount of goodwill consist of the following:
($ thousands) 
North America
Gaming and
Interactive
 
North America
Lottery
 International Italy Total
Balance at December 31, 2015 2,626,282
 1,217,155
 1,535,083
 1,451,979
 6,830,499
           
Acquisitions (402) 4,374
 (64) 3,734
 7,642
Foreign currency translation —
 —
 (7,470) (20,381) (27,851)
Other —
 —
 —
 (278) (278)
Balance at December 31, 2016 2,625,880
 1,221,529
 1,527,549
 1,435,054
 6,810,012
           
Impairment loss (714,000) —
 —
 —
 (714,000)
Disposal (473,000) —
 —
 —
 (473,000)
Acquisitions —
 —
 14,890
 7,303
 22,193
Foreign currency translation —
 —
 6,786
 70,949
 77,735
Other 987
 60
 156
 (328) 875
Balance at December 31, 2017 1,439,867
 1,221,589
 1,549,381
 1,512,978
 5,723,815
           
Balance at December 31, 2016  
  
  
  
  
Cost 2,625,880
 1,225,622
 1,639,282
 1,436,635
 6,927,419
Accumulated impairment loss —
 (4,093) (111,733) (1,581) (117,407)
  2,625,880
 1,221,529
 1,527,549
 1,435,054
 6,810,012
           
Balance at December 31, 2017  
  
  
  
  
Cost 2,153,867
 1,225,682
 1,674,381
 1,514,777
 6,568,707
Accumulated impairment loss (714,000) (4,093) (125,000) (1,799) (844,892)
  1,439,867
 1,221,589
 1,549,381
 1,512,978
 5,723,815
($ in millions)Global LotteryGlobal GamingPlayDigitalTotal
Balance at December 31, 20212,948 1,446 261 4,656 
Acquisitions— — 121 121 
Divestitures(250)— — (250)
Foreign currency translation(36)(2)(6)(44)
Balance at December 31, 20222,662 1,444 376 4,482 
Foreign currency translation16 1 8 25 
Balance at December 31, 20232,678 1,446 384 4,507 


 The Company assesses its reporting units annually and has four reporting units (which are equivalent to its segments)Total goodwill at December 31, 2017 as follows:2023, 2022, and 2021 is net of $1.3 billion of accumulated impairment losses.

North America Gaming and Interactive;
North America Lottery;14.Intangible Assets, net
International; and
Italy.

Impairment Loss

The Company performed an interim goodwill impairment test at September 30, 2017 for the North America Gaming and Interactive reporting unit that resulted in a $714.0 million non-cash goodwill impairment loss with no income tax benefit to reduce the carrying amount of the North America Gaming and Interactive reporting unit to fair value. The impairment loss had no impact on the Company's operations, cash flows, ability to service debt, compliance with financial covenants, or underlying liquidity.


11.Intangible Assets, net
 
Intangible assets at December 31, 20172023 and 2016 consist of: 2022 are summarized as follows:
 December 31, 2023December 31, 2022
($ in millions)
Estimated Life
(Years)
Weighted- Average
Amortization Period
(Years)		Gross Carrying AmountAccumulated
Amortization
Net 
Carrying Amount
Gross Carrying AmountAccumulated
Amortization
Net 
Carrying Amount
Amortized:   
Customer relationships2-2015.62,305 1,582 723 2,303 1,464 838 
Computer software and game library3-145.8916 855 61 887 809 78 
Trademarks1-2012.7185 127 58 184 119 65 
Developed technologies2-156.1286 232 54 283 222 61 
Capitalized software development2-51.733 4 29 — — — 
Licenses - IP2-108.5396 29 367 75 — 75 
Licenses - Other4-234.561 59 2 58 55 3 
Other2-176.247 32 15 40 31 9 
 4,228 2,919 1,310 3,830 2,700 1,130 
Unamortized:      
Trademarks245 — 245 245 — 245 
4,473 2,919 1,555 4,075 2,700 1,375 
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Table of Contents
  December 31, 2017
($ thousands) Gross Carrying
Amount		 Accumulated
Amortization		 Net Book
Value		 Weighted Average
Life (years)
Subject to amortization  
  
  
  
Customer relationships 2,434,051
 956,586
 1,477,465
 15.2
Computer software and game library 947,207
 710,725
 236,482
 5.6
Trademarks 186,218
 47,053
 139,165
 14.1
Concessions and licenses 300,207
 204,533
 95,674
 10.1
Developed technologies 220,213
 155,870
 64,343
 5.4
Networks 18,806
 13,571
 5,235
 7.0
Sports and horse racing betting rights 132,521
 128,888
 3,633
 6.5
Other 8,660
 4,110
 4,550
 16.1
  4,247,883
 2,221,336
 2,026,547
  
Not subject to amortization  
  
  
  
Trademarks 246,913
 —
 246,913
  
Total intangible assets, excluding goodwill 4,494,796
 2,221,336
 2,273,460
  

Intangible asset amortization expense of $214 million, $182 million, and $190 million (which includes computer software amortization expense of $23 million, $22 million, and $23 million) was recorded in 2023, 2022, and 2021, respectively.
  December 31, 2016
($ thousands) Gross Carrying
Amount		 Accumulated
Amortization		 Net Book
Value		 Weighted Average
Life (years)
Subject to amortization  
  
  
  
Customer relationships 2,590,225
 809,669
 1,780,556
 14.8
Computer software and game library 946,150
 550,506
 395,644
 5.7
Trademarks 200,107
 35,923
 164,184
 13.4
Developed technologies 234,420
 128,200
 106,220
 5.4
Concessions and licenses 255,299
 153,277
 102,022
 10.3
Networks 15,689
 11,225
 4,464
 7.0
Sports and horse racing betting rights 115,991
 112,060
 3,931
 6.5
Other 8,654
 3,557
 5,097
 16.1
  4,366,535
 1,804,417
 2,562,118
  
Not subject to amortization  
  
  
  
Trademarks 311,913
 —
 311,913
  
Total intangible assets, excluding goodwill 4,678,448
 1,804,417
 2,874,031
  


In connection with the June 2017July 2022 acquisition of iSoftBet, previously discussed in Note 3 - Business Acquisitions and Divestitures, the Company allocated $58 million (€59 million) of the purchase price to the intangible assets acquired (primarily acquired developed technologies of €51 million and customer relationships of €8 million). The estimated useful life of the assets are 6 to 15 years with a weighted average amortization period of 9.2 years. In connection with the September 2022 sale of DoubleDown,Lis Holding S.p.A., the Company recorded a $277.3€12 million reduction in net book value of intangible assets (principally customer relationshipspatents and trademarks) related to the sale.divestiture.

TheIn December 2022, the Company recorded impairment lossesentered into a $75 million multi-year license agreement of $30.0 millionintellectual property with payments due under the agreement commencing in its North America Gaming and Interactive segment in 2016 for certain indefinite lived trademarks relating2023.

In June 2023, the Company entered into a ten-year licensing agreement with Sony that grants the Company exclusive rights to the forecasted slowingWheel of growthFortune® brand across gaming, lottery, iGaming, and iLottery and non-exclusive rights to distribute Wheel of Fortune® content for free-to-play social casinos. Minimum guaranteed payments of $313 million under the agreement are included as a licensed IP asset within intangible assets, net with a corresponding licensing obligation payable within other non-current liabilities. Payments due under the agreement commence in 2025.

Payments made after the social gaming market and $9.7 million in its International segment in 2015 for certain indefinite lived trademarks. The Company usedfirst 90 days following execution of these agreements are classified as payments on license obligations within the Relief from Royalty method in determining the amountfinancing section of the impairment losses.Consolidated Statements of Cash Flows.


Intangible asset amortization expense of $401.5 million, $492.1 million and $410.4 million (which includes computer software amortization expense of $31.4 million, $38.4 million and $34.0 million) was recorded in 2017, 2016 and 2015, respectively.

Amortization expense on intangible assets for the next five years is expected to be as follows ($ thousands)in millions):
YearAmount
2024210 
2025200 
2026156 
2027145 
2028143 
855 

15.Debt

The Company’s long-term debt obligations consist of the following: 
December 31, 2023
($ in millions)PrincipalDebt issuance cost, netTotal
6.500% Senior Secured U.S. Dollar Notes due February 2025500 (1)499 
4.125% Senior Secured U.S. Dollar Notes due April 2026750 (3)747 
3.500% Senior Secured Euro Notes due June 2026829 (3)826 
6.250% Senior Secured U.S. Dollar Notes due January 2027750 (3)747 
2.375% Senior Secured Euro Notes due April 2028553 (3)550 
5.250% Senior Secured U.S. Dollar Notes due January 2029750 (5)745 
Senior Secured Notes4,131 (18)4,113 
Euro Term Loan Facilities due January 2027884 (8)876 
Euro Revolving Credit Facility B due July 2027467 (9)458 
U.S. Dollar Revolving Credit Facility A due July 2027216 (9)207 
Long-term debt, less current portion5,699 (44)5,655 
Short-term borrowings16 — 16 
Total debt5,714 (44)5,671 

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Year Amount
2018 263,614
2019 250,267
2020 219,808
2021 189,583
2022 166,136
Total 1,089,408


December 31, 2022
($ in millions)PrincipalDebt issuance
cost, net		Total
3.500% Senior Secured Euro Notes due July 2024320 (1)319 
6.500% Senior Secured U.S. Dollar Notes due February 2025700 (3)697 
4.125% Senior Secured U.S. Dollar Notes due April 2026750 (5)745 
3.500% Senior Secured Euro Notes due June 2026800 (4)796 
6.250% Senior Secured U.S. Dollar Notes due January 2027750 (4)746 
2.375% Senior Secured Euro Notes due April 2028533 (3)530 
5.250% Senior Secured U.S. Dollar Notes due January 2029750 (5)745 
Senior Secured Notes4,603 (26)4,578 
Euro Term Loan Facilities due January 20271,067 (9)1,058 
U.S. Dollar Revolving Credit Facility A due July 202465 (10)55 
Long-term debt, less current portion5,735 (45)5,690 
5.350% Senior Secured U.S. Dollar Notes due October 202361 — 61 
Current portion of long-term debt61 — 61 
Total debt5,795 (45)5,750 
12.Other Liabilities
Other current liabilities
  December 31,
($ thousands) 2017 2016
Payable to Italian regulator 899,475
 179,197
Accrued interest payable 179,230
 165,290
Employee compensation 146,891
 158,236
Taxes other than income taxes 128,703
 123,267
Accrued expenses 121,181
 127,092
Current financial liabilities 113,217
 108,915
Jackpot liabilities 84,250
 95,574
Deferred revenue 48,222
 80,528
Advance payments from customers 28,874
 25,473
Other 30,832
 33,473
  1,780,875
 1,097,045
Payable to Italian Regulator


At December 31, 2017,2023, there were no debt issuance costs, net recorded as other non-current assets in the Company owed €750 million ($899.5 million at the December 31, 2017 exchange rate) to Agenzia delle Dogane e Dei Monopoli, the governmental authority responsible for regulating and supervising gaming in Italy ("ADM" or the "Italian regulator") related to the Italian Scratch & Win extension, which is expected to be paid in 2018.

Consolidated Balance Sheets. At December 31, 2016,2022, $9 million of debt issuance costs, net for the Company owedRevolving Credit Facilities with no outstanding borrowings, were recorded as other non-current assets in the Italian regulator €170 million ($179.2 million at the December 31, 2016 exchange rate) related to the Italian Gioco del Lotto service concession (the "Lotto Concession").Consolidated Balance Sheets.

Other non-current liabilities
  December 31,
($ thousands) 2017 2016
Jackpot liabilities 191,376
 203,468
Deferred revenue 60,831
 66,220
Finance leases 60,766
 62,142
Reserve for uncertain tax positions 34,447
 14,733
Royalties payable 32,997
 37,681
Italian staff severance fund 12,577
 11,454
Other 53,119
 48,858
  446,113
 444,556


13.Debt


 December 31,
($ thousands) 2017 2016
6.250% Senior Secured Notes due 2022 1,470,075
 1,472,150
6.500% Senior Secured Notes due 2025 1,086,913
 1,085,537
4.750% Senior Secured Notes due 2023 1,008,601
 884,917
4.125% Senior Secured Notes due 2020 833,655
 730,465
5.625% Senior Secured Notes due 2020 595,767
 593,954
4.750% Senior Secured Notes due 2020 585,171
 509,050
7.500% Senior Secured Notes due 2019 148,231
 521,894
5.500% Senior Secured Notes due 2020 125,709
 126,294
5.350% Senior Secured Notes due 2023 61,082
 61,187
6.625% Senior Secured Notes due 2018 —
 521,556
Senior Secured Notes, long-term 5,915,204
 6,507,004
     
Term Loan Facility due 2023 1,785,361
 —
Revolving Credit Facilities due 2021 76,880
 516,529
Term Loan Facilities due 2019 —
 839,552
Long-term debt, less current portion 7,777,445
 7,863,085
     
6.625% Senior Secured Notes due 2018 599,114
 —
Other —
 77
Current portion of long-term debt 599,114
 77
Total Debt 8,376,559
 7,863,162


The principal balanceamount of eachlong-term debt obligation and a reconciliation to the consolidated balance sheet follows: 
  December 31, 2017
($ thousands) Principal 
Debt issuance
cost, net
 Premium Swap Total
6.250% Senior Secured Notes due 2022 1,500,000
 (14,808) —
 (15,117) 1,470,075
6.500% Senior Secured Notes due 2025 1,100,000
 (13,087) —
 —
 1,086,913
4.750% Senior Secured Notes due 2023 1,019,405
 (10,804) —
 —
 1,008,601
4.125% Senior Secured Notes due 2020 839,510
 (5,855) —
 —
 833,655
5.625% Senior Secured Notes due 2020 600,000
 (4,233) —
 —
 595,767
4.750% Senior Secured Notes due 2020 599,650
 (14,479) —
 —
 585,171
7.500% Senior Secured Notes due 2019 144,303
 —
 3,708
 220
 148,231
5.500% Senior Secured Notes due 2020 124,143
 —
 1,757
 (191) 125,709
5.350% Senior Secured Notes due 2023 60,567
 —
 515
 —
 61,082
Senior Secured Notes, long-term 5,987,578
 (63,266) 5,980
 (15,088) 5,915,204
           
Term Loan Facility due 2023 1,798,950
 (13,589) —
 —
 1,785,361
Revolving Credit Facilities due 2021 95,000
 (18,120) —
 —
 76,880
6.625% Senior Secured Notes due 2018 599,650
 (536) —
 —
 599,114
Total Debt 8,481,178
 (95,511) 5,980
 (15,088) 8,376,559




 December 31, 2016
($ thousands) Principal Debt issuance
cost, net		 Premium Swap Total
6.250% Senior Secured Notes due 2022 1,500,000
 (17,804) —
 (10,046) 1,472,150
6.500% Senior Secured Notes due 2025 1,100,000
 (14,463) —
 —
 1,085,537
4.750% Senior Secured Notes due 2023 895,985
 (11,068) —
 —
 884,917
4.125% Senior Secured Notes due 2020 737,870
 (7,405) —
 —
 730,465
5.625% Senior Secured Notes due 2020 600,000
 (6,046) —
 —
 593,954
4.750% Senior Secured Notes due 2020 527,050
 (18,000) —
 —
 509,050
7.500% Senior Secured Notes due 2019 500,000
 (29) 20,733
 1,190
 521,894
5.500% Senior Secured Notes due 2020 124,143
 —
 2,418
 (267) 126,294
5.350% Senior Secured Notes due 2023 60,567
 —
 620
 —
 61,187
6.625% Senior Secured Notes due 2018 527,050
 (5,494) —
 —
 521,556
Senior Secured Notes, long-term 6,572,665
 (80,309) 23,771
 (9,123) 6,507,004
           
Term Loan Facilities due 2019 843,280
 (3,728) —
 —
 839,552
Revolving Credit Facilities due 2021 540,820
 (24,291) —
 —
 516,529
Other 77
 —
 —
 —
 77
Total Debt 7,956,842
 (108,328) 23,771
 (9,123) 7,863,162

Principal payments for each debt obligation formaturing over the next five years and thereafter are as follows:of December 31, 2023 is as follows ($ in millions): 
YearU.S. Dollar DenominatedEuro DenominatedTotal
2024— — — 
2025500 221 721 
2026750 1,050 1,800 
20271,208 667 1,875 
2028— 553 553 
2029 and thereafter750 — 750 
Total principal payments3,208 2,491 5,699 
  Calendar year
($ thousands) 2018 2019 2020 2021 2022 2023 and
thereafter		 Total
6.250% Senior Secured Notes due 2022 —
 —
 —
 —
 1,500,000
 —
 1,500,000
6.500% Senior Secured Notes due 2025 —
 —
 —
 —
 —
 1,100,000
 1,100,000
4.750% Senior Secured Notes due 2023 —
 —
 —
 —
 —
 1,019,405
 1,019,405
4.125% Senior Secured Notes due 2020 —
 —
 839,510
 —
 —
 —
 839,510
5.625% Senior Secured Notes due 2020 —
 —
 600,000
 —
 —
 —
 600,000
4.750% Senior Secured Notes due 2020 —
 —
 599,650
 —
 —
 —
 599,650
7.500% Senior Secured Notes due 2019 —
 144,303
 —
 —
 —
 —
 144,303
5.500% Senior Secured Notes due 2020 —
 —
 124,143
 —
 —
 —
 124,143
5.350% Senior Secured Notes due 2023 —
 —
 —
 —
 —
 60,567
 60,567
Senior Secured Notes, long-term —
 144,303
 2,163,303
 —
 1,500,000
 2,179,972
 5,987,578
               
Term Loan Facility due 2023 —
 —
 383,776
 383,776
 383,776
 647,622
 1,798,950
Revolving Credit Facilities due 2021 —
 —
 —
 95,000
 —
 —
 95,000
6.625% Senior Secured Notes due 2018 599,650
 —
 —
 —
 —
 —
 599,650
Total Principal Payments 599,650
 144,303
 2,547,079
 478,776
 1,883,776
 2,827,594
 8,481,178




Senior Secured Notes
 
The key terms of the Company'sour senior secured notes (the "Notes"“Notes”), all of which arewere issued by the Parent and were rated Ba2 and BB+BBB- by Fitch Ratings, Inc. (“Fitch”), Ba1 by Moody’s Investor Service (“Moody’s”), and BB+ by Standard & Poor’s Ratings Services (“S&P”), respectively,at December 31, 2023 are as follows:
DescriptionPrincipal
(in millions)		Effective Interest RateRedemption
6.500% Senior Secured U.S. Dollar Notes due February 2025$5006.71%+
4.125% Senior Secured U.S. Dollar Notes due April 2026$7504.34%++
3.500% Senior Secured Euro Notes due June 2026€7503.65%++
6.250% Senior Secured U.S. Dollar Notes due January 2027$7506.41%+
2.375% Senior Secured Euro Notes due April 2028€5002.50%++
5.250% Senior Secured U.S. Dollar Notes due January 2029$7505.39%++
Description Principal (thousands) Effective 
Interest Rate		 Issuer Guarantors Collateral Redemption Interest payments
6.250% Senior Secured Notes due 2022 $1,500,000 6.52% Parent * † + Semi-annually in arrears
6.500% Senior Secured Notes due 2025 $1,100,000 6.71% Parent * † + Semi-annually in arrears
4.750% Senior Secured Notes due 2023 €850,000 4.98% Parent * † + Semi-annually in arrears
4.125% Senior Secured Notes due 2020 €700,000 4.47% Parent * † + Semi-annually in arrears
5.625% Senior Secured Notes due 2020 $600,000 5.98% Parent * † + Semi-annually in arrears
4.750% Senior Secured Notes due 2020
1 
€500,000 6.00% Parent * † ++ Annually in arrears
7.500% Senior Secured Notes due 2019 $144,303 5.67% IGT ** †† +++ Semi-annually in arrears
5.500% Senior Secured Notes due 2020 $124,143 4.88% IGT ** †† +++ Semi-annually in arrears
5.350% Senior Secured Notes due 2023 $60,567 5.47% IGT ** †† +++ Semi-annually in arrears
6.625% Senior Secured Notes due 2018
1 
€500,000 7.74% Parent * † ++ Annually in arrears

*    Certain subsidiaries+    The Parent may redeem in whole or in part at any time prior to the date which is six months prior to maturity at 100% of their principal amount together with accrued and unpaid interest and a make-whole premium. After such date, the Parent may redeem in whole or in part at 100% of the Parent.

**principal amount together with accrued and unpaid interest. The Parent may also redeem in whole but not in part at 100% of the principal amount together with accrued and unpaid interest in connection with certain tax events. Upon the occurrence of certain events, the Parent will be required to offer to
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repurchase all of the applicable Notes at a price equal to 101% of their principal amount together with accrued and unpaid interest.

++    The Parent may redeem in whole or in part at any time prior to the first date set forth in the redemption price schedule at 100% of their principal amount together with accrued and unpaid interest and a make-whole premium. After such date, the Parent may redeem in whole or in part at a redemption price set forth in the redemption price schedule in the indenture governing the applicable Notes, together with accrued and unpaid interest. The Parent may also redeem in whole but not in part at 100% of the principal amount together with accrued and unpaid interest in connection with certain tax events. Upon the occurrence of certain events, the Parent will be required to offer to repurchase all of the applicable Notes at a price equal to 101% of their principal amount together with accrued and unpaid interest.

Interest on the Notes is payable semi-annually in arrears. The Notes are guaranteed by certain subsidiaries of the Parent.

†OwnershipParent and secured by ownership interests of the Parent in certain of its direct subsidiaries and certain intercompany loans with principal balances in excess of $10 million.

††Certain intercompany loans with principal balances in excess of $10 million.

+The Parent may redeem in whole or in part at any time prior to (1) the date which is three months prior to maturity with respect to the notes which are due in 2020 and (2) the date which is six months prior to maturity with respect to the notes which are due in 2022, 2023 and 2025 at 100% of their principal amount together with accrued and unpaid interest and a make-whole premium. After such dates, the Parent may redeem in whole or in part at 100% of their principal amount together with accrued and unpaid interest. The Parent may also redeem in whole but not in part at 100% of their principal amount together with accrued and unpaid interest in connection with certain tax events. Upon the occurrence of certain events, the Parent will be required to offer to repurchase all of these notes at a price equal to 101% of their principal amount together with accrued and unpaid interest.

++The Parent may redeem in whole but not in part at the greater of (1) 100% of their principal amount together with accrued and unpaid interest, or (2) at an amount specified in the terms and conditions of these notes. The Parent may also redeem in whole but not in part at 100% of their principal amount together with accrued and unpaid interest in connection with certain tax events. Upon the occurrence of certain events, the Parent will be required to redeem in whole or in part at 100% of their principal amount together with accrued and unpaid interest.

+++IGT may redeem in whole but not in part at 100% of their principal amount together with accrued and unpaid interest and a make-whole premium. Upon the occurrence of certain events, IGT will be required to offer to repurchase all of these notes at a price equal to 100% of their principal amount together with accrued and unpaid interest.

1 Subject to a 1.25% per annum decrease in certain subsidiaries of the eventParent, certain intercompany loans with principal balances in excess of an upgrade in ratings by Moody’s$10 million, and S&P.


certain accounts receivable. The Notes contain customary covenants and events of default. At December 31, 2017,2023, the issuers wereParent was in compliance with allsuch covenants.


On June 12, 2017,October 27, 2023, the Company offeredParent exercised the right to purchase any and allredeem in full the remaining €112 million of the $500.0 million 7.500%3.500% Senior Secured Euro Notes due 2019July 2024 on November 7, 2023 for a redemption price of 100% of the principal amount consistent with the terms of the indenture governing such notes, together with accrued and on June 21, 2017unpaid interest.

On February 28, 2023, the Company purchased $355.7Parent exercised the right to redeem: (i) €188 million of thesethe 3.500% Senior Secured Euro Notes due July 2024 on March 16, 2023 for a redemption price of 100% of the principal amount and a make-whole call premium consistent with the terms of the indenture governing such notes, together with accrued and unpaid interest, and (ii) $200 million of the 6.500% Senior Secured U.S. Dollar Notes due February 2025 on March 16, 2023 for a redemption price of $1,012.54 per $1,000.00 of principal amount, together with accrued and unpaid interest.

In January 2023, International Game Technology redeemed the 5.350% Senior Secured U.S. Dollar Notes due October 2023 issued by International Game Technology in full pursuant to the exercise of the make-whole call option for $61 million, excluding interest.

In September 2022, the Parent used the proceeds from the sale of Lis Holdings S.p.A. to repurchase €200 million ($197 million) of the 3.500% Senior Secured Euro Notes due July 2024 for total consideration, excluding interest, of $393.5€201 million ($198 million) and $400 million of the 6.500% Senior Secured U.S. Dollar Notes due February 2025 for total consideration, excluding interest, of $406 million. The Company recorded a $25.7$2 million loss on early extinguishment of debt in connection with the purchase,redemption of the 3.500% Senior Secured Euro Notes and a $9 million loss on extinguishment of debt in connection with the redemption of the 6.500% Senior Secured U.S. Dollar Notes, which isare classified withinin other non-operating expense, net onin the consolidated statement of operations for the year ended December 31, 2017.2022.


Term Loan Facility
On July 25, 2017,In May 2021, the Parent entered into a senior facility agreement (the “Term Loan Facility Agreement”) for a €1.5 billion term loan facility maturing in January 2023 (the “Term Loan Facility”).
The Parent used the proceeds from the Term Loan Facility to:
prepaysale of the €800 million Term Loan Facilities due 2019 in the third quarter of 2017;
redeem the €500 million 6.625% Senior Secured Notes due 2018 when they matured on February 2, 2018;Italian B2C businesses and
prepay €160 million borrowings under the Revolving Credit Facilities to redeem €850 million ($1.0 billion) of the 4.750% Senior Secured Euro Notes due 2021February 2023 through the exercise of the make-whole call option for $1.1 billion, excluding interest. The Company recorded a $67 million loss on extinguishment of debt in connection with the redemption, which is classified in other non-operating expense, net in the fourth quarterconsolidated statement of 2017.operations for the year ended December 31, 2021.
The
In March 2021, the Parent used the remaining €40net proceeds from the sale of the 4.125% Senior Secured U.S. Dollar Notes due April 2026 and borrowings under the Revolving Credit Facilities to redeem $1.0 billion of the 6.250% Senior Secured U.S. Dollar Notes due February 2022 through the exercise of the make-whole call option for $1.0 billion, excluding interest. The Company recorded an $18 million loss on extinguishment of debt in connection with the redemption, of which a $24 million loss is classified in other non-operating expense, net and an offsetting gain of $6 million is classified in interest expense, net in the consolidated statement of operations for general corporate purposes.the year ended December 31, 2021.

Euro Term Loan Facilities

The Parent and certain of its subsidiaries are parties to an Amended and Restated Senior Facilities Agreement dated July 21, 2021, as amended (the “TLF Agreement”), which provides for two €500 million senior secured term loan facilities, one to the
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Parent and one to IGT Lottery Holdings B.V., maturing on January 25, 2027 (the “Euro Term Loan Facilities”). The borrowers must repay the Euro Term Loan FacilityFacilities in four installments, as detailed below:
Due DateAmount
(€ in millions)
Due DateAmount (€ thousands)
January 25, 20202024— 320,000
January 25, 20212025200 320,000
January 25, 20222026200 320,000
January 25, 20232027400 540,000

In December 2023, the Parent prepaid €200 million of the Euro Term Loan Facilities which was applied in full to the repayment installment due January 25, 2024.

Interest on the Euro Term Loan FacilityFacilities is payable between one and six months in arrears at rates equal to the applicable LIBOR or EURIBOR plus a margin based on the Company’s long-term(i) our public debt ratings by Fitch, Moody’s, and S&P.&P and (ii) our ESG rating by Institutional Shareholder Services Inc. (“ISS”). At December 31, 2017,2023 and 2022, the effective interest rate on the Euro Term Loan FacilityFacilities was 2.05%.5.42% and 2.15%, respectively.

The Euro Term Loan Facility isFacilities are guaranteed by the Parent and certain of its subsidiaries and are secured by ownership interests in certain subsidiaries of the Parent, and is secured by ownership interests of the Parent in certain of its direct subsidiaries and certain intercompany loans with principal balances in excess of $10 million.
million and certain accounts receivable. Upon the occurrence of certain events, the Parentborrowers may be required to prepay the Euro Term Loan FacilityFacilities in full.
The Term Loan FacilityTLF Agreement limits the aggregate amount that the Parent can pay with respect to dividends and repurchases of ordinary shares in each year to $400 million if any two of our public debt ratings by Fitch, Moody’s, and S&P are lower than Ba1/BB+ and $550 million if any two of our public debt ratings by Fitch, Moody’s, and S&P are equal to or higher than Ba1/BB+, and provides that such limit is eliminated if any two of our public debt ratings by Moody’s, S&P, and Fitch are equal to or higher than Baa3/BBB-. The TLF Agreement also contains customary covenants (including maintaining a minimum ratio of EBITDA to net interest costs and maximum ratio of total net debt to EBITDA) and events of default. At December 31, 2017,2023, the Parent was in compliance with allthe covenants.

In November 2023, the lenders under the TLF Agreement agreed that each principal prepayment by a borrower be applied to the next repayment installments due from such borrower in order of maturity instead of being applied to all repayment installments due from such borrower pro rata.

In July 2022, the Parent entered into an amendment to the TLF Agreement pursuant to which, among other changes, (i) the annual permitted acquisition limit was increased from 10% to 15% of consolidated total assets and the lifetime permitted acquisition limit was increased from $2.25 billion to $2.5 billion; and (ii) the annual limit on dividends and share repurchases was increased from $300 million to $400 million based on our public debt ratings at the time and to $550 million if any two of our public debt ratings are equal to or higher than Ba1/BB+ and eliminated if any two of our public debt ratings are equal to or higher than Baa3/BBB-.

Revolving Credit Facilities
 
The senior facilities agreement (the "RCFParent and certain of its subsidiaries are parties to an Amended and Restated Senior Facilities Agreement"Agreement dated July 27, 2022 (the “RCF Agreement”), which provides for the following senior secured multi-currency revolving credit facilities (the "Revolving“Revolving Credit Facilities"Facilities”):
maturing on July 31, 2027:
Facility (1)
Maximum Amount
Available (in millions)
Maximum Amount
Available (thousands)
FacilityBorrowers
$1,200,000Revolving Credit Facility AParent, IGT and IGT Global Solutions Corporation$820
€725,000Revolving Credit Facility BParent and Lottomatica Holding S.r.l.€1,000
On July(1) The Parent, IGT Global Solutions Corporation, IGT Lottery Holdings B.V., IGT Lottery S.p.A, and International Game Technology are all borrowers under the Revolving Credit Facilities.

At December 31, 2017,2023, the Company voluntarily reduced theamounts available to be borrowed under Revolving Credit Facility A commitment from $1.8 billion to $1.2 billion and the Revolving Credit Facility B commitment from €1.05 billion to €725 million.were $604 million and €570 million ($630 million), respectively.



Interest on the Revolving Credit Facilities is payable between one and six months in arrears at rates equal to the applicable LIBORSecured Overnight Financing Rate (“SOFR”) or Sterling Overnight Index Average (“SONIA”) rate, in each case subject to a credit adjustment spread, for borrowings in U.S. Dollars and Pounds Sterling, respectively, or the applicable EURIBOR for
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Euro borrowings, plus a margin based on the Parent’s long-term(i) our public debt ratings by Fitch, Moody’s, and S&P.&P and (ii) our ESG rating by ISS. At December 31, 20172023, the weighted average effective interest rate on Revolving Credit Facility A and 2016,Revolving Credit Facility B was 6.49%. At December 31, 2022, the effective interest rate on the Revolving Credit FacilitiesFacility A was 3.48%6.04%, and 2.42%, respectively.there were no outstanding borrowings under Revolving Credit Facility B.

The RCF Senior Facilities Agreement provides that the following fees, (whichwhich are recorded asin interest expense)expense, net in the Consolidated Statements of Operations, are payable quarterly in arrears:
 
•Commitment fees - payable on the aggregate undrawn and un-cancelled amount of the Revolving Credit Facilities dependingbased on the Parent’s long-term ratings by Moody’s and S&P. The applicable rate was 0.725% at December 31, 2017.a 0.35% margin.
•Utilization fees - payable on the aggregate drawn amount of the Revolving Credit Facilities at a rate dependingranging from 0.10% to 0.60% dependent on the percentage of the Revolving Credit Facilities utilized. The applicable rate was 0.15%0.10% at December 31, 2017.
2023.
The Revolving Credit Facilities are guaranteed by the Parent and certain of its subsidiaries and are secured by ownership interests in certain subsidiaries of the Parent, in certain of its direct subsidiaries and certain intercompany loans with principal balances in excess of $10 million.
million and certain accounts receivable. Upon the occurrence of certain events, the borrowers may be required to repay the Revolving Credit Facilities and the lenders may have the right to cancel their commitments.
At December 31, 2017 and 2016, the Company’s available liquidity under the Revolving Credit Facilities was $1.974 billion and $2.367 billion, respectively.

The RCF Senior Facilities Agreement limits the aggregate amount that the Parent can pay with respect to dividends and repurchases of ordinary shares in each year to $400 million if any two of our public debt ratings by Fitch, Moody’s, and S&P are lower than Ba1/BB+ and $550 million if any two of our public debt ratings by Fitch, Moody’s, and S&P are equal to or higher than Ba1/BB+, and provides that such limit is eliminated if any two of our public debt ratings by Fitch, Moody’s, and S&P are equal to or higher than Baa3/BBB-. The RCF Agreement also contains customary covenants (including maintaining a minimum ratio of EBITDA to net interest costs and a maximum ratio of total net debt to EBITDA) and events of default. At December 31, 2017,2023, the borrowers were in compliance with allthe covenants.

In July 2022, the Parent entered into an Amendment and Restatement Agreement (the “RCF Amendment and Restatement Agreement”) with respect to the RCF Agreement, pursuant to which, among other changes, (i) the aggregate revolving facility A commitments of the lenders were decreased from $1.05 billion to $820 million; (ii) the aggregate revolving facility B commitments of the lenders were increased from €625 million to €1.0 billion; (iii) the final maturity date was extended from July 31, 2024 to July 31, 2027; (iv) LIBOR was replaced as a reference rate with the SOFR or SONIA rate, in each case subject to a credit adjustment spread, for borrowings in U.S. Dollars and Pounds Sterling, respectively; (v) the margins based on public debt ratings were reduced by at least 0.25% (0.40% at current public debt ratings) subject to a maximum of 0.075% increase or decrease based on the group's ESG rating; (vi) the annual permitted acquisition limit was increased from 10% to 15% of consolidated total assets and the lifetime permitted acquisition limit was increased from $2.25 billion to $2.5 billion; and (vii) the annual limit on dividends and share repurchases was increased from $300 million to $400 million based on our public debt ratings at the time and to $550 million if any two of our public debt ratings are equal to or higher than Ba1/BB+, and eliminated if any two of our public debt ratings are equal to or higher than Baa3/BBB-.

TLF Agreement and RCF Agreement Amendments - Announced Separation & Divestiture

In November 2023 and February 2024, the Parent entered into amendments to the TLF Agreement and RCF Agreement to permit the divestiture of the Global Gaming and PlayDigital segments via a sale, spin-off, or spin-off with a merger. Effective immediately upon the divestiture’s closing, the amendments:

•Reduce the Revolving Credit Facility A commitment from $820 million to $650 million;
•Reduce the Revolving Credit Facility B commitment from €1 billion to €800 million;
•Mandate the first $2 billion of net proceeds be used to pay down debt within six months of the closing date, which shall include the full repayment of the Parent’s Euro Term Loan facility within one month of the closing date (this excludes the Euro Term Loan facility principal held by IGT Lottery Holdings B.V.);
•Permit shareholder distributions and/or share buy backs to the extent that the net proceeds exceed $2 billion; and
•Make certain adjustments to the debt covenants, such as the subsidiaries guaranteeing the Facilities.

In the event of a spin-off or spin-off with a merger, net proceeds may include, but is not limited to, repaid intercompany debt.

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Other Credit Facilities
 
The Parent and certain of its subsidiaries may borrow under senior unsecured uncommitted demand credit facilities made available by several financial institutions. At December 31, 2017 and 2016,2023, there were nowas $16 million of short-term borrowings under these facilities.facilities with an effective interest rate of 6.77%, and no outstanding borrowings at December 31, 2022.


Letters of Credit
 
The Parent and certain of its subsidiaries may obtain letters of credit under the Revolving Credit Facilities and under senior unsecured uncommitted letter ofdemand credit facilities. The letters of credit secure various obligations, including obligations arising under customer contracts and real estate leases. The following table summarizes the letters of credit outstanding at December 31, 20172023 and 20162022 and the weighted averageweighted-average annual cost of such letters of credit:
($ in millions)
Letters of Credit Outstanding (1)
Weighted-Average
Annual Cost
December 31, 2023121 1.11 %
December 31, 2022118 1.26 %
(1) There were no letters of credit outstanding under the Revolving Credit Facilities.

Interest Expense, Net
 For the year ended December 31,
($ in millions)202320222021
Senior Secured Notes205 249 292 
Term Loan Facilities42 24 30 
Revolving Credit Facilities53 21 29 
Other11 8 4 
Interest expense311 302 354 
Interest income(25)(13)(13)
Interest expense, net285 289 341 

16.Other Liabilities
 
Other Current Liabilities
 December 31,
($ in millions)Notes20232022
Employee compensation170 173 
Current financial liabilities149 145 
Accrued expenses83 75 
Income taxes payable83 32 
Accrued interest payable82 85 
Contract liabilities469 91 
Taxes other than income taxes53 68 
Operating lease liabilities1140 37 
Licensing obligation payable39 38 
Jackpot liabilities1938 57 
Other74 36 
 879 837 

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  Letters of Credit Outstanding  
($ thousands) 
Not under the
Revolving Credit
Facilities
 
Under the
Revolving Credit
Facilities
 Total 
Weighted 
Average
Annual Cost
December 31, 2017 510,962
 —
 510,962
 1.02%
December 31, 2016 827,850
 —
 827,850
 0.94%
Other Non-Current Liabilities
 December 31,
($ in millions)Notes20232022
Licensing obligation payable14350 61 
Jackpot liabilities19118 114 
Reserves for uncertain tax positions45 52 
Contract liabilities443 49 
Other54 98 
 609 372 


17.Other Non-Operating Expense, Net

14.Income Taxes


On December 22, 2017, the President of the United States signed into law the Tax Act which has resulted in significant changes to the U.S. corporate income tax system.
($ in millions)NotesFor the year ended December 31,
202320222021
Loss on extinguishment of debt155 13 92 
Loss on blue-chip swap5 — — 
DDI / Benson Matter provision19— 270 — 
Gain on sale of business3— (278)— 
Other expense, net2 2 6 
Total other non-operating expense, net12 7 98 
The Tax Act includes a federal statutory rate reduction from 35% to 21%, the elimination or reduction of certain domestic deductions and credits and further limitations on the deductibility of interest expense and executive compensation, and imposition of a territorial tax system with a one-time repatriation tax on deemed repatriated earnings of foreign subsidiaries (“Transition Toll Tax”) effective in 2017. The Tax Act also includes new tax provisions that potentially impact certain foreign income, expenses and credits, such as the global intangible low-taxed income (“GILTI”), the base-erosion and anti-abuse tax (“BEAT”), and the foreign derived intangible income ("FDII"). These provisions are effective beginning in 2018.
ASC 740 requires companies to recognize the effect of the tax law changes in the period of enactment. However, the SEC staff issued SAB 118 which allows a company to record provisional amounts when it does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change as a result of the Tax Act. The measurement period ends when the company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year from the enactment date. The Company has recognized the provisional tax impacts related to its Transition Toll Tax and the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017.
Transition Toll Tax18.Income Taxes
The 2017 Tax Act eliminates the deferral of U.S. income tax on historical unrepatriated earnings by imposing the Transition Toll Tax, which is a mandatory deemed repatriation tax on undistributed foreign earnings. The Transition Toll Tax is assessed on the U.S. shareholder's share of the foreign corporation's accumulated foreign earnings that have not been previously taxed by the U.S. Earnings in the form of deemed cash and cash equivalents will be taxed at a rate of 15.5% and all other earnings will be taxed at a rate of 8.0%. As of December 31, 2017, the Company has accrued liabilities of $60.5 million under the Transition Toll Tax, of which $4.8 million is expected to be paid within one year. The Transition Toll Tax will be paid over an eight-year period starting in 2018, and will not accrue interest.
Remeasurement of Deferred Tax Assets and Liabilities
The Company's deferred tax assets and liabilities are measured at the enacted tax rate expected to apply when these temporary differences are expected to be realized or settled. As the Company's deferred tax liabilities exceed the balance of the deferred tax assets at the date of enactment, the Company has recorded an income tax benefit of $174.7 million, reflecting the decrease in the U.S. corporate income tax rate.
Status of the Company's Assessment
The Company's preliminary estimate of the Transition Toll Tax, the remeasurement of the deferred tax assets and liabilities and GILTI is subject to the finalization of management's analysis of certain matters and changes to certain estimates and amounts related to the earnings and profits of certain subsidiaries and the filing of the Company's tax returns. U.S. Treasury regulations, administrative interpretations or court decisions interpreting the Tax Act may require further adjustments and changes in the Company's estimates. The final determination of the Transition Toll Tax and the remeasurement of the Company's deferred tax assets and liabilities will be completed as additional information becomes available, but no later than one year from the enactment of the Tax Act. For the GILTI provisions of the Tax Act, a provisional estimate could not be made as the Company has not yet completed its assessment or elected an accounting policy to either recognize deferred taxes for basis differences expected to reverse as GILTI or to record GILTI as period costs if and when incurred.
The components of (loss) income from continuing operations before the provision for income taxes, determined by tax jurisdiction, are as follows:
For the year ended December 31,
($ in millions)($ in millions)202320222021
United Kingdom
United States
Italy
Other
 For the year ended December 31,
($ thousands) 2017 2016 2015
Italy 479,851
 578,221
 419,116
United States (1,173,601) (355,451) (379,425)
United Kingdom (408,595) 87,269
 (150,475)
All other 125,420
 13,374
 93,753
 (976,925) 323,413
 (17,031)


The (benefit from) provision for income taxes consists of:
For the year ended December 31,
 For the year ended December 31,
($ thousands) 2017 2016 2015
($ in millions)($ in millions)202320222021
Current:  
  
  
Current: 
United Kingdom
United States
Italy 131,155
 192,712
 168,915
United States 80,140
 (16,982) (24,434)
United Kingdom 733
 711
 (5,097)
All other 54,823
 36,414
 48,753
Other
 266,851
 212,855
 188,137
Deferred:  
  
  
Deferred: 
United States
United States
United States
Italy 865
 (5,837) 1,660
United States (175,539) (109,139) (121,032)
United Kingdom 4,366
 19,232
 (16,242)
All other (125,957) (57,905) (13,627)
Other
 (296,265) (153,649) (149,241)
 (29,414) 59,206
 38,896

Income taxes paid, (netnet of refunds)refunds, were $296.4$205 million, $183.3$335 million, and $199.2$188 million in 2017, 20162023, 2022, and 2015,2021, respectively.



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At December 31, 2023, undistributed profits of subsidiaries of approximately $1.1 billion are considered indefinitely reinvested. Foreign withholding taxes on these undistributed earnings would be approximately $65 million.

The Parent is a tax resident in the United Kingdom.Kingdom (the “U.K.”). A reconciliation of the provision for income taxes, withfrom the amount computed by applying the weighted average rate of the United KingdomU.K. statutory main corporation tax rates enacted in each of the Parent’s calendar year reporting periods (19.25% in 2017, 20.00% in 2016 and 20.25% in 2015)(2023 tax rate is based on a weighted average rate of the United Kingdom statutory tax rate enacted on April 1, 2023) to (loss) income from continuing operations before the provision for income taxes is as follows:
  For the year ended December 31,
($ thousands) 2017 2016 2015
(Loss) income before provision for income taxes (976,925) 323,413
 (17,031)
United Kingdom statutory tax rate 19.25% 20.00% 20.25 %
Statutory tax (benefit) expense (188,058) 64,682
 (3,449)
       
Tax Impact of 2017 Tax Act (114,219) —
 —
Foreign tax and statutory rate differential (71,050) (17,013) (48,407)
Italian allowance for corporate equity (11,761) (9,243) (6,929)
Research and development tax credit (5,052) (4,980) (4,393)
Tax impact of tax law and rate changes excluding the Tax Act (2,463) (8,422) (4,746)
Non-controlling interest (2,205) (3,605) 8,565
Provision to return adjustments (1,334) (6,705) (1,434)
Nondeductible expenses 1,204
 2,659
 30,244
Tax cost of tax dividends 3,041
 4,619
 12,888
Foreign withholding and state taxes on unremitted earnings 9,290
 —
 —
Foreign tax expense, net of federal benefit 14,500
 3,457
 9,003
Change in unrecognized tax benefits 20,624
 (10,914) (15,593)
IRAP and other state taxes

 33,484
 36,754
 29,697
Change in valuation allowances 58,672
 3,610
 7,495
Capital gain taxes on sale of DoubleDown 94,303
 —
 —
Nondeductible goodwill impairment 137,445
 —
 —
Italian tax litigation settlement —
 15,256
 —
Non-taxable gains on investments —
 (5,880) —
Italian reorganization tax —
 —
 13,405
Other (5,835) (5,069) 12,550
  (29,414) 59,206
 38,896
       
Effective tax rate 3.0% 18.3% (228.4)%
 For the year ended December 31,
($ in millions)202320222021
Income from continuing operations before provision for income taxes629 589 529 
United Kingdom statutory tax rate23.5 %19.0 %19.0 %
Statutory tax expense (benefit)148 112 100 
Change in valuation allowances91 22 125 
Italy regional tax (“IRAP”) and state taxes44 33 41 
Non-deductible expenses9 17 25 
Base erosion and anti-abuse (“BEAT”) tax8 — 17 
Foreign tax and statutory rate differential (1)
(9)42 17 
Foreign tax expense, net of U.S. federal benefit17 18 11 
Provision to return adjustment(5)(9)6 
GILTI tax10 9 5 
Non-taxable gain on sale of business— (79)— 
Non-taxable foreign exchange loss (gain)2 2 (11)
Italian patent box tax benefit(2)— (27)
Change in unrecognized tax benefits18 3 — 
Tax law changes— 6 (38)
Other(8)(1)2 
 322 175 274 
Effective tax rate51.2 %29.7 %51.8 %
The Company’s effective income tax rate was 3.0% in 2017 as compared to 18.3% in 2016. The principal drivers of the change were capital gains taxes incurred on the June 2017 sale of DoubleDown, a net increase in valuation allowances in U.K. and foreign jurisdictions, and impairment loss incurred with no associated tax benefit, partially offset by a favorable net tax benefit recorded related to the provisions of the Tax Act.

The Company’s effective income tax rate was 18.3% in 2016, as compared to (228.4)% in 2015 . The principal drivers of the change were one time non-deductible costs associated with the IGT acquisition in 2015, the non-recurring costs associated with the migration of the Parent company from Italy to the United Kingdom in 2015 and a reduction in operating losses in 2016 without tax benefits in certain foreign jurisdictions.
The significant components reflected within the tax rate reconciliation labeled “Foreign tax and statutory rate differential” includes (1) Includes the effects of foreign subsidiaries’ earnings taxed at rates other than the U.K. statutory rate.rate


On December 18, 2015, the Consolidated Appropriations Act 2016 was signed into law in the United States. Some
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Table of the provisions were retroactive to January 1, 2015, including the permanent extension of the U.S. research and development tax credit. The effective tax rate reflects the Company’s estimated 2016 and 2015 U.S. research and development tax credit.Contents

The U.K. 2015 Finance Bill received Royal Assent in the fourth quarter of 2015, which resulted in the enactment of the U.K. corporate tax rate change from 20% in 2015 to 19% in 2017, then 18% in 2020. As a result, the Company recorded $1.4 million of income taxes in the fourth quarter of 2015 to write down the U.K. net deferred tax asset.

In December 2015, the Italian Government approved the reduction of the Italian federal tax rate from the current rate of 27.5% to 24% in 2017. As a result, the Company recorded an $11.8 million tax benefit in the fourth quarter of 2015 to write down Italy’s net deferred tax liability.

The Company early adopted ASU 2016-09 in the fourth quarter of 2016. The primary impact of adoption required the Company to recognize all excess tax benefits and tax deficiencies in the income statement prospectively beginning in the first quarter of 2016. This could result in fluctuations in the effective tax rate period over period depending on how many awards vest during the year as well as the volatility of the stock price. At January 1, 2016, the Company had $3.3 million of excess tax deductions related to stock-based compensation that were tracked off balance sheet. The tax effect of these deductions was $1.2 million. The Company recorded a cumulative effect adjustment to retained earnings of $1.2 million to recognize these excess tax benefits on the balance sheet.
The components of deferred tax assets and liabilities are as follows: 
December 31,
 December 31,
($ thousands) 2017 2016
($ in millions)($ in millions)20232022
Deferred tax assets:  
  
Deferred tax assets: 
Net operating losses 241,702
 266,547
Section 163(j) interest limitation
Italian goodwill tax step-up
Provisions not currently deductible for tax purposes 132,365
 160,202
Lease liabilities
Jackpot timing differences
Depreciation and amortization 72,101
 118,122
Jackpot timing differences 51,438
 83,989
Inventory reserves 9,913
 15,974
Deferred revenue 5,317
 9,129
Stock-based compensation 2,402
 7,468
Credit carryforwards —
 38,618
Other 4,155
 15,897
Gross deferred tax assets 519,393
 715,946
Valuation allowance (184,554) (151,653)
Net deferred tax assets 334,839
 564,293
Deferred tax assets, net of valuation allowance
    
Deferred tax liabilities:
Deferred tax liabilities:
Deferred tax liabilities:  
  
 
Acquired intangible assets 635,471
 1,115,345
Depreciation and amortization 138,764
 144,115
Italian goodwill equity reserve liability
Lease right-of-use assets
Other 10,518
 35,381
Total deferred tax liabilities 784,753
 1,294,841
    
Net deferred income tax liability (449,914) (730,548)
 
The Company’sOur net deferred income taxes are recorded in the consolidated balance sheetsConsolidated Balance Sheets as follows: 
December 31,
 December 31,
($ thousands) 2017 2016
($ in millions)($ in millions)20232022
Deferred income taxes - non-current asset 41,546
 31,376
Deferred income taxes - non-current liability (491,460) (761,924)
 (449,914) (730,548)
 

Net Operating Loss Carryforwards


The Company hasWe have a $1.0 billion gross tax loss carryforwards in a number of tax jurisdictions of $1.061 billioncarryforward, of which $422.7$703 million relates to the U.K., $186.4U.K and $318 million relates to U.S. Federal, and $451.9 million relates to foreignother tax jurisdictions. Carryforwards in certain tax jurisdictions that begin to expire in 2030,2031, while others have an unlimited carryforward period. A valuation allowance has been provided on $819.7$960 million of the gross net operating loss carryfowards.carryforwards. Portions of thesethe tax loss carryforwards are subject to annual limitations in most of our significant tax jurisdictions, including Section 382 of the U.S. Internal Revenue Code of 1986, as amended, for U.S. tax purposes and similar provisions under other countries laws.U.K. In addition, as of December 31, 2017 the Company2023, we had U.S. state tax net operating loss carryforwards, resulting in a deferred tax asset (net of U.S. federal tax benefit) of approximately $16.4$7 million. StateU.S. state tax net operating loss carryfowardscarryforwards generally expire in the years 20182025 through 2037.2041.


Valuation Allowance


A reconciliation of the beginning and ending amount of the valuation allowance is as follows:
 December 31,
($ in millions)202320222021
Balance at beginning of year430 412 284 
Net charges to expense91 22 86 
Tax rate change(3)— 39 
Provision to return adjustment— (3)3 
Balance at end of year518 430 412 
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  December 31,
($ thousands) 2017 2016 2015
Balance at beginning of year 151,653
 139,663
 77,631
Expiration of tax attributes (25,771) —
 —
Net charges to expense 58,672
 11,990
 62,032
Balance at end of year 184,554
 151,653
 139,663


The valuation allowance pertainsprimarily relates to certain U.K. and foreign net operating losses and the section 163(j) business interest expense limitation carryforward that are not more likely than not expected to be realized. In assessing the need for a valuation allowance, the Companywe considered both positive and negative evidence for each jurisdiction including past operating results, estimates of future taxable income, and the feasibility of tax planning strategies. When the Company changes itswe change our determination as to the amount of deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to the provision for income taxes in the period in which such determination is made.

In December 2017, the Company recorded a valuation allowance on its U.K. net operating losses. The net operating losses were primarily due to significant foreign exchange losses relating to its euro denominated debt that is recorded on a U.S. dollar functional currency U.K. company. In the future, this valuation allowance could be adjusted downward if the euro weakens against the U.S. dollar, and the Company still has euro denominated debt and the resulting income is taxable in the U.K.

For the years ended December 31, 2017 and December 31, 2016, the Company recorded a net valuation increase of $32.9 million and $11.9 million, respectively.

Unremitted Earnings

The Company previously considered the earnings in its non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. The Tax Act eliminated the deferral of U.S. income tax on these foreign earnings by imposing a mandatory one-time deemed repatriation transition tax. As a result, the Company now intends to repatriate substantially all of its accumulated foreign earnings (not including the earnings of its Italian sub-group of entities). The Company continues to have significant cash needs outside the United States and, accordingly, the extent and timing of repatriation of these earnings continues to be monitored. Tax reform, however, has given the Company more flexibility to manage and deploy cash globally.

The Company has recorded $9.3 million of non-U.S. withholding taxes and U.S. state taxes as part of the provisional repatriation tax amount, which will be incurred as a result of certain future cash distributions. Additional tax effects, if any, related to the ultimate repatriation of these earnings will be recorded in the period that the tax effects become determinable and a reasonable estimate can be made.

The Company continues to indefinitely reinvest the earnings of its subsidiary investments held by its Italian parent sub-holding company and, therefore, no deferred income taxes have been provided on these earnings. If the Company were to change its position with respect to the indefinite reinvestment of earnings on its Italian parent sub-holding company , the estimated deferred tax effects would be $10.2 million as of December 31, 2017.


Accounting for Uncertainty in Income Taxes


A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 
December 31,
 For the year ended December 31,
($ thousands) 2017 2016 2015
($ in millions)($ in millions)202320222021
Balance at beginning of year 14,340
 37,370
 6,296
Current year acquisition —
 —
 49,934
Additions to tax positions - current year 479
 423
 9,462
Additions to tax positions - prior years 7,503
 1,718
 —
Reductions to tax positions - current year (893) (652) —
Reductions to tax positions - prior years (41) (12,755) (7,733)
Settlements —
 (8,750) (5,313)
Lapses in statutes of limitations (413) (3,014) (15,276)
Balance at end of year 20,975
 14,340
 37,370
Balance at end of year
Balance at end of year
 
At December 31, 2017, 20162023, 2022, and 2015, $16.62021, $15 million, $10.8$27 million, and $30.1$27 million, respectively, of the unrecognized tax benefits, if recognized, would affect the Company’sour effective tax rates.

The Company recognizesWe recognize interest expense and penalties related to income tax matters in the provisionincome tax expense. The charges were nominal for income taxes. For 2017, 20162023, 2022, and 2015, the Company recognized $12.1 million, $(0.1) million and $(10.0) million, respectively, in interest expense, penalties , and inflationary adjustments. At December 31, 2017, 2016 and 2015, the2021. The gross balance of accrued interest and penalties was $15.7 million, $3.6$30 million and $3.7$25 million at December 31, 2023 and 2022, respectively.


Unrecognized tax benefits increased during 2017 as a result of the Mexico Tax Audit. Unrecognized tax benefits decreased during 2016 as a result of the settlement with the U.S. Internal Revenue Service ("IRS"). For 2016, the additions to unrecognized tax benefits related to the current year are primarily attributable to U.S. tax issues.

The Company filesWe file income tax returns in various jurisdictions of which the United Kingdom, United States, and Italy represent the major tax jurisdictions. The Company is currently under audit with the IRS for calendar year 2014 and 2015. All years prior to calendar year 20142017 are closed with the IRS.Internal Revenue Service. As of December 31, 2017, the Company is2023, we are subject to income tax audits in various tax jurisdictions globally, most significantly in Mexicothe U.S. and Italy.Mexico.


Mexico Tax Audit


In November 2012,Based on a 2006 tax examination, the Company’s Mexican subsidiary, GTECH Mexico S.A. concluded a tax audit related to tax year 2006. This conclusion resulted in ade C.V., was issued an income tax assessment of approximately 424 million Mexican Pesos, including interest, inflationary adjustmentspeso (“MXN”) 425 million. The assessment relates to the denial of a deduction for cost of goods sold and penalties.the taxation of intercompany loan proceeds. The Company has unsuccessfully contested the two issues in the Mexican court system receiving unfavorable decisions by the Mexican Supreme Court in June 2017 and October 2019, respectively. As of December 31, 2017, this assessment2023, based on the unfavorable decisions received, the Company has increased asrecorded a resultliability of MXN 555 million (approximately $33 million), inclusive of additional interest, inflation,penalties, and penalty accruals to 520 million Mexican Pesos. While the Mexico assessment covers several issues, there were two main issues. One issueinflationary adjustments, which is associated with deductibility of cost of goods sold (approximately 65% of the updated total assessment) while the remaining assessment relates primarily to loan proceeds being treated as taxable income. GTECH Mexico S.A. filed appeals of the different components of the assessment and on the issue of the deductibility of cost of goods sold, the Supreme Court ruled against the company in 2017. This loss resultedreported within other non-current liabilities in the company recording a tax charge in the amount of 341 million Mexican Pesos ($19.1 million when the reserve was recorded and $17.4 million at the December 31, 2017 exchange rate) in 2017. The other tax issues are still being addressed in the courts in Mexico. Consolidated Balance Sheets.


Italy Tax Audits


Since February 2020, the Company’s Italian corporate income tax returns for the calendar years ended December 31, 2015 through December 31, 2019 were under examination. In September 2017,October 2020, the Italian Tax Agency startedAuthorities issued a taxfinal audit focusing on the reorganization of the Italian business and the merger of the former GTECH with and into the Parent effective from April 7,report for calendar year 2015. The tax audit relates to 2014 and 2015 tax years. While the audit for 2015 is open, on December 21, 2017,Company filed a defense memorandum with the Italian Tax Agency servedAuthorities in May 2021 rejecting all findings. In December 2021, the Parent, as the successor of GTECH,Company received a preliminary report ("Tax Audit Report")tax assessment notice for the fiscal€15 million relating to calendar year 2014.2015. The main findings relate to the deductibility of certain transaction costs and related withholding taxes on fees paid forCompany filed an aggregate proposed assessment of €3.2 million ($3.8 million at the December 31, 2017 exchange rate). Following the Tax Audit Report, the Parent submitted toappeal with the Italian Tax Agency a defense memorandum clarifying its position on these claims. WhileCourt in May 2022 relating to the 2015 tax assessment. On March 21, 2023, the Company received a tax reserve was bookedassessment notice for an amount of €0.3

€27 million ($0.4 million at the December 31, 2017 exchange rate) in connection with the proposed assessment,relating to calendar year 2016. On September 7, 2023, the Company believes that it will prevail on this issue.

In June 2015signed a tax audit in Italy was initiated, which is also focused on the leveraged buyout transaction of GTECH Holdings Corporation in 2006 and subsequent acquisition debt refinancing. In July 2015,Settlement Agreement with the Italian Tax Police issued a tax audit report ("First Report") covering the years 2006-2010, alleging that GTECH did not recharge to GTECH Holdings Corporation all interest expense and other costs incurred in connection with the 2006 transaction and subsequent refinancing. Based on this tax report, in December 2015 the Italian Tax Agency issued a number of tax assessment notices to the Company covering the years 2006-2010 and alleging that additional taxes, penalties and interest for these years totaling €200.0 million are due.

Under Italian Law, the Company had 60 days in which to appeal the tax assessment notice. On February 26, 2016, the Company submitted a Voluntary Settlement Request, which entitled the Company to an automatic 90 day extension. In the meantime, on April 12, 2016, the Parent received a Tax Audit report ("Second Report") from the Italian Tax Police covering years 2011- 2014. Based upon this report, the additional taxes, penalties and interest associated with the transfer pricing challenge was estimated to be approximately €275 million for those years.

During the mentioned extension period the Tax Agency re-examined the preliminary conclusions of the Tax Police in both First and Second Report and offered a tax settlement of an aggregate amount of €13.5 million ($15.3 million). The settlement procedure concluded on June 20, 2016 with the relevant tax payments made by the Parent. The above-mentioned settlement was booked as a reserve in the Company's 2016 Financial Statements.

Finally, the two additional claims contained in the Second Report regarding (i) the alleged improper deduction of €140.0 million in Value Added Tax and (ii) under-reported taxable incomeAuthorities pursuant to Italy’s controlled foreign corporation regime with specific reference to the Company’s fully controlled subsidiary incorporated in Cyprus, were abandoned by the Italian Tax Agency. Consequently, all of the tax assessments, penalty and interest claims emanating from the aforementioned tax audits have been resolved.

Based upon the timing and outcome of examinations of the Parent, or the result of the expiration of statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in the consolidated balance sheets. The Company does not anticipate that these audits will be finalized within the next twelve months. While the Company does not expect the amount of the unrecognized tax benefits to change in the next twelve months, the Company does not expect any change to have a significant impact on the consolidated balance sheet or statement of operations when these audits are finalized.

15.Employee Benefit Plans
Defined Contribution Plan
The Company maintains a salary deferral 401(k) plan that allows eligible employees to contribute a portion of their base pay up to the IRS prescribed limit. The Company matches a portion of the employee’s contribution. Employee and Company matching contributions vest immediately. The Company recognized expense related to the matching contribution of $13.8 million, $13.8 million and $10.8 million in 2017, 2016 and 2015, respectively.
Defined Benefit Plan
The Company has a defined benefit plan to provide certain post-employment benefits to Italian employees following termination from the Company. These employees may choose to participate in an unfunded plan within the Company or transfer their plan balance to independent external funds. These benefits are funded only to the extent paid to external funds. The cost of providing benefits under the plan, for those employees that participate in the unfunded plan within the Company, is determined using the projected unit credit actuarial valuation method. The cost of providing benefits for those employees that choose to transfer their plan to independent external funds are considered as defined contributions and are accrued as the employees render the related service. Net benefit expense was $8.1 million, $8.8 million and $6.8 million in 2017, 2016 and 2015, respectively. The present value of the defined benefit obligation was $12.3 million, $11.3 million and $11.2 million at December 31, 2017, 2016 and 2015, respectively.

16.Commitments and Contingencies
Commitments
Lease Commitments
Rent and lease expense, net of sublease rent, was $81.9 million in 2017, $72.5 million in 2016, and $60.8 million in 2015. Rent and lease expense included no contingent rent payments.
The minimum amounts due for non-cancellable leases at December 31, 2017 are as follows ($ thousands): 
Year Operating Capital Total
2018 76,779
 7,999
 84,778
2019 61,258
 7,643
 68,901
2020 55,782
 6,844
 62,626
2021 49,881
 6,039
 55,920
2022 48,485
 4,348
 52,833
Thereafter 248,389
 5,078
 253,467
Total minimum payments 540,574
 37,951
 578,525
Less amount representing interest  
 (10,252)  
Capitalized lease obligation  
 27,699
  

Facility capital lease
The Company has a finance lease for a facility in Providence, Rhode Island. The Company has the right to terminate the lease after June 30, 2023 if its facilities management contract with the State of Rhode Island is not renewed, in exchange for a termination fee equal to six months of base rent plus operating expenses. The lease includes two 10-year extension options. The Company has the unilateral right to extend the lease under the two extension options under the same terms as in the initial term. The Company may not assign the lease or sublease its portion of the building without the lessor’s approval, which is not to be unreasonably withheld. The lease has been accounted for under build-to-suit guidance, under which the Company carriesagreed to settle the entire cost2015 and 2016 tax assessments for €10 million. Additionally, the Company agreed to settle the 2015 and 2016 audit findings that were relevant to tax years 2017-2022 for €13 million. The total impact, net of amounts previously reserved, was $14 million.

Pillar Two Global Minimum Tax Framework - Legislative Updates

In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“Pillar Two”). Many non-U.S. tax jurisdictions, including the European Union, have
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committed to adopting Pillar Two, which establishes a global minimum tax of 15% and is intended to be effective for tax years beginning in 2024. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the facility on its books. The facility will remain onPillar Two global minimum tax. We continue to evaluate the bookspotential impact of the proposed and enacted legislative changes, including eligibility to qualify for the lease termsafe harbor rules.

19.Commitments and is depreciated over its useful life of 40 years.Contingencies


Sale and Leaseback TransactionsCommitments


On March 29, 2017, the Company entered into a sale-leaseback transaction for its main manufacturing and production facility located in Reno, Nevada. The transaction included a 15.5 year initial lease term, with four 5-year additional renewal periods exercisable at the Company’s option, 3% annual rent increases, and payment and performance guarantees. A gain of $6.7 million on the sale of the facility was deferred and is being recognized on a straight-line basis over the initial term of the lease. Rent expense is recorded on a straight-line basis. The Company's straight-line rent calculation does not include an assumption of lease renewal periods. The Company recorded the difference between the amount charged to expense and the rent paid as deferred rent in the consolidated balance sheets. Rent expense was $10.1 million for the year ended December 31, 2017.

On December 30, 2015, the Company sold its Las Vegas, Nevada campus and entered into a sale-leaseback agreement with the buyer for a portion of the facility for a term of 15 years with optional renewals.

The Company sold its technology center facility in West Greenwich, Rhode Island in December 2006 and entered into a sale-leaseback agreement for a portion of the facility with the buyer that was initially due to expire in November 2019 with renewal options. In August 2017 the Company renewed the lease agreement extending the lease term to November 2027 with an optional renewal.
The facilities in Reno, Las Vegas and West Greenwich are accounted for as operating leases, and future minimum lease payments are included in the operating lease section in the table above.


Communication equipment capital leases
The Company has finance leases for certain communication equipment that expire between 2019 and 2022. The leases have options to extend and options to purchase the equipment, and do not contain escalation clauses. There are no restrictions placed upon the Company by entering into these leases.
Point of sale capital leases
The Company's finance leases for certain point of sale equipment expired in 2017.

Jackpot Commitments

Jackpot liabilities are recorded as current and non-current liabilities as follows: 
($ in millions)December 31, 2023
Current liabilities38 
($ thousands)Non-current liabilities118 December 31, 2017
Current liabilities155 84,250
Non-current liabilities191,376
275,626

Future jackpot paymentsliabilities as of December 31, 2023 are due as follows ($ thousands):follows: 
Year Previous Winners Future Winners Total
2018 40,644
 43,460
 84,104
2019 32,127
 8,674
 40,801
2020 28,554
 526
 29,080
2021 24,190
 526
 24,716
2022 21,417
 526
 21,943
Thereafter 115,615
 7,886
 123,501
Future jackpot payments due 262,547
 61,598
 324,145
Unamortized discounts  
  
 (48,519)
Total jackpot liabilities  
  
 275,626
($ in millions)Previous WinnersFuture WinnersTotal
202422 16 38 
202517 6 23 
202614 1 15 
202713 1 13 
202811 1 12 
Thereafter78 10 88 
Future jackpot payments due154 35 188 
Unamortized discounts (33)
Total jackpot liabilities  155 
 
Other Commitments

Yeonama Holdings Co. Limited

In 2013, the Company invested €19.8 million in Yeonama Holdings Co. Limited (“Yeonama”), a shareholder in Emma Delta Limited, the fund that holds a 33% interest in OPAP S.A., the Greek gaming and football betting operator. At December 31, 2017, the Company had a commitment to invest up to an additional €10.2 million ($12.2 million at the December 31, 2017 exchange rate) in Yeonama, representing a total potential €30.0 million ($35.9 million at the December 31, 2017 exchange rate) investment.

CLS-GTECH Company Limited

The Company has a 50% interest in CLS-GTECH Company Limited (“CLS”), a joint venture that was formed to provide a nationwide KENO system for Welfare lotteries throughout China. At December 31, 2017, the Company has a capital commitment to CLS of $3.8 million in the form of a non-interest bearing promissory note to be repaid at the discretion of the CLS board of directors, which is included in other current liabilities in the consolidated balance sheets.


Contingencies
Performance and other bonds

In connection with certainCertain contracts and procurements, the Company has deliveredrequire us to provide a surety bond as a guarantee of performance bonds for the benefit of customers andcustomers; bid and litigation bonds for the benefit of potential customers. customers; and WAP bonds that are used to secure our financial liability when a player elects to have their WAP jackpot winnings paid over an extended period of time.

These bonds give the beneficiarybeneficiaries the right to obtain payment and/or performance from the issuer of the bond if certain specified events occur. In the case of performance bonds, which generally have a term of one year, such events include the Company’sour failure to perform itsour obligations under the applicable contract. The following table provides informationcontracts. In general, we would only be liable for these guarantees in the event of default in our performance of our obligations under each contract, the probability of which we believe is remote. Accordingly, no liability has been recorded as of December 31, 2023 and 2022 related to potential commitments for bonds outstanding at December 31, 2017: these bonds.

($ thousands)Total bonds
Performance bonds447,014
Wide Area Progressive bonds266,218
Bid and litigation bonds8,600
All other bonds24,827
746,659

Guarantees and Indemnifications
Incentive Payments and Shortfall Payments under Minimum Profit Contracts

The Company has two contracts (each of which is an LMA) where it has provided customers with minimum profit level guarantees (the Indiana contract and the New Jersey contract). Under these contracts, subject to certain caps, the Company may earn incentive compensation if it exceeds minimum profit level guarantees and may be required to make shortfall payments should it fail to achieve them.
In relation to the Indiana contract, the Company guaranteed a minimum profit level to the State of Indiana commencing with the contract year ending June 30, 2014. The Company recorded a reduction of service revenue of $8.0 million in 2015 in connection with the Company's performance during the fiscal year ended June 30, 2015 related to this guarantee. In 2015, the Company and the State of Indiana renegotiated the Indiana contract which resulted in revised guarantee levels, and in consideration, the Company paid the State of Indiana $18.3 million which the Company capitalized to other non-current assets in its consolidated balance sheet and which the Company is amortizing to service revenue over the remaining contract term. The Company did not earn incentive compensation or make shortfall payments related to the guarantee in 2017 or 2016.
In relation to the New Jersey contract, the Company guaranteed a minimum profit level to the State of New Jersey commencing with the contract year ending June 30, 2014. In 2015, the Company and the State of New Jersey renegotiated the New Jersey contract which resulted in revised guarantee levels, and in consideration, the Company paid the State of New Jersey $15.4 million which the Company capitalized to other non-current assets in its consolidated balance sheet and which the Company is amortizing to service revenue over the remaining contract term. The Company earned incentive compensation of $29.0 million and $30.6 million in 2017 and 2016, respectively based on its performance for the fiscal years ended June 30, 2017 and June 30, 2016, respectively, which was recorded as service revenue in the consolidated statements of operations.
Loxley GTECH Technology Co., LTD Guarantee
The Company has a 49% interest in Loxley GTECH Technology Co., LTD (“LGT”). LGT is a joint venture that was formed to provide an online lottery system in Thailand.
The Company has guaranteed, along with the 51% shareholder in LGT, performance bonds provided on behalf of LGT by an unrelated commercial lender. The performance bonds relate to LGT’s performance under the July 2005 contract between the Government Lottery Office of Thailand and LGT should such contract become operational. The Company is jointly and severally liable with the other shareholder in LGT for this guarantee. There is no scheduled termination date for the Company’s guarantee obligation. At December 31, 2017, the maximum liability under the guarantee was Baht 375 million ($11.5 million), and the Company does not have any obligation related to this guarantee because the July 2005 contract to provide the online lottery system is not in operation due to continuing political instability in Thailand.


Zest Gaming Contingent Consideration

On July 25, 2017, the Company acquired the video bingo subsidiaries and related operating assets of Zest Gaming S.r.l., a leading supplier of multi-card video bingo solutions headquartered in Italy. The acquisition consideration included a fair value estimate of contingent consideration related to existing operations for the twelve month period ending June 30, 2018. At December 31, 2017, contingent consideration was €6.5 million ($7.8 million), and is capped at €17.2 million ($20.6 million at the December 31, 2017 exchange rate) for existing operations.
Legal Proceedings


From time to time, the Parent and/or one or more of its subsidiaries are party to legal, regulatory, or administrative proceedings regarding, among other matters, claims by and against the Company,us, and injunctions by third parties arising out of the ordinary course of business or its other business and investigationsactivities. Licenses are also subject to legal challenges by competitors seeking to annul awards made to the Company. The Parent and/or one or more of its subsidiaries are also, from time to time, subjects of, or parties to, ethics and compliance inquiries and investigations related to the Company’s ongoing operations. Legal proceedings can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings are often difficult to predict and the Company’s view of these matters may change as the related proceedings and events unfold. The Company expenses legal fees as incurred and records a provision for contingent losses when it is both probable that a liability will be incurred and the amount or range of the loss can be reasonably estimated. At December 31, 2017,2023, provisions for litigation matters amounted to $4.7all legal proceedings, including what is discussed in detail below, was $14 million. With respect to litigation and other legal proceedings where the Company haswe have determined that aan incremental loss is reasonably possible but the Company iswe are unable to determine an estimate the amount or range of that reasonably possible loss in excess of amounts already accrued, no additional amounts have been accrued, (givengiven the uncertainties of litigation and the inherent difficulty of predicting the outcome of legal proceedings). If material, an unfavorable outcome to any legal matter could have an adverse effect on the Company’s operations, financial position, liquidity, or resultsproceedings.

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Brazil ICMS Tax
Since 1997, GTECH Brazil paid ISS service taxes on its revenues derived from its lottery contract with Caixa Eonomica Federal. On July 26, 2005, the State of São Paulo challenged this tax classification, claiming the higher ICMS tax (Brazilian VAT) should have been applied on the value of printing ribbons, rolls of paper, and wagering slips (“Consumables”) distributed to lottery outlets. On February 27, 2017, the Brazilian court ruled that rolls of paper and wagering slips were not subject to ICMS, but printing ribbons were, although at a lower tax rate than the São Paulo tax authorities had applied. Both parties appealed the respective unfavorable aspects of the lower court’s ruling to the Court of Appeals. On March 7, 2018, the Court of Appeals ruled in GTECH Brazil’s favor with respect to its petition to also exclude the printer ribbons from the ICMS tax. The Court of Appeals also ruled against the petition of the tax authority to reverse the lower court’s ruling to exclude rolls of paper and wagering slips from ICMS tax.  If the tax authority elects to appeal the ruling to higher courts, the tax authority has 30 business days following publication of the decision by the Court of Appeals in the relevant website or journal to file such appeal. Should the tax authority decide to further appeal the matter, the proceedings are likely to take several years. The net claim after the current ruling, plus statutory interest and fees is approximately 18.5 million Brazilian Reals ($5.6 million at the December 31, 2017 exchange rate).

Texas Fun 5’s Instant Ticket Game


Five lawsuits have been filed against IGT Global Solutions Corporation (f/k/a(formerly GTECH Corporation) is party to four lawsuits in Texas state court arising out of the Fun 5’s instant ticket game sold by the Texas Lottery Commission (“TLC”) from September 14, 2014 to October 21, 2014. Plaintiffs allege each ticket’s instruction for Game 5 provided a 5x win (five times the prize box amount) any time the “Money Bag” symbol was revealed in the “5X BOX”. However, TLC awarded a 5x win only when (1) the “Money Bag” symbol was revealed and (2) three symbols in a pattern were revealed.

(a)
Steele, James et al. v. GTECH Corp., filed on December 9, 2014, in Travis County (No. D1GN145114). Through intervenor actions, over 1,200 plaintiffs claim damages in excess of $500 million. GTECH Corporation’s plea to the jurisdiction for dismissal based on sovereign immunity was denied. GTECH Corporation appealed. The appellate court ordered that plaintiffs' sole remaining claim should be reconsidered. Both sides may consider petitioning for Texas Supreme Court review. 
(b)
Nettles, Dawn v. GTECH Corp. et al., filed on January 7, 2015, in Dallas County (No. 051501559CV). Plaintiff claims damages in excess of $4 million. GTECH Corporation and the Texas Lottery Commission won pleas to the jurisdiction for dismissal based on sovereign immunity. Plaintiff appealed, lost the appeal, and is petitioning for Texas Supreme Court review.
(c)
Guerra, Esmeralda v. GTECH Corp. et al., filed on June 10, 2016, in Hidalgo County (No. C277716B). Plaintiff claims damages in excess of $500,000.

(d)
Wiggins, Mario & Kimberly v. IGT Global Solutions Corp., filed on September 15, 2016, in Travis County (No. D1GN16004344). Plaintiffs claim damages in excess of $1 million.
(e)
Campos, Osvaldo Guadalupe et al. v. GTECH Corp., filed on October 20, 2016, in Travis County (No. D1GN16005300). Plaintiffs claim damages in excess of $1 million.

(a)Steele, James et al. v. GTECH Corp., filed on December 9, 2014 in Travis County (No. D1GN145114). Through intervenor actions, over 1,200 plaintiffs claim damages in excess of $600 million, as alleged via discovery. GTECH Corporation’s plea to the jurisdiction for dismissal based on sovereign immunity was denied. GTECH Corporation appealed. The appellate court ordered that Plaintiffs’ sole remaining claim should be reconsidered. On April 27, 2018, this and a related matter were appealed to the Texas Supreme Court, which heard arguments on December 3, 2019.On June 12, 2020, the Texas Supreme Court ruled that Plaintiffs could proceed with their fraud allegations in the lower court; all other claims were dismissed. On March 26, 2021, October 29, 2021, and February 3, 2022 (two motions), GTECH Corporation filed motions for summary judgment. One such motion was denied on February 25, 2022, while the other three remain pending. In April 2023, pursuant to court ordered mediation, the Company advanced confidential settlement negotiations regarding this matter, and a tentative settlement has been reached subject to certain conditions to be satisfied by Plaintiff’s counsel. We anticipate settling on a mutually confidential basis with all, or a significant majority of, plaintiffs for an amount which is not material to the Company’s results of operations, financial position, or cash flows and is expected to be paid with cash on hand. The Court granted the Motion to Appoint Masters in Chancery on July 13, 2023 to oversee and assist the parties with the potential settlement process. Given the large number of plaintiffs, some plaintiffs may continue to pursue their case and perhaps proceed to trial on their claims.
The Company disputes(b)Guerra, Esmeralda v. GTECH Corp. et al., filed on June 10, 2016 in Hidalgo County (No. C277716B). Plaintiff claims damages in excess of $0.5 million. Court has ordered a trial to occur no later than autumn of 2024, subject to mediation efforts. A control status conference has been scheduled for March 5, 2024.
(c)Wiggins, Mario & Kimberly v. IGT Global Solutions Corp., filed on September 7, 2016 in Travis County (No. D1GN16004344). Plaintiffs claim damages in excess of $1 million. This matter was consolidated with the Steele case.
(d)Campos, Osvaldo Guadalupe et al. v. GTECH Corp., filed on October 20, 2016 in Travis County (No. D1GN16005300). Plaintiffs claim damages in excess of $1 million.
We dispute the claims made in each of these cases and continuescontinue to defend against these lawsuits.


Illinois State LotteryThe Company will continue to monitor these matters and may adjust its disclosure and accrual in accordance with its Process for Disclosure and Recording of Liabilities Related to Legal Proceedings as described in Note 2 - Summary of Significant Accounting Policies, herein.


Disposition of Previously Disclosed Matters

Adrienne Benson and Mary Simonson, individually and on behalf of all others similarly situated v. Double Down Interactive LLC, et al.

On February 2, 2017,April 9, 2018, a plaintiff, Adrienne Benson, filed a putative class representatives of retailersaction against the Company’s wholly-owned subsidiary, International Game Technology, and lottery ticket purchasers alleged the Illinois Lottery collected millions of dollars from sales of instant ticket games and wrongfully ended certain games before all top prizes had been sold. Raqqa, Inc. et al. v. Northstar Lottery Group, LLC., was filed in Illinois state court, St. Clair County (No. 17L51) against Northstar Lottery GroupDouble Down Interactive LLC, a consortiumWashington limited liability company in which the Parent indirectly holds an 80% controlling interest. The claims include tortious interference with contract, violations of Illinois Consumer Fraud and Deceptive Practices Act, and unjust enrichment. The lawsuit was removed to the U.S.United States District Court for the SouthernWestern District of Illinois.Washington (the “Benson Matter”). On March 15, 2017,July 23, 2018, plaintiff filed a first amended complaint, adding named plaintiff Mary Simonson, and adding allegations to represent a putative class of all persons in the United States who purchased and allegedly lost virtual “chips” while playing games through an online gaming platform called Double Down Casino. On April 26, 2021, plaintiffs filed a second lawsuit, Atteberry, Dennis et al. v. Northstar Lottery Group, LLCamended complaint naming IGT (“IGT U.S. Gaming OpCo”), was filed in Illinois state court, Cook County (No. 2017CHO3755) seekinga wholly-owned subsidiary of International Game Technology, as an additional defendant. Plaintiffs have asserted claims for alleged violations of Washington’s Recovery of Money Lost at Gambling Act, Washington’s Consumer Protection Act, and for unjust enrichment, and seeks unspecified money damages on(including treble damages as appropriate), the same matter. The Company disputes the claims made in both casesaward of reasonable attorneys’ fees and continues to defend against these lawsuits.

Mexican Inventory Tax

The Mexican Tax Administration Service levied an assessment of income tax, VAT, profit sharing,costs, pre- and post-judgment interest, and penalties on GTECH Mexico, S.A. de C.V.injunctive and/or declaratory relief.

International Game Technology acquired Double Down Interactive LLC (“GTECH Mexico”DDI”), in 2012 and, effective June 1, 2017, sold DDI to DoubleU Diamond LLC (“DoubleU”) pursuant to a purchase agreement (the “Purchase Agreement”). At all times relevant, DDI was the sole operator of the Double Down Casino, and International Game Technology asserts, among other defenses, that it has no liability for the 2006 fiscal year that, as at December 31, 2017, amountedactions of a bona fide subsidiary.

On May 10, 2018, DDI and DoubleU sent a claim notice (the “DDI Claim Notice”) to International Game Technology seeking indemnification and reimbursement of defense costs for all claims against DoubleU and its affiliates (the “DoubleU Entities”) in
520,806,390 Mexican Pesos ($26.5 million at
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the December 31, 2017 exchange rate). Approximately 65%Benson Matter, pursuant to the Purchase Agreement. On June 7, 2018, International Game Technology responded to the DDI Claim Notice, rejecting any obligation to indemnify or pay defense costs of the assessment relatesDoubleU Entities, and sent a claim notice to denialDoubleU for indemnification and reimbursement of defense costs for all claims against International Game Technology in the Benson Matter pursuant to the terms of certain agreements with DoubleU.

On June 17, 2021, IGT U.S. Gaming OpCo sent a deductionclaim notice to DoubleU for inventory sold ("costindemnification and reimbursement of goods sold deduction") by GTECH Mexicodefense costs for all claims against IGT U.S. Gaming OpCo in the Benson Matter pursuant to its parent; the remaining assessment relates primarilyterms of certain agreements with DoubleU.

On August 29, 2022, the Company and DoubleDown Interactive Co., Ltd., parent company of DDI, announced an agreement in principle to intercompany loan proceeds (treated as taxable income) received from GTECH Mexico’s parent. Although lower courts upheldsettle the assessment, the Mexican Appellate Court ruled the loan proceeds non-taxable, but denied the Company’s cost of goods sold deduction. The Mexican Supreme Court upheld the Appellate Court’s ruling that the cost of goods sold deduction would not apply. GTECH Mexico filed a constitutional appeal on November 23, 2017. The Company maintains that the assessment is without merit. For a further discussion of the Mexican cost of goods sold deduction tax issue, refer to Note 14, Income Taxes.

17. Redeemable Non-Controlling Interests

In March 2016, the Parent, through its subsidiary Lottomatica S.p.A. (“Lottomatica”), Italian Gaming Holding a.s. (“IGH”), Arianna 2001lawsuit and Novomatic Italia (collectively the “Members”) entered into a consortium (Lottoitalia S.r.l. or “Lottoitalia”) to bid on the Lotto Concession. On May 16, 2016, Lottoitalia was awarded management of the Lotto Concession for a nine-year term.associated proceedings. Under the terms of the consortium agreement, Lottomatica is the principal operating partner fulfilling the requirementssettlement, which would take effect only after final court approval of the Lotto Concession.

In 2016proposed class settlement, a total of $415 million will be paid into a settlement fund, of which the Company’s subsidiaries will contribute $270 million and 2017,DDI will contribute $145 million. Subject to final court approval of the Members made capital contributions to Lottoitalia of €908.2 million on a pro rata basis based on each party’s equity ownership interest. These contributions financed €770.0 millionsettlement in upfront concession paymentsthe Benson Matter, International Game Technology, IGT U.S. Gaming OpCo, and upgradesthe DoubleU Entities have also resolved all indemnification and other claims between themselves and their respective subsidiaries and affiliates relating to the technological infrastructure supportingBenson Matter.

On November 14, 2022, the Lotto Concession. The upfront concession payments made in 2016 and 2017 were as follows:
Year Paid € $
2016 600.0
 665.3
2017 170.0
 185.4
  770.0
 850.7

Ownership in Lottoitalia at December 31, 2017 and 2016 is as follows:
Name of entity% Ownership
Lottomatica S.p.A.61.50%
Italian Gaming Holding a.s.32.50%
Arianna 20014.00%
Novomatic Italia2.00%


The Company fully consolidates Lottoitalia as a variable interest entity due to the Company's risks and rewardscourt granted preliminary approval of the investment and Lottoitalia's current need for funding to finance planned operations.

All annual profits of Lottoitalia are distributed to the Members within five business dayssettlement. As a result of the approvalsettlement agreement, the Company accrued $270 million of its annual financial statements. In addition, quarterly for a period of nine years beginning in 2017, Lottoitalia makes equal distributions of cash to the Members in an aggregate amount equal to that additional paid in surplus but excluding any reserves deriving from profits or retained earnings generated in previous quarters ("return of capital"). Each distribution of annual profits and return of capital will be made pro rata to the Members' ownership interest in Lottoitalia.

In connection with the formation of Lottoitalia, Lottomatica entered into an agreement with IGH in May 2016, which contains the following put/call options:
Underperformance put option - IGH has the right, at its discretion, to sell its interest in Lottoitalia to Lottomatica in the event that Lottoitalia underperforms relative to certain thresholds related to pro forma cash from operations generated in 2017. The put option is exercisable by IGH beginning on the date of approval of Lottoitalia's financial statementsother non-operating expense, net for the year endingended December 31, 20172022, respectively, related to the loss associated with the Benson Matter and ending 60 days thereafter.
Deadlock put/call option - IGH hasrelated claims between the right, at its discretion, to sell its interestCompany and the DoubleU Entities. In November, 2022, the Company placed $50 million in Lottoitalia to Lottomatica and Lottomatica has a reciprocal call right,escrow, resulting in $220 million recorded as DDI / Benson Matter provision as of December 31, 2022 in the event of certain specified events as definedConsolidated Balance Sheets. The cash flows relating to this payment are reported in operating activities in the agreement. The put/call options expire 60 days following written notice by either party followingConsolidated Statements of Cash Flows.

On June 1, 2023, the applicable event. The strike priceCourt granted the Motion for Final Approval of Settlement and dismissed the options is determined based on a specified formula as defined in the agreement.

case. The Company determined that it is not currently probable that IGH's non-controlling interestpaid the $270 million agreed upon settlement amount (including the $50 million placed in escrow in November 2022) on June 13, 2023. In 2022, the Company realized a deferred tax benefit of $66 million (with no cash benefit). In 2023, the Company recognized a cash tax benefit of $36 million and will be redeemed as Lottoitalia's 2017 results indicaterecognize the underperformance put option is not exercisable and the deadlock put/call options cannot be exercised unilaterally. The Company has recorded the non-controlling interest initially at fair value and no fair value adjustments will be recorded unless it becomes probable that IGH will redeem its non-controlling interest.remaining cash tax benefit in future periods.


The following table reconciles the activity in IGH's redeemable non-controlling interest in 2017 and 2016:
20.Shareholders’ Equity
  For the year ended
December 31,
($ thousands) 2017 2016
Balance at beginning of year 223,141
 —
Capital contribution 107,457
 215,684
Income allocated to IGH 65,665
 7,457
Dividend paid (7,307) —
Return of capital (32,039) —
Balance at end of year 356,917
 223,141

18.Shareholders’ Equity
Shares Authorized and Outstanding
 
The Board of Directors of the Parent (the “Board”) is authorized tomay issue shares of any class in the capital of the Parent. The authorized ordinary shares of the Parent consistsupon shareholder approval. At the Parent’s 2023 annual general meeting, the shareholders authorized the issuance of 1.850 billionup to 133 million additional ordinary shares (of which 67 million can be issued in connection with an offer by way of rights issue), with a par value of $0.10 per share, par value.for a period expiring at the end of the 2024 annual general meeting, or, if sooner, on August 8, 2024, unless previously revoked, varied, or renewed.

Ordinary shares of common stock outstanding were as follows:
 December 31,
 202320222021
Balance at beginning of year199,078,909 203,688,118 204,856,564 
Shares issued under stock awards1,403,340 702,273 331,554 
Shares issued upon exercise of stock options— 61,714 — 
Repurchases of common stock— (5,373,196)(1,500,000)
Balance at end of year200,482,249 199,078,909 203,688,118 

Share Repurchase Program
  December 31,
  2017 2016 2015
Balance at beginning of year 202,285,166
 200,244,239
 172,792,526
Shares issued under restricted stock award plans 947,709
 1,080,532
 1,118,970
Shares issued upon exercise of stock options 213,697
 960,395
 744,374
Shares issued upon acquisition of IGT —
 —
 45,322,614
GTECH rescission shares —
 —
 (19,734,245)
Balance at end of year 203,446,572
 202,285,166
 200,244,239


Shares Issued Upon AcquisitionOn November 15, 2021, the Parent’s Board of IGT
UponDirectors authorized a share repurchase program (the “Program”) pursuant to which the acquisition of IGT, IGT shareholders received 45,322,614 common sharesCompany may repurchase up to $300 million of the Parent in accordance withParent’s outstanding ordinary shares during a period of four years commencing on November 18, 2021. At the terms ofParent’s 2023 annual general meeting, the transaction.

GTECH Rescission Shares

GTECHParent’s shareholders who did not vote in favor of the merger of GTECH into the Parent were entitled to exercise a cash exit right equal to €19.174 per share. GTECH shareholders exercised the cash exit right on 19,796,852 GTECH shares, of which 62,607 were subsequently purchased by other GTECH shareholders, resulting in 19,734,245 net shares repurchased upon the merger. The Company paid $407.8 million to shareholders.
Treasury Stock Purchases

The Parent has thegranted authority to purchase,repurchase, subject to a maximum repurchase price, a maximum of 20%up to 19,968,394 of the aggregate issued share capital ofParent’s ordinary shares. This authority remains valid until November 8, 2024, unless previously revoked, varied, or renewed at the Parent’s 2024 annual general meeting.

The Parent repurchases ordinary shares under the Program at the market price on the trade date and the Parent cancels repurchased ordinary shares or holds them in treasury. If the Parent holds repurchased ordinary shares in treasury, all amounts
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paid to repurchase such shares have been recorded as treasury stock in our Consolidated Balance Sheets until they are reissued or retired. Under the Program, no shares were purchased in 2023. Repurchases of the Parent’s ordinary shares paid out of distributable reserves reduce the amount of distributable reserves available for the Parent asto make distributions to its shareholders, including the payment of April 7, 2015. This authority will expire on July 28, 2020.dividends which, under English law, may only be paid out of distributable reserves.


The Parent did not repurchase common shares in 2017, 2016 or 2015.

Dividends
 
The CompanyWe declared a $0.20 cash dividendsdividend per share duringin all four quarters of 2023, 2022, and the periods presented as follows: 
Per share amount ($) 2017 2016 2015
First Quarter 0.20
 0.20
 —
Second Quarter 0.20
 0.20
 —
Third Quarter 0.20
 0.20
 0.20
Fourth Quarter 0.20
 0.20
 0.20
Total cash dividends declared 0.80
 0.80
 0.40
Future dividends are subject to Board approval.fourth quarter of 2021.
 
The RCF Senior FacilitiesTLF Agreement and Term Loan Facilitythe RCF Agreement limit the aggregate amount ofthat the Parent can pay with respect to dividends and repurchases of the Parent's ordinary shares in each year to $300 million based on the Company’s current ratings by Moody’s and S&P provided that the ratioany two of the sum of total netpublic debt ratings issued by the rating agencies. The TLF Agreement and the aggregate amount ofRCF Agreement prohibited dividends and repurchases to EBITDA does not exceed 90% of ordinary shares during the applicable ratio of total net debt to EBITDA.period commencing on April 1, 2020 and expiring on June 30, 2021.



Accumulated Other Comprehensive Income

The following table details the changes in Accumulated Other Comprehensive Income (“AOCI”):AOCI: 
Unrealized Gain (Loss) on:AOCI
($ in millions)Foreign
Currency
Translation		HedgesOtherTotalAttributable 
to non-controlling
interests		Attributable to IGT PLC
Balance at December 31, 2020358 (9)4 353 (24)330 
Change during period9 3 (1)11 51 62 
Reclassified to operations (1)
19 1 — 20 1 21 
Tax effect— (1)— — — — 
Other comprehensive income (loss)28 3 (1)30 52 82 
Balance at December 31, 2021387 (6)3 384 28 412 
Change during period55 2 1 57 27 84 
Reclassified to operations (1)
36 (3)— 34 — 34 
Other comprehensive income (loss)90 (1)1 91 27 117 
Balance at December 31, 2022477 (7)4 474 55 529 
Change during period5 (2)— 3 (13)(10)
Reclassified to operations (1)
— 2 — 2 — 2 
Tax effect(1)— — (1)— (1)
Other comprehensive income (loss)4 1 — 4 (13)(8)
Balance at December 31, 2023481 (6)3 479 42 521 
    Unrealized Gain (Loss) on:   
Less: OCI attributable 
to non-controlling
interests
 
Total
AOCI
attributable to
IGT PLC
  
Foreign
Currency
Translation
 
Cash
Flow
Hedges
 
Hedge of
Net
Investment
 
Available
for Sale
Securities
 
Defined
Benefit
Plans
 
Share of
OCI of
Associate
  
Balance at December 31, 2014 158,131
 971
 (4,499) 5,019
 (4,356) (748) 685
 155,203
Change during period 60,079
 (594) —
 (3,046) 395
 —
 304
 57,138
Reclassified to operations —
 (244) —
 —
 —
 —
 —
 (244)
Tax effect (14,024) 254
 (64) (3,259) (166) —
 —
 (17,259)
OCI 46,055
 (584) (64) (6,305) 229
 —
 304
 39,635
Balance at December 31, 2015 204,186
 387
 (4,563) (1,286) (4,127) (748) 989
 194,838
Change during period (49,881) 8,351
 —
 8,772
 (682) —
 (203) (33,643)
Reclassified to operations 118
 (5,218) —
 —
 —
 —
 —
 (5,100)
Tax effect 373
 (615) (15) 4,723
 82
 —
 —
 4,548
OCI (49,390) 2,518
 (15) 13,495
 (600) —
 (203) (34,195)
Balance at December 31, 2016 154,796
 2,905
 (4,578) 12,209
 (4,727) (748) 786
 160,643
Change during period 182,791
 (6,610) —
 (678) (120) —
 463
 175,846
Reclassified to operations —
 1,744
 —
 —
 —
 —
 —
 1,744
Tax effect 559
 1,312
 —
 57
 8
 —
 —
 1,936
OCI 183,350
 (3,554) —
 (621) (112) —
 463
 179,526
Balance at December 31, 2017 338,146
 (649) (4,578) 11,588
 (4,839) (748) 1,249
 340,169
For(1) Foreign currency translation of approximately $19 million was reclassified into gain on sale of discontinued operations, net of tax on the yearsConsolidated Statements of Operations for the year ended December 31, 2017, 2016 and 2015, $1.7 million, $5.2 million, and $0.2 million, respectively,2021. Other foreign currency translation adjustments were reclassified from AOCIinto other non-operating expense, net on the Consolidated Statements of Operations for subsidiaries sold for the year ended December 31, 2022 and foreign exchange loss (gain), net for subsidiaries liquidated for the year ended December 31, 2022. Unrealized gain (loss) on hedges were reclassified into service revenue inon the consolidated statementsConsolidated Statements of operations.

19.Non-Controlling Interests

Non-controlling interests’ share of equity in the accompanying consolidated balance sheets was $349.9 million and $357.0 million at December 31, 2017 and 2016, respectively. At December 31, 2017 the Company’s material non-controlling interests were as follows: 
Name of subsidiary
% Ownership held by
the Company
Lotterie Nazionali S.r.l. ("LN")64.00%
Northstar New Jersey Lottery Group, LLC82.31%
LN holds the Scratch & Win concession license in Italy. In December 2017, the Italian regulator exercised a nine-year contract extension option for the Scratch & Win concession, extending the concession through September 2028. LN is required to pay an upfront license fee of €800 million related to the extension, of which €50 million ($59.3 million) was paid in December 2017, and the remaining €750 million ($899.5 million at the December 31, 2017 exchange rate) is expected to be paid in 2018.
Northstar New Jersey Lottery Group, LLC (“Northstar NJ”), is a consolidated joint venture which is party to an agreement with the State of New Jersey, Department of the Treasury, Division of Purchase and Property and Division of Lottery (the “Division of Lottery”) where Northstar NJ manages a wide range of the Division of Lottery’s marketing, sales, and related functions.

20.Segment Information
The structure of the Company’s internal organization is customer-facing aligned around four business segments operating in three regions as follows:
North America Gaming and Interactive
North America Lottery
International
Italy
The Company monitors the operating results of its operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating income. Segment accounting policies are consistent with those of the consolidated financial statements.

Corporate support expenses, which are not allocated to the segments, are principally composed of selling, general and administrative expenses and other expenses that are managed at the corporate level, including restructuring, transaction, corporate headquarters and Board expenses.
Purchase accounting principally represents the depreciation and amortization of acquired tangible and intangible assets in connection with acquired companies.
Segment information is as follows ($ thousands):  
For the year ended
December 31, 2017		 
North
America
Gaming and
Interactive
 
North
America
Lottery
 International Italy 
Operating
Segment
Total
 
Corporate
Support
 
Purchase
Accounting
 Total
Service revenue 780,633
 1,093,048
 557,049
 1,703,901
 4,134,631
 1,203
 722
 4,136,556
Product sales 377,065
 92,174
 332,015
 1,149
 802,403
 —
 —
 802,403
Total revenue 1,157,698
 1,185,222
 889,064
 1,705,050
 4,937,034
 1,203
 722
 4,938,959
                 
Operating income (loss) 278,963
 289,025
 163,799
 478,540
 1,210,327
 (197,089) (1,064,330) (51,092)
Depreciation and amortization 81,355
 129,517
 66,745
 161,484
 439,101
 11,554
 351,785
 802,440
Expenditures for long-lived assets (147,175) (204,104) (77,815) (188,013) (617,107) (3,964) —
 (621,071)
Long-lived assets
(at year end)
 271,833
 666,627
 292,962
 396,495
 1,627,917
 —
 —
 1,627,917
Total assets (at year end) 3,683,258
 2,460,676
 3,038,806
 4,900,130
 14,082,870
 1,076,338
 —
 15,159,208
For the year ended
December 31, 2016		 North
America
Gaming and
Interactive		 North
America
Lottery		 International Italy 
Operating
Segment
Total
 Corporate
Support		 Purchase
Accounting		 Total
Service revenue 975,206
 1,128,306
 512,668
 1,759,843
 4,376,023
 —
 (437) 4,375,586
Product sales 398,248
 65,269
 314,637
 1,295
 779,449
 —
 (1,139) 778,310
Total revenue 1,373,454
 1,193,575
 827,305
 1,761,138
 5,155,472
 —
 (1,576) 5,153,896
                 
Operating income (loss) 349,275
 299,182
 142,200
 583,504
 1,374,161
 (245,600) (468,125) 660,436
Depreciation and amortization 86,380
 143,941
 50,879
 150,736
 431,936
 12,481
 438,052
 882,469
Expenditures for long-lived assets (132,297) (148,641) (97,957) (91,834) (470,729) (3,460) —
 (474,189)
Long-lived assets
(at year end)
 394,233
 603,927
 284,276
 275,079
 1,557,515
 —
 —
 1,557,515
Total assets (at year end) 5,577,491
 2,396,557
 3,021,448
 3,724,856
 14,720,352
 339,810
 —
 15,060,162

For the year ended
December 31, 2015		 North
America
Gaming and
Interactive		 North
America
Lottery		 International Italy 
Operating
Segment
Total
 Corporate
Support		 Purchase
Accounting		 Total
Service revenue 780,169
 992,684
 512,014
 1,702,184
 3,987,051
 —
 (9,358) 3,977,693
Product sales 321,624
 52,986
 341,064
 1,872
 717,546
 —
 (6,183) 711,363
Total revenue 1,101,793
 1,045,670
 853,078
 1,704,056
 4,704,597
 —
 (15,541) 4,689,056
                 
Operating income (loss) 295,531
 181,813
 164,190
 555,223
 1,196,757
 (292,371) (364,430) 539,956
Depreciation and amortization 71,886
 154,619
 45,855
 152,293
 424,653
 13,123
 342,052
 779,828
Expenditures for long-lived assets (82,834) (107,854) (93,666) (22,422) (306,776) (11,618) —
 (318,394)
Long-lived assets
(at year end)
 403,482
 616,760
 236,043
 220,910
 1,477,195
 —
 —
 1,477,195
Total assets (at year end) 6,077,680
 2,476,112
 2,950,807
 2,855,797
 14,360,396
 754,296
 —
 15,114,692

In connection with the June 2017 sale of DoubleDown, the Company recorded a $783.8 million reduction in assets in the North America Gaming and Interactive segment, principally composed of goodwill and intangible assets.

In the second quarter of 2017, the Company made changes to management reporting lines within functions that support its segments, principally field services, data center and research and development. These changes resulted in insignificant changes in how certain shared operating expenses were allocated to segments. The Company has reclassified prior period amounts to conform to the current year presentation.

The resulting changes in operating income (loss) by segmentOperations for the years ended December 31, 20162023, 2022, and 2015 were as follows ($ thousands):2021.

21.Stock-Based Compensation
For the year ended
December 31, 2016		 North
America
Gaming and
Interactive		 North
America
Lottery		 International Italy Segment
Total		 Corporate
Support		 Purchase
Accounting		 Total
As previously presented 344,125
 300,394
 144,125
 585,517
 1,374,161
 (245,600) (468,125) 660,436
As currently presented

 349,275
 299,182
 142,200
 583,504
 1,374,161
 (245,600) (468,125) 660,436
Change 5,150
 (1,212) (1,925) (2,013) —
 —
 —
 —

For the year ended
December 31, 2015		 North
America
Gaming and
Interactive		 North
America
Lottery		 International Italy Segment
Total		 Corporate
Support		 Purchase
Accounting		 Total
As previously presented 294,256
 182,615
 164,949
 554,937
 1,196,757
 (292,371) (364,430) 539,956
As currently presented

 295,531
 181,813
 164,190
 555,223
 1,196,757
 (292,371) (364,430) 539,956
Change 1,275
 (802) (759) 286
 —
 —
 —
 —

Geographical Information
Revenue from external customers, which is based on the geographical location of the Company’s customers, is as follows: 
  December 31,
($ thousands) 2017 2016 2015
United States 2,195,791
 2,472,013
 2,030,251
Italy 1,728,472
 1,778,750
 1,712,583
Canada 100,315
 89,938
 105,377
United Kingdom 74,567
 82,271
 93,839
All other 839,814
 730,924
 747,006
Total 4,938,959
 5,153,896
 4,689,056

Revenue from exclusive and non-exclusive concessions awarded to the Company by ADM represented 31.9%, 31.7% and 33.6% of consolidated revenue in 2017, 2016 and 2015, respectively.

Long-lived assets are composed of the following:
Systems, equipment and other assets relating to contracts
Property, plant and equipment
Long-lived assets based on the geographical location of the assets are as follows: 
  December 31,
($ thousands) 2017 2016
United States 938,925
 989,374
Italy 366,990
 254,052
United Kingdom 43,379
 47,388
All other 278,623
 266,701
Total 1,627,917
 1,557,515


21.Stock-Based Compensation
 
Incentive Awards
 
Stock-based incentive awards are provided to directors and employees under the terms of the Company’sour 2015 and 2021 Equity Incentive Plan (the “Plan”Plans (collectively, the “Plans”) as administered by the Board. Awards available under the PlanPlans principally include stock options, performance share units, restricted share units or any combination thereof. The maximum number of new shares that may be granted under the PlanPlans is 11.520 million shares. To the extent any award is forfeited, expires, lapses, or is settled for cash, the award is available for reissue under the Plan. The Company utilizesPlans. We utilize authorized and unissued shares to satisfy all shares issued under the Plan.Plans.
 
Stock Options
 
Stock options are awards that allow the employee to purchase shares of the Company’sour stock at a fixed price. Stock options are granted
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under the PlanPlans at an exercise price not less than the fair market value of a share on the date of grant. No stock options were granted in 2017 or 2016. In 2015,2021, stock options were granted solely to the Company’sour former Chief Executive Officer, which will vest in 20182024 subject to certain performance and other criteria, and have a contractual term of approximately seven years. No stock options were granted in 2023 or 2022.
 
Stock Awards
 
Stock awards are principally made in the form of performance share units (PSUs)(“PSUs”) and restricted share units (RSUs)(“RSUs”).

PSUs are stock awards where the number of shares ultimately received by the employee depends on the Company’s performance against specified targets.targets, which may include Adjusted EBITDA, Adjusted Free Cash Flow, Total Shareholder Return (“TSR”) relative to the Russell Mid Cap Market Index, or share price. PSUs typically vest 50% over an approximate three-year period and 50% over an approximate four-year period.period (i.e. four years to vest both tranches). In 2021, a second round of PSUs awardedwas granted in 2015lieu of there being no 2020 PSUs that vest 50% over an approximate one-yeartwo-year period and 50% over an approximate two-yearthree-year period. Dividend equivalents are not paid under the Plan.Plans. The fair value of each PSU is determined on the grant date or modification date, based on the Company’s stock price, adjusted for the exclusion of dividend equivalents, and assumes that performance targets will be achieved. Over the performance period, the number of shares of stock that will be issued is adjusted based upon the probability of achievement of performance targets. The ultimate number of shares issued and the related compensation cost recognized as expense is based on a comparison of the final performance metrics to the specified targets.targets, if applicable.
 
RSUs are stock awards granted to directors that entitle the holder to shares of common stock as the award vests, typically over a one-year period, and have a contractual term of 10 years.vests. Dividend equivalents are not paid under the Plan.Plans. In 2020, RSUs were also granted to employees, which vested in approximately one- and two-year vesting periods.



Stock Option Activity
 
A summary of the Company’sour stock option activity and related information is as follows: 
  Weighted-Average 
(Shares in thousands)Stock
Options		Exercise Price Per Share ($)Remaining Contractual Term (in years)Aggregate Intrinsic Value ($ in millions)
Outstanding at January 1, 2023173 20.37   
Granted— — 
Forfeited— — 
Exercised— —   
Outstanding at December 31, 2023173 20.37 4.36 
At December 31, 2023:    
Vested and expected to vest173 20.37 4.361 
Exercisable— — — — 
    Weighted Average  
  
Stock
Options
 Exercise Price Per Share ($) Remaining Contractual Term (in years) Aggregate Intrinsic Value ($ thousands)
Outstanding at January 1, 2017 3,747,268
 19.06
    
Granted —
 —
    
Forfeited (442,138) 20.30
    
Exercised (1,112,423) 17.21
    
Expired —
 —
    
Outstanding at December 31, 2017 2,192,707
 19.76
 1.97  
         
At December 31, 2017:  
  
    
Vested and expected to vest 2,192,707
 19.76
 1.97 14,811
Exercisable 1,942,707
 20.30
 0.49 12,066
No stock options were exercised in 2023 and 2021. The total intrinsic value of stock options exercised was $9.3 million, $7.8 million and $3.3$3 million in 2017, 2016 and 2015, respectively. The total cash proceeds from stock options exercised was $12.7 million and $10.7 million in 2016 and 2015, respectively.2022. There were no cash proceeds from stock options exercised in 2017.2022 due to net share settlement.
 
Fair Value of Stock Options Granted
 
The Company estimatesWe estimate the fair value of stock options at the date of grant using a valuation model that incorporates key inputs and assumptions as detailed in the table below. The weighted averageweighted-average grant date fair value of stock options granted during 20152021 was $2.31$9.82 per share. 
2021
Valuation modelMonte Carlo
2015
Valuation modelMonte Carlo
Exercise price ($)20.37 15.53
Expected option term (in years)2.38
2.00
Expected volatility of the Company’s stock (%)60.00 35.00
Risk-free interest rate (%)0.80 1.06
Dividend yield (%)— 5.15
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The expected volatility assumes the historical volatility is indicative of future trends, which may not be the actual outcome. The expected option term is based on historical data and is not necessarily indicative of exercise patterns that may occur. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of theour original estimates of fair value made by the Company.value.



Stock Award Activity
 
A summary of the Company’sour stock award activity and related information is as follows: 
(Shares in thousands)
PSUs(1)
Weighted- Average Grant Date Fair Value ($)RSUsWeighted- Average Grant Date Fair Value ($)
Nonvested at January 1, 20235,281 25.85 91 20.07 
Granted(2)
1,925 27.94 68 26.96 
Vested(1,229)26.50 (91)20.07 
Forfeited(183)26.00 — — 
Nonvested at December 31, 20235,794 26.37 68 26.96 
At December 31, 2023:    
Unrecognized cost for nonvested awards ($ in millions)33  —  
Weighted-average future recognition period (in years)1.55 0.37 
  PSUs Weighted Average Grant Date Fair Value ($) RSUs Weighted Average Grant Date Fair Value ($)
Nonvested at January 1, 2017 4,321,197
 15.04
 117,551
 19.14
Granted 1,723,730
 17.74
 117,745
 21.12
Vested (1,329,031) 10.65
 (129,073) 19.41
Forfeited (632,397) 16.55
 —
 —
Nonvested at December 31, 2017 4,083,499
 16.35
 106,223
 21.00
         
At December 31, 2017:  
  
  
  
Unrecognized cost for nonvested awards ($ thousands) 375
  
 878
  
Weighted average future recognition period (in years) 0.29
  
 0.39
  
(1) Unless otherwise noted, the number of PSUs granted are based on the target number of shares. Based on specified targets, actual performance may result in additional shares vesting, up to a maximum 145% payout achievement.
(2) Includes 517 thousand PSUs for vestings above the target thresholds. These PSUs were granted in prior years and either vested in 2023 or will vest in 2024 upon achievement of normal service requirements.

The total vest-date fair value of PSUs vested was $28.8 million, $8.4$36 million and $13.4$3 million in 2017, 20162023 and 2015, respectively.2021. No PSUs vested in 2022. The total vest-date fair value of RSUs vested was $2.8$2 million, $15.9$23 million, and $8.4$33 million for 2017, 20162023, 2022, and 20152021, respectively.
 
Fair Value of Stock Awards Granted
 
The CompanyWe estimated the fair value of PSUs at the date of grant using a Monte Carlo simulation valuation model, as the award includesawards include a market condition. The market condition is based on the Company’s TSR relative to the Russell Midcap Market Index.
 
During 2017, 20162023, 2022, and 2015, the Company2021, we estimated the fair value of RSUs at the date of grant based on the Company’sour stock price adjusted for the exclusion of dividend equivalents.price. Details of the grants are as follows: 
(Shares in thousands)202320222021
PSUs granted during the year1,408 1,715 3,740 
Weighted-average grant date fair value ($)28.39 25.37 26.10 
RSUs granted during the year68 95 80 
Weighted-average grant date fair value ($)26.96 20.46 22.29 

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  2017 2016 2015
PSUs granted during the year 1,723,730
 1,788,050
 2,204,963
Weighted average grant date fair value ($) 17.74
 21.08
 7.58
       
RSUs granted during the year 117,745
 117,551
 1,538,583
Weighted average grant date fair value ($) 21.12
 19.14
 19.52

Modifications
2017

During the second quarterTable of 2017, the Company modified the measurement of a performance condition for the PSUs granted in 2016. The modification affected 974 employees but did not result in any incremental compensation cost.Contents

2015
During the first quarter of 2015, the Company modified the expiration date of outstanding stock options granted in July 2009 from April 8, 2015 to June 30, 2015. The modification affected 58 employees but did not result in any incremental compensation cost.
During the fourth quarter of 2015, the Company modified the performance conditions of outstanding stock options and PSUs granted in July 2013 and 2014, as the original vesting conditions were not expected to be satisfied. The modification affected 223 employees and resulted in $14.6 million of incremental compensation cost.

Stock-Based Compensation Expense
 
Total compensation cost for the Company’sour stock-based compensation plans is recorded based on the employees’ respective functions as detailed below. 
For the year ended December 31,
($ in millions)($ in millions)202320222021
Cost of services
 For the year ended December 31,
($ thousands) 2017 2016 2015
Cost of services 26
 1,302
 602
Cost of product sales (8) 330
 675
Selling, general and administrative
Selling, general and administrative
Selling, general and administrative 4,628
 22,304
 15,700
Research and development 58
 2,410
 4,223
 4,704
 26,346
 21,200
Transaction (income) expense, net —
 —
 14,867
Stock-based compensation expense before income taxes 4,704
 26,346
 36,067
Income tax benefit 975
 7,846
 15,349
Total stock-based compensation, net of tax 3,729
 18,500
 20,718
 
Compensation cost recorded in transaction (income) expense, net, relates to the acceleration of unvested RSUs upon termination of employment following the acquisition of IGT.PlayDigital Synthetic Equity Award Program



22.Other (Expense) Income, Net

The components of other (expense) income, net are as follows: 
  For the year ended December 31,
($ thousands) 2017 2016 2015
Tender premium (37,793) —
 —
Unamortized debt premium 12,394
 —
 —
Swap 705
 —
 —
Fees (1,039) —
 —
7.500% Senior Secured Notes due 2019 (25,733) —
 —
       
Unamortized debt issuance costs (7,307) —
 —
Revolving Credit Facilities due 2021 (7,307) —
 —
       
Third-party fees and costs (2,380) —
 —
Term Loan Facility due 2023 (2,380) —
 —
       
Gain (loss) on interest rate swaps 3,827
 (5,220) —
6.250% Senior Secured Notes due 2022 3,827
 (5,220) —
       
Tender premium —
 —
 (73,376)
Unamortized debt issuance cost —
 —
 (4,295)
Fees —
 —
 (2,040)
Capital Securities —
 —
 (79,711)
       
Unamortized debt issuance cost —
 —
 (34,526)
Fees —
 —
 (3,640)
Bridge Facility —
 —
 (38,166)
       
       
Total debt related (31,593) (5,220) (117,877)
       
Gain on sale of available-for-sale investment —
 20,365
 —
Other (1,800) 3,220
 (4,418)
  (33,393) 18,365
 (122,295)

As discussed in Note 13, Debt,In 2021, the Company completed several debt transactionsestablished a synthetic equity award program (the “PlayDigital Equity Award Program”) designed to align the incentives of certain employees of the Company’s PlayDigital segment with the growth in 2017, including the purchasevaluation of such business. The amount of compensation paid to an employee will depend on the valuation of the PlayDigital segment on each applicable vesting date and requires the employee’s continued service through each vesting date.

Awards under the PlayDigital Equity Award Program vest in three tranches, with certain specified percentages (the “Tranche Percentages”) of the award scheduled to vest three, four, and five years after the grant date. The first vesting date is subject to acceleration in the event of a portionseparate public listing of the 7.500% Senior Secured Notes due 2019PlayDigital business, while the remaining two vesting dates shall not be affected.

PlayDigital synthetic equity awards provide that resultedon each applicable vesting date, the employee shall be entitled to an amount (payable in a $25.7 million loss on early extinguishmentcombination of debt.

In 2016,equity and cash) equal to a certain percentage (the “Synthetic SAR Percentage”) of the Company sold an available-for-sale investmentappreciation, if any, in the Italy segment for approximately $23.9 million and recognized a gain on sale of $20.4 million.

In 2015, in anticipationvaluation of the acquisitionPlayDigital business at each vesting date over the contractually agreed initial valuation. Additionally, the employee shall be entitled to an amount (payable in a combination of IGT,equity and cash) equal to a certain percentage (the “Synthetic RSU Percentage”) of the Company completed several debt transactions that resulted in $117.9valuation of the PlayDigital business as of each vesting date.

At December 31, 2023, $2 million of expense.estimated unrecognized compensation expense attributable to PlayDigital synthetic equity awards will be recognized as compensation expense over a weighted average period of 2.5 years.



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23.Earnings Per Share
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22.    Earnings Per Share
 
Basic (loss) earnings per share is computed on the basis of the weighted-average number of common stock outstanding during the period. Diluted (loss) earnings per share is computed on the basis of the basic weighted-average shares plus the effect of potentially dilutive securities outstanding during the period using the treasury stock method. Potentially dilutive securities include outstanding stock options and unvested PSUs and RSUs.

The following table presents the computation of basic and diluted income (loss) earnings per share:share of common stock: 
 For the year ended December 31,
($ and shares in millions, except per share amounts)202320222021
Numerator:   
Net income from continuing operations attributable to IGT PLC156 275 65 
Net income from discontinued operations attributable to IGT PLC— — 417 
Net income attributable to IGT PLC156 275 482 
Denominator:   
Weighted-average shares - basic200 202 205 
Incremental shares under stock based compensation plans3 2 2 
Weighted-average shares - diluted203 203 207 
Net income from continuing operations attributable to IGT PLC per common share - basic0.78 1.36 0.32 
Net income from continuing operations attributable to IGT PLC per common share - diluted0.77 1.35 0.31 
Net income from discontinued operations attributable to IGT PLC per common share - basic— — 2.03 
Net income from discontinued operations attributable to IGT PLC per common share - diluted— — 2.02 
Net income attributable to IGT PLC per common share - basic0.78 1.36 2.35 
Net income attributable to IGT PLC per common share - diluted0.77 1.35 2.33 
  For the year ended December 31,
($ and shares in thousands, except per share amounts) 2017 2016 2015
Numerator:  
  
  
Net (loss) income attributable to IGT PLC (1,068,576) 211,337
 (75,574)
       
Denominator:  
  
  
Weighted-average shares, basic 203,130
 201,511
 192,398
Incremental shares under stock based compensation plans —
 703
 —
Weighted-average shares, diluted 203,130
 202,214
 192,398
       
Basic (loss) earnings per share attributable to IGT PLC (5.26) 1.05
 (0.39)
Diluted (loss) earnings per share attributable to IGT PLC (5.26) 1.05
 (0.39)

Certain stock options to purchase common shares were outstanding, but were excluded from the computation of diluted earnings per share, because the exercise price of the options was greater than the average market price of the common shares for the full year, and therefore, the effect would have been antidilutive.


In addition, duringDuring years when the Company iswe are in a net loss position, certain outstanding stock options and unvested restricted stock awards were excluded from the computation of diluted earnings per share because including them would have had an antidilutive effect due to the net loss position of the Company.

For the years ended December 31, 2017 and 2015, 0.4 million and 2.6 million stock options and unvested restricted stock awards, respectively, wereare excluded from the computation of diluted earnings per share because including them would have had an antidilutive effect.


For the years ended December 31, 2023 and December 31, 2022, there were nominal stock options and unvested restricted stock awards shares excluded from the computation of diluted earnings per share because including them would have had an antidilutive effect. There were no shares that would have had an antidilutive effect for the year ended December 31, 2021.

23.Variable Interest Entities

We hold ownership interests in and consolidate the following variable interest entities (“VIEs”):
Name of subsidiary% Ownership held by the Company
24.Lottoitalia S.r.l. (“Lottoitalia”)Related Party Transactions61.50 %
Lotterie Nazionali S.r.l. (“LN”)64.00 %
Northstar New Jersey Lottery Group, LLC (“Northstar NJ”) (1)
76.64 %
Rhode Island VLT Company LLC (“RI VLT”)60.00 %

(1) Northstar New Jersey Holding Company LLC, of which we are a 71.12% shareholder, holds the 76.64% ownership in Northstar NJ.

Lottoitalia holds a license to operate the Lotto game in Italy through November 2025. LN holds a license to operate the Scratch & Win instant lottery game in Italy through September 2028. Northstar NJ manages a wide range of the lottery’s day-to-day operations in the State of New Jersey, as well as provides marketing and sales services under a license valid through June 2029. RI VLT manages VLT operations and holds the exclusive technology provider license in the State of Rhode Island through June 2043.

We are the principal operating partner fulfilling the requirements under the licenses held by the VIEs. As such, we have the power to direct the activities that significantly affect the VIEs’ economic performance, along with the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIEs. As a result, we concluded we are the primary beneficiary of the VIEs and they have been consolidated. Accordingly, the balance sheet and operating activity of the VIEs are
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included in our Consolidated Financial Statements and we adjust the net income in our Consolidated Statements of Operations to exclude the non-controlling interests’ proportionate share of results. We present the proportionate share of non-controlling interests as equity in the Consolidated Balance Sheets.

The Company engagescarrying amounts and classification of these VIEs’ assets and liabilities in our Consolidated Balance Sheets at December 31, 2023 and 2022 are as follows:
December 31,
($ in millions)20232022
Current assets1,220 941 
Non-current assets800 936 
Total assets2,020 1,877 
Total liabilities732 521 
The balances presented above are net of intercompany balances and transactions that are eliminated in our Consolidated Financial Statements.
Additionally, IGT holds a 50.00% ownership interest in a consortium, Mineria da Sorte Loteria SPE LTDA (“Brazil Lottery”), formed in June 2023 which holds an exclusive 20-year license to operate instants and passive lottery in the State of Minas Gerais, Brazil. We determined that the consortium is a VIE, but we are not the primary beneficiary of the VIE. Therefore, as of December 31, 2023 the joint venture was unconsolidated and accounted for under the equity method.

24.Segment Information

We report our financial performance based on three business segments: Global Lottery, Global Gaming, and PlayDigital, and analyze revenue by segment as well as operating income as the measure of segment profitability.

Through our three business segments, we operate and provide an integrated portfolio of innovative gaming technology products and services including online and instant lottery systems, iLottery, instant ticket printing, lottery management services, gaming systems, electronic gaming machines, iGaming, and sports betting.

The Global Lottery segment has full responsibility for the worldwide traditional lottery and iLottery business, including sales, operations, product development, technology, and support. The Global Gaming segment has full responsibility for the worldwide land-based gaming business, including sales, product management, studios, global manufacturing, operations, and technology. The PlayDigital segment has full responsibility for the worldwide iGaming and sports betting business, including sales, operations, studios, technology, and support.

Our three business segments are supported by central corporate support functions, including finance, people and transformation, legal, marketing and communications, corporate public affairs, and strategy and corporate development. Certain support costs that are identifiable and that benefit our business segments are allocated to them. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. Corporate support function expenses that are not allocated to the business segments, which are principally composed of selling, general and administrative expenses, are reported as Corporate and Other expenses, along with goodwill impairment and the depreciation and amortization of acquired tangible and intangible assets in connection with acquired companies. Segment assets are not reported to, or used by, the chief operating decision maker to allocate resources to, or assess performance of, the segments and therefore, total segment assets have not been disclosed.

Global Lottery

Our Global Lottery segment provides lottery products and services primarily to governmental organizations through operating contracts, FMCs, LMAs, and product sales contracts.

As part of our lottery product and services, we provide instant and draw-based lottery products, point-of-sale machines, central processing systems, software, commercial services, instant ticket printing services, and other related equipment and support services.

We categorize revenue from operating contracts, FMCs, and LMAs as “Operating and facilities management contracts” and revenue from commercial services, software hosting, software maintenance, and other services not included within operating
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contracts, FMCs, or LMAs as service revenue from “Systems, software, and other”. Revenue included within “Operating and facilities management contracts” include all services required by the contract, including iLottery and instant ticket printing.

We categorize sales or sales-type leases of lottery terminals, lottery systems, fixed-fee software licenses, and instant tickets not part of “Operating and facilities management contracts” as product sales from “Lottery products”.

Global Gaming

Our Global Gaming segment provides gaming products and services including software and game content, casino gaming management systems, video lottery terminals (“VLTs”), VLT central systems, and other related equipment and support services to commercial and tribal casino operators.

We categorize revenue from WAP services, and operating leases for VLTs and other gaming machines as service revenue from “Gaming terminal services”. We categorize sales or usage-based royalties promised in exchange for software intellectual property licenses, and systems as service revenue from “Systems, software, and other”.

Revenue from the sale or sales-type lease of gaming machines, systems, component parts, and other miscellaneous equipment and services are categorized as product sales from “Gaming terminals” and revenue from systems, fixed-fee software licenses, casino gaming management systems, game content, and spare parts as product sales from “Other”.

PlayDigital

Our PlayDigital segment provides iGaming systems and digital platforms offering customers a remote game server solution, which is a fast gateway to extensive casino content, and digital gaming services that enhance player experiences and create marketing opportunities around either the Company’s games or third-party games via our aggregation capabilities. The segment also provides sports betting technology and services to commercial and tribal operators and lotteries in regulated markets, primarily in the U.S. We categorize revenue from iGaming and sports betting as service revenue from “PlayDigital services”.

Segment information is as follows:
For the year ended December 31, 2023
($ in millions)Global LotteryGlobal GamingPlayDigitalBusiness Segments TotalCorporate and OtherTotal IGT PLC
Service revenue2,359 762 227 3,347 — 3,347 
Product sales171 791 1 963 — 963 
Total revenue2,530 1,552 228 4,310 — 4,310 
Operating income (loss)913 313 65 1,291 (290)1,001 
Depreciation and amortization192 163 12 367 156 523 
Expenditures for long-lived assets(124)(188)(4)(317)(8)(324)
(1) Depreciation and amortization excludes amortization of upfront license fees of $200 million.
For the year ended December 31, 2022
($ in millions)Global LotteryGlobal GamingPlayDigitalBusiness Segments TotalCorporate and OtherTotal IGT PLC
Service revenue2,436 714 209 3,359 — 3,359 
Product sales157 709 1 866 — 866 
Total revenue2,593 1,423 209 4,225 — 4,225 
Operating income (loss)909 242 50 1,201 (279)922 
Depreciation and amortization196 119 17 333 160 492 
Expenditures for long-lived assets(141)(140)(6)(287)(6)(293)
(1) Depreciation and amortization excludes amortization of upfront license fees of $193 million.
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For the year ended December 31, 2021
($ in millions)Global LotteryGlobal GamingPlayDigitalBusiness Segments TotalCorporate and OtherTotal IGT PLC
Service revenue2,690 630 163 3,483 — 3,483 
Product sales123 482 1 606 — 606 
Total revenue2,812 1,112 165 4,089 — 4,089 
Operating income (loss)1,088 43 33 1,164 (262)902 
Depreciation and amortization225 126 15 366 160 526 
Expenditures for long-lived assets(123)(67)(13)(203)(6)(208)
(1) Depreciation and amortization excludes amortization of upfront license fees of $216 million.

Geographical Information
Revenue from external customers, which is based on the geographical location of our customers, is as follows: 
 For the year ended December 31,
($ in millions)202320222021
United States2,480 2,355 2,126 
Canada228 199 120 
Italy952 1,062 1,307 
United Kingdom68 67 72 
Rest of Europe273 254 217 
All other309 289 247 
Total4,310 4,225 4,089 

Revenue from one customer in the Global Lottery segment represented approximately 20%, 18%, and 23% of consolidated revenue in 2023, 2022, and 2021, respectively.

Long-lived assets, which are comprised of Systems & Equipment and PPE, are based on the geographical location of the assets as follows: 
 December 31,
($ in millions)20232022
United States793 775 
Canada21 15 
Italy70 79 
United Kingdom2 6 
Rest of Europe96 92 
All other65 48 
Total1,047 1,016 

25.Related Party Transactions

We engage in business transactions with certain related parties which include (i) De Agostini S.p.A. (“De Agostini”) or entities directly or indirectly controlled by De Agostini, (ii) other entities and individuals capable of exercising control, joint control, or significant influence over the Company, (ii) De Agostini or entities directly or indirectly controlled by De Agostinius, and (iii) our unconsolidated subsidiaries or joint ventures of the Company.ventures. Members of the Company’s Board, of Directors, executives with authority for planning, directing, and controlling the activities of the Company and such Directors'Directors’ and executives'executives’ close family members are also considered related parties. The CompanyWe may make investments in such entities, enter into transactions with such entities, or both.


InvestmentsDe Agostini Group

De Agostini has a controlling interest in IGT. As of December 31, 2023, De Agostini had an economic interest of approximately 42.6% (excluding treasury shares) and, due to its election to exercise the special voting shares associated with its
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ordinary shares pursuant to the Loyalty Plan, a voting interest of approximately 59.7% of the total voting rights (excluding treasury shares).

Amounts receivable from De Agostini and subsidiaries of De Agostini (collectively, the “De Agostini Group”) are non-interest bearing. Transactions with the De Agostini Group include payments for support services provided and office space rented pursuant to a lease entered into prior to the formation of the Company. In addition, certain of our Italian subsidiaries had a corporate income tax unit agreement, and in some cases, a Group VAT agreement, with De Agostini, both of which terminated in 2022, pursuant to which De Agostini consolidated certain Italian subsidiaries of De Agostini for the collection and payment of taxes to the Italian tax authority.

Related Partiesparty amounts due to or from the De Agostini Group are as follows:

 December 31,
($ in millions)20232022
Trade receivables— 2 
Tax-related receivables2 — 
Trade payables2 1 
Tax-related payables— 3 

PlayDigital Synthetic Equity Award Program

On March 9, 2022, Enrico Drago, Chief Executive Officer, PlayDigital, an immediate family member of Marco Drago, a member of the Parent’s board of directors, was granted a synthetic equity award pursuant to the PlayDigital Equity Award Program with Tranche Percentages of 35%, 25%, and 40%, a Synthetic SAR Percentage of 1.275%, and a Synthetic RSU Percentage of 0.225%. At December 31, 2023, $1 million of estimated unrecognized compensation expense attributable to the synthetic equity award granted to Mr. Drago will be recognized as compensation expense over a weighted average period of 2.6 years.

Unconsolidated Subsidiaries, Partnerships and Joint Ventures

From time to time, the Company makeswe make strategic investments in publicly traded and privately held companies that develop software, hardware, and other technologies or provide services supporting its technologies. The CompanyWe may also purchase from or make sales to these organizations.


Ringmaster S.r.l.


The Company hasWe have a 50% interest in Ringmaster S.r.l. (“Ringmaster”), an Italian joint venture, whichthat is accounted for using the equity method of accounting. Ringmaster S.r.l. provides software development services for the Company’sour interactive gaming business pursuant to an agreement dated December 7, 2011. The Company'sOur investment in Ringmaster S.r.l. was $0.8 million and $0.6$1 million at December 31, 20172023 and 2016, respectively.2022.



Yeonama Holdings Co. Limited and OPAP S.A.

The Company has a 30% interest in Yeonama Holdings Co. Limited (“Yeonama”), which is accounted for at cost. Yeonama is a shareholder in Emma Delta Limited, the fund that holds a 33% interest in OPAP S.A. (“OPAP”), the Greek gaming and football betting operator. Marco Sala, Chief Executive Officer of the Company and Board member, is a member of the board of directors of OPAP. The Company's investment in Yeonama was $23.1We incurred $14 million, $9 million, and $20.3$6 million atin expenses to Ringmaster for the years ended December 31, 20172023, 2022, and 2016,2021, respectively.


The Company provides sports betting and player account management systems to OPAP S.A. The Company is also a technology provider of VLT central systems to OPAP S.A.

Connect Ventures One LP and Connect Ventures Two LP


The Company has heldWe hold investments in two venture capital funds, Connect Ventures One LP and Connect Ventures Two LP (the “Connect Ventures”) since 2011 and 2015, respectively. The, that are accounted for as equity method investments. De Agostini also holds investments in the Connect Ventures, are venture capital funds which target ‘‘early stage’’ investment operations, with the legal statusand Nicola Drago, an immediate family member of limited partnership under English law. Each fund is consideredMarco Drago, a related party because at least one key figure in the fund’s management is related to a number of leading representatives of De Agostini S.p.A., as well as directorsmember of the Company.Parent’s board of directors, holds a 10% ownership interest in, and is a non-executive member of, Connect Ventures LLP, the fund that manages the Connect Ventures.


The Company’sOur investment in Connect Ventures One LP was $4.7$2 million and $4.2$3 million at December 31, 20172023 and 2016,2022, respectively. The Company accounts for this investment as an available-for-sale investment. The Company’sOur investment in Connect Ventures Two LP was $3.8$6 million and $1.7$5 million at December 31, 20172023 and 2016,2022, respectively. The Company accounts for its investment as an available-for-sale investment.


Transactions
26. Subsequent Events

On February 28, 2024, the Parent entered into definitive agreements with Related Parties

De Agostini Group

The Company is majority owned by De Agostini S.p.A. Amounts receivable from De Agostini S.p.A. and subsidiaries of De Agostini S.p.A.Everi Holdings Inc. (“De Agostini Group”Everi”) are non-interest bearing. Transactions with the De Agostini Group include payments for support services provided and office space rented.

In addition, certain Italian subsidiaries of the Company have a tax unit agreement with De Agostini S.p.A., pursuant to which De Agostini S.p.A. consolidates certain Italian subsidiariesthe Parent will separate its Global Gaming and PlayDigital businesses by way of De Agostini S.p.A. for the collection and payment of taxesa taxable spin-off to the Italian tax authority.Parent’s shareholders and then immediately combine such businesses with Everi, (the “Separation & Divestiture”) resulting in the “Combined Company”.


Autogrill S.p.A.
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Gianmario Tondato da Ruos, a memberUnder the terms of the board of directorsagreements, the Parent’s shareholders are expected to own at closing approximately 54%, and Everi stockholders are expected to own approximately 46% of the Parent, is Chief Executive Officer and a director of Autogrill S.p.A. (“Autogrill”), a global operator of food and beverage services for travelers. Autogrill has a contractshares in the combined company. In connection with the CompanySeparation & Divestiture, the Parent will receive approximately $2.6 billion in cash that will be funded with the proceeds of debt incurred by the Combined Company. The Parent expects to sell scratchallocate approximately $2 billion to debt repayment. After closing, Everi will change its name to International Game Technology, Inc. and winwill trade on the NYSE under the ticker IGT. The Parent will change its name and lottery ticketscontinue to trade on the NYSE under a new ticker symbol. The transaction is expected to close in Italy.late 2024 or early 2025, subject to receipt of all regulatory approvals, shareholders approvals, and other customary closing conditions.


Assicurazioni Generali S.p.A.

Assicurazioni Generali S.p.A. (“Generali”)Revenue information relative to the Global Gaming and PlayDigital segments is a related partyincluded in Note 4. - Revenue Recognition. Due to factors such as the nature of the Companytransaction and underlying approvals, the business is not considered held for sale as the Vice-Chairman of the Board also serves on Generali’s board of directors. In 2012, the Company entered into a lease agreement to lease the Company’s facility in Rome, Italy from a wholly-owned subsidiary of Generali.December 31, 2023.

Willis Towers Watson

A Board member, James McCann, is a member of the board of directors of Willis Towers Watson (previously Willis Group Holdings PLC) (“Willis Towers”), a global firm with offerings from insurance and reinsurance to retirement planning and health-care consulting. Another Board member, Sir Jeremy Hanley, was a member of the board of directors of Willis Ltd., a subsidiary of Willis Towers until February 2017. Effective November 1, 2017, Sir Jeremy Hanley retired from the Board and from his roles on the Audit Committee and the Nominating and Corporate Governance Committee. Willis Towers currently acts as a broker for the Company’s insurance needs.


Employment Arrangement

Enrico Drago, the son of Board member Marco Drago, was the CEO and a board member of the Company’s wholly owned subsidiary Lottomatica S.p.A. and a board member of Lottoitalia. On March 29, 2017, he resigned as CEO and board member of Lottomatica S.p.A. and on April 21, 2017, he resigned as a board member of Lottoitalia. Enrico Drago continues to work for the Company in a management position within the North America Gaming and Interactive business segment.

Summary of Related Party Transactions
Amounts receivable from and payable to related parties are as follows:
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  December 31,
($ thousands) 2017 2016
Trade receivables 65
 71
De Agostini Group 65
 71
     
Trade receivables 7,374
 10,970
Autogrill S.p.A. 7,374
 10,970
     
Trade receivables 6,888
 1,597
OPAP S.A. 6,888
 1,597
     
Trade receivables 176
 —
Ringmaster S.r.l. 176
 —
     
Total related party receivables 14,503
 12,638
     
Tax related payables 19,673
 72,916
Trade payables 10,974
 27,578
De Agostini Group 30,647
 100,494
     
Trade payables 915
 365
Autogrill S.p.A. 915
 365
     
Trade payables 6,404
 2,454
Ringmaster S.r.l. 6,404
 2,454
     
Trade payables 340
 —
OPAP S.A. 340
 —
     
Total related party payables 38,306
 103,313


The following table sets forth transactions with related parties:  
  For the year ended December 31,
($ thousands) 2017 2016 2015
Service revenue and product sales  
  
  
OPAP S.A. 37,512
 4,437
 4,036
Ringmaster S.r.l. 136
 156
 239
Autogrill S.p.A. 55
 59
 6,060
De Agostini Group 20
 19
 21
  37,723
 4,671
 10,356
       
Operating costs  
  
  
Ringmaster S.r.l. 10,940
 9,535
 12,651
Assicurazioni Generali S.p.A. 3,765
 3,102
 3,003
Autogrill S.p.A. 2,391
 678
 —
Willis Towers Watson 550
 550
 5,000
OPAP S.A. 11
 87
 —
De Agostini Group 120
 57
 569
  17,777
 14,009
 21,223


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