Edgar Filing: SCIENTIFIC GAMES CORP

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Amendment No. )

Filed by the Registrant [ ]
Filed by a party other than the Registrant [X]

Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12

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(Name of Registrant as Specified In Its Charter)

SCIENTIFIC GAMES
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(Name of Persons(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.

(1) Title of each class of securities to which transaction
applies:

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(1) Aggregate number of securities to which transaction applies:

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[SCIENTIFIC GAMES LOGO]

August __, 2002

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of
Scientific Games Corporation to be held at 10:00 a.m. on Tuesday, September 10,
2002, at the Metropolitan Club, 1 East 60th Street, New York, New York.

At the Annual Meeting, you will be asked to elect Directors, to approve an
amendment to the Company's Restated Certificate of Incorporation, to approve the
adoption of the Scientific Games Corporation 2002 Employee Stock Purchase Plan
and to ratify the appointment of KPMG LLP as independent accountants for the
fiscal year ending December 31, 2002.

The Board of Directors recommends that you vote FOR the election of all the
nominees as Directors, FOR the amendment to the Restated Certificate of
Incorporation, FOR approval of the adoption of the Scientific Games Corporation
2002 Employee Stock Purchase Plan and FOR ratification of the appointment of the
independent accountants.

Whether you plan to attend in person or not, it is important that your
shares be represented and voted at the Annual Meeting. Therefore, regardless of
the number of shares you own, please sign, date and mail the enclosed proxy card
in the return envelope provided. Most stockholders will also be able to vote by
telephone or over the Internet. Please refer to your proxy card to see which
options are available to you.

I look forward to seeing you at the Annual Meeting.

Sincerely,

A. Lorne Weil
Chairman of the Board

SCIENTIFIC GAMES CORPORATION
750 LEXINGTON AVENUE, 25TH FLOOR
NEW YORK, NY 10022

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NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
--------------------------------------------------

Notice is hereby given that the Annual Meeting of Stockholders of
Scientific Games Corporation (the "Company") will be held at 10:00 a.m. on
Tuesday, September 10, 2002, at the Metropolitan Club, 1 East 60th Street, New
York, New York, for the following purposes:

1. To elect ten members of the Board of Directors to serve for the
ensuing year and until their respective successors are duly elected
and qualified.

2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of shares of Common Stock that
the Company has authority to issue from 100,000,000 to 200,000,000.

3. To approve the adoption of the Scientific Games Corporation 2002
Employee Stock Purchase Plan.

4. To ratify the appointment of KPMG LLP as independent accountants for
the Company for the fiscal year ending December 31, 2002.

5. To consider and act upon any other matter that may properly come
before the meeting or any adjournment thereof. The Board of Directors
is not presently aware of any such matter.

All holders of record of the Company's Class A Common Stock and the
Company's Series A Convertible Preferred Stock at the close of business on
August 1, 2002 are entitled to receive notice of and to vote at the Annual
Meeting and any adjournment thereof. Only holders of the Company's Series A
Convertible Preferred Stock are entitled to elect four of the ten members of the
Board. A list of the holders will be open to the examination of stockholders for
ten days prior to the date of the meeting, between the hours of 9:00 a.m. and
5:00 p.m., at the office of the Secretary of the Company at 750 Lexington
Avenue, New York, New York, and will be available for inspection at the meeting
itself.

Whether you plan to be personally present at the Annual Meeting or not,
please complete, date and sign the enclosed proxy and return it promptly in the
enclosed envelope or, if available to you, submit your proxy by telephone or
over the Internet. If you later desire to revoke your proxy, you may do so at
any time before it is exercised, in the manner described in the enclosed Proxy
Statement.

By Order of the Board of Directors

Martin E. Schloss
Vice President, General Counsel and Secretary

Dated: August __, 2002

SCIENTIFIC GAMES CORPORATION
750 LEXINGTON AVENUE, 25TH FLOOR
NEW YORK, NEW YORK 10022

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PROXY STATEMENT
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GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "Board") of Scientific Games Corporation, a
Delaware corporation (the "Company"), of proxies to be voted at the Annual
Meeting of Stockholders to be held on Tuesday, September 10, 2002, at 10:00 a.m.
at the Metropolitan Club, 1 East 60th Street, New York, New York, and any
adjournment thereof (the "Annual Meeting"), for the purposes set forth in the
Notice of Annual Meeting of Stockholders. It is expected that this Proxy
Statement and enclosed form of proxy will be mailed to stockholders commencing
on or about August __, 2002. The annual report of the Company for the fiscal
year ended December 31, 2001, including the text of the Company's Annual Report
on Form 10-K, as amended, is also being mailed to the Company's stockholders
with this Proxy Statement.

STOCKHOLDERS ENTITLED TO VOTE

All holders of the Company's Class A Common Stock, $.01 par value per
share (the "Common Stock"), and the Company's Series A Convertible Preferred
Stock, $1.00 par value per share (the "Preferred Stock"), at the close of
business on August 1, 2002, the record date for the Annual Meeting, will be
entitled to vote at the Annual Meeting. At the close of business on August 1,
2002, a total of 57,450,425 shares of Common Stock and a total of 1,256,115
shares of Preferred Stock were outstanding. All stockholders, voting as a single
class, will be able to vote for the election of six directors, the amendment to
the Restated Certificate of Incorporation, the adoption of the 2002 Employee
Stock Purchase Plan and the ratification of the appointment of the independent
accountants. With respect to these matters, each outstanding share of Common
Stock is entitled to one vote and each outstanding share of Preferred Stock,
participating on an `as-converted' basis, is entitled to 100/5.10 or
approximately 20 votes. In addition, the holders of the Preferred Stock, voting
as a separate class, are entitled to elect four directors (the "Preferred
Directors"). With respect to the election of the Preferred Directors, each
outstanding share of Preferred Stock is entitled to one vote.

VOTING PROCEDURES

If you are the record holder of your shares, you can vote in person at
the Annual Meeting or by proxy in one of the following three ways:

1. Mail: To vote by mail, sign, date and return your proxy card in
the enclosed postage-paid envelope. If you vote by mail and
return a signed proxy card but do not give voting instructions,
the shares represented by that proxy will be voted FOR the
election of the nominees for director named in this Proxy
Statement, FOR adoption of the amendment to the Company's
Restated Certificate of Incorporation, FOR adoption of the
Company's 2002 Employee Stock Purchase Plan and FOR ratification
of the appointment of KPMG LLP as independent accountants.

2. Telephone: To vote by telephone, call 1-800-proxies. You will
need to provide the control number printed on your proxy card and
follow the instructions on your card and the voice prompts.

3. Internet: To vote over the Internet, access the website
"www.voteproxy.com". You will need to provide the control number
printed on your proxy card and follow the instructions on your
card and the website.

If you vote by telephone or over the Internet, do not return your proxy
card.

If you are not the record holder of your shares (i.e., they are held in
the name of a bank, broker or nominee), you will receive instructions from the
holder of record that you must follow in order for your shares to be voted.

CHANGING YOUR VOTE

A proxy may be revoked at any time prior to its being voted by
delivering written notice to the Secretary of the Company, by delivering a
properly executed later-dated proxy (including by telephone or Internet), or by
voting in person at the Annual Meeting.

REQUIRED VOTE

The presence, in person or by proxy, of the stockholders of a majority
of the shares of Common Stock and Preferred Stock (on an `as-converted' basis)
outstanding and entitled to vote constitutes a quorum for the transaction of
business at the Annual Meeting. With respect to the election of the Preferred
Directors, as to which only holders of shares of Preferred Stock are entitled to
vote, the presence of a majority of the shares of Preferred Stock constitutes a
quorum. Abstentions and broker "non-votes" are included in determining whether a
quorum is present. A broker "non-vote" occurs when a broker or nominee holding
shares for a beneficial owner does not vote on a particular proposal because the
broker or nominee does not have discretionary voting power on that item and has
not received instructions from the beneficial owner.

Assuming a quorum is present, the six directors other than the
Preferred Directors will be elected by a plurality of the votes of the holders
of the Common Stock and the Preferred Stock cast in person or by proxy at the
Annual Meeting, and the four Preferred Directors will be elected by the votes of
the holders of the Preferred Stock, voting as a separate class, at the Annual
Meeting. Abstentions and broker "non-votes" are not counted for purposes of the
election of directors.

Approval of any matter other than the election of directors requires
the affirmative vote of a majority of the votes of the holders of the Common
Stock and Preferred Stock entitled to be cast in person or by proxy at the
Annual Meeting, and the amendment to the Restated Certificate of Incorporation
also requires the affirmative vote of the majority of the votes of the holders
of the Preferred Stock, voting as a separate class, at the Annual Meeting. With
respect to the amendment to the Restated Certificate of Incorporation, the
adoption of the 2002 Employee Stock Purchase Plan and ratification of the
appointment of the independent accountants, abstentions are considered to be
shares present and entitled to be cast and will have the effect of a negative
vote on the matter, and broker "non-votes" are not counted as shares eligible to
vote and will have no effect on the outcome of the matter.

PROPOSAL 1

ELECTION OF DIRECTORS

NOMINEES FOR ELECTION

The Board of Directors has nominated for election to the Board the ten
persons named below to serve for a one-year term and until their successors have
been duly elected and qualified or until their earlier death, resignation or
removal. Each nominee is presently a director of the Company. The holders of the
Common Stock and Preferred Stock, voting together as a single class, are
entitled to elect directors other than Messrs. Antonio Belloni, Rosario Bifulco,
Peter A. Cohen and Michael S. Immordino (the "Preferred Directors"), who have
been designated for election to the Board by the holders of the Preferred Stock.
Only the holders of the Preferred Stock, voting as a separate class, are
entitled to elect the Preferred Directors.

The Board recommends that the stockholders elect the nominees named
below as directors of the Company for the ensuing year, and the persons named as
proxies in the enclosed form of proxy will vote the proxies received by them for
the election as directors of the nominees named below unless otherwise indicated
on those proxies. Cumulative voting is not permitted. Each nominee has indicated
a willingness to serve, but in case any nominee is not a candidate at the
meeting for reasons not now known to the Company, the proxies named in the
enclosed proxy may vote for a substitute nominee at their discretion.

The name, age, business experience and certain other information
regarding each of the ten nominees for director are set forth below.

NAME AGE POSITION WITH THE COMPANY DIRECTOR
---- --- ------------------------- SINCE
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A. Lorne Weil.............................. 56 Chairman of the Board, President and 1989
Chief Executive Officer (1)(4)
Larry J. Lawrence.......................... 59 Vice Chairman of the Board (1)(2)(3) 1989
Colin J. O'Brien........................... 63 Director (2) 2000
Eric M. Turner............................. 46 Director 2002
Sir Brian G. Wolfson....................... 66 Director (2) 1988
Alan J. Zakon.............................. 66 Director (1)(3)(4) 1993
Antonio Belloni............................ 52 Director (4) 2002
Rosario Bifulco............................ 47 Director (2)(3) 2002
Peter A. Cohen............................. 55 Director (1) 2000
Michael S. Immordino....................... 41 Director 2000

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(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
(4) Member of Nominating Committee

Mr. A. Lorne Weil has been a director of the Company since December
1989, Chairman of the Board since October 1991, Chief Executive Officer of the
Company since April 1992 and President of the Company since August 1997. Mr.
Weil held various senior management positions with the Company and its
subsidiaries from October 1990 to April 1992 and was a director and consultant
to Autotote Systems, Incorporated from 1982 until it was acquired by the Company
in 1989. Mr. Weil was President of Lorne Weil, Inc., a firm providing strategic
planning and corporate development services to high technology industries, from
1979 to November 1992. Mr. Weil is currently a director of Bluefly, Inc.

Mr. Larry J. Lawrence has been a director of the Company since December
1989 and Vice Chairman of the Board since August 1997. Mr. Lawrence has been
managing partner of LTOS II Partners, the general partner of Lawrence, Tyrrell,
Ortale & Smith II, a private equity fund manager, since 1990. Mr. Lawrence has
been general partner of Allegra Partners III, L.P., the general partner of
Allegra Capital Partners III, L.P., since May 1995, and has been managing
partner of Allegra Partners IV, L.P., the general partner of Allegra Capital
Partners IV, L.P., since January 2000. From 1985 to 2000, Mr. Lawrence was
managing partner of Lawrence Venture Partners, the general partner of Lawrence,
Tyrrell, Ortale & Smith. Mr. Lawrence served as a director of Autotote Systems,
Incorporated until it was acquired by the Company in 1989. Mr. Lawrence is
currently a director of Globe Tax Services, Inc.

Mr. Colin J. O'Brien has been a director of the Company since September
2000. Between February 1992 and his retirement in January 2001, Mr. O'Brien was
employed in various positions with Xerox Corporation, including Vice President,
President of the Document Production Systems Division, Chief Executive Officer
of the New Enterprise Board and Executive Chairman of XESystems, Inc., a
subsidiary of Xerox. In 1986, Mr. O'Brien formed an investment company with E.M.
Warburg Pincus & Co. Inc., making a number of acquisitions in defense
electronics. Prior to that time, Mr. O'Brien served as Chief Executive of Times
Fiber Communications, Inc. and President of General Instrument's cable
television operations. He has held management positions with Union Carbide in
both Canada and Europe. Mr. O'Brien is currently a director of Document Sciences
Corporation and several privately held companies.

Mr. Eric M. Turner has been a director of the Company since July 2002.
Mr. Turner has served as the Senior Vice President, Investment Services, of
State Street Corporation since 2001 and has served as a Senior Vice President of
various divisions of State Street since 1996. From 1992 to 1995, Mr. Turner
served as the executive director of the Massachusetts State Lottery Commission.
During his time at the commission, Mr. Turner was elected to positions of

Treasurer and Secretary of the North American Association of State and
Provincial Lotteries, a professional association of 46 North American lotteries.
Prior to his tenure at the Massachusetts State Lottery Commission, Mr. Turner
served as Deputy Treasurer of the Office of the State Treasurer of
Massachusetts.

Sir Brian G. Wolfson has been a director of the Company since 1988. Sir
Brian served as Vice Chairman of the Company's Board of Directors from May 1995
to August 1997 and as Acting President and Chief Executive Officer of the
Company from June 1991 to October 1991. Sir Brian served as Chairman of Wembley
plc, a United Kingdom corporation, from 1987 to May 1995, and as its Deputy
Chairman from May 1995 to September 1995. Sir Brian is currently Chairman of the
Board of Kepner-Tregoe Inc. and a director of Playboy Enterprises, Inc.

Mr. Alan J. Zakon has been a director of the Company since 1993 and
Chairman of the Executive Committee of the Board since August 1997. Mr. Zakon
served as Vice Chairman of the Company's Board of Directors from May 1995 to
August 1997. Mr. Zakon served as a managing director of Bankers Trust
Corporation from 1989 to April 1995, and as Chairman of the Strategic Policy
Committee of Bankers Trust Corporation from 1989 to 1990. Mr. Zakon served as
Chairman of the Board of The Boston Consulting Group from 1986 until 1989. Mr.
Zakon is currently a director of MicroFinancial Inc. and Arkansas Best
Corporation.

PREFERRED DIRECTORS

Mr. Antonio Belloni has been a director of the Company since June 2002.
Mr. Belloni has served as Deputy Chairman of Lottomatica S.p.A. since March 2002
and as Managing Director of De Agostini S.p.A., the majority stockholder of
Lottomatica S.p.A., since May 2000. He has served in various positions of De
Agostini since March 1998. From May 1990 to February 1998, Mr. Belloni was the
Chief Executive Officer of Camfin S.p.A., a holding company which controls,
among others, the Pirelli Group. From September 1984 to April 1990, he was Chief
Executive Officer of Andrea Merzario S.p.A., a leading integrated logistics
services provider.

Mr. Rosario Bifulco has been a director of the Company since June 2002.
Mr. Bifulco has served as CEO-Managing Director of Lottomatica S.p.A. since
March 2002. From December 1993 to March 2002, Mr. Bifulco was Vice President and
Managing Director of Techint S.p.A., a leading engineering and construction
company, and from January 1994 to April 2002 he served as Managing Director of
Techosp S.p.A., a start up company controlled by Techint Group. Since May 2002,
Mr. Bifulco has also served as CEO of Techosp S.p.A. From December 1999 to March
2002, he was the Managing Director of Techint Finanziaria, the European holding
company of Techint Group. From November 1988 to November 1993, Mr. Bifulco
served as Division General Manager of Gilardini S.p.A., the industrial and
automotive components division of FIAT Group.

Mr. Peter A. Cohen has been a director of the Company since September
2000. Mr. Cohen is a principal of Ramius Capital Group, LLC, a private
investment firm. From November 1992 until May 1994, Mr. Cohen was Vice Chairman
and a director of Republic New York Corporation, as well as a member of its
management executive committee. Mr. Cohen was also the Chairman of Republic New
York Corporation's wholly-owned subsidiary, Republic New York Securities
Corporation. From February 1990 to November 1992, Mr. Cohen was a private
investor and an advisor to several industrial and financial companies. From 1983
to 1990, Mr. Cohen was Chairman of the Board and Chief Executive Officer of
Shearson Lehman Brothers. Mr. Cohen has served on a number of corporate,
industry and philanthropic boards, including The New York Stock Exchange, The
American Express Company, The Federal Reserve Capital Market Advisory Board, The
Depository Trust Company, Olivetti S.p.A., Ohio State University Foundation, The
New York City Opera and Telecom Italia S.p.A. Mr. Cohen is currently a director
of Presidential Life Corporation, Mount Sinai Hospital and Titan Corporation.

Mr. Michael S. Immordino has been a director of the Company since
September 2000. Mr. Immordino is a partner of the worldwide law firm of Latham &
Watkins, based in its London office. Prior to joining Latham & Watkins, Mr.
Immordino was a partner in the firm of Rogers & Wells.

There are no family relationships among any of the Company's directors
or executive officers.

The Preferred Directors were designated for election to the Board of
Directors by the holders of the Preferred Stock pursuant to their rights under
the Certificate of Designations governing the Preferred Stock, which was filed
with the Secretary of State of the State of Delaware on September 6, 2000, and a
Stockholders' Agreement between the

Company and the holders dated September 6, 2000. The Certificate of Designations
and the Stockholders' Agreement provide such holders with the right to designate
and elect four members of the Board of Directors (or a lesser number in the
event that their ownership level declines), and to have at least one of such
directors serve on all committees of the Board. A voting agreement among the
holders (except for Ramius Securities, LLC) dated September 6, 2000 gives
Cirmatica Gaming, S.A., which purchased approximately 90% of the Preferred
Stock, the right to designate the persons who will serve as the director
designees, provided that, except under certain circumstances, Peter A. Cohen is
one of the designees. The holders of the Preferred Stock have agreed under the
Stockholders' Agreement to vote their shares in favor of the election of all ten
of the nominees as directors of the Company at the Annual Meeting.

THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE TEN NOMINEES.

MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES

The Board of Directors currently consists of A. Lorne Weil (Chairman),
Larry J. Lawrence, Colin J. O'Brien, Eric M. Turner, Sir Brian G. Wolfson, Alan
J. Zakon, Antonio Belloni, Rosario Bifulco, Peter A. Cohen and Michael S.
Immordino. The Board held a total of six meetings during fiscal 2001. All
incumbent directors attended at least 75% of the aggregate of (i) the total
number of meetings of the Board (held while they were directors) and (ii) the
total number of meetings held by all Committees of the Board on which they
served (during the periods that they served).

The Board of Directors has four Committees: the Audit Committee, the
Compensation Committee, the Executive Committee and the Nominating Committee.
The holders of the Preferred Stock have the right to have one of their director
designees serve on each Committee of the Board.

The Audit Committee of the Board currently consists of Larry J.
Lawrence (Chairman), Rosario Bifulco, Colin J. O'Brien and Sir Brian G. Wolfson.
The Audit Committee recommends engagement of the Company's independent
accountants and is charged with the responsibility of overseeing the financial
reporting process of the Company. In the course of performing its functions, the
Audit Committee reviews, with management and the independent accountants, the
Company's internal accounting controls, the annual financial statements, the
report and recommendations of the independent accountants, the scope of the
audit, and the qualifications and independence of the auditors. The Audit
Committee also oversees the Company's compliance program. The Audit Committee
operates under a written charter adopted by the Board, a copy of which was
included as Appendix A to last year's proxy statement. The report of the Audit
Committee is set forth later in this Proxy Statement. The Committee held four
meetings during fiscal 2001.

The Compensation Committee of the Board currently consists of Alan J.
Zakon (Chairman), Rosario Bifulco and Larry J. Lawrence. The Compensation
Committee administers the Company's incentive compensation and stock option
plans, and in doing so determines the eligibility of employees to participate in
such plans and approves stock option and incentive compensation awards under the
plans. The Committee approves the compensation of executives of the Company and
makes recommendations to the Board with regard to the adoption of new employee
benefit plans and new executive compensation plans. The report of the
Compensation Committee is set forth later in this Proxy Statement. The Committee
held four meetings during fiscal 2001.

The Executive Committee of the Board currently consists of Alan J.
Zakon (Chairman), Peter A. Cohen, Larry J. Lawrence and A. Lorne Weil. The
Executive Committee is authorized to exercise all of the powers and authority of
the Board in the management of the business and affairs of the Company between
regular meetings of the Board, subject to Delaware law. The Committee held three
meetings during fiscal 2001.

The Nominating Committee, which was established in September 2000,
consists of A. Lorne Weil (Chairman), Antonio Belloni and Alan J. Zakon. No
member of the Board or candidate for the Board may be proposed, nominated or
elected (except pursuant to the Certificate of Designations governing the
Preferred Stock or the Stockholders' Agreement) unless first approved by a
majority vote of the Committee and thereafter approved by a majority vote of the
Board. Any stockholder wishing to propose a nominee should submit a
recommendation in writing to the Company's Secretary at least 120 days before
the mailing date for proxy material applicable to the annual meeting for which
such nomination is proposed for submission, indicating the nominee's
qualifications and other relevant biographical information and providing
confirmation of the nominee's consent to serve as a director. The Nominating
Committee held one meeting during fiscal 2001.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who beneficially own more than ten
percent of the Company's Common Stock, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Based solely on its review of the copies of the reports that the
directors, officers and ten percent holders filed with the SEC and on the
representations made by the Company's officers and directors, the Company
believes that all filing requirements applicable to its officers, directors and
ten percent holders were complied with during the two-month transition period
ended December 31, 2000 and during fiscal 2001, except that Peter A. Cohen filed
two late Forms 4 (with respect to the sale of shares held by Ramius Securities,
LLC in December 2000 and the sale of shares held by the Peconic Fund Ltd. in
February 2001) and Alan J. Zakon filed one late Form 4 (with respect to the
cashless exercise of a warrant in December 2001).

SECURITY OWNERSHIP

The following table sets forth certain information as of July 15, 2002
as to the security ownership of those persons known to us to be the beneficial
owners of more than five percent of the outstanding shares of Class A Common
Stock and the outstanding shares of Series A Convertible Preferred Stock, each
of the Company's directors, each of the executive officers named in the Summary
Compensation Table, and all of the Company's directors and executive officers as
a group. Except as otherwise indicated, the stockholders listed in the table
below have sole voting and investment power with respect to the shares
indicated.

------------------------------------------------------------- ------------------------------- ---------------------------------
SHARES OF COMMON STOCK SHARES OF PREFERRED STOCK(16)
---------------- -------------- ---------------- ----------------
NAME NUMBER(1) PERCENT(1) NUMBER(1) PERCENT(1)
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------

Cirmatica Gaming, S.A....................................... 24,195,806(2) 29.70 % 1,225,481(17) 97.56%
(subsidiary of Lottomatica S.p.A.)
Rambla de Catalunya 16, 4E2a
Barcelona, Spain 08007
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Oaktree Capital Management, LLC............................. 3,900,000(3) 6.79% -0- -0-
333 South Grand Avenue
Los Angeles, CA 90071
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Olivetti International S.A.................................. 1,310,568(4) 2.23% 66,839(18) 5.32%
(subsidiary of Olivetti S.p.A.)
125 Avenue du X Septembre
Luxembourg
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
A. Lorne Weil............................................... 3,855,650(5) 6.49% -0- -0-
c/o Scientific Games Corporation
750 Lexington Avenue, 25th Floor
New York, New York 10022
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Larry J. Lawrence........................................... 2,590,995(6) 4.45% -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Peter A. Cohen ............................................. 1,473,333(7) 2.53% 30,634(19) 2.44%
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Alan J. Zakon............................................... 1,283,230(8) 2.23% -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Antonio Belloni............................................. -0- -0- -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Rosario Bifulco............................................. -0- -0- -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Michael S. Immordino 38,107(9) * -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Colin J. O'Brien ........................................... 48,107(9) * -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Eric M. Turner ............................................. -0- -0- -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Sir Brian G. Wolfson 223,107(10) * -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------

------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
DeWayne E. Laird 223,750(11) * -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Martin E. Schloss .......................................... 367,951(12) * -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
William J. Huntley ......................................... 384,232(13) * -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
Clifford O. Bickell......................................... 80,750(14) * -0- -0-
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------
All directors and executive officers as a group 10,569,212(15) 16.94% 30,634(19) 2.44%
(consisting of 14 persons)(5)(6)(7)(8)(9)(10)(11)(13)(14)
------------------------------------------------------------- ---------------- -------------- ---------------- ----------------

----------

* Represents less than 1% of the outstanding shares of Common Stock.

(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934.
Owners of options, warrants, the Preferred Stock or other convertible
securities exercisable or convertible within 60 days of July 15, 2002 are
deemed to be the beneficial owners of the securities which may be
acquired. The percentage of outstanding securities reported reflects the
assumption that only the person whose ownership is being reported has
exercised or converted his options, warrants or Preferred Stock. Pursuant
to the Certificate of Designations governing the Preferred Stock, each
share of Preferred Stock is convertible into the number of shares of
Common Stock calculated by dividing $100 (the liquidation preference) by
the "conversion price" (as defined), which would have been $5.10 had the
conversion occurred on July 15, 2002, and, as such, the number of shares
reported in this table as issuable upon conversion of the Preferred Stock
is based on such calculation. The "conversion price" is subject to upward
adjustment to $5.56 and downward adjustment to $4.63, based on the
performance of the Common Stock on the 30 trading days preceding the date
of conversion.

(2) Includes (a) 6,769 shares and (b) 21,844,764 shares issuable upon
conversion of Preferred Stock held by Cirmatica Gaming, S.A.
("Cirmatica"), representing 27.56% of the outstanding Common Stock. Also
includes (a) 1,310,568 shares issuable upon conversion of Preferred Stock
held by Olivetti International S.A. ("Olivetti") and (b) 160,000 shares
and 873,705 shares issuable upon conversion of Preferred Stock held by The
Oak Fund ("Oak"), all of which shares are subject to a voting agreement
dated September 6, 2000 between Cirmatica, Olivetti and Oak (the "Voting
Agreement"). Pursuant to the Voting Agreement, Cirmatica has the power to
direct the voting of the shares held by Olivetti on all matters and to
direct the voting of the shares held by Oak with respect to electing the
persons who the holders of the Preferred Stock have the right to elect to
the Board of Directors. Cirmatica is a wholly owned subsidiary of
Lottomatica S.p.A., a publicly held Italian company, and De Agostini
S.p.A., a privately held Italian company, is the majority stockholder of
Lottomatica. Amendment No. 4 to the Schedule 13D jointly filed with the
SEC by Cirmatica, Lottomatica, De Agostini, among others, on February 5,
2002 sets forth information as of such date with respect to the board of
directors and executive officers of such entities.

(3) Based on a Schedule 13G filed with the SEC on May 20, 2002 by Oaktree
Capital Management, LLC, a California limited liability company, in its
capacities as the general partner of OCM Opportunities Fund, L.P., a
Delaware limited partnership, and as investment manager of a third-party
account. Amendment No. 6 to the Schedule 13D jointly filed with the SEC by
Oaktree and the OCM Opportunities Fund on January 29, 2002 sets forth
information as of such date with respect to the members and executive
officers of such entities. Bruce A. Karsh and David Richard Masson,
principals of Oaktree and portfolio managers of the Fund, share voting
authority over the shares.

(4) Consists of 1,310,568 shares issuable upon conversion of Preferred Stock
held by Olivetti. As described in footnote 2 above, Cirmatica has sole
power to direct the voting of these securities.

(5) Includes (a) 1,930,250 shares issuable upon exercise of stock options and
(b) 28,691 shares issuable upon exercise of a warrant. Also includes (a)
108,445 shares and (b) 14,345 shares issuable upon exercise of a warrant
held for Mr. Weil's deferred compensation account by a grantor trust
established in connection with the Company's deferred compensation plan.
Excludes 297,076 shares held by The Lorne Weil 1989 Trust, John Novogrod,
Trustee, as to which Mr. Weil disclaims beneficial ownership.

(6) Includes (a) 175,000 shares issuable upon exercise of a stock option and
(b) 594,914 shares issuable upon exercise of a warrant.

(7) Includes 25,000 shares issuable upon exercise of a stock option held by
Mr. Cohen. Also includes (a) 1,022,766 shares held by Ramius Securities,
LLC ("Ramius Securities") (which holdings consist of (i) 172,100 shares,
(ii) 600,666 shares issuable upon conversion of Preferred Stock and (iii)
250,000 of which shares are issuable upon exercise of a warrant) and (b)
412,460 shares held by third party accounts managed by Ramius Securities
(124,900 of which shares are held for the accounts of Peter Cohen and
members of his immediate family). Mr. Cohen is one of three managing
members of C4S & Co., LLC, the sole managing member of Ramius Capital
Group, LLC, which is the parent company of Ramius Securities. Accordingly,
Mr. Cohen may be deemed to beneficially own all of the securities held by
Ramius Securities and the third party accounts. Mr. Cohen disclaims
beneficial ownership of such securities except 124,900 of the shares held
by the third party accounts.

(8) Includes 170,000 shares issuable upon exercise of stock options.

(9) Includes 25,000 shares issuable upon exercise of stock options.

(10) Includes 120,000 shares issuable upon exercise of stock options.

(11) Includes 222,250 shares issuable upon exercise of stock options.

(12) Includes 351,250 shares issuable upon exercise of stock options.

(13) Includes 334,500 shares issuable upon exercise of stock options.

(14) Consists of 80,750 shares issuable upon exercise of stock options.

(15) Includes (a) 3,459,000 shares issuable upon exercise of stock options, (b)
887,950 shares issuable upon exercise of warrants and (c) 600,666 shares
issuable upon conversion of Preferred Stock.

(16) Pursuant to the Certificate of Designations governing the Preferred Stock,
the holders of the Preferred Stock are entitled to vote along with the
holders of Common Stock, on an `as-converted' basis, on all matters on
which the holders of Common Stock are entitled to vote; and the holders of
the Preferred Stock, voting separately as a class, are entitled to elect
four directors (or a lesser number in the event that their ownership level
declines).

(17) Includes 1,114,083 shares of Preferred Stock held by Cirmatica,
representing 88.69% of the outstanding Preferred Stock. Also includes (a)
66,839 shares of Preferred held by Olivetti and (b) 44,559 shares of
Preferred Stock held by Oak, all of which shares are subject to the Voting
Agreement.

(18) Consists of 66,839 shares of Preferred Stock held by Olivetti. As
described in footnote 2 above, Cirmatica has sole power to direct the
voting of these securities.

(19) Solely for purposes of disclosure in this table with respect to ownership
by directors, consists of 30,634 shares of Preferred Stock held by Ramius
Securities. Mr. Cohen disclaims beneficial ownership of these securities.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table shows the compensation awarded or paid by the
Company for services rendered for the fiscal years ended October 31, 1999 and
2000, the two-month transition period ended December 31, 2000 (the "Stub
Period"), and the fiscal year ended December 31, 2001 to the Chief Executive
Officer and the individuals who, in fiscal 2001, were the other highest paid
executive officers of the Company who received in excess of $100,000 in salary
and bonuses in that year (collectively, the "Named Executive Officers").

------------------------------------------------------- --------------------------- ---------------------------- -----------------
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
--------------------------------------- --------------- ------------ -------------- -------------- -------------
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) STOCK AWARD OPTIONS COMPENSATION(3)
($) ($) ($) (#) ($)
--------------------------------------- --------------- ------------ -------------- -------------- ------------- -----------------

A. Lorne Weil 2001 $ 754,500 $ 754,500 $ 11,120(2) 261,000 $ 17,920 (4)
President and Stub Period(5) 125,750 125,750 ----- ---- 21
Chief Executive Officer 2000 536,000 736,000(6) ----- 70,000 (5)
1999 481,888 481,888 ----- 1,136,000 17,026 (7)
16,535 (8)
--------------------------------------- --------------- ------------ -------------- -------------- ------------- -----------------
DeWayne E. Laird 2001 250,000 118,930 ----- 40,000 9,265 (4)
Vice President and Stub Period(5) 41,666 ---- ----- ----- 21 (5)
Chief Financial Officer 2000 207,700 125,700(6) ----- 14,000 8,626 (7)
1999 175,000 87,500 ----- 60,000 8,135 (8)
--------------------------------------- --------------- ------------ -------------- -------------- ------------- -----------------
Martin E. Schloss 2001 301,844 139,583 1,462(2) 46,000 9,418 (4)
Vice President, Stub Period(5) 50,000 ---- ----- ---- 21 (5)
General Counsel and Secretary 2000 236,500 193,800(6) ----- 16,000 8,626 (7)
1999 225,000 112,500 ----- 32,000 8,135 (8)
--------------------------------------- --------------- ------------ -------------- -------------- ------------- -----------------
William J. Huntley 2001 275,000 136,585 563(2) 96,000 6,093 (4)
President, Systems Stub Period(5) 45,833 ---- ----- ---- 60,056 (5)
Division of Scientific Games 2000 213,000 106,300 ----- 164,000 8,626 (7)
International, Inc. 1999 200,000 87,500 ----- 29,000 8,135 (8)
--------------------------------------- --------------- ------------ -------------- -------------- ------------- -----------------
Cliff O. Bickell (9) 2001 275,000 64,240 ----- 42,000 6,093 (4)
President, Printed Products Stub Period(5) 45,833 ---- ----- ---- 620 (5)
Division of Scientific Games 2000 40,690(9) ---- ----- 150,000 620 (7)
International, Inc. ----- ----- ---- ----- ---- ----
--------------------------------------- --------------- ------------ -------------- -------------- ------------- -----------------

-------------------

(1) See "Report of the Compensation Committee," which describes
performance-based bonuses awarded under the Company's management
incentive compensation program to the Named Executive Officers. Amounts
indicated represent bonuses earned with respect to the fiscal year, which
were paid or deferred (under the Company's deferred compensation plan) in
the following year.

(2) The amounts reported as restricted stock awards were calculated by
multiplying the number of units of the Company's Performance Accelerated
Restricted Stock (or "PARS") granted on May 25, 2001 to the Named
Executive Officer by $4.30, the closing price of the Company's Common
Stock on the grant date. Messrs. Weil, Schloss and Huntley were granted
2,586, 340 and 131 units of PARS, respectively, in exchange for their
consenting to extend the scheduled vesting date with respect to 25,859,
3,403 and 1,308 units of PARS, respectively, (representing 20% of the
PARS granted to them in May 1995) from May 2001 until May 2003. As of
December 31, 2001, Messrs Weil, Schloss and Huntley held a total of
131,884, 17,355 and 6,675 PARS, respectively, which, based on the closing
price of $8.75 of the Company's Common Stock on December 31, 2001, had a
value of $1,153,985, $151,856, and $58,406, respectively.

(3) In accordance with SEC rules, amounts related to personal benefits,
including automobile allowances, have been omitted, since such amounts
did not exceed the lesser of $50,000 or 10% of the total annual salary
and bonus for the Named Executive Officer.

(4) The amounts indicated as All Other Compensation for fiscal 2001 consist
of the following:

(i) Employer contributions to the Company's defined contribution
retirement plan for salaried employees: $8,500 for each of
Messrs. Weil, Laird and Schloss, and $5,250 for each of Messrs.
Huntley and Bickell.

(ii) Insurance premiums paid for individual life insurance coverage:
Mr. Weil, $8,400.

(iii) Insurance premiums paid for group term life insurance coverage:
Mr. Weil, $1,020; Mr. Laird, $765; Mr. Schloss, $918; Mr.
Huntley, $843; and Mr. Bickell, $843.

(5) The amounts reported for the "Stub Period" are for the two-month
transition period beginning November 1, 2000 and ended December 31, 2000.
The amounts indicated as All Other Compensation for this period consist
of the following: (i) insurance premiums paid for group term life
insurance coverage: $21 for each of Messrs. Weil, Laird, Schloss and
Huntley, and $620 for Mr. Bickell; and (ii) relocation expenses: Mr.
Huntley, $60,035.

(6) Bonuses for fiscal 2000 consist of awards under the incentive
compensation program and special bonuses in the following amounts which
were awarded for extraordinary contributions in connection with the
acquisition of Scientific Games and the related debt and equity financing
transactions: Mr. Weil, $200,000; Mr. Laird, $25,000; and Mr. Schloss,
$75,000.

(7) The amounts indicated as All Other Compensation for fiscal 2000 consist
of the following:

(i) Employer contributions to the Company's defined contribution
retirement plan for salaried employees: $8,500 for each of
Messrs. Weil, Laird, Schloss and Huntley.

(ii) Insurance premiums paid for individual life insurance coverage:
Mr. Weil, $8,400.

(iii) Insurance premiums paid for group term life insurance coverage:
$126 for each of Messrs. Weil, Laird, Schloss and Huntley, and
$620 for Mr. Bickell.

(8) The amounts indicated as All Other Compensation for fiscal 1999 consist
of the following:

(i) Employer contributions to the Company's defined contribution
retirement plan for salaried employees: $8,000 for each of
Messrs. Weil, Laird, Schloss and Huntley.

(ii) Insurance premiums paid for individual life insurance coverage:
Mr. Weil, $8,400.

(iii) Insurance premiums paid for group term life insurance coverage:
$135 for each of Messrs. Weil, Laird, Schloss and Huntley.

(9) Mr. Bickell became an employee as of September 6, 2000 as a result of the
Company's acquisition of Scientific Games International, Inc.
Compensation paid by Scientific Games International, Inc. to Mr. Bickell
prior to that date is not included in this schedule.

OPTION GRANTS IN FISCAL 2001

The following table sets forth information regarding stock options granted
to the Named Executive Officers during the fiscal year ended December 31, 2001.
(No options were granted to such individuals during the two-month transition
period ended December 31, 2000.)

INDIVIDUAL GRANTS
----------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(3)
OPTIONS EMPLOYEES EXERCISE --------------------------------
GRANTED(1) IN FISCAL YEAR PRICE(2) EXPIRATION 5% 10%
NAME (#) ($/SH) DATE ($) ($)

A. Lorne Weil................ 127,000(4) 6.29% $ 2.95 12-31-10 $ 235,615 $ 597,096

DeWayne E. Laird............. 21,000(4) 1.04% 2.95 12-31-10 38,960 98,732

Martin E. Schloss............ 25,000(4) 1.24% 2.95 12-31-10 46,381 117,539

William J. Huntley........... 23,000(4) 1.14% 2.95 12-31-10 42,671 108,135

Clifford O. Bickell.......... 23,000(4) 1.14% 2.95 12-31-10 42,671 108,135

A. Lorne Weil................ 134,000(5) 6.63% 7.10 12-13-11 598,330 1,516,287

DeWayne E. Laird............. 19,000(5) 0.94% 7.10 12-13-11 84,838 214,996

Martin E. Schloss............ 21,000(5) 1.04% 7.10 12-13-11 93,768 237,627

William J. Huntley........... 73,000(5) 3.61% 7.10 12-13-11 325,956 826,037

Clifford O. Bickell.......... 19,000(5) 0.94% 7.10 12-13-11 84,838 214,996

-------

(1) These options become exercisable in four equal installments, one-quarter
of the total on each of the first, second, third and fourth anniversaries
of the date of grant, or in full upon a change in control of the Company.
In the event a holder's employment is terminated under certain
circumstances, his option may become fully vested and exercisable
pursuant to his agreement with the Company (see "Employee Agreements").

(2) These options entitle the holder to purchase shares of Common Stock at a
price equal to the fair market value of the stock on the date of grant.

(3) The dollar amounts under these columns are based upon calculations using
assumed rates of appreciation set by the SEC and are not intended to
forecast possible future appreciation of the Company's stock price.

(4) These options were awarded as of January 1, 2001 under the Company's
management incentive compensation program for fiscal year 2001.

(5) These options were awarded as of December 14, 2001 under the Company's
management incentive compensation program for fiscal year 2002.

AGGREGATED OPTION EXERCISES IN FISCAL 2001 AND FISCAL YEAR-END OPTION VALUES

The following table sets forth information for the Named Executive Officers
with respect to the exercise of stock options during the fiscal year ended
December 31, 2001 and the year-end value of unexercised options. (None of such
individuals exercised any options during the two-month transition period ended
December 31, 2000.)

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT DEC. 31, 2001 DEC. 31, 2001(1)
SHARES # ($)
ACQUIRED ON VALUE ------------------------------------------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------

A. Lorne Weil........... -0- -0- 2,181,000 984,000 $13,212,875 $5,411,825
DeWayne E. Laird...... -0- -0- 207,000 72,000 1,449,406 362,244
Martin E. Schloss...... -0- -0- 331,250 75,750 2,152,500 368,150
William J. Huntley...... 25,000 148,000 279,000 235,000 1,731,488 1,012,725
Clifford O. Bickell...... -0- -0- 37,500 154,500 196,875 755,375

----------
(1) Amounts are based on the difference between the closing price of the
Company's Common Stock on December 31, 2001 ($8.75) and the exercise
price.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The Company adopted a Supplemental Executive Retirement Plan, or "SERP," as
of September 2000, in order to provide supplemental retirement benefits for
senior executives of the Company. The SERP provides for retirement benefits
according to a formula based on each participant's years of service with the
Company and average rate of compensation.

Payments under the SERP will commence upon a participant's termination of
employment with the Company after reaching the age of at least 55 and having at
least 10 years of full-time employment with the Company. The annual retirement
benefit will be an amount equal to 3% of the participant's average compensation
for the three highest consecutive calendar years in the last ten years before
termination of employment, multiplied by the participant's years of full-time
employment with the Company up to a maximum of 15 years. Accordingly, the
maximum annual payment under the SERP would be 45% of a participant's highest
average annual compensation. A participant may receive a total of 15 annual
payments in that amount, or may elect to receive the discounted present value of
those 15 annual payments in equal installments over a period of 5 or 10 years or
in a single lump sum. The date for payment of benefits may be accelerated in the
event of a participant's death or total permanent disability, and certain
additional provisions will apply in the event of a change of control of the
Company. A participant whose highest average annual compensation is $500,000 and
who is credited with at least 15 years of full-time employment with the Company
would receive 15 annual

payments of $225,000 under the SERP. If their highest average compensation were
based on compensation through December 31, 2001, the Named Executive Officers
who are participants in the SERP would be expected to receive annual retirement
benefits for 15 years in the following estimated amounts assuming their
retirement after at least 15 years of service with the Company: Mr. Weil,
$575,000; Mr. Schloss, $183,000; Mr. Laird, $146,500; and Mr. Huntley, $154,500.
These amounts would be subject to an offset for Social Security benefits.
Messrs. Weil, Schloss, Laird and Huntley have 11, 9, 5 and 28 years of credited
service, respectively, under the SERP.

DEFERRED COMPENSATION PLAN

During fiscal 1998, the Board adopted a non-qualified deferred compensation
plan, and established a grantor trust to assist it in meeting its obligations
under the plan. The deferred compensation plan, as amended, enables eligible
employees to defer receipt of up to 100% of the bonus which may be payable under
the Company's management incentive compensation program and, commencing as of
July 1, 2002, up to 50% of their base salary. The plan also enables the
Company's non-employee directors to defer receipt of up to 100% of the fees
which may be payable for director services. Accounts are maintained for each of
the participants, who elect to have their accounts mirror the performance of
investment options that the Company may offer from time to time. It is intended
that amounts deferred under the plan will not be subject to any federal and, in
most cases, state and local income taxes until participants receive payment from
the plan. Unless participants elect to extend a deferral period, deferrals and
related earnings will be paid as soon as practicable following the end of the
deferral period. Accounts may be distributed prior to that date if a participant
leaves the Company, dies or becomes disabled, if there is a change in control,
if the Company terminates the plan or, under extremely limited circumstances, in
the event of an "unforeseeable emergency". As of December 31, 2001, none of the
Company's directors or Named Executive Officers, other than Mr. Weil, was a
participant in the plan. Mr. Weil elected to defer his entire fiscal 1998 bonus,
a portion of his fiscal 2000 bonus and his entire fiscal 2001 bonus into the
plan; such compensation is held in a self-directed deferred compensation
account.

EMPLOYEE AGREEMENTS

A. Lorne Weil. Mr. Weil serves as Chairman of the Board and Chief Executive
Officer pursuant to an employment agreement dated as of November 1, 2000, which
provides for an annual base salary of $750,000 (subject to increases on each
January 1 to reflect increases in the Consumer Price Index for the Greater New
York area), participation in the SERP, the opportunity to earn annually up to
100% of his base salary as incentive compensation pursuant to the terms of the
Company's management incentive compensation program, and a term of employment
ending December 31, 2004. The term of employment extends automatically for an
additional year on December 31, 2004 and on each succeeding December 31
thereafter unless either party serves written notice upon the other party six
months prior to the date upon which such extension would become effective. In
the event Mr. Weil's employment is terminated by the Company without Cause
(which includes the Company's election not to extend the term), or by Mr. Weil
for Good Reason (which includes Mr. Weil's election not to extend the term due
to the failure of the parties to agree to the terms of his continued
employment), or by reason of Total Disability (as such capitalized terms are
defined in Mr. Weil's employment agreement), Mr. Weil will be entitled to
receive the following: (a) cash severance in a lump sum equal to three times the
sum of his then current base salary and the higher of the average annual
incentive compensation paid for the prior three years and the amount payable
upon achievement of maximum performance targets for the year of termination; (b)
a lump sum cash payment equal to the cash value of all payments and benefits to
which Mr. Weil would have been entitled under the SERP upon termination, or if
he had 15 years of service with the Company, whichever is greater (the "SERP
Payment"); (c) a pro rata annual incentive amount for the year of termination;
(d) stock options will become fully vested and exercisable at the date of
termination, and any options which were granted on or after November 1, 1997
(the effective date of his prior employment agreement) or, if previously
granted, were not "in the money" on such effective date, will remain exercisable
until the scheduled expiration date of such options; (e) full vesting and
settlement of all deferred stock held at termination; (f) continued
participation in certain employee benefit plans for a period of three years
after termination other than due to Total Disability, in which case the period
shall be until age 65, and if such plans do not allow continuation, receive
payment in lieu of such benefits; and (g) a payment to Mr. Weil to fund any
excise tax that may be imposed under Section 4999 of the Internal Revenue Code
with respect to payments made in connection with a change in control, as well as
an amount to fund any income taxes payable with respect to such payment by the
Company. If Mr. Weil's employment terminates due to retirement or death, Mr.
Weil will be entitled to receive the following: (a) the SERP Payment; (b) a pro
rata annual incentive amount for the year of termination; (c) stock options will
become fully vested and exercisable at the date of termination, and any options
which were granted on or after November 1, 1997 (the effective date of his prior
employment

agreement) will be exercisable until the earlier of three years and the
scheduled expiration date of such options; and (d) full vesting and settlement
of all deferred stock held at termination.

DeWayne E. Laird. By letter dated January 11, 2001, the Company entered
into an agreement with Mr. Laird, the Company's Vice President and Chief
Financial Officer, pursuant to which his annual base salary was increased to
$250,000 (subject to annual increases in accordance with the Consumer Price
Index for Philadelphia, Pennsylvania). The terms, which will be memorialized in
a formal employment agreement, include participation in the SERP and a term of
employment ending August 31, 2003. If Mr. Laird's employment is terminated
without cause within two years of a Change in Control (as defined in the Change
in Control Agreement discussed below), he will be entitled to receive, in lieu
of any payment under said agreement, a cash payment in an amount equal to three
times the sum of his annual base salary on the date of termination and the
higher of the average incentive compensation paid to him for the three prior
years, and the amount payable to him upon achievement of the target level of
performance for the year of termination.

Martin E. Schloss. By letter dated January 11, 2001, the Company entered
into an agreement with Mr. Schloss, the Company's Vice President, General
Counsel and Secretary, pursuant to which his annual base salary was increased to
$300,000 (subject to annual increases in accordance with the Consumer Price
Index for New York, New York). The terms, which will be memorialized in a formal
employment agreement, include participation in the SERP and a term of employment
ending August 31, 2003. If Mr. Schloss's employment is terminated without cause
within two years of a Change in Control (as defined in the Change in Control
Agreement discussed below), he will be entitled to receive, in lieu of any
payment under said agreement, a cash payment in an amount equal to three times
the sum of his annual base salary on the date of termination and the higher of
the average incentive compensation paid to him for the three prior years, and
the amount payable to him upon achievement of the target level of performance
for the year of termination.

Employment and Severance Benefits Agreements. As of September 6, 2000,
Scientific Games International, Inc., a subsidiary of the Company, entered into
an employment and severance benefits agreement with each of Messrs. William J.
Huntley and Clifford O. Bickell, pursuant to which they serve as Systems
Division President and Printed Products Division President, respectively, of
Scientific Games International and its subsidiaries. Each agreement provides for
an annual base salary of $275,000 (subject to annual increases in the percentage
generally provided to the Company's executive officers), a transportation
allowance of $16,000, a term of employment ending September 5, 2003, and an
opportunity to receive an annual cash bonus and an annual grant of stock options
in amounts commensurate with, and based on substantially the same criteria as,
those awarded to executive officers of the Company. Such agreements also provide
that if the executive's employment is terminated without cause or in the event
of a constructive termination that occurs on or before the second anniversary of
the agreement, he will be entitled to receive a sum each month for a period of
two years after termination equal to one-twelfth of the highest annual rate of
base salary plus bonus paid during the twenty-four month period preceding the
date of termination; and if such a termination occurs during the third year of
the agreement, he will be entitled to receive the aforesaid monthly severance
payment for a period of one year. (Had such a termination occurred on or before
September 5, 2001, the first anniversary of the agreement, he would have been
entitled to receive the aforesaid monthly sum for a period of three years.) If
such a termination occurs, the executive will also be entitled to receive a pro
rata bonus for the year of termination and to continue participation in certain
employee benefit plans for a period of time not to exceed the applicable period
in which severance is being paid, and if such plans do not allow continuation
and the Company is unable to obtain substantially similar benefits, he would be
entitled to receive a payment in lieu of such benefits. If the executive's
employment is terminated due to disability, he will be entitled to receive a pro
rata bonus for the year of termination and to continue to receive all
disability, life and medical insurance benefits for a period of twelve months as
well as his base salary for such period (to the extent payments under the
Company's disability plan do not cover 100% of base salary); and in the event of
the executive's death, his beneficiary will be paid a lump sum payment equal to
six months of base salary and a pro rata bonus for the year of termination.

Change in Control Agreements. The Company entered into a Change in Control
Agreement with each of Messrs. DeWayne E. Laird, Martin E. Schloss and William
J. Huntley as of November 1, 1997. Each of the Change in Control Agreements has
a term ending on October 31, 2002, which extends automatically for an additional
year on October 31, 2002 and on each succeeding October 31 thereafter unless
either party serves written notice upon the other party six months prior to the
date upon which such extension would become effective. Pursuant to the
agreements, if the Company terminates the employment of any of these executives
without Cause, or the executive terminates his employment for Good Reason, at
the time of or within two years following a Change in Control (as such
capitalized terms are defined in the agreements), such executive will be
entitled to receive the following: (a) cash severance in a lump sum equal to two
times the sum of his then current base salary and the higher of the average
annual incentive

compensation paid to him for the three prior years, and the amount payable to
him upon achievement of the target level of performance for the year of
termination; (b) a pro rata annual incentive amount for the year of termination;
(c) stock options will become fully vested and exercisable at the date of
termination, and any options which were granted on or after November 1, 1997
(the effective date of the agreement) or, if previously granted, were not "in
the money" on such effective date, will remain exercisable until the earlier of
36 months after termination and the scheduled expiration date of such options;
(d) full vesting and settlement of all deferred stock held at termination; and
(e) continue participation in certain employee benefit plans until the earliest
of 18 months, the date equivalent benefits are provided by a subsequent
employer, and age 65, and if such plans do not allow continuation, to receive
payment in lieu of such benefits. The agreements also provide that if the
executive's employment with the Company is terminated without Cause and he is
not entitled to the severance described above, he will be entitled to receive a
lump sum cash payment equal to his then current base salary.

DIRECTORS' COMPENSATION

Directors who are not employees of the Company receive the following
compensation:

(1) an annual cash retainer of $30,000;

(2) an additional annual cash retainer of $50,000 for members of the
Executive Committee;

(3) an additional annual cash retainer of $15,000 for Committee Chairmen;

(4) meeting fees of $1,000 for each Board meeting attended in person and
for each Committee meeting attended in person that is held on a day
other than one on which a Board meeting is held (except for Executive
Committee meetings, which carry no meeting fees); and $500 for each
meeting attended by telephone conference call and for each Committee
meeting attended in person if held on the same day as a Board meeting;
and

(5) an annual grant of restricted stock in an amount equal to the lesser of
(x) 10,000 shares and (y) that number of shares having a value of
$30,000 on the date of grant. The restrictions on these awards lapse in
three equal installments, one-third of the total on each of the first,
second and third anniversaries of the date of grant, or in full if the
director ceases to serve as a director due to death, disability,
retirement at or after the age of 65, the failure to be renominated or
reelected, or in the event of a change in control.

In addition, upon joining the Board directors are granted a stock option to
purchase 50,000 shares at a price equal to the fair market value of the
Company's Common Stock on the date of grant. Such options become exercisable in
four equal installments, one-quarter of the total on each of the first, second,
third and fourth anniversaries of the date of grant, and expire on the tenth
anniversary of the date of grant.

Directors who serve on the Company's Compliance Committee also receive fees
for attending meetings thereof at the rates described above for attending
meetings held by Committees of the Board.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In connection with our public offering of 14,375,000 shares of Common Stock
in June 2002, we issued pro rata to the holders of the Series A Preferred Stock,
a new series of preferred stock that has certain voting rights that, together
with the voting rights of the Series A Preferred Stock, effectively reduce the
aggregate ownership of Series A Preferred Stock (on an `as-converted' basis)
that the holders are required to maintain in order to elect directors of the
Company. The threshold for electing four directors was reduced from 25% to 22.5%
and the threshold for electing three directors was reduced from 20% to 17.5%.
The 10% and 5% thresholds for electing two directors and one director,
respectively, remain in effect. The new series of preferred stock does not pay
dividends and has a liquidation preference of no more than $2,000 in the
aggregate. In addition, we agreed to permit Cirmatica Gaming, S.A., the holder
of a majority of the Series A Preferred Stock, subject to certain limitations,
to select a representative to attend all meetings of, and participate in
discussions of matters brought to, both the Board of Directors and the Executive
Committee of the Board of Directors.

The Company is part of a consortium which includes Lottomatica S.p.A. (the
parent company of Cirmatica Gaming, S.A.) that has been awarded a contract to be
the exclusive operator for instant tickets in Italy. This award has been
protested and is being reviewed in the Italian courts. If the award is ratified,
we expect to enter into a contract, which initially would provide for the
printing of tickets and the installation of a new centralized system, along with
a full complement of cooperative services.

Richard Weil, the brother of A. Lorne Weil, is Vice President of
International Business Development for the Company. Richard Weil received a base
salary of $225,000 and a bonus of $111,375 for fiscal 2001.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board of Directors currently consists of
Alan J. Zakon (Chairman), Rosario Bifulco and Larry J. Lawrence. Luciano La
Noce, who resigned from the Board in June 2002, served on the Committee
throughout fiscal 2001.

None of the members of the Compensation Committee is or has been an officer
or employee of the Company or a subsidiary of the Company or has had any
relationship or transaction with the Company requiring disclosure under this
item.

No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of our Board or Compensation Committee.

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee of the Board of Directors administers the
Company's executive compensation program. The Committee's responsibilities
include approving awards under the Company's incentive compensation and stock
option plans, approving the compensation of the Company's executives and making
recommendations to the Board of Directors with regard to the adoption of new
employee benefit plans and new executive compensation plans. The Committee is
comprised of three members of the Board of Directors who are not officers or
employees of the Company.

COMPENSATION COMPONENTS AND PHILOSOPHY

The principal components of the Company's compensation program consist of
base salaries, performance-based bonuses and stock options. The Company's
compensation program is designed to provide executives with compensation that is
competitive with other companies, reward executives based on Company and
individual performance and to align management and stockholder interests by
providing incentive compensation through stock option awards and
performance-based bonuses.

EXECUTIVE OFFICER COMPENSATION

Base salaries for the Company's executives other than the Chief Executive
Officer, as well as changes in such salaries, are based upon recommendations by
the Chief Executive Officer and other senior managers and reviewed on an annual
basis in conjunction with the Company's budget for the upcoming fiscal year,
taking into account such factors as competitive industry salaries, a subjective
assessment of the nature of the position and the contribution and experience of
the executive and the length of the executive's service.

The Company's management incentive compensation program (the "MICP"), which
was established in fiscal 1996, provides annual bonus opportunities for the
Company's key executive personnel based on three criteria: (1) the Company's
overall financial performance relative to the budget for a given fiscal year as
approved by the Board of Directors, (2) the financial performance of individual
business units of the Company for executives directly involved with the
operation of those units, and (3) a qualitative assessment by the Committee of
individual performance not directly measurable by financial results pursuant to
recommendations made by the Chief Executive Officer and other senior managers in
the Company. The purpose of the MICP is to reward employees who have made
significant contributions to the Company's achievement of its objectives and to
provide an incentive for further contributions. The financial performance of the
Company and its business units is principally measured under the MICP by the
attainment of "EBITDA" (Earnings

Before Interest, Taxes, Depreciation and Amortization) targets established for
the year. If the financial performance targets are met or exceeded, participants
will be eligible to receive year-end cash bonuses based on a percentage of their
base salaries, subject to adjustment by the Committee after consideration of
various objective and subjective factors. Potential payments under the MICP
during fiscal 2001 ranged from 25% to 50% of base salary for participants other
than the Chief Executive Officer, with each of Messrs. DeWayne E. Laird, Martin
E. Schloss, William J. Huntley and Clifford O. Bickell having the opportunity to
earn a bonus in an amount equal to 50% of base salary. In awarding bonuses for
fiscal 2001, the Company considered the achievement by the Company and its
business units of financial performance targets as well as various strategic
objectives during the fiscal year which significantly strengthened and expanded
the Company's businesses, including the following:

o The integration of Scientific Games Holdings Corp. and Autotote
Corporation, which has enabled the Company to achieve substantial cost
reduction and increased marketplace effectiveness.

o The award of new instant ticket and/or Cooperative Service contracts in
Italy, Norway, Ohio and South Carolina, as well as contract renewals or
extensions in six US states.

o The award of on-line lottery equipment or service contracts in South
Carolina, Jamaica, Ontario and Atlantic Canada, together with the
simultaneous start-up of the Maine and Iowa lotteries in July 2001.

o The commercial launch of our business-to-business account wagering
platform "Trackplay" that has been adopted by a number of leading
operators in the US and abroad.

o The re-signing of several pari-mutuel customers including Woodbine
Entertainment and the Atlantic City Casinos, as well as the award of
the Turf Paradise totalizator contract.

o Successful restructuring of our pari-mutuel operations in Germany,
France and the Netherlands resulting in significant profit
improvements.

While base salary and the annual incentive compensation components are tied
to employee responsibility and the Company's financial performance and progress
in achieving strategic goals, the purpose of stock option grants is to align
stockholder and employee interests by providing a component of compensation tied
directly to the performance of the Company's stock price. In January 2001, the
Committee granted each of the Named Executive Officers and other participants in
the MICP stock options to purchase the number of shares equal to approximately
50% of the maximum cash incentive award payable to such executive for fiscal
2001, divided by the fair market value of the Company's Common Stock on the date
of grant.

CEO COMPENSATION

The Company and Mr. Weil entered into a new employment agreement as of
November 1, 2000, which provides for an annual base salary of $750,000, a term
of employment ending December 31, 2004 and participation in the SERP. Mr. Weil's
employment agreement also provides him with the opportunity to earn annually up
to 100% of his base salary as incentive compensation pursuant to the terms of
the Company's MICP. Mr. Weil received his maximum incentive award for the fiscal
year ended December 31, 2001 and for the two-month transition period ended
December 31, 2000, as a result of the Company and Mr. Weil having achieved the
financial and performance objectives referred to above. (For additional
information relating to Mr. Weil's employment agreement, see "Employee
Agreements".)

DEDUCTIBILITY OF EXECUTIVE COMPENSATION

The Company expects that the compensation paid to executive officers during
fiscal 2001 will qualify for income tax deductibility under Section 162(m) of
the Internal Revenue Code. In addition, the Company has a general policy of
awarding stock options to its executive officers only pursuant to plans that the
Company believes will satisfy the requirements of Section 162(m).

Compensation Committee

Alan J. Zakon, Chairman
Rosario Bifulco
Larry J. Lawrence

STOCK PERFORMANCE GRAPH

The following graph compares the cumulative total stockholder return over
the sixty-two month period from October 31, 1996 through December 31, 2001 on
(a) the Company's Common Stock, (b) the Nasdaq National Market ("Nasdaq"), on
which the Company's shares of Common Stock commenced trading as of January 29,
2002, having previously traded on the American Stock Exchange Market Value Index
("Amex"), (c) Amex and (d) a peer group index of companies that provide services
similar to those of the Company, consisting of International Lottery and
Totalisator Systems, Inc., Churchill Downs, Inc. and GTECH Holdings Corp. (the
"Peer Group Index"). The Company elected to use a peer group index rather than a
published industry or line-of-business index because the Company is not aware of
any such published index of companies which, in terms of their businesses, are
as comparable to the Company as those included in the peer group index. The peer
group companies have been weighted based upon their relative market
capitalization each year. The graph assumes that $100 was invested on October
31, 1996 in the Company's Common Stock, the Nasdaq, Amex and the Peer Group
Index and that all dividends were reinvested. The Company changed its fiscal
year-end from an October 31 year-end to a calendar year-end, beginning with the
year ended December 31, 2001, so that the measurement period for the performance
graph covers the fiscal years ended October 31, 1997, 1998, 1999 and 2000, the
two-month transition period ended December 31, 2000 and the last completed
fiscal year ended December 31, 2001.

COMPARISON OF SIXTY-TWO MONTH CUMULATIVE TOTAL RETURN
FOR THE PERIOD BEGINNING ON OCTOBER 31, 1996 AND ENDING ON DECEMBER 31, 2001

[GRAPH OMITTED]

10/96 10/97 10/98 10/99 10/00 12/00 12/01
-------------------------------------------------------------------------------------------------------------

Scientific Games Corporation $100.00 $185.71 $123.81 $195.24 $236.19 $224.76 $666.67
Nasdaq $100.00 $131.59 $147.21 $248.85 $280.75 $204.81 $162.52
Amex $100.00 $123.72 $125.78 $156.22 $182.31 $169.94 $154.64
Peer Group Index $100.00 $111.54 $92.17 $75.41 $69.57 $80.03 $146.02

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors currently consists of Larry
J. Lawrence (Chairman), Rosario Bifulco, Colin J. O'Brien and Sir Brian G.
Wolfson. Messrs. Lawrence, O'Brien and Wolfson are independent as defined in
Rule 4200(a)(14) of the National Association of Securities Dealers' ("NASD")
listing standards. Mr. Bifulco, who was designated as a director by the holders
of the Company's Preferred Stock, is employed by Lottomatica S.p.A., which may
be deemed to be an affiliate of the Company by virtue of its ownership of
Cirmatica Gaming S.A., our largest stockholder. In accordance with NASD Rule
4350(d)(2)(B), Mr. Bifulco was appointed to the Audit Committee upon the
determination by the Board of Directors that his membership is in the best
interests of the Company and its stockholders due to his experience in corporate
finance.

The Audit Committee's specific responsibilities are set forth in its
charter, a copy of which was filed as Appendix A to the Proxy Statement for the
2001 Annual Meeting of Stockholders, which was filed with the Securities and
Exchange Commission on March 28, 2001.

As required by the charter, the Committee reviewed the Company's financial
statements for the fiscal year ended December 31, 2001 and met with management
and KPMG LLP, the independent accountants, to discuss the financial statements.
The Committee also discussed with representatives of KPMG LLP the matters
required to be discussed by Statement on Auditing Standards 61, Communication
with Audit Committees.

The Committee received the written disclosures and the letter from KPMG LLP
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and discussed with KPMG LLP its independence
from the Company. The Committee also considered whether the provision of
non-audit services by KPMG LLP is compatible with its maintaining auditor
independence.

Based on these reviews and discussions and in reliance thereon, the
Committee recommended to the Board of Directors that the audited financial
statements for the Company be included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2001 for filing with the Securities
and Exchange Commission.

Audit Committee

Larry J. Lawrence, Chairman
Rosario Bifulco
Colin J. O'Brien
Sir Brian G. Wolfson

FEES PAID TO KPMG LLP

KPMG LLP billed the Company the following fees for professional services
rendered in respect of the Company's fiscal year ended December 31, 2001:

Audit Fees: $733,376
Financial Information Systems Design and Implementation Fees: - 0 -
All Other Fees: $739,374

The Audit Fees listed above were billed in connection with the audit of the
Company's financial statements for the fiscal year ended December 31, 2001 and
the two-month transition period ended December 31, 2000, and the review of the
financial statements included in the Company's Forms 10-Q for that fiscal year
and the two-month transition period. The amount listed as All Other Fees
consists of $346,639 billed for tax consulting services and $392,735 for
audit-related services, which included accounting consultation and services
related to the Company's filings with the Securities and Exchange Commission.

PROPOSAL 2

AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE AGGREGATE NUMBER OF SHARES
OF CAPITAL STOCK AUTHORIZED TO BE ISSUED BY THE COMPANY
FROM 102,000,000 SHARES (2,000,000 SHARES OF PREFERRED STOCK
AND 100,000,000 SHARES OF COMMON STOCK) TO 202,000,000 SHARES
(2,000,000 SHARES OF PREFERRED STOCK AND
200,000,000 SHARES OF COMMON STOCK)

INTRODUCTION

The Board of Directors has determined that it is advisable and in the best
interests of the Company to increase the Company's authorized capital stock from
102,000,000 shares to 202,000,000 shares.

The Company's Restated Certificate of Incorporation, as currently in effect
(the "Certificate of Incorporation"), authorizes the Company to issue up to One
Hundred Two Million (102,000,000) shares of capital stock: Two Million
(2,000,000) shares of preferred stock (the "Preferred Stock"), par value $1.00
per share, including 1,600,000 authorized shares of Series A Convertible
Preferred Stock and 2,000 authorized shares of Series B Preferred Stock; and One
Hundred Million (100,000,000) shares of common stock (the "Common Stock"),
including 99,300,000 authorized shares of Class A Common Stock, par value $.01
per share (the "Class A Common"), and 700,000 shares of Class B Nonvoting Common
Stock, par value $.01 per share. The Board of Directors on July 25, 2002,
adopted a resolution proposing that the Certificate of Incorporation be amended
to increase the authorized number of shares of capital stock to Two Hundred Two
Million (202,000,000) shares, of which Two Million (2,000,000) shares will be
Preferred Stock and Two Hundred Million (200,000,000) shares will be Common
Stock, including 199,300,000 shares of Class A Common Stock, subject to approval
of the amendment by the Company's stockholders.

CURRENT USE OF SHARES

As of August __, 2002, the Company has approximately _______________ shares
of Common Stock outstanding, approximately ________________ shares reserved for
conversion of the Company's Series A Convertible Preferred Stock, approximately
________________ shares reserved for exercise of the Company's warrants, and
approximately ________________ shares reserved for issuance under the Company's
stock option plans, of which, currently, approximately _________ shares are
covered by outstanding options and approximately ______________ shares are
available for grant or purchase. Based upon the foregoing number of outstanding
and reserved shares of Common Stock, the Company currently has approximately
_____________ shares remaining available for other purposes.

PROPOSED AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION

The Board of Directors has adopted resolutions setting forth (i) the
proposed amendment to the first paragraph of Article Fourth of the Certificate
of Incorporation (the "Amendment"); (ii) the advisability of the Amendment; and
(iii) a call for submission of the Amendment for approval by the Company's
stockholders at the Annual Meeting.

The following is the text of the first paragraph of Article Fourth of the
Certificate of Incorporation, as proposed to be amended:

"The total number of shares of all stock which the Corporation shall
have authority to issues is 202,000,000), consisting of: (i)
199,300,000 shares of Class A Common Stock, par value of $.01 per
share (herein called the "Class A Common Stock"); (ii) 700,000 shares
of Class B Nonvoting Common Stock, par value $.01 per share (the
"Class B Common Stock"); and (iii) 2,000,000 shares, $1.00 par value,
as designated Preferred Stock. All cross references in each
subdivision of this ARTICLE FOURTH refer to other paragraphs in such
subdivision unless otherwise indicated."

PURPOSE AND EFFECT OF THE PROPOSED AMENDMENT

The Board of Directors believes it is in the Company's best interest to
increase the number of shares of Common Stock that the Company is authorized to
issue in order to provide flexibility to issue Common Stock for corporate action
in the future, such as to adopt additional employee benefits plans or reserve
additional shares for issuance under such plans and to make acquisitions through
the use of stock. The Board of Directors believes that the currently available
unissued shares do not provide sufficient flexibility for corporate action in
the future. The Board of Directors has no immediate plans, understandings,
agreements, or commitments to issue any of the shares of additional Common Stock
being authorized. The proposed increase would avoid repeated separate amendments
to the Certificate of Incorporation and the delay and expense of holding special
meetings of the stockholders to approve such amendments.

No additional action or authorization by the Company's Common stockholders
would be necessary prior to the issuance of such additional shares, unless
required by applicable law, regulatory authorities or the rules of the Nasdaq
National Market or any other stock exchange or national securities association
trading system on which the Common Stock is may then be listed or quoted. The
Company reserves the right to seek a further increase in authorized shares from
time to time in the future as considered appropriate by the Board of Directors.

Under the Certificate of Incorporation, only the holders of the Company's
Series A Convertible Preferred Stock have preemptive rights with respect to the
Common Stock. Thus, should the Board of Directors elect to issue additional
shares of Common Stock, existing holders of the Common Stock would not have any
preferential rights to purchase such shares. In addition, if the Board of
Directors elects to issue additional shares of Common Stock, such issuance could
have a dilutive effect on the earnings per share and book value per shares and
on the voting power of current holders of Common Stock.

The affirmative vote of the holders of a majority of the outstanding shares
of the Company's Class A Common Stock and Series A Convertible Preferred Stock
entitled to vote, voting together as a single class on an `as-converted' basis,
and the affirmative vote of the holders of a majority of the outstanding shares
of the Series A Convertible Preferred Stock entitled to vote, voting as a
separate class, are required to approve the amendment to the Certificate of
Incorporation to effect the proposed increase in our authorized shares.

THE BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL

PROPOSAL 3

APPROVAL OF THE SCIENTIFIC GAMES CORPORATION
2002 EMPLOYEE STOCK PURCHASE PLAN AND
THE RESERVATION OF SHARES FOR ISSUANCE THEREUNDER

The Board of Directors adopted the Scientific Games Corporation 2002
Employee Stock Purchase Plan (the "ESPP") on April 25, 2002, and reserved One
Million (1,000,0000) shares of the Company's Class A Common Stock ("Common
Stock") for issuance under the ESPP, subject to stockholder approval.

At the Annual Meeting, the Company's stockholders are being asked to
approve the ESPP and the Board's reservation of shares of Common Stock under the
ESPP for the purpose of qualifying such shares for special tax treatment under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").

SUMMARY OF THE ESPP

General. The purpose of the ESPP is to provide eligible employees of the
Company and its designated subsidiaries with an opportunity to purchase shares
of the Company's Common Stock by means of voluntary, systematic payroll
deductions. The Board of Directors believes that the ESPP will assist the
Company in attracting and retaining employees and provide additional incentives
for employees to contribute to the prosperity of the Company.

Administration. The ESPP is administered by the Compensation Committee of
the Board. The Compensation Committee has full power to interpret the ESPP and
the decisions of the Compensation Committee are final and binding upon all
participants. In the event the Compensation Committee is no longer responsible
for administering the ESPP, the Board of Directors will be responsible for
administering the ESPP.

Participation in the Offering. During the term of the ESPP, offerings under
the ESPP will begin on each January 1 and July 1 and extend for six months
thereafter (an "Option Period"). If the ESPP is approved at the Annual Meeting,
the Company anticipates implementing the first Option Period under the ESPP as
of January 1, 2003. To participate in the ESPP, each eligible employee must
authorize payroll deductions pursuant to the ESPP. Such payroll deductions may
not exceed, for an Option Period, 15% of a participant's compensation for the
two calendar quarters immediately preceding the first day of the Option Period
and are also subject to the limitations discussed below. Each participant who
has elected to participate is automatically granted an option to purchase shares
of Common Stock as of the first day of the Option Period. The option is
exercised on the last day of each Option Period to the extent of the payroll
deductions accumulated during such Option Period, except that the option expires
upon termination of employment if that occurs prior to the exercise date.

Eligibility. An employee who has been employed by the Company (or a
designated subsidiary of the Company) for at least one year, and has a customary
work schedule of at least 20 hours per week, is eligible to participate in the
ESPP. However, no employee is eligible to participate in the ESPP to the extent
that, immediately after the grant, the employee would own 5% or more of the
total combined voting power or value of all classes of stock of the Company or a
subsidiary of the Company, and no employee's rights to purchase shares of Common
Stock pursuant to the ESPP may accrue at a rate that exceeds $25,000 per
calendar year. An eligible employee may become a participant in the ESPP by
filing, prior to the beginning of the Option Period, a payroll deduction
authorization form authorizing the Company to withhold automatically a
percentage of his or her compensation during the Option Period. Once an employee
becomes a participant for an Option Period, he or she will automatically remain
a participant for succeeding Option Periods until he or she changes or revokes
his or her payroll deduction authorization in writing or becomes ineligible to
participate in the ESPP. As of August ___, 2002, approximately 1,350 of the
Company's employees, including four executive officers, were eligible to
participate in the ESPP.

Purchase Price, Shares Purchased. The purchase price of the Common Stock
issued pursuant to the exercise of an option under the ESPP will equal 85% of
the fair market value of the Common Stock on (i) the first day of the Option
Period, or (ii) the last day of the Option Period, whichever is less. On August
___, 2002, the closing price per share of the Company's Common Stock was
$_____________ . The number of whole shares of Common Stock a participant
purchases in each Option Period is determined by dividing the total amount of
payroll deductions withheld from the participant's compensation during that
Option Period by the purchase price.

Termination of Employment. Termination of a participant's employment for
any reason, including death, immediately cancels his or her option and
participation in the ESPP. In such event, the payroll deductions credited to the
participant's account will be returned without interest to him or her or, in the
case of death, to the person or persons entitled to those deductions and he or
she will have no further rights under the ESPP.

Adjustments Upon Changes in Capitalization, Merger or Sale of Assets. In
the event that the Company's Common Stock is changed by reason of any stock
split, stock dividend, combination, recapitalization or other similar change in
the Company's capital structure effected without the receipt of consideration,
appropriate proportional adjustments may be made in the number of shares of
stock subject to the ESPP, the number of shares of stock to be purchased
pursuant to an option and the price per share of Common Stock covered by an
option. Any such adjustment will be made by the Compensation Committee, whose
determination will be conclusive and binding.

Amendment and Termination of the ESPP. The Board may terminate or amend the
ESPP at any time, except that it may not increase the number of shares subject
to the ESPP other than as described in the ESPP. The ESPP will continue until
all stock reserved for purposes of the ESPP has been purchased, unless otherwise
terminated earlier by the Board.

Withdrawal. A participant may withdraw from the ESPP at any time during an
Option Period by giving written notice to the Company of his or her election to
withdraw. Upon such withdrawal, the participant shall cease to be a

participant, such option shall be deemed cancelled in its entirety, and the
balance in his or her withholding account will be returned to him or her as soon
as practicable.

New Plan Benefits. Because benefits under the ESPP will depend upon
employees' elections to participate and the fair market value of the Company's
Common Stock at various future dates, it is not possible to determine the
benefits that will be received by executive officers and other employees if the
ESPP is approved by the shareholders. Non-employee directors are not eligible to
participate in the ESPP.

FEDERAL INCOME TAX CONSEQUENCES

If the Company's shareholders approve this proposal, the ESPP, and the
right of participants to make purchases thereunder, should qualify under the
provisions of Sections 421 and 423 of the Code. Under these provisions, no
income will be taxable to a participant until the shares purchased under the
ESPP are sold or otherwise disposed of. Upon a sale or other disposition of the
shares, the participant will generally be subject to tax, and the amount of the
tax will depend upon the holding period. If the shares are sold or otherwise
disposed of more than two years from the first day of the applicable Option
Period and more than one year from the date of transfer of the shares to the
participant, then the participant generally will recognize ordinary income equal
to the lesser of (i) the excess of the fair market value of the shares at the
time of such sale or disposition over the purchase price, or (ii) an amount
equal to 15% of the fair market value of the shares as of the first day of the
Option Period. Any additional gain should be treated as long-term capital gain.
If the shares are sold or otherwise disposed of before the expiration of this
holding period, the participant will recognize ordinary income generally equal
to the excess of the fair market value of the shares on the date the shares are
purchased over the purchase price. Any additional gain or loss on such sale or
disposition will be long-term or short-term capital gain or loss, depending on
the holding period. The Company is not entitled to a deduction for amounts taxed
as ordinary income or capital gain to a participant except to the extent
ordinary income is recognized by participants upon a sale or disposition of
shares prior to the expiration of the holding period described above. In all
other cases, no deduction is allowed to the Company.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION ON
THE PARTICIPANT AND THE COMPANY WITH RESPECT TO THE SHARES PURCHASED UNDER THE
ESPP. IT DOES NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE TAX
CONSEQUENCES ARISING IN THE CONTEXT OF A PARTICIPANT'S DEATH OR THE INCOME TAX
LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT'S
INCOME OR GAIN MAY BE TAXABLE.

INCORPORATION BY REFERENCE

The foregoing is only a summary of the ESPP and is qualified in its
entirety by reference to its full text, a copy of which is attached hereto as
Appendix A.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the votes cast is
required to approve the Scientific Games Corporation 2002 Employee Stock
Purchase Plan.

THE BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL

EQUITY COMPENSATION PLAN INFORMATION

The following table gives information about the Company's Common Stock that
may be issued upon exercise of options or other stock rights under all of the
Company's existing compensation plans as of December 31, 2001.

--------------------------------------------------------------------------------------------------------------------
(a) (b) (c)

NUMBER OF
SECURITIES NUMBER OF SECURITIES
TO BE ISSUED UPON FOR FUTURE ISSUANCE REMAINING AVAILABLE
EXERCISE OF WEIGHTED-AVERAGE EXERCISE UNDER EQUITY
PLAN CATEGORY OUTSTANDING PRICE OF OUTSTANDING COMPENSATION PLANS
OPTIONS, OPTIONS, (EXCLUDING SECURITIES
WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (a)
--------------------------------------------------------------------------------------------------------------------

EQUITY COMPENSATION PLANS APPROVED BY 5,178,676 $3.17 2,200,183
SECURITY HOLDERS
--------------------------------------------------------------------------------------------------------------------
EQUITY COMPENSATION PLANS NOT APPROVED 6,835,176 $2.79 43,113
BY SECURITY HOLDERS
--------------------------------------------------------------------------------------------------------------------
Total: 12,013,852 $2.95 2,243,296
--------------------------------------------------------------------------------------------------------------------

As of December 31, 2001, the equity compensation plans of the Company not
submitted for stockholder approval consisted of certain stock options granted in
1992 and 1993, warrants issued in 1991, 1992, 1995 and 2000, and the Company's
1995 Equity Incentive Plan, which was originally adopted by the Board of
Directors in May 1995.

Stock Options Granted in 1992 and 1993. The Company granted stock options
to members of management pursuant to arrangements approved by the Board of
Directors in 1992 and 1993. The options permit the holders to purchase an
aggregate of 1,215,000 shares of Common Stock at exercise prices ranging between
$2.34 and $13.50 per share, and each such option is scheduled to expire on the
tenth anniversary of its date of grant.

Warrants Issued in 1991. The Company issued warrants in October 1991 to
holders of the Company's subordinated debentures outstanding as of such date in
connection with an amendment to the debentures. The warrants, as amended in
November 1998, permit the holders to purchase an aggregate of 1,805,707 shares
of Common Stock at an exercise price of $1.6875 per share and are scheduled to
expire in October 2002.

Warrants Issued in 1992. The Company issued warrants in October 1992 to
lenders of the Company in connection with an amendment to a credit agreement.
The warrants permit the holders to purchase an aggregate of 146,793 shares of
Class B Common Stock at an exercise price of $3.83 per share and are scheduled
to expire in October 2003.

Warrants Issued in 1995. The Company issued warrants in September 1995 to
lenders of the Company in connection with an amendment to a credit agreement.
The warrants, as amended in April 2000, permit the holders to purchase an
aggregate of 43,036 shares of Common Stock at an exercise price of $3.32 per
share and are scheduled to expire in April 2003.

Warrant Issued in 2000. The Company issued a warrant in October 2000 to a
financial advisor for services related to the acquisition of Scientific Games
Holdings Corp. The warrant permits the holder to purchase an aggregate of
250,000 shares of Common Stock at an exercise price of $3.58 per share and is
scheduled to expire in October 2004.

The 1995 Equity Incentive Plan. The Company's 1995 Equity Incentive Plan,
as amended (the "1995 Plan"), authorizes grants of non-qualified stock options,
deferred stock and other stock-related awards to employees who are not executive
officers or directors of the Company. As of December 31, 2001, 3,374,640 shares
were subject to outstanding awards under the 1995 Plan and 43,113 shares
remained available for grant under the 1995 Plan. The 1995 Plan is administered
by the Compensation Committee, which is authorized to select the participants,
determine the type and number of awards to be granted and the number of shares
of Common Stock to which awards will relate, specify times at which awards will
be exercisable, set other terms and conditions of such awards, interpret and
specify rules and regulations relating to the 1995 Plan, and make all other
determinations that may be necessary or advisable for the administration of the
1995 Plan. The Committee's practice has been to award stock options which vest
in four annual installments (one-quarter of the total on each of the first,
second, third and fourth anniversaries of the grant date), have an exercise
price equal to the fair market value of the Company's Common Stock on the date
of grant, and expire on the tenth anniversary of the date of grant. The
Committee may, in its discretion, accelerate the exercisability, the lapsing of

restrictions, or the expiration of deferral or vesting periods of any award, and
such accelerated exercisability, lapse, expiration and vesting shall occur
automatically in the event of a consolidation or merger of the Company or a sale
of substantially all of the Company's assets. The Board may amend or terminate
the 1995 Plan without stockholder approval, but no amendment or termination of
the 1995 Plan may adversely affect any award previously granted under the 1995
Plan without the consent of the holder. Unless earlier terminated by the Board,
the 1995 Plan will terminate at such time as no shares remain available for
issuance under the 1995 Plan and the Company has no further rights or
obligations with respect to outstanding awards under the 1995 Plan.

PROPOSAL 4

APPOINTMENT OF INDEPENDENT ACCOUNTANTS

The Board has appointed KPMG LLP as independent accountants for the Company
to examine the Company's financial statements for the current fiscal year ending
December 31, 2002 and recommends that the stockholders of the Company ratify
that appointment. KPMG LLP has served as the Company's independent accountants
for all fiscal years since 1982. Representatives of KPMG LLP are expected to be
present at the Annual Meeting. They will have an opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions from stockholders.

The persons named on the enclosed proxy card intend to vote each proxy for
ratification of the appointment of KPMG LLP unless such proxy specifies
otherwise. If the appointment is not ratified by stockholders, the Board is not
obligated to appoint other independent accountants, but the Board will give
consideration to such unfavorable vote.

THE BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL

OTHER MATTERS

The Company is not aware of any matter other than those described in this
Proxy Statement that will be acted upon at the Annual Meeting. In the event that
any other matter properly comes before the meeting for a vote of stockholders,
the persons named as proxies in the enclosed form of proxy will vote in
accordance with their best judgment on such other matter.

Expenses in connection with the solicitation of proxies will be paid by the
Company. Proxies are being solicited primarily by mail, but, in addition,
officers and regular employees of the Company who will receive no extra
compensation for their services may solicit proxies in person or by telephone or
telegram. The Company also has retained D.F. King & Co., Inc. to assist in
soliciting proxies at a fee of $4,000 plus reimbursement of reasonable
out-of-pocket costs and expenses.

STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING

Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, if a
stockholder wants to submit a proposal for inclusion in the Company's proxy
materials for the next annual meeting of stockholders, it must be received at
the Company's principal executive offices, 750 Lexington Avenue, 25th Floor, New
York, New York 10022, Attention: Secretary, not later than April __, 2003. In
order to avoid controversy, stockholders should submit proposals by means,
including electronic means, that permit them to prove the date of delivery.

If a stockholder intends to present a proposal for consideration at the
next annual meeting outside of the processes of Rule 14a-8 under Exchange Act,
the Company must receive notice of such proposal at the address given above by
June __, 2003, or such notice will be considered untimely under Rule 14a-4(c)(1)
under the Exchange Act, and the Company's proxies will have discretionary voting
authority with respect to such proposal, if presented at the annual meeting,
without including information regarding such proposal in its proxy materials.

The deadlines described above are calculated by reference to the mailing
date of the proxy materials for this year's annual meeting. If the Board changes
the date of next year's annual meeting by more than 30 days, the Board will, in
a timely manner, inform stockholders of such change and the effect of such
change on the deadlines given above by including a notice under Item 5 in the
Company's earliest possible quarterly report on Form 10-Q, or if that is
impracticable, by any means reasonably calculated to inform the stockholders.

Your cooperation in giving this matter your immediate attention and in
returning your proxy promptly will be appreciated.

By Order of the Board of Directors
MARTIN E. SCHLOSS
Vice President, General Counsel and Secretary

Dated: August __, 2002

APPENDIX A

SCIENTIFIC GAMES CORPORATION

2002 EMPLOYEE STOCK PURCHASE PLAN

SECTION 1. PURPOSE OF PLAN

(a) The purpose of the Scientific Games Corporation 2002 Employee Stock
Purchase Plan is to provide Eligible Employees with the opportunity to
purchase Common Stock of the Company by means of voluntary, systematic
payroll deductions and thereby acquire an interest in the future of the
Company.

(b) It is the intention of the Company that the Plan qualify as an
"employee stock purchase plan" under Section 423 of the Code. The
provisions of the Plan shall be construed so as to comply in all
respects with the requirements of the Code applicable to employee stock
purchase plans.

SECTION 2. DEFINITIONS

"Board of Directors" means the Board of Directors of Scientific Games
Corporation.

"Closing Price" of the Stock means, on any business day, the last sale
price for a share of such Stock as reported on the principal market on which the
Stock is traded.

"Code" means the Internal Revenue Code of 1986, as amended.

"Committee" means the Compensation Committee of the Board of Directors
or a committee duly authorized by the Board of Directors to administer the Plan.

"Company" means Scientific Games Corporation.

"Compensation" means the Participant's base wages, salary, bonuses, and
commissions and shall include (and all calculations based upon the Participant's
Compensation shall include) all amounts that would be included in the
Participant's taxable income but for the fact that such amount was contributed
to a qualified plan pursuant to an elective deferral under Section 401(k) of the
Code or contributed under a salary reduction agreement pursuant to Section 125
of the Code or deferred pursuant to a non-qualified deferred compensation plan,
in each case, to the full extent permitted by law and applicable regulations, if
any.

"Eligible Employee" means an employee of the Company or a Subsidiary
who meets the eligibility requirements set forth in Section 5 hereof.

"Option Period" means each of the periods pursuant to Section 6 of this
Plan during which this Plan remains in effect.

"Options" shall mean a right to purchase shares of Stock pursuant to
this Plan.

"Participant" shall have the meaning set forth in Section 6 of this
Plan.

"Plan" means this 2002 Employee Stock Purchase Plan.

"Specified Percentage" shall have the meaning set forth in Section 7(a)
of this Plan.

"Stock" means the Class A Common Stock, $.01 par value per share, of
the Company.

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"Subsidiary" means a "subsidiary corporation" as defined in Section
424(f) of the Code that the Board of Directors has designated as a subsidiary
whose employees are, subject to the specific requirements of the Plan, eligible
to participate in the Plan.

SECTION 3. ADMINISTRATION OF PLAN

The Plan shall be administered by the Committee. The Committee shall have the
right to determine all questions regarding the interpretation and application of
the provisions of the Plan and to make, administer, and interpret such rules and
regulations as it deems necessary or advisable with respect to the Plan. The
Committee's decisions will be final and binding. At the request of the
Committee, the Company may appoint a "Plan Administrator" to carry out the
ministerial functions necessary to implement the decisions and actions of the
Committee with respect to any offering under the Plan.

SECTION 4. STOCK

Under the Plan, there is available an aggregate of 1,000,000 shares of Stock
(subject to adjustment as provided in Section 17) for sale pursuant to the
exercise of Options granted under the Plan to Eligible Employees. The Stock to
be delivered upon exercise of Options under the Plan may be either shares of
authorized but unissued Stock or shares of reacquired Stock, as the Board of
Directors may determine. With respect to the offering applicable to an Option
Period, the Committee will specify the number of shares to be made available and
such other terms and conditions not inconsistent with the Plan as may, in the
opinion of the Committee, be necessary or appropriate; provided, however, that
absent action by the Committee, the maximum number of shares then available for
purchase under the Plan shall be offered in each Option Period. All shares
included in any offering under the Plan in excess of the total number of shares
for which Options are granted hereunder and all shares with respect to which
Options granted hereunder which are not exercised or are cancelled or deemed to
be cancelled as provided herein shall continue to be reserved for the Plan and
shall be available for inclusion in any subsequent offering under the Plan.

SECTION 5. ELIGIBLE EMPLOYEES

(a) Except as otherwise provided below, each individual who is an employee
of the Company or a Subsidiary, who has a customary working schedule of
at least twenty (20) hours per week, and who has been an employee of
the Company or a Subsidiary for at least one year will be eligible to
participate in the Plan.

(b) Any employee who, immediately after the grant of an Option, would own
or be considered to own (in accordance with the provisions of Sections
423 and 424(d) of the Code) stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of
the Company or a subsidiary of the Company will not be eligible to
receive an Option pursuant to the Plan.

(c) The Plan will be operated in compliance with the limitations on
purchases of stock contained in Section 423(b)(8) of the Code.

SECTION 6. OPTION PERIODS; METHOD OF PARTICIPATION

(a) Unless the Board of Directors determines otherwise, an offering of
shares under the Plan shall be made with respect to each Option Period
during which the Plan remains in effect. Each Option Period shall be of
six-months duration. Each Option Period shall commence on either
January 1 or July 1 of the calendar year.

(b) Each person who will be an Eligible Employee on the first day of an
Option Period may elect to participate in the Plan by executing and
delivering, within a reasonable time frame prior to the first day of
the Option Period as specified by the Committee, a payroll deduction
authorization form in accordance with Section 7. Such employee will
thereby become a participant ("Participant") in the Plan for that
Option Period and each subsequent Option Period unless he or she
withdraws from participation in the Plan in accordance with Section 12.

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SECTION 7. PAYROLL DEDUCTION AMOUNTS AND PROCEDURES

(a) The payroll deduction authorization form completed by the Participant
will request withholding by means of payroll deductions from
Compensation payable during the applicable Option Period at a rate,
expressed as a whole percentage, of not less than 1%, except as
provided in Section 7(b), nor more than 15% of his or her Compensation
for the two calendar quarters immediately preceding the first day of
such Option Period (the "Specified Percentage"). The amount equal to
the Specified Percentage of the Participant's Compensation for the two
preceding calendar quarters will be withheld from the Participant's
Compensation in installments over the term of the Option Period (one
installment each pay period during the Option Period, with the
installments to be as nearly equal as is practicable, subject to
adjustment resulting from a change in the Specified Percentage as
permitted in Section 7(b) below). Such withheld amounts will be
credited to a withholding account for the Participant. The
Participant's payroll deduction authorization will remain in effect
until amended in writing by the Participant in accordance with Section
7(b) or Section 7(c), or until the Participant withdraws from the Plan
in accordance with Section 12.

(b) As of the April 1 or October 1 which marks the first day of the second
three months of any Option Period, a Participant may, subject to the
provisions set forth elsewhere in this Plan, elect either to increase
or decrease by one or more whole percentages (including a reduction to
zero) the Specified Percentage of his or her payroll deductions by
delivering written notice to the Company of such election within a
reasonable time period before such April 1 or October 1 date, as
applicable, as specified by the Committee; provided, however, that an
increase in the Specified Percentage will not increase the maximum
number of shares for which the Participant may exercise the Option
granted for such Option Period as determined under Section 7 of this
Plan. Such increase or decrease in the Specified Percentage will take
place as of the applicable date or as soon thereafter as practicable,
as determined by the Company. A reduction in future payroll deductions
to zero will not be treated as an election to withdraw from the Plan
for the current Option Period unless the Participant affirmatively
elects to withdraw in writing as provided by Section 12(a) of this
Plan; however, a reduction to zero will be treated as an election by
the Participant to withdraw from the Plan with respect to subsequent
Option Periods.

(c) A Participant may increase or reduce (but not below 1%) the Specified
Percentage of his or her payroll deduction authorization for a future
Option Period by written notice delivered to the Company, within a
reasonable time period specified by the Committee, prior to the first
day of the Option Period as to which the change is to be effective.

SECTION 8. GRANT OF OPTIONS

Each person who is a Participant on the first day of an Option Period will as of
such day be granted an Option for such Option Period. Such Option will be for
the number of whole shares of Stock to be determined by dividing (i) an amount
equal to 15% of such Participant's Compensation for the two calendar quarters
immediately preceding the first day of the Option Period by (ii) 85% of the fair
market value of a share of the Stock as of the first day of the Option Period
and disregarding any fractional interest.

In the event the total maximum number of shares for which Options would
otherwise be granted in accordance with this Section 8 under any offering
hereunder exceeds the number of shares offered or available under the Plan, the
Company shall reduce the maximum number of shares for which Participants may be
granted Options to allot the shares available in such manner as it shall
determine, but generally pro rata, and shall grant Options to purchase only for
such reduced number of shares. In such event, the payroll deductions to be made
pursuant to the authorizations therefor shall be reduced accordingly (without
regard to the otherwise applicable minimum contributions) and the Company shall
give written notice of such reduction to each Participant affected thereby.

Notwithstanding the foregoing, no Participant may be granted an Option to
purchase shares under the Plan which permits his or her right to purchase Stock
under the Plan and all other stock option plans of the Company pursuant to
Section 423 of the Code to accrue at a rate which exceeds in any one calendar
year $25,000 of the fair market value of such Stock (determined as of the first
day of the applicable Option Period).

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SECTION 9. PURCHASE PRICE

The purchase price of Stock issued pursuant to the exercise of an Option will be
85% of the fair market value of the Stock at (a) the time of grant of the
Option, or (b) the time at which the Option is deemed exercised, whichever is
less. Unless the Board of Directors determines otherwise in good faith, fair
market value on any given day will mean the Closing Price of the Stock on such
day (or, if there was no Closing Price on such day, the latest day prior thereto
on which there was a Closing Price). A good faith determination by the Board of
Directors as to fair market value shall be final and binding. The purchase price
for shares purchased pursuant to the Plan will be payable only by means of
payroll deductions as provided herein.

SECTION 10. EXERCISE OF OPTIONS

(a) Each employee who is a Participant in the Plan on the last day of an
Option Period will be deemed on such day to have exercised, to the
extent of such Participant's withholding, the Option granted to him or
her for that Option Period. The exercise shall be for the purchase of
the maximum number of whole shares of Stock subject to the Option which
can be purchased with the entire withholding amount in the
Participant's account, but not to exceed the number of shares
determined under Section 8. In the event that the amount of the
Participant's withholding is in excess of the total purchase price of
the Stock so issued, the balance of the account shall be returned to
the Participant, provided, that if such excess amount is less than the
purchase price of one share of Stock, such excess amount shall be
retained by the Company in the Participant's withholding account and
shall be available for application toward the purchase price of shares
of Stock in a subsequent Option Period. The entire balance of the
Participant's withholding account following the final Option Period
shall be returned to the Participant.

(b) As promptly as practicable after the end of the Option Period, the
Company will deliver the shares purchased upon exercise of the Option
to a brokerage firm, as may be designated by the Committee from time to
time, which will hold shares in individual accounts established for the
benefit of each Participant. The brokerage account may be in the name
of the Participant or, if such Participant so indicates on the
appropriate form, in the Participant's name jointly with another
person, with right of survivorship.

(c) Notwithstanding anything herein to the contrary, the obligation of the
Company to issue and deliver shares of Stock under the Plan is subject
to the approval required of any governmental authority in connection
with the authorization, issuance, sale or transfer of said shares of
Stock, to any requirements of any national securities exchange
applicable thereto, and to compliance by the Company with other
applicable legal requirements in effect from time to time, including
without limitation any applicable tax withholding requirements.

SECTION 11. USE OF FUNDS; NO FRACTIONAL SHARE INTERESTS

(a) All payroll deductions received or held by the Company under the Plan
may be used by the Company for any corporate purpose and the Company
shall not be obligated to segregate such payroll deductions; provided,
however, that the Company may elect, at its sole discretion, to
segregate such payroll deductions for the benefit of Participants.
Until paid over to the applicable Participant or used to purchase
shares of Stock as provided hereunder, the amount of each Participant's
payroll deductions in connection with any applicable offering shall
represent an indebtedness of the Company to such Participant.

(b) No interest will be payable on withholding accounts; provided, however,
that the Company may elect, at its sole discretion, to pay interest on
such withholding accounts on a non-discriminatory basis at a market
rate of interest calculated pursuant to procedures established by the
Company, all as determined in good faith by the Committee in its sole
discretion.

(c) No fractional shares or fractional share interests will be issued or
credited to a Participant's account under this Plan.

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SECTION 12. WITHDRAWAL AND CANCELLATION

(a) A Participant who holds an Option under the Plan may at any time prior
to exercise thereof under Section 10 withdraw from participation in the
Plan by written notice delivered to the Company. Upon such withdrawal,
the Participant shall cease to be a Participant, such Option shall be
deemed cancelled in its entirety, and the balance in his or her
withholding account will be returned to him or her as soon as
practicable.

(b) If a Participant reduces to zero his or her future payroll deductions
with respect to the then current Option Period pursuant to Section
7(b), the Participant shall continue to be a Participant for such
Option Period unless the Participant elects by notice in writing to the
Company to withdraw from participation in the Plan as provided in
Section 12(a). The Participant's reduction to zero, however, will be
treated as an election by the Participant to withdraw from the Plan
with respect to subsequent Option Periods.

(c) Any Participant who withdraws from participation in the Plan as
provided herein may, as of the beginning of a subsequent Option Period,
again become a Participant in accordance with Section 6 of this Plan.

(d) If Participant's payroll deduction terminates for any reason not
otherwise provided for in this Section 12, Participant will be deemed
to have withdrawn from participation in the Plan and his or her Options
shall be cancelled in their entirety, and the balance in his or her
withholding account will be returned to him or her as soon as
practicable.

SECTION 13. TERMINATION OF EMPLOYMENT

Subject to Section 14, upon the termination of a Participant's service with the
Company or a Subsidiary for any reason, such person will cease to be a
Participant, and any Option held by such Participant under the Plan will be
deemed cancelled, the balance of his or her withholding account will be returned
to him or her, and such person will have no further rights under the Plan.

SECTION 14. DESIGNATION OF BENEFICIARY; DEATH OF PARTICIPANT

(a) A Participant may file a written designation of a beneficiary who is to
receive any shares of Stock and cash to the Participant's credit under
the Plan in the event of such Participant's death prior to delivery to
him or her of any such shares and cash. Such designation of beneficiary
may be changed by the Participant at any time by written notice. Upon
the death of a Participant and upon receipt by the Company of proof of
the identity and existence at the Participant's death of a beneficiary
validly designated by the Participant under the Plan, the Company shall
deliver such shares and cash to such beneficiary. In the event of the
death of a Participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such
Participant's death, the Company shall deliver such shares and cash to
the executor or administrator of the estate of the Participant, or if
no such executor or administrator has been appointed (to the actual
knowledge of the Company) the Company shall deliver such shares and
cash to the applicable court having jurisdiction over the
administration of such estate. No designated beneficiary shall, prior
to the death of the Participant by whom he or she has been designated,
acquire any interest in the shares or cash credited to the Participant
under the Plan.

(b) In the event of the death of a Participant, any Option held by the
Participant at such time shall be deemed to be immediately canceled and
any cash and/or Stock credited to the Participant under the Plan will
be delivered to his or her designated beneficiary or, in the absence of
a living designated beneficiary, his or her estate as soon as
practicable after the end of the current Option Period.

SECTION 15. PARTICIPANT'S RIGHTS NOT TRANSFERABLE

All Participants will have the same rights and privileges under the Plan;
provided, that the use of Compensation

A-5

(which varies among Eligible Employees) as the basis for determining the number
of shares for which an Eligible Employee electing to participate in an offering
under the Plan may be granted an Option shall not be construed to create a
difference in such rights and privileges so long as each Eligible Employee has
the right to elect the same percentage of his Compensation as a payroll
deduction under Section 7. Each Participant's rights and privileges under any
Option may be exercisable during the Participant's lifetime only by him or her,
and may not be sold, pledged, assigned, or transferred in any manner. In the
event any Participant violates the terms of this Section, any Option held by
such Participant may be terminated by the Company and, upon return to the
Participant of the balance of his or her withholding account, all his or her
rights under the Plan will terminate.

SECTION 16. EMPLOYMENT RIGHTS AND STOCKHOLDER RIGHTS

(a) Nothing contained in the provisions of the Plan will be construed to
give to any employee the right to be retained in the employ of the
Company or a Subsidiary or to interfere with the right of the Company
or a Subsidiary to discharge any employee at any time. The loss of
existing or potential profit in Options will not constitute an element
of damages in the event of termination of employment for any reason,
even if the termination is in violation of an obligation to the
Participant.

(b) An Eligible Employee shall have no rights as a stockholder with respect
to shares subject to an Option issued hereunder until such Option has
been exercised and shares issued in accordance with the terms of the
Plan.

SECTION 17. CHANGE IN CAPITALIZATION

In the event of any change in the outstanding Stock of the Company by reason of
a stock dividend, spin-off, recapitalization, merger, consolidation,
reorganization, or other capital change, after the effective date of this Plan,
the aggregate number of shares available under the Plan, the number of shares
under Options granted but not exercised, and the Option price will be
appropriately adjusted in the manner determined by the Committee, in its sole
discretion.

SECTION 18. AMENDMENT AND TERMINATION OF PLAN

(a) The Company reserves the right at any time or times to amend the Plan
to any extent and in any manner it may deem advisable by proper action
of the Board of Directors; provided, however, that any amendment
relating to the aggregate number of shares which may be issued under
the Plan (other than an adjustment provided for in Section 17 of this
Plan) or to the employees (or class of employees) eligible to receive
Options under the Plan will have no force or effect unless it is
approved by the shareholders of the Company within twelve months of its
adoption; and provided further, that no such amendment shall make any
change in any Option theretofore granted which would adversely affect
the rights of any Participant without the express written consent of
such Participant

(b) The Plan shall terminate: (i) automatically when all the Stock reserved
for the purposes of the Plan has been purchased or (ii) as of the
conclusion of any Option Period, as the Board, acting in its sole
discretion prior to the last day of such Option Period, shall specify.

SECTION 19. GOVERNMENTAL APPROVALS OR CONSENTS

The Board of Directors may make such changes in the Plan and include such terms
in any offering under the Plan as may be necessary or desirable, in the opinion
of counsel, so that the Plan will comply with the rules and regulations of any
governmental authority and so that Eligible Employees participating in the Plan
will be eligible for tax benefits under the Code or the laws of any state.

SECTION 20. COSTS AND EXPENSES

No brokerage commissions or fees shall be charged by the Company in connection
with the purchase of shares of

A-6

Stock by Participants under the Plan. All costs and expenses incurred in
administering the Plan shall be borne by the Company.

SECTION 21. APPROVAL OF SHAREHOLDERS

The Plan is subject to the approval of the shareholders of the Company, which
approval must be secured within twelve (12) months after the date the Plan is
adopted by the Board of Directors.

IN WITNESS WHEREOF, the Company has caused this Plan to be executed on its
behalf the ____ day of __________, 2002.

SCIENTIFIC GAMES CORPORATION

By:
----------------------------------
Its:
---------------------------------

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--------------------------------------------------------------------------------
PROXY

SCIENTIFIC GAMES CORPORATION
750 LEXINGTON AVENUE, 25TH FLOOR, NEW YORK, NEW YORK 10022
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 10, 2002

The undersigned hereby appoints Martin E.Schloss and DeWayne E.Laird,or either
of them,as Proxy or Proxies of the undersigned with full power of substitution
to act for the undersigned and to vote the full number of shares of the Class A
Common Stock of Scientific Games Corporation that the undersigned is entitled to
vote at the Annual Meeting of Stockholders of Scientific Games Corporation to be
held at the Metropolitan Club,1 East 60th Street,New York,New York at 10:00
a.m.,on Tuesday, September 10,2002,and at any adjournments or postponements
thereof,in accordance with the instructions set forth on this proxy card,and in
their discretion,with respect to all other matters that may properly come before
the meeting.Any proxy heretofore given by the undersigned with respect to such
shares is hereby revoked.

-----------
SEE REVERSE
SIDE
-----------

(To be Signed on Reverse Side)
--------------------------------------------------------------------------------

PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!

ANNUAL MEETING OF STOCKHOLDERS
SCIENTIFIC GAMES CORPORATION

SEPTEMBER 10, 2002

Please Detach and Mail in the Envelope Provided
--------------------------------------------------------------------------------

A [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.

WITHHOLD
FOR ALL AUTHORITY
NOMINEES from all nominees

1. Election of
Directors: [ ] [ ]

Nominees: A. Lorne Weil
Larry J. Lawrence
Colin J. O'Brien
Eric M. Turner
Sir Brian G. Wolfson
Alan J. Zakon

INSTRUCTION: To withhold authority to vote for any individual nominee(s), place
an "X" in the left box "FOR ALL NOMINEES" and write the name(s) of any such
nominee(s) in the space provided below:

-----------------------------------------------------------

FOR AGAINST ABSTAIN

2. Approval of Amendment to the
Company's Restated Certificate [ ] [ ] [ ]
of Incorporation.

3. Approval of Adoption of the
Company's 2002 Employee Stock [ ] [ ] [ ]
Purchase Plan.

4. Ratification of KPMG LLP as
independent accountants of the [ ] [ ] [ ]
Company for the fiscal year
ending December 31, 2002.

5. On such other matters as may properly come before the meeting.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL THE NOMINEES FOR DIRECTOR LISTED ABOVE, FOR
PROPOSALS 2, 3 AND 4, AND, IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES, FOR
OR AGAINST ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.

Please check if you plan to attend the meeting. [ ]

PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.

SIGNATURE(S) DATED , 2002
--------------------------------------------- -----------

NOTE: Please sign exactly as your name appears above. For joint accounts, each
joint owner must sign. Please give full title if signing in a representative
capacity.

--------------------------------------------------------------------------------

ANNUAL MEETING OF STOCKHOLDERS OF

SCIENTIFIC GAMES CORPORATION

SEPTEMBER 10, 2002

Co. # Acct. #
-------------------- -------------------

---------------------------
PROXY VOTING INSTRUCTIONS
---------------------------

TO VOTE BY MAIL
---------------
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS
POSSIBLE.

TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
--------------------------------------------
PLEASE CALL TOLL-FREE 1-800-PROXIES AND FOLLOW THE INSTRUCTIONS. HAVE YOUR
CONTROL NUMBER AND THE PROXY CARD AVAILABLE WHEN YOU CALL.

TO VOTE BY INTERNET
-------------------
PLEASE ACCESS THE WEB PAGE AT WWW.VOTEPROXY.COM AND FOLLOW THE ON-SCREEN
INSTRUCTIONS. HAVE YOUR CONTROL NUMBER AVAILABLE WHEN YOU ACCESS THE WEB PAGE.

---------------------------------
YOUR CONTROL NUMBER IS ---->
---------------------------------

Please Detach and Mail in the Envelope Provided
--------------------------------------------------------------------------------

A [X] Please mark your votes as in this example.

WITHHOLD
FOR ALL AUTHORITY
NOMINEES from all nominees
1. Election of
Directors: [ ] [ ]

Nominees: A. Lorne Weil
Larry J. Lawrence
Colin J. O'Brien
Eric M. Turner
Sir Brian G. Wolfson
Alan J. Zakon

INSTRUCTION: To withhold authority to vote for any individual nominee(s), place
an "X" in the left box FOR ALL NOMINEES and write the name(s) of any such
nominee(s) in the space provided below:

FOR AGAINST ABSTAIN

2. Approval of Amendment to
the Company's Restated [ ] [ ] [ ]
Certificate of Incorporation.

3. Approval of Adoption of the
Company's 2002 Employee Stock [ ] [ ] [ ]
Purchase Plan.

4. Ratification of KPMG LLP as
independent accountants of the [ ] [ ] [ ]
Company for the fiscal year
ending December 31, 2002.

5. On such other matters as may properly come before the meeting.

Please check if you plan to attend the meeting. [ ]

PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.

SIGNATURE(S) DATED , 2002
--------------------------------------------- -----------

NOTE: Please sign exactly as your name appears above. For joint accounts, each
joint owner must sign. Please give full title if signing in a representative
capacity.

--------------------------------------------------------------------------------

PREFERRED STOCK
---------------

SCIENTIFIC GAMES CORPORATION

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS - SEPTEMBER 10, 2002

The undersigned hereby appoints Martin E. Schloss and DeWayne E. Laird,
or either of them, as Proxy or Proxies of the undersigned with full power of
substitution to act for the undersigned and to vote the full number of shares of
Series A Convertible Preferred Stock of Scientific Games Corporation that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of
Scientific Games Corporation to be held at the Metropolitan Club, 1 East 60th
Street, New York, New York at 10:00 a.m., on Tuesday, September 10, 2002, and at
any adjournments or postponements thereof, in accordance with the instructions
set forth on this proxy card, and in their discretion, with respect to all other
matters that may properly come before the meeting. Any proxy heretofore given by
the undersigned with respect to such shares is hereby revoked. The undersigned
authorizes and instructs said Proxies or their substitutes to vote as indicated
below.

TO VOTE, MARK BOXES BELOW.

1. ELECTION OF DIRECTORS: To elect the following nominees to the Board of
Directors:

Antonio Belloni
Rosario Bifulco
Peter A. Cohen
Michael S. Immordino
A. Lorne Weil
Larry J. Lawrence
Colin J. O'Brien
Eric M. Turner
Sir Brian G. Wolfson
Alan J. Zakon

FOR ALL WITHHOLD AUTHORITY
NOMINEES from all Nominees
[ ] [ ]

INSTRUCTION: To withhold authority to vote for any individual nominee(s),
mark the box above "FOR ALL NOMINEES" and write the name(s) of any such
nominee(s) in the space provided below:

--------------------------------------------------------------------------

2. AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION: To approve the
amendment to the Company's Restated Certificate of Incorporation:

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

(Continued and to be signed and dated on the other side.)

3. ADOPTION OF THE 2002 EMPLOYEE STOCK PURCHASE PLAN: To approve the adoption
of the Company's 2002 Employee Stock Purchase Plan:

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

4. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS: To ratify the
appointment of KPMG LLP as independent accountants of the Company for the
fiscal year ending December 31, 2002:

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

5. On such other matters as may properly come before the meeting or any
adjournments thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED UNDER
"ELECTION OF DIRECTORS" AND FOR PROPOSALS 2, 3 AND 4.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR, FOR PROPOSALS 2, 3, AND
4, AND, IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES, FOR OR AGAINST ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY POSTPONEMENTS
OR ADJOURNMENTS THEREOF.

If you plan to attend the Annual Meeting, please mark this box. [ ]

PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.

SIGNATURE(S) DATED , 2002
------------------------------------------ -------------

DATED , 2002
------------------------------------------ -------------

Please sign exactly as your name appears on your stock certificate. For joint
accounts, each joint owner must sign. If signing as attorney, executor,
administrator, trustee or guardian, please indicate the capacity in which
signing. When the proxy is given by a corporation or other entity, it should be
signed by an authorized representative.

STOCKHOLDER NUMBER OF SHARES
----------- ----------------

-2-