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Equity Investments | 12 Months Ended
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Dec. 31, 2017
Equity Method Investments and Joint Ventures [Abstract] |
Equity Investments | Equity Investments We account for our equity investments where we own a non-controlling interest, but exercise significant influence, under the equity method of accounting. Under the equity method of accounting, our original cost of the investment is adjusted for our share of equity in the earnings of the equity investee and reduced by dividends and distributions of capital received, unless the fair value option is elected, in which case the investment balance is marked to fair value each reporting period and the impact of changes in fair value of the equity investment are reported in earnings. We elected the fair value option to account for our equity investment in NYX. This option was elected as only a partial interest was acquired in NYX as of December 31, 2017 as part of a step acquisition completed in January 2018. We evaluate our investments in unconsolidated affiliates, for which the fair value option has not been elected, for impairment whenever events or changes in circumstances indicate that the carrying value of the investment may have experienced an "other-than-temporary" decline in value. If such conditions exist, we compare the estimated fair value of the investment to its carrying value to determine if an impairment is indicated and determine whether the impairment is "other-than-temporary" based on an assessment of all relevant factors, including consideration of our intent and ability to retain our investment until the recovery of the unrealized loss. We estimate fair value using a discounted cash flow analysis based on estimated future results of, or cash distributions from, the investee. Impairment charges, if any, are recorded in earnings (loss) from equity investment. During the fourth quarter of 2016, we recorded an impairment charge of $11.3 million related to our investment in GLB. At December 31, 2017, we had investments in a number of entities (principally in our Lottery business segment) which are accounted for under the equity method of accounting because we do not have a controlling financial interest but we have the ability to exercise significant influence. For those investments for which the fair value option has not been elected, equity method income (loss) is recorded in “Earnings (loss) from equity investments”, with our investment recorded in “Equity investments”. See the tables below for details of our equity investments:
Equity Investment | Purpose | Term | Ownership Interest | Segment
LNS (1) | Exclusive operator of Italian instant game lottery | Initial term of nine years beginning October 2010, which was subsequently extended for up to nine years (September 2028). | 20% | Lottery
Northstar IL (2) | Private manager of Illinois lottery under a PMA | 10 years beginning January 2011, see below | 20% | Lottery
Northstar NJ (3) | Provision of marketing and sales services to New Jersey Lottery | October 1, 2013 through 2029 | 17.69% | Lottery
Northstar SupplyCo New Jersey LLC (NJ SupplyCo) | Separate agreement under which we provide instant games to Northstar NJ | October 1, 2013 through 2029 | 30% | Lottery
NYX | Leading digital gaming software supplier for interactive, social and mobile gaming worldwide. Non-controlling interest acquired as a part of step acquisition. | n/a | 36% | Unallocated (Corporate)
(1) Other members of consortium are Lottomatica Holdings, S.r.l. and Arianna 2001. LNS succeeded Consorzio Lotterie Nazionali, a consortium comprised of essentially the same group that owns LNS, as holder of the concession as the exclusive operator of the Italian Gratta e Vinci instant game lottery. (2) Other member of Northstar Illinois is IGT Global Solutions Corporation, a subsidiary of IGT. (3) Other members are IGT Global Solutions Corporation and a subsidiary of the administrator of the Ontario Municipal Employees Retirement System, this agreement provides us substantive participating rights.
| Equity investment Balance as of December 31, |  | Equity earnings (loss) recognized for the Year Ended December 31, |  | Cash distributions and dividends received for the Year Ended December 31,
Equity Investment | 2017 |  | 2016 |  | 2017 |  | 2016 |  | 2015 |  | 2017 |  | 2016 |  | 2015
LNS | $ | 75.1 |  |  | $ | 80.0 |  |  | $ | 14.3 |  |  | $ | 14.0 |  |  | $ | 14.8 |  |  | $ | 40.4 |  |  | $ | 34.3 |  |  | $ | 31.5 |
Northstar IL | — |  |  | — |  |  | 2.8 |  |  | (0.4 | ) |  | (2.7 | ) |  | — |  |  | — |  |  | — |
Northstar NJ and NJ Supply Co | 21.2 |  |  | 24.8 |  |  | 0.9 |  |  | 1.0 |  |  | (4.0 | ) |  | 4.6 |  |  | 4.8 |  |  | — |
GLB and CSG | 35.3 |  |  | 38.3 |  |  | (0.1 | ) |  | (8.0 | ) |  | 3.5 |  |  | 5.0 |  |  | 1.7 |  |  | 4.7 |
International Terminal Leasing | 8.1 |  |  | 12.3 |  |  | 0.8 |  |  | — |  |  | 1.0 |  |  | 5.6 |  |  | 5.9 |  |  | 10.0 |
Other | 23.8 |  |  | 24.5 |  |  | 8.0 |  |  | 6.4 |  |  | 4.3 |  |  | 11.7 |  |  | 5.0 |  |  | 17.4 |
Total under equity method | $ | 163.5 |  |  | $ | 179.9 |  |  | $ | 26.7 |  |  | $ | 13.0 |  |  | $ | 16.9 |  |  | $ | 67.3 |  |  | $ | 51.7 |  |  | $ | 63.6 |
NYX | 90.4 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total equity investment | $ | 253.9 |  |  | $ | 179.9 |  |  | $ | 26.7 |  |  | $ | 13.0 |  |  | $ | 16.9 |  |  | $ | 67.3 |  |  | $ | 51.7 |  |  | $ | 63.6 |
| Revenue recognized from sales to investee for the Year Ended December 31,
Equity Investment | 2017 |  | 2016 |  | 2015
LNS | $ | 44.9 |  |  | $ | 45.3 |  |  | $ | 46.6 |
Northstar IL | 22.8 |  |  | 22.6 |  |  | 20.8 |
Northstar NJ and NJ Supply Co | 20.6 |  |  | 20.9 |  |  | 18.3 |
Other | 6.7 |  |  | 4.9 |  |  | 6.0 |
Total | $ | 95.0 |  |  | $ | 93.7 |  |  | $ | 91.7 |
NYX In November 2017, we acquired a non-controlling interest in NYX, comprised of 36% of the issued and outstanding ordinary shares of NYX, warrants to acquire ordinary shares of NYX and exchangeable preferred shares in a subsidiary of NYX, allowing us to exercise significant influence over NYX operating and financial policies. As described above, we elected the fair value option to account for our equity investment in NYX, with subsequent changes in fair value of investment recorded in other income (expense), net in our consolidated statements of operations and comprehensive loss. As of December 31, 2017, we owned the following financial instruments of NYX:
Financial Instrument | Number of Shares | Investment cost | Fair value as of December 31, 2017 | Change in fair value loss (gain) | Fair value hierarchy level
Ordinary shares | 39.0 |  | $ | 73.2 |  | $ | 73.2 |  | $ | — |  | Level 1
Class A exchangeable preferred shares, warrants and other(1) | n/a |  | 18.7 |  | 17.2 |  | 1.5 |  | Level 2(2)
Total | n/a |  | $ | 91.9 |  | $ | 90.4 |  | $ | 1.5 |  | n/a
(1) | Includes 40,000 of Class A preferred shares exchangeable for 9,174,364 ordinary shares and warrants to acquire 3,535,178 ordinary shares.
(2) | The value principally relates to the exchangeable preferred shares, which were valued using quoted market prices for similar securities.
LNS On December 4, 2017, we announced that LNS had accepted a contract extension of up to nine years for the Italian Scratch and Win concession. LNS is required to pay an upfront fee of €800 million in three installments. The first installment of €50 million was paid as of December 31, 2017; payments of the second installment of €300 million and third installment of €450 million are expected to be made in April 2018 and October 2018, respectively. Our pro-rata concession funding payments to LNS are €10 million, €60 million and €90 million, respectively, and treated as contributions to our equity method investment as contributions are made. As of December 31, 2017 we had accounts receivable of $13.3 million from LNS. Northstar Illinois In August 2015, Northstar Illinois, the State of Illinois, SGI and Gtech Corporation ("Gtech") (now known as IGT Global Solutions Corporation) entered into a termination agreement with respect to the PMA (the “Termination Agreement”). The Termination Agreement contemplated, among other things, (1) a $10.0 million net income shortfall payment for the lottery’s 2015 fiscal year, (2) termination of the PMA in January 2017 (subject to possible extension by mutual agreement of the State of Illinois and Northstar Illinois in three- to six-month increments), (3) that, following December 2014, Northstar Illinois will no longer be entitled to any incentive compensation payments and will no longer be liable for any shortfall payments following the $10.0 million shortfall payment for the lottery's 2015 fiscal year, (4) reimbursement of Northstar Illinois for certain costs it incurs in transitioning its obligations under the PMA, (5) continuation of our instant lottery game supply agreement (and Gtech’s lottery systems supply agreement) with Northstar Illinois until July 2017, subject to a reduced rate structure, and (6) our right to negotiate a new supply agreement with any manager that replaces Northstar Illinois and our ability to participate in the procurement process for such replacement manager. In September 2016, Northstar Illinois, the State of Illinois, SGI and IGT (formerly Gtech) entered into a letter agreement that (a) extended the term of the PMA to July 2017 and (b) extended our instant lottery game supply agreement (and IGT’s lottery systems supply agreement) with Northstar Illinois to January 2018. In October 2017, the PMA was further extended to January 1, 2018 and the supply agreements between Northstar Illinois and SGI and IGT, respectively, were extended through April 1, 2019 (though it may be terminated by December 31, 2018 subject to certain events occurring, including Intralot S.A. completing its conversion of the IGT draw system). The new PMA between the state of Illinois and Camelot Illinois, LLC commenced in January 2018, and Camelot Illinois, LLC has accepted the assignment and assumption of the SGI and IGT supply agreements. Our instant lottery game supply agreement continues to be in place through April 1, 2019. Northstar New Jersey Northstar New Jersey is entitled to receive annual incentive compensation payments from the State of New Jersey to the extent the lottery's net income for the applicable year exceeds specified target levels, subject to a cap of 3% of the applicable year's net income. Northstar New Jersey is responsible for payments to the State of New Jersey to the extent certain net income targets are not achieved by the New Jersey Lottery, subject to a cap of 2% of the applicable year’s net income and a $20.0 million shortfall payment credit that was fully used by the end of the fourth quarter of 2015. In addition, pursuant to a December 2015 amendment to the Northstar New Jersey services agreement, the State of New Jersey will be entitled to additional amounts for each of the lottery’s 2016-2018 fiscal years to the extent the sum of the New Jersey Lottery’s net income and the net income shortfall payments paid to the State of New Jersey by Northstar New Jersey (if any) for the applicable year fall below certain guaranteed amounts. We may be required to make capital contributions to Northstar New Jersey to fund our pro rata share of any shortfall payments that are payable to the State of New Jersey under the services agreement. In December 2015, pursuant to the terms of the amendment to its services agreement discussed above, (i) Northstar New Jersey made a $15.4 million payment to the State of New Jersey, of which we contributed our pro rata portion of $2.7 million, representing consideration in connection with the terms and conditions of the amendment, and (ii) Northstar New Jersey satisfied the $5.9 million net income shortfall payment owed to the State of New Jersey for the lottery’s fiscal year ended June 30, 2015 with the remainder of the $20.0 million shortfall payment credit.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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