DISCUSSION AND ANALYSIS OF SCIPLAY CORP’S MANAGEMENT OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Form 10-K)

The following discussion is intended to enhance the reader's understanding of
our operations and current business environment and should be read in
conjunction with the description of our business (see Part I, Item 1 of this
Annual Report on Form 10-K) and our Consolidated Financial Statements and Notes
(see Part IV, Item 15 of this Annual Report on Form 10-K).

This "Management's Discussion and Analysis of Financial Condition and Results of
Operations" contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and should be read in
conjunction with the disclosures and information contained and referenced under
"Forward-Looking Statements" and "Risk Factors" included in this Annual Report
on Form 10-K.
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BUSINESS OVERVIEW

We are a leading developer and publisher of digital games on mobile and web
platforms. We operate in the social gaming market, which is characterized by
gameplay online, on mobile phones or on tablets that are social and competitive,
and self-directed in pace and session length. We generate substantially all of
our revenue from in-app purchases in the form of coins, chips and cards, which
players can use to play slot games, table games or bingo games. Players who
install our games receive free coins, chips or cards upon the initial launch of
the game and additional free coins, chips or cards at specific time intervals.
Players may exhaust the coins, chips or cards that they receive for free and may
choose to purchase additional coins, chips or cards in order to extend their
time of game play. Once obtained, coins, chips and cards (either free or
purchased) cannot be redeemed for cash nor exchanged for anything other than
game play within our apps.

We currently offer a variety of social casino games, including Jackpot Party®
Casino, Gold Fish® Casino, Quick Hit® Slots, 88 Fortunes® Slots, MONOPOLY®
Slots, and Hot Shot Casino®. We continue to pursue our strategy of expanding
into the casual games market. Current casual game titles include Bingo
Showdown®, Solitaire Pets™ Adventure, and Backgammon Live. We currently plan to
launch an additional casual game in 2022. Our social casino games typically
include slots-style game play and occasionally include table games-style game
play, while our casual games blend solitaire-style or bingo game play with
adventure game features. All of our games are offered and played across multiple
platforms, including Apple, Google, Facebook, Amazon, and Microsoft. In addition
to our internally created game content, our content library includes
recognizable, game content from Scientific Games. This content allows players
who like playing land-based game content to enjoy some of those same titles in
our free-to-play games. We have access to Scientific Games' library of more than
1,500 iconic casino titles, including titles and content from third-party
licensed brands such as MONOPOLYâ„¢, THE FLINTSTONESâ„¢, JAMES BONDâ„¢, and PLAYBOYâ„¢.
We believe our access to this content, coupled with our years of experience
developing in-house content, uniquely positions us to create compelling social
games.

As described in Note 12, on March 1, 2022, we acquired 80% of all issued and
outstanding share capital of privately held Alictus. Alictus has developed and
published a number of games that have achieved #1 free game status in the iOS
U.S. App Store, including Candy Challenge 3Dâ„¢, Rob Master 3Dâ„¢, Deep Clean Inc.â„¢,
Oh God!â„¢, Money Buster!â„¢, and Collect Cubesâ„¢. The Alictus acquisition allows us
to further scale in the casual market while diversifying our revenue streams.

Recent trends and updates

In March 2020, the World Health Organization declared the rapidly spreading
COVID-19 outbreak a pandemic. In response to the COVID-19 pandemic, governments
across the world are implementing measures to prevent its spread, including the
temporary closure of all non-essential businesses and travel restrictions. While
many of our current and potential players may have had significantly more free
time to play our games during the earlier stages of the pandemic, they may have
also experienced sustained consumer unease and lower discretionary income.
Although the increased player engagement we experienced during the first half of
2020 as a result of the stay-at-home measures across the U.S. receded, we are
still seeing higher player engagement as compared to the pre-COVID-19 time
period. We are not able to predict and quantify the ultimate impact of further
COVID-19 developments on our results of operations in future periods.

Throughout 2021, we deployed significant updates across a number of our
portfolio games, and we expect to deploy further updates to games in future
years. While we have continued testing in certain international markets, we have
not yet achieved the anticipated international market share growth. We plan to
continue to explore opportunities and increase our investments in the expansion
of international markets throughout 2022 and in future years.

In July of 2021, we acquired privately held Koukoi, a Finland-based developer
and operator of casual mobile games which allows us to expand our casual games
portfolio. See Note 1.

On July 15, 2021, Scientific Games submitted a proposal to our board of
directors to acquire the approximately 19% remaining equity interest in SciPlay
not already owned by them. On December 22, 2021, Scientific Games announced that
it had withdrawn its offer and that it will retain its 81% economic interest and
98% voting interest in the Company.

Despite a challenging 2020 comparable that heavily benefited from global
stay-at-home measures, 2021 was another record year for total revenue. Our year
over year total revenue growth of 4% was below the overall industry growth. This
result is primarily attributable to the previously disclosed event isolated in
Jackpot Party® Casino during the third quarter and
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a delayed release of the third version of Quick Hit® Slots. Our fourth quarter
compared to the third quarter of 2021 total revenue growth of 5% is above
overall industry growth, showing a strong rebound from the above noted factors
impacting Jackpot Party® Casino and Quick Hit® Slots. We believe that there is
an opportunity for continued improvement of operating results in 2022 and
beyond, as we continue to execute on our strategic game updates, enhanced
analytics, international expansion, and an upcoming new game release.

KEY PERFORMANCE INDICATORS AND NON-GAAP MEASUREMENTS

We manage our business by tracking several key performance indicators, each of
which is tracked by our internal analytics systems and more fully described
below and referred to in our discussion of operating results. Our key
performance indicators are impacted by several factors that could cause them to
fluctuate on a quarterly basis, such as platform providers' policies,
restrictions, seasonality, user connectivity and addition of new content to
certain portfolios of games. Future growth in players and engagement will depend
on our ability to retain current players, attract new players, launch new games
and features and expand into new markets and distribution platforms.

For more information on our strategy and key initiatives so far, see also “Strategy” in Part I, Item 1.

Mobile penetration

Mobile penetration is defined as the percentage of total revenue generated from
mobile platforms. We believe this indicator provides useful information in
understanding revenue generated from mobile platforms such as smartphones and
tablets.

Average monthly active users (MAU)

MAU is defined as the number of individual users who played a game during a
particular month. An individual who plays multiple games or from multiple
devices may, in certain circumstances, be counted more than once. However, we
use third-party data to limit the occurrence of multiple counting. Average MAU
for a period is the average of MAUs for each month for the period presented. We
believe this indicator provides useful information in understanding the number
of users reached across our portfolio of games on a monthly basis.

Average daily active users (DAU)

DAU is defined as the number of individual users who played a game on a
particular day. An individual who plays multiple games or from multiple devices
may, in certain circumstances, be counted more than once. However, we use
third-party data to limit the occurrence of multiple counting. Average DAU for a
period is the average of the monthly average DAUs for the period presented. We
believe this indicator provides useful information in understanding the number
of users reached across our portfolio of games on a daily basis.

Average daily earnings per active user (ARPDAU)

ARPDAU is calculated by dividing revenue for the period by the average DAU for
the period and then dividing by the number of days in the period. We believe
this indicator provides useful information reflecting game monetization.

Average Monthly Payment Users (MPU)

MPU is defined as the number of individual users who made an in-game purchase
during a particular month. An individual who made purchases in multiple games or
from multiple devices may, in certain circumstances, be counted more than once.
However, we use third-party data to limit the occurrence of multiple counting.
Average MPU for a period is the average of MPUs for each month for the period
presented. We believe this indicator provides useful information in
understanding the number of users reached across our portfolio of games making
in-game purchases on a monthly basis.

Average Monthly Income Per Paid User (AMRPPU)

AMRPPU is calculated by dividing the average monthly revenue by the average MPU for the applicable time period. We

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We believe that this indicator provides useful information that reflects the monetization of the game.

Payer conversion rate

Payer conversion rate is calculated by dividing average MPU for the period by
the average MAU for the same period. We believe this indicator provides useful
information reflecting game monetization.

Non-GAAP financial measures

Adjusted EBITDA, or AEBITDA, as used herein, is a non-GAAP financial measure
that is presented as supplemental disclosure and is reconciled to net income
attributable to SciPlay as the most directly comparable GAAP measure as set
forth in the below table. We define AEBITDA to include net income attributable
to SciPlay before: (1) net income attributable to noncontrolling interest;
(2) interest expense; (3) income tax expense; (4) depreciation and amortization;
(5) restructuring and other, which includes charges or expenses attributable to:
(a) employee severance; (b) management changes; (c) restructuring and
integration; (d) M&A and other, which includes: (i) M&A transaction costs;
(ii) purchase accounting adjustments (including contingent acquisition
consideration); (iii) unusual items (including legal settlements related to
major litigation); and (iv) other non-cash items; and (e) cost-savings
initiatives; (6) stock-based compensation; (7) loss (gain) on debt financing
transactions; and (8) other expense (income) including foreign currency (gains)
and losses. We also use AEBITDA margin, a non-GAAP measure, which we calculate
as AEBITDA as a percentage of revenue.

Our management uses AEBITDA and AEBITDA margin to, among other things:
(i) monitor and evaluate the performance of our business operations;
(ii) facilitate our management's internal comparisons of our historical
operating performance and (iii) analyze and evaluate financial and strategic
planning decisions regarding future operating investments and operating budgets.
In addition, our management uses AEBITDA and AEBITDA margin to facilitate
management's external comparisons of our results to the historical operating
performance of other companies that may have different capital structures and
debt levels.

Our management believes that AEBITDA and AEBITDA margin are useful as they
provide investors with information regarding our financial condition and
operating performance that is an integral part of our management's reporting and
planning processes. In particular, our management believes that AEBITDA is
helpful because this non-GAAP financial measure eliminates the effects of
restructuring, transaction, integration or other items that management believes
have less bearing on our ongoing underlying operating performance. Management
believes AEBITDA margin is useful as it provides investors with information
regarding the underlying operating performance and margin generated by our
business operations.

COMPONENTS OF OPERATING RESULTS

Income

We generate substantially all of our revenue from the sale of coins, chips and
cards, which players of our games can use to play slot games, table games and
bingo games. Revenue from the sale of coins, chips and cards is generated on
mobile and web platforms. Other revenue primarily represents advertising
revenue, which is currently an insignificant portion of our total revenue. We
expect our overall revenue to continue to grow as we continue to increase our
market share and execute our strategy. As player platform preferences change and
continue to migrate to mobile, we expect revenue generated on web platforms to
continue to decline.

Operating Expenses

Operating expenses consist primarily of cost of revenue, sales and marketing
expenses, general and administrative expenses, R&D, D&A, and restructuring and
other expenses, each more fully described below. D&A expense is excluded from
cost of revenue and other operating expenses, and is separately presented on the
consolidated statements of income.

Cost of income

Cost of revenue consists primarily of fees paid to platform providers such as
Facebook, Google, Apple, Amazon and Microsoft, which generally represent
approximately 30% of our revenue; licensing fees, which include intellectual
property
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royalties paid to both affiliated and unaffiliated third parties; hosting fees;
and other direct expenses incurred to generate revenue. We expect the aggregate
amount of cost of revenue to increase for the foreseeable future as we grow our
revenue and expand our business.

Sales and marketing

Sales and marketing expenses consist primarily of advertising costs related to
marketing and player acquisition and retention, salaries and benefits for our
sales and marketing employees and fees paid to consultants. We intend to
continue to invest in sales and marketing to grow our player base both for our
existing games and future games we may deploy. As a result, we expect the
aggregate amount of sales and marketing expenses to increase for the foreseeable
future as we grow our revenues and business and deploy new games. As deployed
games mature, we generally expect sales and marketing expenses as a percentage
of revenue attributable to such games to decrease.

General and Administrative

General and administrative expenses consist primarily of salaries, benefits, and
stock-based compensation for our executives, finance, information technology,
human resources and other administrative employees, and includes administrative
parent services (see Note 10). In addition, general and administrative expenses
include outside consulting, legal and accounting services, facilities and other
supporting overhead costs not allocated to other departments. We expect that our
aggregate amount of general and administrative expenses will increase for the
foreseeable future as we continue to grow our business.

Research & Development

Research & Development expenses consist primarily of costs associated with game
development, such as associated salaries, benefits, and other supporting
overhead costs associated with game development. Continued investment in
enhancing existing games and developing new games is important to attaining our
strategic objectives. As a result, we expect the aggregate amount of R&D
expenses to increase for the foreseeable future as we grow our business, focus
on retention of our development team and grow our facilities.

Restructuring and others

Our restructuring and other expenses include charges or expenses attributable
to: (a) employee severance; (b) management changes; (c) restructuring and
integration; (d) M&A and other, which includes (i) M&A transaction costs; (ii)
purchase accounting adjustments (including contingent acquisition
consideration); (iii) unusual items (including legal settlements related to
major litigation); and (iv) other non-cash items; and (e) cost-savings
initiatives. Restructuring and other expenses will increase or decrease based on
management actions and/or occurrence of charges described herein.

RESULTS OF OPERATIONS

Summary of results of operations

                                               Years ended December 31,                         Variance
($ in millions, except percentages)            2021                 2020                      2021 vs. 2020
Revenue                                   $     606.1           $    582.2          $     23.9                   4  %
Operating expenses                              474.4                427.2                47.2                  11  %
Operating income                                131.7                155.0               (23.3)                (15) %
Net income                                      125.0                146.0               (21.0)                (14) %
Net income attributable to SciPlay               19.3                 20.9                (1.6)                 (8) %
AEBITDA                                   $     185.9           $    188.7          $     (2.8)                 (1) %
Net income margin                                20.6   %             25.1  %             (4.5) pp                 nm
AEBITDA margin                                   30.7   %             32.4  %             (1.7) pp                 nm
pp = percentage points.
nm = not meaningful.


The following table reconciles the net profit attributable to SciPlay in AEBITDA and AEBITDA margin:

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                                                                               Years ended December 31,
($ in millions, except percentages)                                             2021                  2020
Net income attributable to SciPlay                                       $       19.3             $    20.9
Net income attributable to noncontrolling interest                              105.7                 125.1
Net income                                                                      125.0                 146.0

Restructuring and other(1)                                                       31.5                   2.0
Depreciation and amortization                                                    15.5                   9.7
Income tax expense                                                                5.7                   8.4
Stock-based compensation                                                          7.2                  22.0
Other expense, net                                                                1.0                   0.6
AEBITDA(2)                                                               $      185.9             $   188.7
Revenue                                                                  $      606.1             $   582.2
Net income margin (Net income/Revenue)                                           20.6     %            25.1  %
AEBITDA margin (AEBITDA/Revenue)(2)                                              30.7     %            32.4  %

(1) Includes $ 24.5 million legal settlement charge (see Note 11). (2) See the “Key Performance Indicators and Non-GAAP Measurements” section above for the definitions of AEBITDA and EBITDA margin presented in this table.

Revenue, key performance indicators, and other metrics

                                 Years ended December 31,                    Variance
        ($ in millions)             2021                 2020             2021 vs. 2020
        Mobile            $       537.3                $ 505.9      $        31.4         6  %

        Web and other              68.8                   76.3               (7.5)      (10) %
        Total revenue     $       606.1                $ 582.2      $        23.9         4  %


Geographic revenue information is summarized as follows:

                                               Years ended December 31,                          Variance
($ in millions)                                2021                 2020                      2021 vs. 2020
North America(1)                          $     555.5          $     533.3          $        22.2                 4  %
International                                    50.6                 48.9                    1.7                 3  %
Total revenue                             $     606.1          $     582.2          $        23.9                 4  %

(1) North America income includes income derived from WE, Canadai Mexico. For years to come December 31, 2021 in 2020, WE the income was $ 515.8 million i $ 496.0 millionrespectively.




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The following reflects our key performance metrics and other metrics:

                                                           Years ended December 31,                        Variance
(in millions, except ARPDAU, AMRPPU, and percentages)       2021                2020                    2021 vs. 2020
Mobile Penetration(1)                                           89   %            87  %             2.0   pp                  nm
Average MAU(1)                                                 6.2               7.4               (1.2)                (16.2) %
Average DAU(1)                                                 2.3               2.7               (0.4)                (14.8) %
ARPDAU(1)                                              $      0.71           $  0.60          $    0.11                  18.3  %
Average MPUs(1)                                                0.5               0.5                  -                     -  %
AMRPPU(1)                                              $     95.26           $ 92.75          $    2.51                   2.7  %
Payer Conversion Rate(1)                                       8.5   %           7.1  %             1.4   pp                  nm

(1) KPIs include only the results of players in the current period. pp = percentage points. nm = not significant.

The increase in mobile penetration rate mainly reflects a continuing trend of players migrating from the web to mobile platforms to play our games.

Average MAU and average DAU decreased due to user rotation. As a result, ARPDAU increased as a function of the lower average DAU. AMRPPU increased while the average MPU was consistent with the previous year due to the introduction of new content and features that resulted in greater interaction with paid players.

The highest payer conversion rate of all time was due to the growing popularity of our games, as we focused on live operations to improve gaming and participation.

Operating Expenses
                                           Years ended December 31,                         Variance                                     Percentage of Revenue
                                                                                                                                                                 2021 vs. 2020
($ in millions)                              2021                2020                    2021 vs. 2020                       2021                2020               Change

Operating expenses:
Cost of revenue(1)                     $       190.0          $ 185.3          $         4.7               2.5  %              31.3  %            31.8  %              (0.5) pp
Sales and marketing(1)                         135.3            130.7                    4.6               3.5  %              22.3  %            22.4  %              (0.1) pp
General and administrative(1)                   62.4             66.2                   (3.8)             (5.7) %              10.3  %            11.4  %              (1.1) pp
Research and development(1)                     39.7             33.3                    6.4              19.2  %               6.6  %             5.7  %               0.9  pp
Depreciation and amortization                   15.5              9.7                    5.8              59.8  %               2.6  %             1.7  %               0.9  pp

Restructuring and other                         31.5              2.0                   29.5                   nm                   nm                 nm
Total operating expenses               $       474.4          $ 427.2          $        47.2              11.0  %
(1) Excludes depreciation and amortization.
nm = not meaningful.
pp = percentage points.



Cost of Revenue

Revenue cost increased due to higher platform rates in line with revenue growth and $ 1.7 million increase in accommodation rates, which was partially offset by $ 4.4 million Decreased copyright by third party IP.

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Sales and marketing

Sales and marketing expenses increased due to higher user acquisition spend of
$2.6 million coupled with higher salaries and benefits of $1.7 million related
to an average increased headcount of 11%. Sales and marketing expense as a
percentage of revenue remained relatively flat.

General and Administrative

General and administrative expenses decreased primarily due to a decrease in
stock-based compensation of $14.8 million due to a lower achievement of
performance-based restricted stock plans. This decrease was partially offset by
a $3.5 million increase in salaries and benefits related to an average increased
headcount of 21% coupled with a $2.7 million increase in legal fees.

Research & Development

Research and development costs increased mainly as a result of $ 4.5 million in higher wage costs and benefits, mainly due to an increase in average wages along with $ 1.5 million at higher rates for external development services.

Depreciation and amortization

Depreciation expenses increased primarily as a result of the depreciation associated with Come2Play and the intangible assets recently acquired by Koukoi.

Restructuring and Other

Restructuring and other expense increased primarily as a result of the $24.5
million charge related to our settlement of the Washington State Matter (see
Note 11) coupled with an increase of $5.1 million in legal and professional
services fees primarily associated with the Scientific Games buyback offer and
acquisition due diligence. Additionally, Restructuring and other expense
includes a $1.5 million credit related to the remeasurement of our contingent
acquisition consideration.

Net Income

Net income primarily decreased as a result of the Washington State settlement
charge of $24.5 million coupled with higher legal and professional services
(described in Restructuring and other section above), partially offset by
continued growth in mobile revenue as average monthly revenue per paying
customer and payer conversion rates continued to increase throughout 2021 (as
described above).

The net income margin decreased by (4.5) percentage points as a result of the above factors.

Noncontrolling Interest

Net income attributable to non-controlling interests decreased due to the decrease in net income described above.

USA

AEBITDA decreased primarily due to the increase in operating costs resulting
from increases in salaries and benefits, partially offset by revenue growth (as
described above).

The AEBITDA margin decreased by (1.7) percentage points as a result of the aforementioned boosters.

For a comparison of the consolidated results for 2020 and 2019, see Part II, Item 7 of our 2020 Annual Report on Form 10-K.

RECENTLY ISSUED ACCOUNTING GUIDE

For a description of recently issued accounting statements, see Note 1.

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CRITICAL ACCOUNTING ESTIMATES

Information regarding significant accounting policies is included in the Notes
to the audited consolidated financial statements. As stated in Note 1, the
preparation of financial statements in accordance with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses, and related disclosure of contingent assets
and liabilities. Management bases its estimates on historical experience and on
various assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates. We believe that the
estimates, assumptions, and judgments involved in the following accounting
policies have the greatest potential impact on our consolidated financial
statements:

•Revenue recognition;

•Business acquisitions;

•Income taxes;

• Variable interest entities (VIE); i

• Legal contingencies.

Income recognition

Our revenue recognition policy described fully in Note 1 requires us to make
significant judgments and estimates. The guidance in ASC 606 requires that we
apply judgments or estimates to determine the performance obligations, the
standalone selling prices of our performance obligations to customers and the
timing of transfer of control of the respective performance obligations. The
evaluation of each of these criteria in light of contract specific facts and
circumstances is inherently judgmental, but certain judgments could
significantly affect the timing or amount of revenue recognized if we were to
reach a different conclusion than we have. The critical judgments we are
required to make in our assessment of contracts with customers that could
significantly affect the timing or amount of revenue recognized are:

•Satisfaction of our performance obligation - We estimate the amount of
outstanding purchased coins, chips or cards at period end based on customer
behavior, because we are unable to distinguish between the consumption of
purchased or free coins, chips or cards. Based on an analysis of the customers'
historical play behavior, the timing difference between when virtual currencies
are purchased by a customer and when those virtual currencies are consumed in
game play is relatively short. Future usage patterns may differ from historical
usage patterns, and therefore the estimated average playing periods may change
in the future, and such changes could be material.

•Principal-agent considerations - We recognize revenues on a gross basis because
we have control over the content and functionality of games before players
access our games on our platform providers platforms. We evaluated our current
agreements with our platform providers and end-user agreements and based on the
preceding, we determined that we are the principal in such arrangements. Any
future changes in these arrangements or to our games and related method of
distribution may result in a different conclusion, and such change would have a
material impact on our gross revenues.

Business acquisitions

We account for commercial acquisitions in accordance with ASC 805.

In business combinations, the acquiring entity is required to recognize all (and
only) acquired assets and liabilities assumed in the transaction and establish
the acquisition-date fair value as the measurement objective for all assets
acquired and liabilities assumed.

If the Company determines the assets acquired do not meet the definition of a
business under the acquisition method of accounting, the transaction is
accounted for as an acquisition of assets rather than a business combination. In
an asset acquisition, the acquiring entity is required to allocate the cost of
the group of assets acquired to the individual assets
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acquired or assumed liabilities based on the relative fair values ​​of identifiable net assets acquired other than unqualified assets (for example, cash) and do not give rise to goodwill.

Determining the fair value of assets acquired and liabilities assumed requires
management judgment and often involves the use of significant estimates and
assumptions with respect to the timing and amounts of future cash inflows and
outflows, discount rates, market prices and asset lives, among other items. Any
changes in the underlying assumptions can impact the estimates of fair value by
material amounts, which can in turn materially impact our results of operations.
If the subsequent actual results and updated projections of the underlying
business activity change compared with the assumptions and projections used to
develop these fair values, we could record impairment charges. In addition, we
have estimated the useful lives of certain acquired assets, and these lives are
used to calculate Depreciation and amortization expense. If our estimates of the
useful lives change, Depreciation & amortization expense could be accelerated or
slowed.

Income Taxes

We are subject to the income tax laws of the U.S. federal, state and foreign
jurisdictions in which we operate. These tax laws are complex, and the manner in
which they apply to our facts is sometimes open to interpretation. In
establishing the provision for income taxes, we must make judgments about the
application of these inherently complex tax laws. For periods prior to the IPO,
the provision for income taxes is calculated as if SciPlay completed separate
tax returns apart from its Parent ("Separate-return Method"), which requires
significant judgments. Certain legal entities that are included in these
financial statements under the Separate-return Method were included in tax
filings of affiliated entities that are not part of these financial statements.

Our income tax positions and analysis are based on currently enacted tax law.
Future changes in tax law could significantly impact the provision for income
taxes, the amount of taxes payable and the deferred tax asset and liability
balances in future periods. Deferred tax assets generally represent the excess
of tax basis in our investment and tax benefits for tax deductions available in
future tax returns. Certain estimates and assumptions are required to determine
whether it is more likely than not that all or some portion of the benefit of a
deferred tax asset will not be realized. In making this assessment, management
analyzes and estimates the impact of future taxable income, available
carry-backs and carry-forwards, reversing temporary differences and available
prudent and feasible tax planning strategies. Should a change in facts or
circumstances lead to a change in judgment about the ultimate realizability of a
deferred tax asset, we record or adjust the related valuation allowance in the
annual period that the change in facts and circumstances occurs, along with a
corresponding increase or decrease in the provision for income taxes. For
discussion of our income taxes, see Note 9.

Variable interest entities (VIE)

As described in Note 1, SciPlay's sole material asset is its member's interest
in SciPlay Parent LLC. Due to SciPlay's power to control combined with its
significant economic interest in SciPlay Parent LLC, we concluded that SciPlay
is the primary beneficiary of the VIE, and therefore it will consolidate the
financial results of SciPlay Parent LLC and its subsidiaries. Any future changes
to the economic interest and/or the SciPlay Parent LLC Agreement, among other
factors, may result in a different conclusion, and such change would have a
material impact on SciPlay financial statements, as SciPlay Parent LLC and its
subsidiaries would not be consolidated but rather accounted for under the equity
method of accounting.

Legal Contingencies

We are subject to certain legal proceedings, demands, claims and threatened
litigation that arise in the normal course of our business. We review the status
of each significant matter quarterly and assess our potential financial
exposure. If the potential loss from any claim or legal proceeding is considered
probable and the amount can be reasonably estimated, we record a liability and
an expense for the estimated loss. If we determine that a loss is reasonably
possible and the range of the loss can be reasonably estimated, then we disclose
the range of the possible loss. Significant judgment is required in the
determination of whether a potential loss is probable, reasonably possible, or
remote and in the determination of whether a potential exposure is reasonably
estimable. Our accruals are based on the best information available at the time.
As additional information becomes available, we reassess the liabilities and
disclosures related to our pending claims and litigation and may revise our
estimates. Potential legal liabilities and the revision of estimates of legal
liabilities could have a material impact on our results of operations, cash
flows, and financial position. For discussion of our legal proceedings, see Note
11, which is incorporated by reference into Item 3 of this Annual Report on Form
10-K.

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LIQUIDS, CAPITAL RESOURCES AND WORKING CAPITAL

SciPlay is a holding company, with no material assets other than its ownership
of SciPlay Parent LLC interests, no operating activities on its own and no
independent means of generating revenue or cash flow. Operations are carried out
by SciPlay Parent LLC and its subsidiaries, and we depend on distributions from
SciPlay Parent LLC to pay our taxes and expenses. SciPlay Parent LLC's ability
to make distributions to us is restricted by the terms of the Revolver, and may
be restricted by any future credit agreement we or our subsidiaries enter into,
any future debt or preferred equity securities we or our subsidiaries issue,
other contractual restrictions or applicable Nevada law.

We have funded our operations primarily through cash flows from operating
activities. Based on our current plans and market conditions, we believe that
cash flows generated from our operations and borrowing capacity under the
Revolver will be sufficient to satisfy our anticipated cash requirements for the
foreseeable future. However, we intend to continue to make significant
investments to support our business growth and may require additional funds to
respond to business challenges, including the need to develop new games and
features or enhance our existing games, improve our operating infrastructure or
acquire complementary businesses, personnel and technologies. Accordingly, we
may need to engage in equity or debt financings to secure additional funds. We
may not be able to obtain additional financing on terms favorable to us, if at
all. If we are unable to obtain adequate financing or financing on terms
satisfactory to us when we require it, our ability to continue to support our
business growth and to respond to business challenges could be significantly
impaired, and our business may be harmed.

Our total cash in hand was $ 364.4 million i $ 268.9 million in the finished years
December 31, 2021 and 2020, respectively.

Revolving credit service

We have a $150.0 million Revolver by and among SciPlay Holding, as the borrower,
SciPlay Parent LLC, as a guarantor, the subsidiary guarantors party thereto, the
lenders party thereto and Bank of America, N.A., as administrative agent and
collateral agent. The interest rate is either Adjusted LIBOR (as defined in the
Revolver) plus 2.250% (with one 0.250% leverage-based step-down to the margin
and one 0.250% leverage-based step-up to the margin) or ABR plus 1.250% (with
one 0.250% leverage-based step-down to the margin and one 0.250% leverage-based
step-up to the margin) at our option. We are required to pay to the lenders a
commitment fee of 0.500% per annum on the average daily unused portion of the
revolving commitments through maturity, which will be the five-year anniversary
of the closing date of the Revolver, which fee varies based on the total net
leverage ratio and is subject to a floor of 0.375%. As of December 31, 2021, the
commitment fee was 0.375% per annum. The Revolver provides for up to $15.0
million in letter of credit issuances, which requires customary issuance and
administration fees, and a fronting fee of 0.125%.

On May 27, 2021, SciPlay Holding, entered into Amendment No. 1 to that certain
$150.0 million Revolver, by and among SciPlay Holding, SciPlay Parent LLC, the
several banks and other financial institutions or entities from time to time
party thereto and Bank of America, N.A., as administrative agent, collateral
agent and issuing lender (such amendment, "Amendment No. 1"). Amendment No. 1
amended, among other things, certain negative covenants in the Revolver to
permit SciPlay Holding to merge or consolidate with and into its direct
subsidiary, Phantom EFX, LLC, which was renamed SciPlay Games, LLC ("SciPlay
Games") immediately following such merger. Substantially simultaneously with the
merger, SciPlay Games expressly assumed all obligations of SciPlay Holding as
the successor borrower under the Revolver.

The Revolver contains covenants that, among other things, restrict our ability
to incur additional indebtedness; incur liens; sell, transfer or dispose of
property and assets; invest; make dividends or distributions or other restricted
payments; and engage in affiliate transactions, with the exception of certain
payments under the TRA and payments in respect of certain tax distributions
under the Operating Agreement. In addition, the Revolver requires us to maintain
a maximum total net leverage ratio not to exceed 2.50:1.00 and to maintain a
minimum fixed charge coverage ratio of no less than 4.00:1.00. Such covenants
are tested quarterly at the end of each fiscal quarter. As of December 31, 2021,
there were no borrowings outstanding, and we were in compliance with the
financial covenants under the Revolver.

The Revolver is secured by a (i) first priority pledge of the equity securities
of SciPlay Holding, SciPlay Parent LLC's restricted subsidiaries and each
subsidiary guarantor party thereto and (ii) first priority security interests
in, and mortgages on, substantially all tangible and intangible personal
property and material fee-owned real property of SciPlay Parent LLC, SciPlay
Holding and each subsidiary guarantor party thereto, in each case, subject to
customary exceptions.

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As described in Note 12, on February 28, 2022, we entered into Amendment No. 2
to the Revolver, by and among SciPlay Holding, SciPlay Parent Company, LLC, the
several banks and other financial institutions or entities from time to time
party thereto and Bank of America, N.A., as administrative agent, collateral
agent and issuing lender (such amendment, "Amendment No. 2"). Amendment No. 2,
among other things, (i) amends certain interest rate provisions related to
Sterling-denominated revolving loans, (ii) increases SciPlay Games' and its
subsidiaries capacity to acquire non-loan parties and (iii) allows for the
acquisition of Alictus.

Changes in cash flows

The following table presents a summary of our cash flows for the periods
indicated:

                                                                        Years Ended December 31,
($ in millions)                                                          2021                 2020
Net cash provided by operating activities                          $       163.8          $   193.4
Net cash used in investing activities                                      (14.8)             (19.7)
Net cash used in financing activities                                      (53.6)             (16.0)

Effect of exchange rate fluctuations on cash and cash equivalents and restricted cash

                                                              0.1                0.6

Increased cash and cash equivalents and restricted cash $ 95.5 $ 158.3

Net cash provided by operating activities decreased mainly due to lower earnings.

Net cash used in investing activities decreased primarily due to a $6.9 million
decrease in acquisition activity, partially offset by a $2.0 million increase in
capital expenditures primarily related to increased internal development costs.

Net cash used in financing activities increased primarily due to a $17.6 million
increase in distributions to Parent and affiliates, a $12.8 million increase in
net redemptions of common stock under stock-based compensation plans, a $5.2
million increase in minimum guarantee license payments, and a $1.3 million
increase in payments made under the TRA.

Credit agreement and other debts

For additional information regarding our credit agreement and other debt and
interest rate risk, see "Contractual Obligations" in this Item 7 below; Part II,
Item 7A "Quantitative and Qualitative Disclosures About Market Risk"; and Note
1.

Contractual Obligations

Our contractual obligations as of December 31, 2021 principally include
obligations associated with our future minimum operating lease obligations,
license minimum guarantees, obligations under the TRA and an obligation related
to Come2Play contingent acquisition consideration as set forth in the table
below:

                                                                                 Cash Payments Due In
                                                              Less than 1                                                    More than 5
                                                Total             year             1 - 3 years           4 - 5 years            years
Operating leases                              $  8.2          $     2.5    

$ 5.7 $ – $ – Contingent acquisition consideration

             1.0                1.0                     -                     -                 -
Obligations under the TRA                       68.8                4.1                  12.7                   8.9              43.1
License royalty minimum guaranteed payments     14.9                3.7                  10.7                   0.5                 -
Total contractual obligations(1)              $ 92.9          $    11.3     

$ 29.1 $ 9.4 $ 43.1

(1) Excluded $ 24.5 million legal settlement charge (see Note 11 for details).


The commitment amounts in the table above are associated with contracts that are
enforceable and legally binding and that specify all significant terms,
including fixed or minimum services to be used, fixed, minimum or variable price
provisions and the approximate timing of the actions under the contracts. The
table does not include obligations under
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agreements that we can cancel without significant penalty. We have agreements under which we are required to pay royalties based on future events that are uncertain and therefore not included in the table above.

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