Equity Investments

12 Months Ended

Dec. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

We account for our equity investments where we own a non-controlling interest, but exercise significant influence, under the equity method of accounting. Under the equity method of accounting, our original cost of the investment is adjusted for our share of equity in the earnings of the equity investee and reduced by dividends and distributions of capital received.

We evaluate our investments in unconsolidated affiliates, for impairment whenever events or changes in circumstances indicate that the carrying value of the investment may have experienced an “other-than-temporary” decline in value. If such conditions exist, we compare the estimated fair value of the investment to its carrying value to determine if an impairment is indicated and determine whether the impairment is “other-than-temporary” based on an assessment of all relevant factors, including consideration of our intent and ability to retain our investment until the recovery of the unrealized loss. We estimate fair value using a discounted cash flow analysis based on estimated future results of, or cash distributions from, the investee. Impairment charges, if any, are recorded in earnings (loss) from equity investment.

At December 31, 2019, we had investments in a number of entities (principally in our Lottery business segment) which are accounted for under the equity method of accounting because we do not have a controlling financial interest but we have the ability to exercise significant influence. For these investments, equity method income (loss) is recorded in “Earnings (loss) from equity investments”, with our investment recorded in “Equity investments.” See the tables below for details of our equity investments:



Equity Investment	Purpose	Concession and/or Supplier Agreement Term	Ownership Interest	Segment
LNS⁽¹⁾	Exclusive operator of Italian instant game lottery	Initial term of nine years beginning October 2010, which was subsequently extended for up to nine years (September 2028)	20%	Lottery
Northstar NJ⁽²⁾	Provision of marketing and sales services to New Jersey Lottery	October 1, 2013 through 2029	18%	Lottery
Northstar SupplyCo New Jersey LLC (NJ SupplyCo)⁽³⁾	Separate agreement under which we provide instant games to Northstar NJ	October 1, 2013 through 2029	30%	Lottery
(1)Other members of consortium are Lottomatica Holdings, S.r.l. and Arianna 2001. LNS succeeded Consorzio Lotterie Nazionali, a consortium comprised of essentially the same group that owns LNS, as holder of the concession as the exclusive operator of the Italian Gratta e Vinci instant game lottery. (2) Other members are IGT Global Solutions Corporation and a subsidiary of the administrator of the Ontario Municipal Employees Retirement System, this agreement provides us substantive participating rights. (3) Other members are Gtech Corporation (now known as IGT) and OSI LTT NJ Holdings Inc., a wholly owned subsidiary of OMERS Administration Corporation.



	Equity investment Balance as of December 31,				Equity earnings (loss) recognized for the Year Ended December 31,						Cash distributions and dividends received for the Year Ended December 31,
Equity Investment	2019		2018		2019		2018		2017		2019		2018		2017
LNS	$	201	$	224	$	16	$	17	$	14	$	33	$	38	$	40
Northstar NJ and NJ Supply Co	21		25		—		3		1		5		—		4
GLB and CSG	26		23		3		1		—		—		11		5
Other	25		26		5		4		12		11		14		18
Total under equity method	$	273	$	298	$	24	$	25	$	27	$	49	$	63	$	67



	Revenue recognized from sales to investee for the Year Ended December 31,
Equity Investment	2019		2018		2017
LNS	$	46	$	40	$	45
Northstar NJ and NJ Supply Co	24		23		20
Other	6		7		30
Total	$	76	$	70	$	95

LNS

On December 4, 2017, we announced that LNS had accepted a contract extension of up to nine years for the Italian Scratch and Win concession. As a part of the contract extension, LNS was required to pay an upfront fee of €800 million in three installments. The first installment of €50 million was paid as of December 31, 2017; payments of the second installment of €300 million and third installment of €450 million were made in April 2018 and October 2018, respectively. Our pro-rata concession funding payments to LNS were €10 million ($12 million), €60 million ($74 million) and €90 million ($104 million), respectively, and were treated as contributions to our equity method investment as contributions were made.

As of December 31, 2019 we had accounts receivable of $12 million from LNS.

Northstar New Jersey

Northstar New Jersey is entitled to receive annual incentive compensation payments from the State of New Jersey to the extent the lottery's net income for the applicable year exceeds specified target levels, subject to a cap of 3% of the applicable year’s net income. Northstar New Jersey is responsible for payments to the State of New Jersey to the extent certain net income targets are not achieved by the New Jersey Lottery, subject to a cap of 2% of the applicable year’s net income.