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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

         [X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998

         [ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the transition period from _______ to _______

                        COMMISSION FILE NUMBER 000-22298

                         SCIENTIFIC GAMES HOLDINGS CORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          DELAWARE                                              13-3615274
(STATE OR OTHER JURISDICTION OF                              (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                             IDENTIFICATION NO.)

             1500 BLUEGRASS LAKES PARKWAY, ALPHARETTA, GEORGIA 30004
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 664-3700

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

       TITLE OF EACH CLASS            NAME OF EACH EXCHANGE ON WHICH REGISTERED
       -------------------            -----------------------------------------
  Common Stock, $.001 Par Value                 New York Stock Exchange

        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulations S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in a definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

         The aggregate market value of the Common Stock of the Registrant held
by non affiliates of the Registrant on March 22, 1999 was $196,981,969. For the
purposes of this response, executive officers and directors are deemed to be
affiliates of the Registrant and the holding by non affiliates was computed as
11,296,457 shares.

         The number of shares outstanding of the Registrant's Common Stock as of
March 22, 1998 was 11,883,962 shares.

DOCUMENTS INCORPORATED BY REFERENCE:

         The Registrant's proxy statement for its Annual Meeting of
Stockholders, to be held May 21, 1999, which will be filed pursuant to
Regulation 14A within 120 days of the close of Registrant's fiscal year, is
incorporated by reference in answer to Part III of this report but only to the
extent indicated in Part III herein. In addition, pages 14 through 40 of
Scientific Games Holdings Corp.'s 1998 Annual Report to Stockholders are
incorporated by reference in answer to Items 6, 7 and 8 of Part II and Item
14(a) of Part IV of this report.

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                                     PART 1

ITEM 1.  BUSINESS

GENERAL

         Scientific Games Holdings Corp. (the "Company" or "Scientific Games")
is a leading provider of lottery products, systems and services worldwide.
Except as the context otherwise requires, references to "Scientific Games," the
"Company," "we," "our," and "us" refer to the consolidated business and
operations of the Company. We operate through our wholly owned subsidiaries and
our joint ventures, principally, Scientific Games Inc. ("SGI") Scientific Games
International Limited ("SGIL"), Scientific Games Kommunikations - und
Computersysteme GmbH ("SG Austria") and SciGames France SAS ("SG France"). Our
corporate headquarters and our primary manufacturing facility are located in
Alpharetta, Georgia (suburban Atlanta) and we employ approximately 1,180 people
worldwide. We also have production and/or operating facilities in California,
the United Kingdom and South Africa and software and hardware development and
maintenance facilities in Georgia, Austria, France and Germany. Our business
consists of sales of products or services to governmentally operated or
sanctioned lotteries worldwide and, to a lesser extent, to non-lottery entities
both in the United States and worldwide. The Company's business is comprised of
two business segments: (1) Instant Ticket and Related Services (hereinafter
sometimes referred to as the "ITRS" segment) and (2) Systems. In the Instant
Ticket and Related Services segment, we primarily supply game design, sales and
marketing training and support, instant ticket manufacturing and delivery,
inventory management and distribution, advising with respect to security, and
retailer telemarketing and field services. In addition, this segment includes
promotional instant tickets and pull-tab tickets sold to both lottery and
non-lottery customers and prepaid phone cards sold to telecommunications
companies. In the Systems segment, we primarily supply transaction processing
software that accommodates instant ticket accounting and validation and on-line
lottery games, point-of-sale terminal hardware which connects to these systems,
central site computers and communication hardware which run these systems, and
on-going support and maintenance services for these products. This segment also
includes software, hardware and support for sports betting and credit card
processing systems for non-lottery customers. In addition, we refer to
cooperative services agreements in various sections of this report. Cooperative
services is our branded marketing name given to the combination of any of the
products and services offered by both the Instant Ticket and Related Services
segment and Systems segment under one customer contract. The Instant Ticket and
Related Services revenues accounted for approximately 78.9% of the Company's
gross revenues in 1998 versus 87.4% in 1997.

         Our acquisition in April 1997 of Vienna, Austria based TeleControl
Kommunications - und Computersysteme Gesellschaft m.b.h., an on-line lottery and
transaction processing company now known as SG Austria, enabled us to expand our
systems offerings and make available on-line lottery technology. Scientific
Games' predecessor company had previously developed and operated on-line lottery
systems from 1985 until 1991. During that period, it supplied and operated
on-line lottery systems in Iowa, Maine, New Hampshire, Vermont, West Virginia
and sold an on-line system to the Virginia Lottery. Following our 1997
acquisition of SG Austria, we entered into a joint venture agreement in 1998
with La Francaise des Jeux ("FDJ"), the operator of the French National Lottery,
to develop a new generation of on-line terminals. Such agreement also provides
for the assumption by the joint venture of FDJ's terminal and software
maintenance contracts with six German State Lottery customers and terminal
software maintenance for FDJ. Related agreements between the Company and FDJ
also provide for the initial supply of 13,500 SciScan Technology(R) terminals,
the installation of an SGI-NET instant ticket validation system, a central site
computer system and on-going maintenance of the system. In addition, the Company
has received contracts to provide systems software and hardware and related
support services from Western Canada Lottery Corporation ("WCLC") and Golden
Casket Lottery Corporation, the state operated lottery in Queensland, Australia
(through Praxa Limited, the prime contractor). The WCLC contract was our first
on-line lottery contract in North America since our 1997 re-entry into the
on-line systems segment of the lottery industry after previously exiting this
business line in 1991. The Company sold an initial order of 400 SciScan
terminals to Instant Lottery, S.A., the operator of the national lottery in
Greece.

INDUSTRY OVERVIEW

         Lotteries are operated by domestic and foreign governmental authorities
and their licensees in approximately 200 jurisdictions throughout the world.
Although there are many types of lotteries worldwide, governmentally authorized
lotteries may generally be categorized into three principal groups: instant
lotteries, on-line lotteries and the traditional draw-type lotteries. An instant
lottery is typically played by removing a coating from 


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a preprinted ticket to determine whether it is a winner. On-line lotteries are
generally pari-mutuel in nature (although fixed prizes are also offered) and are
conducted through a computerized lottery system in which lottery terminals are
connected to a central computer, usually by dedicated telephone lines.
Internationally, the older form of traditional draw-type lottery games, in which
players purchase tickets which are manually processed for a future drawing for
prizes of a fixed amount, is a popular form of play. In addition to the
foregoing types of lotteries, there are video lotteries played on electronic
machines featuring keno, "line-up" (cherries, bars, plums, etc.) and similar
video games. Video lotteries are typically targeted to locations such as horse
and dog racing tracks, athletic arenas, certain bars, clubs and similar
establishments.

         Currently, 38 jurisdictions in the United States sell instant lottery
tickets. Of the approximately 8.4 billion instant tickets sold by the Company in
1998, approximately 24% were sold outside the United States. Based on industry
information, it is estimated that 1998 U.S. on-line lottery retail sales were
approximately $19.7 billion compared to 1998 international on-line lottery
retail sales of approximately $60.3 billion. Currently, 38 jurisdictions in the
United States sell on-line lottery tickets. Governments typically authorize
lotteries as a means of generating revenues without the imposition of additional
taxes. Lottery revenues are frequently set aside for particular public purposes,
such as education, aid to the elderly, conservation, transportation and economic
development. As lottery ticket sales have become a significant source of funding
for such programs, many jurisdictions have come to rely on the revenues
generated by such sales.

         There are many promotional (i.e., commercial) game suppliers (including
the Company) which produce instant tickets for both sales promotion companies
and their end users. Management believes Scientific Games is the only company
which also offers the promotional market a full line of support and services
similar to those which the Company offers to the government lottery market.
While potential instant ticket lottery customers in the United States currently
are limited to the 38 jurisdictions where such games are legally permitted,
promotional games are believed permitted in substantially all states. A
significant difference between lottery games and promotional games is the lower
level of security requirements associated with promotional games, which
typically offer less valuable prizes. The Company also provides several
international telecommunications companies with pre-paid phone cards.

         As previously disclosed in the Company's periodic reports, the lottery
industry (both instant ticket and on-line) is highly competitive and is in a
period of intense price-based competition, particularly in the Instant Ticket
and Related Services segment. This price-based competition has resulted in
certain contracts being awarded or re-awarded at lower equivalent prices than
charged in the previous contracts. The Company expects significant competition
on the basis of price to continue in 1999 in both the instant ticket and on-line
lottery industry.

BUSINESS STRATEGY

         Scientific Games is a leading provider of lottery products, integrated
systems and support services to lotteries worldwide. We intend to expand our
leadership position by (i) pursuing new instant ticket printing and systems
opportunities in both the domestic and foreign marketplaces, (ii) emphasizing
and marketing our expertise in lottery service capabilities, (iii) growing our
on-line lottery business by utilizing our SGI-NET technology, a high
performance, configurable hardware and software-redundant transaction processing
system that can accommodate both instant and on-line lottery operations, (iv)
continuing the our emphasis on customer service and responsiveness to customer
needs both before and after delivery of products and services, (v) investing in
our facilities while aggressively pursuing practices and methods which reduce
operating costs, (vi) increasing the funding of research and development costs
that continue to provide innovations for our customers such as SGI-NET, (vii)
partnering with respected local corporations to establish new lotteries in
foreign countries, (viii) selling SciScan terminals to new and existing
customers both domestically and internationally, (ix) promoting the sales
advantages of our Winner's Choice(TM) probability tickets to new and existing
customers, and (x) expanding our role in the provision of prepaid telephone
cards to international telecommunications customers.

         As state governments face budgetary pressures, they increasingly seek
methods of reducing state spending. One method of reducing spending which is
often considered by states is privatization or outsourcing of various operating
tasks associated with lottery operations. We have contracts that contain
expanded services, sometimes referred to as cooperative services, with eight
domestic lotteries. These lotteries have elected to privatize certain operating
functions related to the management of instant ticket games. We expect that more
state or foreign governments will decide to privatize or outsource various
lottery operations. We have significant experience in this field and are well
positioned to offer this privatization or outsourcing option to the industry. We
intend to continue to 


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emphasize and invest in the provision of expanded services to both our instant
ticket customers and systems customers.

         The increased application of computer-based and communications
technologies (including proprietary technologies) to the manufacturing and
servicing of instant tickets (See - "New Product Development") continues to
separate the instant ticket from conventional forms of printing. We are
generally recognized within the lottery industry as the leader in applying these
technologies to the manufacturing and sale of instant tickets. In order to
maintain our position as a leading innovator within the lottery industry, we
intend to continue to explore and develop new technologies and their application
to instant lottery tickets and systems.

         In addition to the internal development of new products, we intend to
leverage our management expertise, reputation, and contacts in the lottery
industry by pursuing joint ventures and marketing agreements which will provide
access to lottery customers to whom we do not currently provide products or
services.

PRODUCTS AND SERVICES

         In 1974, we introduced the first "secure" instant game ticket. Today,
the instant tickets we manufacture are typically printed on recyclable ticket
stock by a series of computer controlled presses and ink-jet imagers, which we
believe incorporate the most advanced technology and security currently
available in the industry. Instant tickets generally range in size from 2 inches
by 3 inches to ticket sizes as large as some greeting cards; instant tickets are
normally played by removing a coating to determine if they are winning tickets.
We market instant tickets and related services to domestic lottery
jurisdictions, foreign lottery jurisdictions and commercial customers. The
Company currently has contracts with 28 of the 38 states/jurisdictions in the
U.S. which currently sell instant lottery tickets. These U.S. Instant Ticket and
Related Services contracts are typically at a fixed price per thousand tickets
or a percentage of lottery sales to the public and typically range from one to
five years in duration, although they usually have one or more extension
options. Our customers have exercised extension options in domestic lottery
contracts with us a majority of the time. See - "Markets" for additional
information.

         The Company currently manufactures instant tickets and prepaid phone
cards for the promotional game market and international telecommunications
customers. The majority of the Company's promotional games and prepaid phone
cards are produced at our United Kingdom subsidiary, SGIL. Examples of
promotional games produced by the Company include games for European newspapers,
major food and beverage companies, and games for various other commercial
customers. Prepaid phone cards are supplied to international telecommunications
customers. The Company is not in the business of providing telecommunications
services, but rather in the production of the prepaid phone cards used by the
telecommunications industry. Sales of promotional game products and services,
including prepaid phone cards accounted for less than 10% of the Company's
consolidated revenues in 1998.

         Scientific Games pioneered the idea of privatizing lottery functions,
sometimes referred to as cooperative services, as a means of reducing the
operating costs of lotteries while increasing lottery revenues and is the only
instant ticket manufacturer which offers separate lottery ticket cooperative
support services to supplement its manufacturing operations. Cooperative
services may consist of designing and installing game management software,
instant ticket production, telemarketing, field sales, accounting, instant
ticket distribution, sales staff training, estimating ticket needs, managing
staff, advising with respect to security, instant ticket validation, and
provision of computer hardware, validation terminals, SciScan Technology
validation terminals, maintenance, communication network and sales agent
hot-line service for lottery jurisdictions. While the majority of lottery
jurisdictions to date have chosen to control the distribution and sales of
tickets, Scientific Games has been successful in demonstrating to a number of
jurisdictions that the Company can perform these functions effectively and at a
lower cost.

         Domestically, the Company now has contracts for expanded services with
the states of Delaware, Florida, Georgia, Kentucky, Maine, Nebraska,
Pennsylvania and West Virginia. Under such contracts, we typically provide
selected management, distribution services and/or data processing for the
jurisdiction's instant ticket lottery game business and we are paid a percentage
of the lottery's total instant ticket revenues. Customers select those services
which they desire to privatize from a menu of cooperative services offered.
Replacement of these agreements may be associated with large conversion costs
incurred by the lottery to hire and/or retrain staff and redesign and install a
software system and other protocols to manage its instant ticket business.


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         In addition to scratch off instant tickets, our Instant Ticket and
Related Services business also includes the sale of pull-tab tickets to our
lottery customers. In October 1997, we sold substantially all of the assets of
our pull-tab manufacturer subsidiary, GameTec Inc. to International Gamco, Inc.
("Gamco"). However, we continue to sell pull-tab tickets to lotteries in the
U.S. through a marketing agreement with Gamco.

         In its Systems segment, the Company primarily supplies transaction
processing software that accommodates instant ticket accounting and validation
and on-line lottery games, point-of-sale terminal hardware which connects to
these systems, central site-computer and communication hardware which runs these
systems, and ongoing support and maintenance services for these products. This
segment also includes software, hardware and support for sports betting, credit
card processing systems for non-lottery customers, SciScan Technology and
SGI-NET. SciScan Technology is a keyless validation system for retailers which
significantly reduces the time requirements of ticket validation while at the
same time improving security of the game. SGI-NET is a high-performance,
configurable hardware and software-redundant transaction processing system that
can accommodate both instant and on-line lottery operations. SGI-NET's
configurability and software-driven architecture enables it to operate with
virtually any type or number of terminals and provides flexibility to adapt to
unique characteristics of almost any lottery.

NEW PRODUCT DEVELOPMENT

         Since its inception, Scientific Games has provided many of the
innovations in instant ticket technology in both manufacturing and game
development which subsequently became the industry standard. Past examples of
new products developed by Scientific Games include the ink-jet printed instant
ticket, cooperative services (lottery privatization), bar coding on the front
and back of tickets (which facilitates validation), the IL/MVS instant ticket
accounting management, ticket validation software technology, Terra 2000(R)
tickets, SciScan Technology(R) and SGI-NET. The Terra 2000 ticket is a
recyclable and biodegradable paper ticket, which meets the rigorous security
standards demanded by the lottery industry.

         Scientific Games and its partner TeleCom Productions, Inc. introduced
The Daily Race Game(TM) in January 1997. The Daily Race Game is a
player-selection game that combines on-line, virtual reality horse racing with a
popular "pick your numbers" format to draw the winning numbers for an on-lottery
game. Players choose three horses from a field of 12 in a 55-second animated
horse race that can be shown on either commercial or closed-circuit television.
The Delaware Lottery was the first to license the game and rolled it out during
the 4th quarter of 1998.

         Another recent innovation, which we introduced in 1997, is our
probability-game ticket, Winner's Choice. Winner's Choice(TM) is a scratch-off
instant ticket lottery game in which every ticket is a potential winner (unlike
existing tickets, where winning tickets are pre-determined before a player
scratches). Winner's Choice combines some of the best features of instant and
on-line games, and possesses three important player benefits - choice,
instant-win opportunities and appealing play styles. Probability games have been
discussed within the lottery industry for years, but have never been viable
because secure validation could not be assured. The Company's new SciScan
Technology provides secure validation to enable probability tickets to be sold.
Winner's Choice games are currently undergoing field testing in Maine and
Kentucky conducted by Scientific Games in cooperation with the respective
lotteries.

         Scientific Games is continually looking for ways to apply its expertise
in specialty printing technologies and security/randomization techniques to
develop commercially viable products for both the lottery industry as well as
for other commercial applications. We are committed to new product development
and we will continue to explore new means of delivering our products, possibly
via the internet and new opportunities to market new products and services to
new and existing customers.

TRADEMARKS AND PATENTS

         We own rights in the following trademarks, which include certain
federally registered marks: Winner's Choice(TM), Terra 2000(R), SciScan
Technology(R). We believe our marks are valuable and, accordingly intend to
maintain our marks and the related registrations. We are not aware of any
pending claims of infringement or other challenges to our right to use our marks
in the lottery business in the United States. Certain technology associated with
our products is the subject of issued patents and patent applications currently
pending with the United States Patent Office and selected other countries
outside the United States. The Company also holds a number of other


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patents and licenses with respect to certain technology used in its business.
The loss of any such patent or license, however, would not in the opinion of
management have a material adverse effect on the Company's overall business.

CUSTOMER SERVICE

         We have an active professional customer service team which works
closely with lotteries in instant ticket game design. Artwork concepts, game
play style and prize structure are assembled, proposed, and refined. Important
manufacturing information is also assembled and documented in the "working
papers" by our customer service representatives. This information, when approved
by the lottery, becomes the technical manufacturing specifications for specific
instant ticket orders.

MARKETING

         Scientific Games has been instrumental in the development of marketing
strategies for instant games for domestic and foreign lotteries, including some
of the most successful lotteries in North America. The Company's involvement
includes all phases of instant game marketing support, including marketing
strategies, prize structures, game rules, delivery schedules, play styles,
telemarketing, instant ticket ordering and billing, field sales support,
research, game design, working papers, retailer manuals, instant game concepts,
ticket quantities, delivery and promotions. Scientific Games or its predecessor
has prepared market research analysis of gaming tendencies in most new state
lotteries since 1982, and the Company can provide customers with a bank of
lottery-specific consumer and market research data derived from these years of
analyses.

         Instant tickets and on-line games are believed to have a broad consumer
appeal throughout the world. Consumers are generally split equally between men
and women, are distributed evenly between ages 25 and 65, and cover a broad
range of socioeconomic groupings. This broad-based market is significantly
affected by appropriate advertising and promotion activities. The most
successful lotteries have found that lottery products are largely an impulse
item, which must be marketed like other consumer products.

         Sales of lottery products are based on, among other factors, the
quality of the lottery product, prize structure design and the existence of
efficient retail distribution systems, which allow maximum convenience to
consumers. Scientific Games, with its large game library and extensive research
into product design and consumer purchasing habits, has been an industry leader
in producing new products, distribution methodologies and consumer promotions to
enhance sales.

SECURITY

         Scientific Games recognizes that security and integrity are the
foundation of successful lottery organizations. As the incidence and severity of
publicly reported cases of physical and computer crime continue, major lotteries
periodically reassess key security questions concerning the vulnerability of
lottery games. Attempts to penetrate security measures may come from various
combinations of customers, retailers, vendors, lottery employees and others.
Because the integrity of a lottery is believed essential to its successful
operation, both the vendor and lottery must guard their systems against
unauthorized actions. The Company is unaware of any practical, economically
feasible way to breach the security of its instant lottery tickets or on-line
games which could result in a material loss to any of its customers, nor is it
aware of any breach thereof which has resulted in any material loss to any of
its lottery customers.

         Scientific Games constantly assesses the adequacy of its security
systems, incorporating various improvements, such as bar coding and additional
layers of protection in our instant tickets. There must be well-planned security
measures in place at every stage of the lottery operation. Scientific Games has
pioneered and effected security safeguards in areas of ticket specifications,
production, packaging, delivery, distribution and accounting. Also, computer
function safeguards, including secure ticket data, control number encryption,
winner file data, and ticket stock control have been incorporated in the
Company's data processing and the computer operations phase. The Company retains
a major public accounting firm to perform agreed upon procedures for each game
produced before it is sent to the customer.

MANUFACTURING PROCESS

         Using a series of computer-controlled presses and ink-jet imagers,
management believes Scientific Games' tickets incorporate the most advanced
technology and security methodology available in the industry. Our facilities
are 


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designed for efficient, secure production of instant game tickets and support
ink-jet image tape generation, printing, packaging and storage of instant game
tickets.

         The Company's dedicated computer-controlled printing process is
specifically designed for producing instant lottery game tickets for
governmentally sanctioned lotteries and promotional games. The process is not a
business forms press or a direct mail press temporarily diverted to lottery
work. Our specialized equipment contributes to the underlying superior
manufacturing and product quality. Instant ticket games are delivered finished
and ready for distribution by the lottery, or by Scientific Games in the
jurisdictions which are part of an instant ticket contract with cooperative
services provided by Scientific Games.

         Paper and ink are the principal raw materials consumed in the Company's
ticket manufacturing operations. The Company has a variety of sources for both
paper and ink and should, therefore, not be dependent on any particular
supplier.

PERSONNEL

         As of December 31, 1998, we had approximately 1,180 full-time
employees. Four of Scientific Games' employee groups are represented by a labor
union. At the California Facility (See "Properties"), ticket packaging is
performed by approximately 60 employees who are members of the Service Employees
International Union Local 1877. SG Austria's employees are represented by a
Worker's Council, which is typical in many European companies. At the Leed's
Facility in the United Kingdom, approximately 173 employees are members of the
GPMU union. Approximately eleven employees who work at a facility in Harrisburg,
Pennsylvania are members of the Chauffers, Teamsters and Helpers Local Union
776. The Company believes that its employee relations are good.

EXECUTIVE OFFICERS

         The following table sets forth certain information regarding the
executive officers of the Company who are considered executive officers by the
Company for the purposes of Rule 3b-7, as of March 1, 1999:

<TABLE>
<CAPTION>
                   NAME                               AGE                        POSITION WITH THE COMPANY
--------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>
William G. Malloy....................                 52             Director, Chairman, President and Chief
                                                                     Executive Officer
William F. Behm......................                 53             Director and Executive Vice President
Thomas F. Little.....................                 54             Senior Vice President
Cliff O. Bickell.....................                 56             Vice President, Treasurer and Chief Financial Officer
C. Gray Bethea, Jr. .................                 54             Vice President, Secretary and General Counsel
Bruce H. Longhurst...................                 58             Vice President, International Sales and Marketing
Howard H. Roath......................                 46             Vice President-U.S. Sales and Marketing
William C. Christie..................                 50             Managing Director-Scientific Games International
                                                                     Limited
James H. Edwards, Jr. ...............                 53             Director of Manufacturing
Christian Rosner.....................                 42             Managing Director-Scientific Games Austria
Donald N. MacLean....................                 54             Director- Human Resources
Kenneth W. Taylor....................                 38             Corporate Controller
William R. Murphy....................                 45             Senior Director MIS Support
Lynn A. Becker.......................                 37             Senior Director Business Information Systems
John J. Walsh........................                 39             Vice-President, Operations
</TABLE>

         WILLIAM G. MALLOY has been President and Chief Executive Officer since
1990. Mr. Malloy was elected a Director and Chairman of the Board in October
1991 when Centre Partners L.P. and certain executive officers of the Company
purchased substantially all of the assets of the instant lottery ticket
production and sales business and the video lottery business of the predecessor
to the Company in a leveraged buy-out transaction ("Acquisition"). Prior to
becoming the Company's President and Chief Executive Officer, Mr. Malloy served
as Vice President, Treasurer and Chief Financial Officer. Mr. Malloy joined the
Company in 1987 when he transferred from the corporate staff of Bally
Manufacturing Company. Mr. Malloy has over twenty-four years of experience in
the coin-operated amusement and gaming industry.


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         WILLIAM F. BEHM joined the Company in 1978 and was promoted to
Executive Vice President in 1988 and was elected a Director in 1992. Mr. Behm
has overall management responsibility for Scientific Games' research and
business development projects. In addition, he is also responsible for the
Company's product security. Prior to joining Scientific Games, Mr. Behm was an
aerospace engineer with McDonnell Douglas Corporation. Mr. Behm was instrumental
in the development of the Company's former on-line lottery system, the invention
of instant lottery bar codes, the development of the Company's environmental
instant ticket and the development of the Company's recent SciScan Technology
and Winner's Choice product lines. He is co-named as the inventor of various
issued patents and pending applications and is a regular speaker at trade shows
and conferences on the subject of technology in the lottery industry.

         THOMAS F. LITTLE joined the Company in 1975 and was promoted to Senior
Vice President in 1991. Mr. Little has overall management responsibility for
Scientific Games' Systems Division, which includes the Company's on-line lottery
systems business. Prior to joining the Company, Mr. Little was Manager of Data
Processing for First National Bank of Atlanta. Mr. Little's experience includes
the introduction of the first video lottery test in Illinois, the development of
the Company's former on-line lottery system and extensive contacts with the
international lottery industry.

         CLIFF O. BICKELL joined the Company as Vice President, Treasurer and
Chief Financial Officer in January of 1995. Mr. Bickell has overall management
responsibility for Scientific Games' corporate financial, accounting, and
administrative affairs, including the Company's human resource function. Prior
to joining Scientific Games, Mr. Bickell was Vice President, Chief Financial
Officer and Treasurer of Paragon Trade Brands, a multi-national consumer
products manufacturer where he had similar financial responsibilities. In
addition, Mr. Bickell has held the positions as Senior Vice President, Corporate
Administration - Chief Financial Officer of the W. A. Krueger Co., a commercial
printing company, and Treasurer of Dataproducts Corporation, a multinational
electronics manufacturer.

         C. GRAY BETHEA, JR. joined the Company in 1985 as Vice President,
Secretary and General Counsel. Mr. Bethea has overall management responsibility
for Scientific Games' legal compliance, statutory interpretation, corporate
matters, and contract documents. Throughout his corporate and private practice
of law, Mr. Bethea has had extensive experience in corporate and contract law.
Prior to joining Scientific Games, Mr. Bethea was a partner with the law firm of
Smith, Gambrell & Russell in Atlanta, Georgia.

         BRUCE H. LONGHURST joined the Company in 1997 as Vice President,
International Sales and Marketing. Mr. Longhurst has overall management
responsibility for Scientific Games international marketing and sales efforts.
Prior to joining Scientific Games, Mr. Longhurst was Vice President,
International and Strategic Planning for Autotote Corporation and Managing
Director of its subsidiary TeleControl, which was acquired in 1997 by Scientific
Games. Mr. Longhurst held these and other positions with Autotote from
1993-1997. From 1988 - 1992, Mr. Longhurst held the position of Executive Vice
President of the Worldwide Wagering Division of General Instrument Corporation.
In addition, Mr. Longhurst was one of the founders and served as Executive Vice
President and General Manager of Ticketron, including its AWI subsidiary.

         HOWARD H. ROATH joined the Company in 1987 and was promoted to Vice
President, U.S. Sales and Marketing in 1997. Mr. Roath has overall management
responsibility for Scientific Games' U.S. marketing and sales efforts. Prior to
joining Scientific Games, Mr. Roath served as Director of Marketing of the
Pennsylvania Lottery, Director of Pharmaceutical Assistance Program for the
Elderly for the Pennsylvania Department of Aging and Director of the Division of
State Employment for the Pennsylvania's Governor's Office of Administration.

         WILLIAM C. CHRISTIE joined the Company in 1996 as Managing Director for
the Company's subsidiary SGIL in the United Kingdom. Mr. Christie has overall
management responsibility for ticket production and printing for SGIL's
production facilities. Prior to joining the Company, Mr. Christie was the
Managing Director of Lottery Products for De La Rue in the United Kingdom.
During his 26 years with De La Rue, Mr. Christie held various other management
positions.

         JAMES H. EDWARDS, JR. joined the Company in 1991 as Plant Manager and
was promoted to Director of Manufacturing in 1998. Mr. Edwards has overall
management responsibility for ticket production and printing for the 


                                       8
<PAGE>   9

Company's United States production facilities. Prior to joining the Company, Mr.
Edwards held various management positions with Quebecor Printing, Inc. for over
20 years.

         CHRISTIAN ROSNER joined the Company in 1999 as Managing Director for
the Company's subsidiary SG Austria in Vienna, Austria. Mr. Rosner has overall
management responsibility for SG Austria systems operations. Prior to joining
the Company, Mr. Rosner was the Managing Director for CWS.

         DONALD N. MACLEAN joined the Company in 1997 as Director of Human
Resources. Mr. MacLean manages the personnel function for all of the Company's
locations. Prior to joining the Company, Mr. MacLean held the position of Vice
President of Human Resources for Burnham Service Corporation from 1989 to 1997.
In addition, Mr. MacLean was the Corporate Director of Human Resources for
Interlake Corporation and Division Director of Human Resources for Mueller
Corporation.

         KENNETH W. TAYLOR joined the Company in 1987 and was promoted to
Corporate Controller in 1990. Mr. Taylor has management responsibility for
accounting and financial information as well as responsibility for customer
pricing compliance. Prior to joining the Company, Mr. Taylor held auditor
positions with Bally Manufacturing Corporation, Duchossois Industries and Amsted
Industries, Inc.

         WILLIAM R. MURPHY joined the Company in 1984 and was promoted to Senior
Director - MIS Support in 1998. Mr. Murphy has overall management responsibility
for software support for all U.S. system implementations, company-wide
communication networks, domestic PC workstations and system hardware. Mr. Murphy
is also responsible for POS terminal hotline support as well as operational
support for CSP system locations. Mr. Murphy was involved in the initial
development of the Company's original on-line software system and has been
heavily involved in all of the Company's domestic systems installations. Prior
to joining the Company, Mr. Murphy held positions as a systems
engineer/programmer for Consultec, Inc., Data Crown, Inc. and Electronic Data
Systems.

         LYNN A. BECKER joined the Company in 1986 and was promoted to Senior
Director, Business Information Systems in 1998. Mr. Becker has overall
management responsibility for all game development efforts, including
programming for instant game development, game auditing and validation. Mr.
Becker is also responsible for the Company's internal computer systems and
applications.

         JOHN J. WALSH joined the Company in 1986 and was promoted to
Vice-President of Operations in 1998. Mr. Walsh has overall management
responsibility for coordinating lottery operations support for both the Instant
Ticket and Related Services and Systems segments. Prior to joining the Company,
Mr. Walsh held positions with Control Data Corporation and Ticketron's sports
and entertainment division.

         THE FOLLOWING DISCUSSION OF ASPECTS OF THE COMPANY'S BUSINESS ALSO
CONSTITUTES A CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

         The Company wishes to caution readers that the following important
factors, among others, in some cases have affected, and in the future could
affect, the Company's actual results and could cause the Company's actual
quarterly and annual consolidated results for 1999, and beyond, to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company:

GOVERNMENTAL REGULATION

         Lotteries are not permitted in the various states/jurisdictions of the
United States unless expressly authorized by law. The ongoing operations of
authorized lotteries in the United States typically are extensively regulated.
Applicable legislation varies from jurisdiction to jurisdiction but, in addition
to authorizing the lottery and creating the applicable regulatory authority, the
lottery statutes generally dictate certain broad parameters of lottery
operation, including the percentage of lottery revenues which must be paid out
in prizes. Lottery authorities typically exercise significant control as to the
selection of vendors (such as the Company) and award of lottery contracts,
including ticket prices, types of games played and marketing strategy, all of
which can affect the Company's operating results.


                                       9
<PAGE>   10

         Prior to and after granting a lottery contract, governmental
authorities generally conduct an investigation of the Company and its employees
and such authorities may require removal of an employee deemed to be unsuitable.
The Company has not been disqualified from a lottery contract as a result of any
such investigation. Certain states also require extensive personal and financial
disclosure (including, among other things, submission of fingerprints, personal
financial statements and federal and state income tax returns) and background
checks of control persons and entities beneficially owning a specified
percentage (typically 5% or more) of the Company's securities. The failure of
such beneficial owners to submit to such background checks and provide such
disclosure could jeopardize the award of a lottery contract to the Company or
provide the basis for cancellation of existing lottery contracts.

         Scientific Games from time to time retains governmental affairs
representatives in various states of the United States to advise legislators and
the public concerning its views on lottery legislation, to monitor any such
legislation and to advise the Company in its relations with lottery authorities.
Scientific Games also makes campaign contributions to various state political
parties and state political candidates. The Company believes it has complied
with applicable laws and regulations concerning campaign contributions and
lobbying disclosures.

         The award of lottery contracts and ongoing operations of lotteries in
international jurisdictions also are extensively regulated, although this
regulation usually varies from that prevailing in the United States.
Restrictions are frequently imposed on foreign corporations seeking to do
business in such jurisdictions and, as a consequence, the Company has, in a
number of instances, allied itself with a local company when seeking foreign
lottery contracts. Laws and regulations applicable to lotteries in the United
States and foreign jurisdictions are subject to change and the effect of such
changes on the Company's ongoing and potential operations cannot be predicted
with certainty.

MARKETS

         The Company's operations are international in scope. With 37 states and
the District of Columbia currently operating lotteries in the United States, the
Company's growth in the domestic market depends primarily on expanded activities
of existing lotteries as well as winning new contract awards, re-bids and
contract extensions. The Company has a high percentage of the U.S. instant
ticket market but has a minimal U.S. systems presence. As a result, management
believes the U.S. systems market to be a source of potential revenue growth for
the Company. Contrasted with the domestic market, the international market is
far from mature, with various countries viewing lotteries as a potential source
of revenue for a variety of governmental programs. For a discussion of the
Company's net revenues, operating income and identifiable assets attributable to
U.S. production operations, see Note 11 of the Notes to Consolidated Financial
Statements set forth elsewhere in this report, which is incorporated herein by
reference thereto. For a discussion of revenues from lottery agencies and other
customers domiciled in foreign countries, also see Note 11 which is incorporated
herein by reference.

         In 1998, no customer accounted for more than 10% of the revenues of the
Company. During 1998, the Company had nine U.S. contracts that were subject to
extensions or scheduled to expire. Of such contracts, six contained extension
options. With respect to the foregoing contracts, the Company received six
contract extensions, negotiated one additional extension, was the successful
bidder on one new contract and was the unsuccessful bidder on one contract. The
Company was the unsuccessful bidder on the California State Lottery contract.
However, the Company did receive a back-up supply contract extension through
June 1999. With regard to contracts previously held by its competitors, the
Company was the successful bidder in 1998 for the Connecticut Lottery
Corporation.

         The Company has thirteen U.S. contracts which are subject to extensions
or scheduled to expire in 1999. Of these thirteen contracts, 8 have extensions
available. Management believes new contracts for those jurisdictions without
extensions will be awarded through a competitive procurement process in which
the Company will participate. The Company estimates, based in part upon industry
and lottery furnished information, that 1998 U.S. instant ticket retail sales by
lotteries ("1998 Lottery Sales") were in excess of $14 billion. In comparison,
1998 international instant ticket retail sales are estimated to be $14 billion.
Based in part on such information, management estimates the Company's U.S.
customers with contracts subject to extensions or scheduled to expire in 1999
represent, in the aggregate, retail sales of approximately 40.7% of 1998 Lottery
Sales. In contrast, management believes that lottery contracts with eight states
currently serviced by its competitors are subject to extensions or are scheduled
to expire in 1999 which the Company estimates had aggregate retail sales equal
to approximately 32.0% of 1998 Lottery Sales. The Company expects that new
contracts for such states not exercising extensions will be awarded through the
competitive procurement process in which the Company expects to participate.


                                       10
<PAGE>   11

         U.S. instant ticket lottery contracts typically have an initial term of
from one to five years and usually provide the customer with options to extend
the contract one or more times under the same or mutually agreeable terms and
conditions for additional periods generally ranging from one to five years. The
average term of a U.S. on-line contract is five to ten years, with additional
extension options, which limits the number of contracts available for bidding in
any given year. The Company's customers have exercised extension options in the
Company's U.S. instant lottery contracts a majority of the time.

         The table included herein lists the United States lottery contracts for
which the Company had executed agreements as of March 22, 1999 and certain
information with respect thereto. The Company is the primary instant ticket
supplier unless otherwise noted. The table also includes 1998 instant ticket
retail sales for each state or district.



                                       11
<PAGE>   12

                                SCIENTIFIC GAMES
                         UNITED STATES LOTTERY CONTRACTS

<TABLE>
<CAPTION>
                                 1998
                            INSTANT TICKET      COMMENCEMENT         EXPIRATION         CURRENT RENEWAL
                             RETAIL SALES      DATE OF CURRENT    DATE OF CURRENT           OPTIONS
     STATE/DISTRICT         (IN MILLIONS)         CONTRACT            CONTRACT              REMAINING           TYPE OF CONTRACT
---------------------------------------------------------------------------------------------------------------------------------

<S>                         <C>                <C>                <C>                <C>                        <C>
Arizona                                108.4       January 1998        January 2001            2 one-year                    ITRS
California                             685.3       January 1996           June 1999                  none                    ITRS
Colorado                               225.2           May 1995           June 2000                  none                    ITRS
Connecticut                            429.4        August 1998         August 2000            2 one-year                    ITRS
Delaware                                18.1          July 1995           July 2000                  none                    ITRS
District of Columbia                    23.4           May 1996            May 1999            3 one-year                    ITRS
Florida                                663.9         April 1997      September 2002                  none                    ITRS
Georgia                                609.8           May 1993          April 2003                  none                    ITRS
Illinois                               618.3          July 1996           July 1999            3 one-year                    ITRS
Indiana                                351.5      December 1997       December 1999            2 one-year                    ITRS
Iowa                                    90.6       January 1995       December 1999                  none                    ITRS
Kentucky                               261.9       October 1997        October 1999            3 one-year                    ITRS
Maine                                  105.5          July 1990           June 2000                  none       ITRS and  Systems
Massachusetts                        2,085.0       October 1993           June 1999                  none                    ITRS
Minnesota                              260.1       January 1995        January 2000            1 one-year                    ITRS
Missouri                               257.3          June 1997           June 1999                  none        ITRS and Systems
Nebraska                                39.8          July 1993           June 2001                  none        ITRS and Systems
New Jersey                             518.6      November 1996        October 1999            2 one-year                    ITRS
New Mexico                              48.6         March 1997          March 1999            4 one-year                    ITRS
New York                             1.009.9         April 1996           July 1999            1 one-year        ITRS and Systems
Oregon                                 121.9          June 1998           June 1999                  none                   ITRS*
Pennsylvania                           469.2         April 1997          April 2002            5 one-year                    ITRS
South Dakota                            14.5          June 1995           June 1999            1 one-year                    ITRS
Texas                                1,615.6         March 1999          March 2002                  none                    ITRS**
Virginia                               302.3       January 1997           July 2002  1 three or five year                 Systems
Washington                             230.3           May 1995            May 2000                  none                    ITRS
W. Virginia                             80.2      December 1996           June 2000            1 one-year        ITRS and Systems
Wisconsin                              246.6       October 1996        October 1999                  none                   ITRS*

---------------------------------------------------------------------------------------------------------------------------------
 * secondary printer
** See Recent Developments of Management's Discussion and Analysis of Financial Condition and Results of Operations set forth 
   in Part IV, Item 14, Exhibit 13.1 of the Company's Annual Report on Form 10-K.
ITRS = Instant Ticket and Related Services
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

         The Company's re-entry into the on-line lottery business in 1998 has
and will allow the Company to compete for a share of both the U.S. and
international sales in the future. The Company expects to bid on these U.S.
contracts, while pursuing international on-line opportunities during 1999.

         The Company currently provides instant ticket validation systems to the
five states shown in the chart. In addition, the Company currently has eleven
SGI-NET systems installations in Europe and expects to add France, Western
Canada and Golden Casket Lottery Corporation in Australia. As a result of
winning the contract to provide on-line lottery services to the Western Canada
Lottery Corp., we believe we are now better positioned to compete for additional
on-line contracts, not only in the remainder of Canada, but also in the rest of
North America. In addition, the sale of SciScan terminals to Greece and France
better positions the Company to market its SciScan Technology in Europe.
Management believes that its technical and marketing expertise, its reputation
as a quality instant ticket provider, its financial stability and its quality
on-line products will allow it to compete in the U.S. on-line market.

         Sales outside the United States may consist of sales of goods and
services exported to customers located overseas, sales of goods and services to
customers in countries in which the Company's foreign subsidiaries have


                                       12
<PAGE>   13

manufacturing facilities or sales of goods and services by the Company's foreign
subsidiaries located outside the country of production. Although the Company
does business worldwide, a majority of the Company's current foreign operations
are conducted in Europe, and a majority of U.S. export sales are made to
customers located in Europe.

         The Company's international lottery contracts are less likely to have
firm contract periods and, historically, international lottery ticket customers
have sought competitive bids for such contracts more frequently than domestic
U.S. customers. The volume and timing of the international contracts fluctuate
from country to country and it is difficult to predict the volume or timing of
sales to these customers from period to period.

INDUSTRY SEGMENT INFORMATION AND CLASSES OF SIMILAR SERVICES

         Information with respect to the Company's industry segments,
geographical operations and classes of similar services is set forth in Note 11
to the Consolidated Financial Statements of the Company, which appears on pages
28 through 39 of the Company's 1998 Annual Report to Shareholders, which Note 11
is incorporated herein by reference.

LOTTERY CONTRACTS:  PROCUREMENT PROCESS AND REQUIREMENTS

         Lotteries in the United States typically select an instant ticket or
on-line supplier by issuing a Request for Proposals ("RFP") which outlines
contractual obligations as well as products and services to be delivered. An
evaluation committee frequently comprised of key lottery staff evaluates
responses based on various criteria. These criteria usually include quality of
product, security plan and features, experience in the industry, quality of
personnel and services to be delivered and price. We believe that the quality of
our personnel, our technical expertise and our manufacturing efficiency give us
many advantages relative to the competition when responding to state lottery
RFPs. However, many lotteries still award the contract to the qualified vendor
with the lowest price, regardless of factors other than price. Contract awards
by lottery authorities in the United States are sometimes challenged by
unsuccessful competitors which can result in protracted legal proceedings.

         Domestic lottery contracts, including ours, typically contain
provisions for payment of liquidated damages for late delivery of tickets,
delivery of defective tickets or system non-operability, which in the aggregate
could result in several million dollars or more per day in penalties to the
Company. Although the payment of liquidated damages with respect to on-line
lotteries may not be uncommon, the Company believes it is uncommon for instant
lotteries. Scientific Games has not typically paid liquidated damages in a
material amount under instant ticket lottery contracts, although we have on
occasion negotiated customer allowances which have not had a material effect on
our business.

         Lottery contracts to which the Company is party frequently contain
exacting implementation schedules and performance requirements. Failure to meet
these schedules and requirements may result in substantial monetary liquidated
damages, as well as possible contract termination. The Company maintains a
bonding program for its bid bonds, litigation bonds and performance bonds
through various insurance companies. As of December 31, 1998, $77 million was
outstanding in aggregate face amount of surety bonds issued. One or more of
these bonds is generally required by a lottery customer in order to participate
in a lottery procurement or to enter into a contract with the lottery following
successful bid. Failure to provide such bonds would materially and adversely
affect the Company's ability to do business. The Company's bonding program is
backed by a blanket indemnity of the surety.

         Our contracts periodically expire and/or reach optional extension
dates. Upon the expiration of a contract (including any extensions thereof),
lottery authorities may award new contracts through a competitive procurement
process. There can be no assurance that our current contracts will be extended
or that we will be awarded new contracts as a result of competitive procurement
processes in the future. The Company's lottery contracts typically permit a
lottery authority to terminate the contract at any time for failure to perform
and other specified reasons, and many of such contracts permit the lottery
authority to terminate the contract at will without penalty. Depending upon,
among other factors, the amount of new revenue we derived thereunder, the
termination, expiration or failure to renew one or more lottery
contracts could have a material adverse effect on the our results of operation,
business or prospects.


                                       13
<PAGE>   14

COMPETITION

         The instant and on-line lottery businesses are highly competitive, and
the Company's business faces competition from a number of domestic and foreign
instant ticket manufacturers, on-line lottery system providers and other
competitors.

         Scientific Games currently has two primary instant lottery ticket
competitors in the U.S.: Pollard Banknote Limited ("Pollard") and BABN
Technologies ("BABN," a subsidiary of Group Francois-Charles Oberthur of
France). In addition, Creative Games International, Inc. ("Creative Games") is
also a competitor in the U.S. The Company estimates that the retail sales value
of its U.S. customer base was in excess of 70% of total U.S. instant ticket
retail sales in 1998 - approximately twice as large as its next largest
competitor. Except as permitted by the applicable provisions of the North
American Free Trade Act with respect to Canada and Mexico, it is currently
illegal to import lottery tickets into the United States from a foreign country.
The Company's business could be adversely affected should additional foreign
competitors in Canada or Mexico export their lottery products to the U.S. or
should other foreign competitors establish printing facilities in the U.S.,
Canada or Mexico to supply the U.S. market.

         Internationally, there are many lottery instant ticket vendors which
provide competition to the Company, including, among others, BABN, Pollard,
Creative Games, GPS Honsel and various other vendors.

         GTECH Holdings Corporation ("GTECH") is our major competitor in the
on-line market with about 70% of the U.S. market. Other on-line competitors in
the U.S. are Automated Wagering Inc. ("AWI") a subsidiary of Powerhouse
Technologies, and Autotote Corporation. GTECH is also our major competitor in
the international on-line market with the balance of the market being served by
Scientific Games, AWI, EssNet AB and a few other companies.

         Both in the U.S. market and internationally, factors which influence
the award of lottery contracts in addition to price, are believed to include,
among others, the ability to optimize lottery revenues through game design and
technical capability, quality of the product, dependability, production
capacity, marketing experience, financial condition and reputation of the
bidder, the security and integrity of the bidder's production operations,
products and services offered and the satisfaction of various other requirements
and qualifications imposed by specific jurisdictions.

         We believe our position as a leading worldwide producer of instant
lottery tickets and our reputation as a developer of state-of-the-art technology
and marketing concepts, as well as experience in the industry, enhance
significantly our competitive position. The large capital investment necessary
to purchase, customize and install an instant ticket printing operation, the
high level of security required in the lottery industry and the fact that all
states in the U.S. which have lotteries have typically required potential
suppliers to have prior lottery experience are all factors which tend to limit
the number of firms which are willing to, or are in the position to, enter the
instant lottery ticket production business. Our business could be adversely
affected should our competitors' research and development activities result in
reduced technological differentiation between our products and their products.
Similarly, in the event technological developments materially reduce the capital
investment required to finance secure lottery ticket printing and systems
operations, the Company's business could be adversely affected by increased
competition. We do not anticipate any material reduction in the level of capital
financing required for entry into the lottery product business in the
foreseeable future.

         The Company believes it has no current competitor in the U.S. market
which produces instant lottery tickets, provides on-line systems and offers a
full range of services to state lotteries. Competitors have typically either
manufactured only instant tickets or provided only certain services, such as
software for the management systems, marketing assistance or other specific
duties. However, an on-line vendor in cooperation with an instant ticket
supplier may jointly be considered a competitor or potential competitor. In
addition, an on-line vendor not in cooperation with an instant ticket supplier
may nonetheless provide various cooperative services, including data processing
services. Scientific Games has two primary domestic and international
competitors in this regard: AWI and GTECH.

         In 1997, we discontinued our charity pull-tab ticket business, which
was produced and distributed by our subsidiary GameTec Inc. ("GameTec"). In
connection with the disposition, we sold substantially all of the assets of
GameTec to International Gamco, Inc. ("Gamco"). We entered into a three-year
extendible marketing agreement 


                                       14
<PAGE>   15

with Gamco to provide marketing and related services to state lotteries for
pull-tab tickets. Currently, the Company has 3 contracts with state lotteries
for pull-tab tickets. We believe it is desirable to offer pull-tab tickets to
lottery customers to maintain a full range of products and services and we
continue to provide pull-tab tickets to our lottery customers through the
marketing agreement. Our sales of pull-tab tickets to lottery customers are
included in our Instant Ticket and Related Services segment and accounted for
less than 10% of our consolidated gross revenues in 1998.

POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

         Our operating results may vary significantly from period to period.
Revenues and capital expenditures may be difficult to forecast because our sales
cycle may vary and depend upon facts such as the size and timing of awarded
contracts, changes in customer budgets, delays in customer orders, changes in
lottery marketing strategies and ticket ordering patterns and general economic
conditions. Contracts with governmental entities operating newly authorized
instant lotteries tend to generate higher levels of ticket sales in the initial
months.

         Our operating results also may be affected by the working capital
requirements associated with preparing facilities and equipment, establishing
the distribution system and printing tickets for a recently awarded contract,
and by the amount of time elapsing before the receipt and/or recognition of
revenues from the sale of Instant Tickets and Related Services. Significant new
customer contracts may require the expenditure of additional resources and the
creation of additional infrastructures before revenues are realized. In
addition, operating results may be affected if we need to utilize overtime labor
or by our ability to smoothly integrate new and/or upgraded production equipment
with our existing production operations. Revenues from the sale of Instant
Tickets and Related Services and Systems may be recognized based upon ticket
shipments, a percentage of the lottery's sales to the public, a contracted
price, a license agreement, an equipment lease agreement or any combination of
the foregoing.

         Additionally, circumstances encountered in international markets,
including the substantial amount of time involved in bidding on any
international contract, the evaluation of such bid and the resultant contract
award or rejection can vary significantly from that originally anticipated when
the bid is prepared. All of these factors may make it difficult to forecast
revenues and expenditures related to our operations over extended periods and
may result in fluctuations in our quarterly financial results. Accordingly,
quarter to quarter fluctuations in revenues may be expected.

RELIANCE ON SENIOR MANAGEMENT

         The Company believes it has benefited and continues to benefit
substantially from the skills, experience and efforts of its senior management
(See "Executive Officers"). The loss of the services of members of the Company's
senior management could have a material adverse effect on the Company's business
and prospects.

ADDITIONAL RISK FACTORS AND INVESTMENT CONSIDERATIONS

         Additional or related factors which could affect our actual results and
could cause our actual consolidated results for the first quarter of 1999, and
beyond, to differ materially from those expressed in any forward-looking
statement made by, or on behalf of, the Company include:

         Continued or increased pressure to change the selling prices for our
products, and the resulting effects on margins, our actions in connection with
continued competition in many product areas, including, but not limited to,
price competition and fluctuating demand for certain lottery ticket products by
one or more lottery customers;

         Difficulties or delays in the development, production, testing and
marketing of products, including, but not limited to, a failure to ship new
products utilizing SGI-NET, SciScan Technology and/or other technologies when
anticipated, the failure of customers to accept these products or technologies
when planned, any defects in products and a failure of manufacturing economies
to develop when planned;

         Occurrences affecting the Company's ability to reduce product and other
costs, and to increase productivity;

         Inability to offset pricing competition with production efficiencies
and economies of sales; underutilization of the Company's plants and factories
resulting in production inefficiencies and higher costs; start-up expenses and


                                       15
<PAGE>   16


inefficiencies and delays and increased depreciation costs in connection with
the start of production in new plants and expansions;

         The amount, and rate of growth in, the Company's selling, general and
administrative expenses, and the impact of unusual items resulting from the
Company's ongoing evaluation of its business strategies, asset valuations and
organizational structures;

         The compromise or breach or perceived compromise or breach of the
Company's production security and integrity or the security and integrity of its
products or services;

         Difficulties in obtaining raw materials, supplies, power and natural
resources and any other items needed for production of lottery tickets and other
products;

         The inability of the Company's vendors and customers as well as the
Company itself to adequately prepare for and respond to potential business
interruptions caused by the Year 2000 problem;

         The acquisition of fixed assets and other assets, including inventories
and receivables, and the making or incurring of any expenditures and expenses,
including, but not limited to, depreciation and research and development
expenses, any revaluation of assets or related expenses and the amount of, and
any changes to, tax rates;

         The effects of, and changes in, trade, monetary and fiscal policies,
laws and regulations, other activities of governments, agencies and similar
organizations, and social and economic conditions, such as trade restrictions or
prohibitions, inflation and monetary fluctuations, import and other changes or
taxes, the ability or inability of the Company to obtain, or hedge against,
foreign currency, foreign exchange rates and fluctuations in those rates, loss
of international contracts or lower international revenue resulting from
increased expenses associated with overseas operations, the impact of foreign
labor laws and disputes, adverse effects arising out of political unrest,
terrorist activity, nationalizations and unstable governments and legal systems,
and intergovernmental disputes, as well as actions affecting frequency, use and
availability of lottery products and licensing of lotteries for business;

         The costs and other effects of legal or administrative cases and
proceedings (whether civil, such as environmental and product-related, or
criminal), settlements and investigations, claims, and changes in those items;
developments or assertions by or against the Company relating to intellectual
property rights and intellectual property licenses; adoptions of new, or changes
in, accounting policies and practices and the application of such policies and
practices;

         The effects of changes within our Company or in compensation and
benefit levels; activities of third parties with which we have an agreement or
understanding, including any issues affecting any investment or joint venture in
which we have an interest; the amount, type and cost of the financing available
to or utilized by us; and

         The ability to integrate acquisitions into our existing operations and
unexpected difficulties or problems with such acquired entities including
inadequate production equipment, inadequate production capacity or quality,
outdated or incompatible technologies or an inability to realize anticipated
synergies and efficiencies, whether within anticipated timeframes or at all.

         For a more detailed discussion of certain of these risks see Item 3
"Legal Proceedings" and Item 7 "Management's Discussion and Analysis of
Financial Condition and Results of Operations".

ITEM 2.  PROPERTIES

         The Company currently has four instant ticket manufacturing sites: a
71,000 square foot leased facility in Gilroy, California (the "California
Facility"); a 185,000 square foot owned headquarters and manufacturing facility
in Alpharetta, Georgia (the "Georgia Facility"); a 112,000 square foot leased
facility in Leeds, United Kingdom (the "Leeds Facility"); and a 30,000 square
foot leased facility in Bradford, United Kingdom (the "Bradford Facility").


                                       16
<PAGE>   17

         We also have a 8,000 square foot leased facility in Vienna, Austria
(the "Austria Facility"), which is dedicated to software development activities
for our on-line business. We currently are subleasing space from FDJ in Paris,
France for our French software development activities until an appropriate
office building is located and tenant improvements are installed for the
Company's French operations. The South Africa sales branch leases approximately
1,900 square feet in Woodmead, South Africa. Sales support, research, product
development, U.S. software development and graphics are located in the Company's
corporate headquarters at the Georgia Facility where the Company also has a
10,000 square foot leased facility for software development in addition to its
manufacturing facility. Our employees also may be located at facilities owned or
leased by lotteries. In addition, we lease facilities in several states in order
to provide additional services to our Instant Ticket and Related Services
customers.

         The four manufacturing facilities have a combined maximum production
capacity of approximately 14 billion "standard sized" (2 by 4 inch) tickets per
year. However, at maximum production capacity, the Company incurs substantial
overtime expense and can encounter reduced efficiencies. The California Facility
consists of office and production space equipped with a modern gravure press
with multiple ink-jet imagers. The California Facility lease expires April 30,
2005. Currently. In addition, the Company separately leases in California an
approximately 14,000 square foot ink production facility under a lease expiring
April 30, 1999. The Company is currently negotiating the terms of a new lease
for the same 14,000 square foot facility. The Leeds Facility consists of office
and production space equipped with five sheet-fed offset presses. The
administrative and game development departments for both the Leeds and Bradford
Facilities are in this location. The Leeds Facility lease expires October 31,
2001. The Bradford Facility includes office and production space and is equipped
with three separate printing processes: offset, inkjet and rotary screen. The
Bradford Facility lease expires June 30, 2016. The Austria Facility consists of
office and software development space equipped with state-of-the-art software
development tools. The Austria Facility lease expires on December 31, 2007.

         Scientific Games' headquarters and printing facility in Georgia began
operation in February 1992. The Georgia Facility operates two presses, including
a modern 15 station gravure press. The Georgia Facility's gravure press is
equipped with a state-of-the-art register control system, designed to reduce
overall waste while achieving high quality. The press has four reversible
stations providing color flexibility including potential four-color back
printing in selected situations and is designed to accommodate alternative
printing technology on a station-by-station basis. The press is designed to dry
both water-based and solvent-based inks at full press speed. Currently, the use
of water-based inks is increasing as the printing industry moves to reduce its
output of volatile organic compounds (VOC's) created as the result of drying
solvent based inks.

         In 1994-95, after an analysis of projected future manufacturing
requirements, the Company installed new imagers, data stations and related
equipment incorporating significantly advanced technology for its existing
presses in its California and Georgia facilities at a total cost of
approximately $5 million. Such imagers materially increased the efficiency and
flexibility (and thus capacity) of the Company's existing presses.

         In 1995, we also installed an additional custom-designed printing
press, including new imagers, data stations and related equipment, in its
Georgia Facility. The total cost of the equipment and building expansion was
approximately $15.5 million. This is designed to employ both offset and
flexographic printing technologies and allows us to more economically produce
smaller print runs than the existing two gravure presses, by, among other
things, reducing press set-up costs as compared to the existing gravure presses
in Georgia and California. The savings in operation of the third press are
attributable to, among other factors, the flexographic and offset technologies
which use photopolymer and aluminum plates rather than the engraved chrome
plated cylinders used in the gravure process.

         In 1998, we installed our own film development equipment in our Georgia
Facility. The new film development equipment allows us to internalize our
pre-press functions and reduce our manufacturing costs.

         The Company has presses at the Leeds and Bradford Facilities located in
the United Kingdom. The Leeds Facility has five sheet-fed offset presses as well
as imaging and silk screen equipment. The Bradford Facility utilizes three
separate printing processes, which are an offset, inkjet and rotary screen. In
1997, after an analysis of projected future manufacturing requirements, we began
installation of new imagers, data stations and related equipment incorporating
significantly advanced technology for our existing presses at the Bradford
Facility at a total 


                                       17
<PAGE>   18

retail cost of approximately $3.0 million. Such imagers became fully operational
in March 1998 and materially increased the efficiency and flexibility (and thus
capacity) of our existing presses at the Bradford Facility.

ITEM 3.  LEGAL PROCEEDINGS

          The Company's SGI subsidiary owns a minority interest in Wintech de
Colombia, S.A. ("Wintech"), which has operated the Colombian national lottery
under contract with Empresa Colombiana de Recursos para la Salud, S.A.
("Ecosalud"), an agency of the Colombian government. The contract projected that
certain levels of lottery ticket sales would be attained, and provided a penalty
against Wintech, SGI and the other shareholders of Wintech of up to $5,000,000
if such levels were not achieved. In addition, with respect to a further
guarantee of performance under the contract with Ecosalud, SGI delivered to
Ecosalud a $4,000,000 bond issued by a Colombian surety, Seguros del Estado
("Seguros"). Wintech started the instant lottery in Colombia but, due to
difficulties beyond its control, the projected sales level was not met for the
year ending 1993. On July 1, 1993, Ecosalud adopted resolutions declaring, among
other things, that the contract was in default and asserted various claims for
compensation and penalties against Wintech, SGI and shareholders of Wintech. As
the Company has previously disclosed, litigation is pending in Colombia
concerning various claims among Ecosalud, Wintech and the Company relating to
the termination of the contracts with Ecosalud (the "Colombian Litigation").
Ecosalud's claims in the Colombian Litigation are for, among other things,
realization on the full amount of the penalty plus interest and costs of the
bond.

         SGI has consulted with Colombian counsel and has been advised that SGI
has various legal defenses to Ecosalud's claims. SGI also has certain cross
indemnities and undertakings from the two other private shareholders of Wintech
for their respective shares of any liability to Ecosalud. That obligation is
secured in part by a $1,500,000 confirmed letter of credit in favor of SGI. The
Colombian surety which issued a $4,000,000 bond to Ecosalud under the contract
has reportedly paid $2,400,000 to Ecosalud under the bond, and made demand upon
SGI for that amount under the indemnity agreement entered into by the surety and
SGI. SGI declined to make or authorize any such payment and notified the surety
that any payment in response to Ecosalud's demand on the bond is at the surety's
risk. No assurance can be given that the other shareholders of Wintech will, or
have sufficient assets to, honor their indemnity undertakings to SGI when the
claims by Ecosalud against SGI and Wintech are resolved, in the event such
claims result in any liability.

         In June 1996, Ecosalud filed a complaint against the Company in the
United States District Court for the Northern District of Georgia, Atlanta
Division (the "Georgia Litigation"). Total damages claimed in the original
Complaint were "not less than $84,423,267." The complaint also sought reasonable
attorneys' fees and costs allegedly pursuant to the contract. In response to the
complaint, SGI filed a motion to dismiss the action on multiple grounds,
including the mandatory arbitration clause contained within the contract.
Ecosalud then filed an amended complaint in which it withdrew its claim for in
excess of $84,000,000 and, instead, seeks $5,000,000 under an "Executive Title,"
a purported joint and several guarantee by the Company, Wintech and other
shareholders in Wintech that projected levels of lottery ticket sales would be
attained. In addition, Ecosalud also sought attorneys' fees and interest on the
claim. SGI filed a motion to dismiss the amended complaint on the grounds, inter
alia, that litigation involving the same subject matter was pending in Colombia,
the dispute is subject to an arbitration clause and forum non conveniens. On
March 19, 1997, judgment was entered on behalf of the Company. The Court
dismissed the action on the grounds that it was governed by the arbitration and
forum selecting clauses in the contract which require that all disputes be
settled either by arbitration in Colombia or in the administrative courts of
Colombia. The Court also dismissed the action on the grounds of lis alibi
pendens. On April 16, 1997, the Plaintiff filed a notice of appeal. The United
States Court of Appeals for the Eleventh Circuit heard oral argument on the
appeal of the dismissal of the complaint of Ecosalud on January 16, 1998 and
thereafter affirmed the holding of the 


                                       18
<PAGE>   19

trial Court. Ecosalud did not seek reconsideration by the Eleventh Circuit;
accordingly, the Georgia Litigation has been concluded.

         On April 2, 1998, Seguros brought suit against the Company in the
United States District Court for the Northern District of Georgia, Atlanta
Division. The plaintiff seeks $2,400,000 for sums paid by Seguros to Esosalud
under the surety bond on November 1, 1994, plus interest at the Colombian bank
rate of interest. The Company has filed a motion to dismiss based on the
Colombian statute of limitations of two years and, alternatively, seeking that
the case be dismissed on other grounds. Seguros filed a motion for summary
judgment with the Court on May 6, 1998 seeking summary judgment on its claim in
the amount of $2,400,000, plus $3,246,916 in accrued interest, plus interest,
thereafter.

         SGI intends to vigorously defend the Colombian Litigation and the
recently filed Seguros litigation and has been advised by counsel that the
Company has numerous defenses on the merits, as well as procedural defenses to
the litigation. Although it is not possible to determine the outcome of the
litigation in Colombia, or the other related surety and indemnity claims,
management believes based upon, among other things, the advice of counsel that
SGI has various defenses (which it has asserted in response to such proceedings
and claims), that adequate provision has been made for such claims and the
disposition thereof should not have a material adverse effect on the Company's
consolidated financial condition or consolidated results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of security holders at any time
during the fourth quarter of the year ended December 31, 1998.


                                       19
<PAGE>   20

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         In July 1997, the Company adopted a shareholders rights plan which
provided for the issuance to each holder of the Company's Common Stock, certain
rights (the "Rights") to purchase shares of the Company's redeemable Series A
Participating Cumulative Preferred Stock pursuant to the terms of a Rights
Agreement. Such rights are exercisable after distribution by holders other than
"Acquiring Persons" as defined in the Rights Agreement in the event of certain
ownership changes and in connection with certain business combinations. The
Rights may have certain anti-takeover effects. The Rights may cause substantial
dilution to a person that attempts to acquire the Company without a condition to
such an offer being that a substantial number of the Rights be acquired or that
the Rights be redeemed or declared invalid. The Rights should not interfere with
any merger or other business combination approved by the Board of Directors
(under some circumstances, with the concurrence of the Continuing Directors)
since the Rights may be redeemed by the Company. A copy of the Rights Agreement
and a more expansive summary of the provisions thereof is set forth in the
Company's Form 8-A/A with respect thereto, filed with the Commission on August
6, 1997.

         The information presented under the caption "Corporate Information" on
page 41 of the Company's 1998 Annual Report to Shareholders is incorporated
herein by reference.

ITEM 6   SELECTED FINANCIAL DATA

         The information presented under the caption "Five-Year Selected
Financial Data" on page 14 of the Company's 1998 Annual Report to Shareholders
is incorporated herein by reference.

ITEM 7   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The information presented under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" on pages 15
through 23 of the Company's 1998 Annual Report to Shareholders is incorporated
herein by reference.

ITEM 7A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The information set forth under the heading "Inflation, Changing
Prices, Foreign Currency Fluctuations and Market Risk" appearing on pages 21
through 22 of our 1998 Annual Report to Shareholders is incorporated herein by
reference.

ITEM 8   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The information presented under the caption's "Consolidated Statements
of Income", "Consolidated Balance Sheets", "Consolidated Statements of Cash
Flows", "Consolidated Statements of Shareholders' Equity", and "Notes to
Consolidated Financial Statements", on pages 24 - 40 of the Company's 1998
Annual Report to Shareholders is incorporated herein by reference.

ITEM 9   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE

         Not Applicable


                                       20
<PAGE>   21

                                    PART III

ITEM 10  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         This information required by Item 10 is incorporated by reference from
the information in Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Stockholders to be held May 21,
1999, except as to biographical information on Executive Officers which is
contained in Item 1 of this Annual Report on Form 10-K.

ITEM 11  EXECUTIVE COMPENSATION

         The information required by Item 11 is incorporated by reference from
the information in Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Stockholders to be held May 21,
1999.

ITEM 12  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by Item 12 is incorporated by reference from
the information in Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Stockholders to be held May 21,
1999.

ITEM 13  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by Item 13 is incorporated by reference from
the information in Registrant's proxy statement (filed or to be filed pursuant
to Regulation 14A) for its Annual Meeting of Stockholders to be held May 21,
1999.


                                       21
<PAGE>   22

                                     PART IV

ITEM 14  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) Consolidated Financial Statements

         The following financial statements and notes thereto of Scientific
Games Holdings Corp. are incorporated in Item 8 by reference from the Company's
1998 Annual Report to Shareholders: 

<TABLE>
<CAPTION>
                                                                                                            Page in Annual
                                                                                                        Report to Shareholders
                                                                                                        ----------------------

       <S>                                                                                              <C> 
       Consolidated Statements of Income, Years ended December 31, 1998, 1997 and 1996                              24

       Consolidated Balance Sheets-- December 31, 1998 and 1997                                                     25

       Consolidated Statements of Cash Flows  -- Years ended December 31, 1998, 1997 and 1996                       26

       Consolidated Statements of Shareholders' Equity, Years ended December 31, 1998, 1997 and 1996                27

       Notes to Consolidated Financial Statements-- December 31, 1998                                            28-39

       Report of Independent Auditors                                                                               40
</TABLE>

(a)(2) Financial Statement Schedules

       Schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.

(a)(3) Reports on Form 8-K

       No reports on Form 8-K were filed during the fourth quarter of 1998.

(a)(4) Listing of Exhibits

         The exhibits listed below are filed with or incorporated by reference
into this annual report on Form 10-K.

<TABLE>
<CAPTION>
EXHIBIT NO.            DESCRIPTION OF EXHIBIT
-----------            ----------------------

<S>                    <C>                                                                                                       
3.1                        --  Second Amended and Restated Certificate of Incorporation of Scientific Games
                               Holdings Corp. with Certificate of Designation (12)
3.2                        --  Second Amended and Restated By-Laws of Scientific Games Holdings Corp. (4)
10.2                       --  Agreement by and between the Massachusetts State Lottery Commission and
                               Scientific Games, Inc. dated December 18, 1987 and extensions thereto (1)
10.6                       --  Employment Agreement ("Old Malloy Employment Agreement") dated as of October 1,
                               1991 between Scientific Games Operating Corp. (now known as Scientific Games
                               Inc.) and William G. Malloy (1)
10.7                       --  Employment Agreement ("Behm Employment Agreement") dated as of October 1, 1991
                               between Scientific Games Operating Corp. (now known as Scientific Games Inc.)
                               and William F. Behm (1)
10.8                       --  Employment Agreement ("Little Employment Agreement") dated as of October 1,
                               1991 between Scientific Games Operating Corp. (now known as Scientific Games
                               Inc.) and Thomas F. Little (1)
10.10                      --  Form of Promissory Note evidencing loans to Management Stockholders (1)
</TABLE>


                                       22
<PAGE>   23

<TABLE>
<S>                    <C>                                                                                                       
10.16                      --  Second Amendment to Asset Purchase Agreement dated as of October 1, 1991
                               between Bally Manufacturing Corporation and Scientific Games Operating Corp.
                               (now known as Scientific Games Inc.) (re: earnout) (1)
10.17                      --  Stockholders' Agreement dated as of July 1, 1993, as amended (1)
10.18                      --  Amended First 1991 Management Stock Option Plan (1)
10.19                      --  Amended Second 1991 Management Stock Option Plan (1)
10.20                      --  1993 Management Stock Option Plan (1)
10.21                      --  Industrial Real Estate Lease dated December 4, 1984 between Arroyo One as
                               Landlord and Scientific Games Inc. as Tenant (Gilroy Lease), as amended (1)
10.22                      --  Lease dated April 27, 1987 between Kishimura Bros. and Scientific Games of
                               California, Inc. (Scientific Games of California, Inc. assigned its leasehold
                               interest to Scientific Games Operating Corp., now known as Scientific Games,
                               Inc.), as amended (1)
10.23                      --  Form of Amendment to Old Malloy Employment Agreement (1)
10.24                      --  Form of Amendment to Behm Employment Agreement (1)
10.25                      --  Form of Amendment to Little Employment Agreement (1)
10.26                      --  Instant Ticket and Associated Products and Services Agreement dated May 4, 1993
                               by and between Georgia Lottery Corporation and Scientific Games, Inc. (4)
10.31                      --  Form of revised Severance Benefits Agreement (4)
10.32                      --  Amendment to Amended First 1991 Management Stock Option Plan (4)
10.33                      --  Amendment to Amended Second 1991 Management Stock Option Plan (4)
10.34                      --  Amendment to 1993 Management Stock Option Plan (4)
10.35                      --  First Amended and Restated 1993 Directors' Stock Option Plan (4)
10.37                      --  1994 Management Stock Option Plan (6)
10.38                      --  1995/1996 Management Stock Option Plan (6)
10.39                      --  Key Employee Restricted Stock Option Plan (6)
10.40                      --  Severance Benefits Agreement dated as of May 5, 1995, between Scientific Games Holdings Corp. and
                               Cliff O. Bickell (7)
10.42                      --  Key Employee Restricted Stock Plan (6)
10.43                      --  Form of Key Employee Restricted Stock Plan Restricted Stock Award Agreement (7)
10.45                      --  Instant Lottery Tickets Supply Agreement between Thomas De La Rue Limited, Scientific Games Inc. and
                               Camelot Group plc, dated June 15, 1995. (3)(8)
10.46                      --  Credit Agreement for Line of Credit From First Union National Bank of Georgia to Scientific Games
                               Holdings Corp. and Scientific Games Inc. Dated: December 20, 1996 (9)
10.47                      --  Rights Agreement dated as of July 10, 1997 between Scientific Games Holdings Corp. and First Union
                               National Bank as Rights Agent (11)
10.48                      --  Amended Bank Credit Agreement (12)
10.49                      --  1998 Employee Stock Purchase Plan, as amended and restated (12)
10.50                      --  Stock Purchase Agreement dated as of April 15, 1997, by and between Scientific Games Holdings Corp.
                               and Autotote Corporation with Respect to All Outstanding Capital Stock of TeleControl Kommunications
                               - und Computersysteme Gesellschaft m.b.H. (12)
10.51                      --  Form of Amendment to Behm Employment Agreement (12)
10.52                      --  Form of Amendment to Little Employment Agreement (12)
10.53                      --  Severance Benefits And Employment Agreement dated as of January 1, 1998 between William G. Malloy 
                               and Scientific Games Holdings Corp.
11.0                       --  Statement re: computation of per share earnings (loss)
13.1                       --  1998 Annual Report to Shareholders pages 14, 15-39 and 41 only
21.0                       --  List of Subsidiaries of Registrant
23.0                       --  Consent of Independent Auditors
27.0                       --  Financial Data Schedule (for SEC use only)
</TABLE>

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

(1)      Previously filed with Registration Statement No. 33-65582, filed on
         July 2, 1993 or as subsequently amended on July 28, 1993, August 9,
         1993 or August 20, 1993.


                                       23
<PAGE>   24

(2)      Previously filed with the Company's Quarterly Report on Form 10-Q for
         the Quarter Ended September 30, 1993.
(3)      Portions of Exhibits 10.28 and 10.43 deemed confidential by the Company
         have been omitted, were filed separately with the Commission and
         confidential treatment has been granted for portions of these exhibits.
(4)      Previously filed with the Company's Registration Statement No.
         33-75168, filed on February 11, 1994 or as subsequently amended on
         March 4, 1994.
(5)      Previously filed with the Company's Annual Report on Form 10-K for the
         year ended December 31, 1993.
(6)      Previously filed with the Company's Annual Report on Form 10-K for the
         year ended December 31, 1994.
(7)      Previously filed with the Company's Quarterly Report on Form 10-Q for
         the quarter ended June 30, 1995. 
(8)      Previously filed with the Company's Quarterly Report on Form 10-Q for
         the quarter ended September 30, 1995.
(9)      Previously filed with the Company's Annual Report on Form 10-K for the
         year ended December 31, 1996.
(10)     Previously filed with the Company's Current Report on Form 8-K dated
         April 15, 1997 and filed with the Commission on June 30, 1997.
(11)     Previously filed with the Company's Current Report of Form 8-K 8A/A
         dated August 6, 1997 and filed with the Commission on such date.
(12)     Previously filed with the Company's Annual Report on Form 10-K for the
         year ended December 31, 1997.


(b)      Reports on Form 8-K:  none.

(c)      Executive Compensation Plans and Arrangements.

                  (i)      Employment Agreement ("Old Malloy Employment 
                           Agreement") dated as of October 1, 1991 between 
                           Scientific Games Operating Corp. (now known as 
                           Scientific Games Inc.)
                           and William G. Malloy, Exhibit 10.6 (1)
                  (ii)     Employment Agreement ("Behm Employment Agreement")
                           dated as of October 1, 1991 between Scientific Games
                           Operating Corp. (now known as Scientific Games Inc.)
                           and William F. Behm, Exhibit 10.7 (1)
                  (iii)    Employment Agreement ("Little Employment Agreement")
                           dated as of October 1, 1991 between Scientific Games
                           Operating Corp. (now known as Scientific Games Inc.)
                           and Thomas F. Little, Exhibit 10.8 (1)
                  (iv)     Amended First 1991 Management Stock Option Plan,
                           Exhibit 10.18 (1)
                  (v)      Amended Second 1991 Management Stock Option Plan,
                           Exhibit 10.19 (1)
                  (vi)     1993 Management Stock Option Plan, Exhibit 10.20 (1)
                  (vii)    Form of Amendment to Old Malloy Employment Agreement,
                           Exhibit 10.23 (1)
                  (viii)   Form of Amendment to Behm Employment Agreement,
                           Exhibit 10.24 (1)
                  (ix)     Form of Amendment to Little Employment Agreement,
                           Exhibit 10.25 (1)
                  (x)      Form of revised Severance Benefits Agreement, Exhibit
                           10.31 (2)
                  (xi)     Amendment to Amended First 1991 Management Stock
                           Option Plan, Exhibit 10.32 (2)
                  (xii)    Amendment to Amended Second 1991 Management Stock
                           Option Plan, Exhibit 10.33 (2)
                  (xiii)   Amendment to 1993 Management Stock Option Plan,
                           Exhibit 10.34 (2)
                  (xiv)    1994 Management Stock Option Plan, Exhibit 10.37 (3)
                  (xv)     1995/1996 Management Stock Option Plan, Exhibit 10.38
                           (3)
                  (xvi)    Severance Benefits Agreement dated as of May 5, 1995,
                           between Scientific Games Holdings Corp and Cliff O.
                           Bickell, Exhibit 10.40 (4)
                  (xvii)   Key Employee Restricted Stock Plan, Exhibit 10.42 (3)
                  (xviii)  Form of Key Employee Restricted Stock Plan Restricted
                           Stock Award Agreement, Exhibit 10.43 (4)
                  (xix)    Form of Amendment to Behm Employment Agreement,
                           Exhibit 10.51 (5)


                                       24
<PAGE>   25
                  (xx)     Form of Amendment to Little Employment Agreement,
                           Exhibit 10.52 (5)
                  (xxi)    Severance Benefits and Employment Agreement dated as
                           of January 1, 1998 between William G. Malloy and
                           Scientific Games Holdings Corp. Exhibit 10.53.

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

                  (1)      Previously filed with Registration Statement No.
                           33-65582, filed on July 2, 1993 or as subsequently
                           amended on July 28, 1993, August 9, 1993 or August
                           20, 1993.

                  (2)      Previously filed with Registration Statement No.
                           33-75168, filed on February 11, 1994 or as
                           subsequently amended on March 4, 1994.

                  (3)      Previously filed with the Company's Annual Report on
                           Form 10-K for the year ended December 31, 1994.

                  (4)      Previously filed with the Company's Annual Report on
                           Form 10-Q for the quarter ended June 30, 1995.

                  (5)      Previously filed with the Company's Annual Report on
                           Form 10-K for the year ended December 31, 1997.


                                       25
<PAGE>   26

                                 SIGNATURE PAGE

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, Scientific Games Holdings Corp. has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Alpharetta, and State of Georgia on this 31st day of
March, 1999.

                                    Scientific Games Holdings Corp.

                                    By: /s/ William G. Malloy         
                                        ---------------------------------------
                                    William G. Malloy, Chairman
                                    of the Board, President, and
                                    Chief Executive Officer

         Pursuant to the requirements of the Securities Act of 1934, this report
has been signed by the following persons on behalf of the Registrant, Scientific
Games Holdings Corp. in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature                                   Title                                       Date
---------                                   -----                                       ----

<S>                                         <C>                                         <C>
/s/ William G. Malloy                       Chairman of the Board, President,           March 31, 1999
----------------------------                and Chief Executive Officer
William G. Malloy                           (Principal Executive Officer)
                                            

/s/ Cliff O. Bickell                        Chief Financial Officer,                    March 31, 1999
----------------------------                Vice President and Treasurer
Cliff O. Bickell                            (Principal Financial and Accounting
                                            Officer)

/s/ Paul F. Balser                          Director                                    March 31, 1999
----------------------------
Paul F. Balser

/s/ William F. Behm                         Director                                    March 31, 1999
----------------------------
William F. Behm

/s/ Mark E. Jennings                        Director                                    March 31, 1999
----------------------------
Mark E. Jennings
</TABLE>


                                       26
<PAGE>   27


<TABLE>
<S>                                         <C>                                         <C>
/s/ Frank S. Jones                          Director                                    March 31, 1999
----------------------------
Frank S. Jones

/s/ Edith K. Manns                          Director                                    March 31, 1999
----------------------------
Edith K. Manns

/s/ Dennis L. Whipple                       Director                                    March 31, 1999
----------------------------
Dennis L. Whipple
</TABLE>


                                       27