<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    -------

                                   FORM 10-K/A-1

                                    -------
(Mark One)
   [X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF      
             THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED,  
             EFFECTIVE OCTOBER 7, 1996).                            
                                                                    
             For the fiscal year ended December 31, 1996            

                                      OR
   
   [ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF      
             THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)  
                                                                    
             For the transition period from _______ to _______

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

                       Commission file number   000-22298

                        SCIENTIFIC GAMES HOLDINGS CORP.

                             A Delaware Corporation
                              IRS No. 13 361 5274
            1500 Bluegrass Lakes Parkway, Alpharetta, Georgia 30201
                                 (770) 664-3700

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

           Securities registered pursuant to Section 12(b) of the Act
                             and listed on the NYSE
                         Common Stock, $.001 Par Value
          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 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 17, 1997 was $310,203,803.  The aggregate
market value was computed by reference to the closing price of the stock on the
New York Stock Exchange on such date.  For the purposes of this response,
executive officers and directors are deemed to be the affiliates of the
Registrant and the holding by non affiliates was computed as 11,490,856 shares.

The number of shares outstanding of the Registrant's Common Stock as of March
17, 1997 was 12,164,855 shares.

Documents incorporated by reference:

     The Registrant's proxy statement for its Annual Meeting of Stockholders,
to be held May 16, 1997, 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 31 of Scientific Games Holdings
Corp.'s 1996 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

     The Company hereby amends its Form 10-K for the year ended December 31,
1996 solely to disclose the identity of the only customer accounting for 10% or
more of its revenues in 1996.


ITEM 1. BUSINESS


GENERAL
     Scientific Games Holdings Corp. (the "Company" or "Scientific Games")
through its wholly owned subsidiaries, principally, Scientific Games Inc.
("SGI") and Scientific Games International, Limited ("SGIL"), is the leading
worldwide manufacturer of instant lottery tickets based upon the number of
instant lottery tickets sold. The Company has production facilities in
Alpharetta, Georgia (suburban Atlanta), Gilroy, California, Albert Lea,
Minnesota and the United Kingdom and employs approximately 1,022 people in
total. Scientific Games' business consists primarily of manufacturing and
selling instant lottery tickets to domestic and foreign governmental lottery
authorities and licensees and providing lottery services to such customers. The
Company also offers its customers a full range of instant lottery services
under cooperative services contracts, including some or all of the following
services: designing and installing game management software, ticket production,
telemarketing, field sales, accounting, ticket distribution, training sales
staff, estimating ticket needs, managing staff, advising with respect to
security, ticket validation and provision of computer hardware, validation
terminals, SciScan Technology validators, maintenance, communication network
and sales agent hot-line service.  Through the acquisition of a pull-tab ticket
business, GameTec, in June 1994, the Company now also manufactures and sells
pull-tab tickets to lotteries and charities.  The GameTec facility is located
in Albert Lea, Minnesota. The Company announced in January 1997 that it had
signed a letter of intent to purchase Tele Control, a Vienna, Austria based
on-line lottery and transaction processing company.

INDUSTRY OVERVIEW
     Lotteries are operated by domestic and foreign governmental authorities
and their licensees in approximately 200 jurisdictions throughout the world.
Currently, 39 jurisdictions in the United States sell instant lottery tickets.
Of the approximately 7.2 billion tickets sold by the Company in 1996,
approximately 27% were sold outside the United States. Governments typically
authorize lotteries as a means of generating revenues without the imposition of
additional taxes. Lottery revenues are frequently being 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.

     Although there are many types of lotteries worldwide, government
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 one which is typically played by removing a coating from
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 the prevalent 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.

     There are many promotional (i.e., commercial) game suppliers (including
the Company) in the United States which produce tickets for both sales
promotion companies and their end users. Management believes Scientific Games
is the only company which also offers the commercial market a full line of
support and services similar to those which the Company offers to the
government lottery market. Management believes the total potential commercial
game market may be larger than the instant lottery market and that such market
has shown extensive growth in recent years. While potential lottery customers in
the United States currently are limited to the 39 jurisdictions where such games
are legally permitted, commercial games are believed permitted in substantially
all states. Commercial games are used to promote a manufacturer's or retailer's
products and typically do not involve a cumbersome bidding/procurement process.
Orders for commercial games may vary in quantity from less than 50,000 to more
than 500 million tickets. Commercial games are subject to a variety of state
laws which regulate promotional games of chance. A significant difference
between lottery games and commercial games is the lower level of security


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requirements associated with commercial games which typically offer less
valuable prizes. Tickets for commercial games may not require foil, laminated or
similar paper stock or overprint inks.

BUSINESS STRATEGY
     The Company is the leading worldwide supplier of instant lottery tickets
and support services.  Scientific Games intends to expand this leadership
position by (i) pursuing new instant ticket printing opportunities in both the
domestic and foreign marketplaces, (ii) emphasizing and marketing Scientific
Games' capabilities in cooperative services, (iii) reentering the on-line
lottery business through its acquisition of Tele Control, (iv) continuing the
Company's emphasis on customer service and responsiveness to customer needs
both before and after delivery of products and services, (v) investing in its
facilities while aggressively pursuing practices and methods which reduce
operating costs, and (vi) funding research and development costs that continue
to provide innovations for the Company's customers.

     As state governments face budgetary pressures, they increasingly seek
methods of reducing state spending. A method of reducing spending which is
often considered by states is privatization or outsourcing  of various
operating tasks associated with lottery operations. The Company estimates that
nine domestic lotteries have elected to privatize certain operating functions
related to the management of instant ticket games, including six lotteries with
whom the Company has, or is negotiating, cooperative services contracts. The
Company has significant experience in this field and is well positioned to
offer this privatization or outsourcing option to the industry. The Company
intends to continue to emphasize and invest in its growing cooperative services
business.

     The increased application of computer-based and communications
technologies (including proprietary technologies) to the manufacturing and
servicing of instant tickets (See "Business-New Product Development") continues
to separate the instant ticket from conventional forms of printing. The Company
is 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 its position as a leading innovator within the lottery industry,
the Company intends 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, the Company
intends to leverage its management expertise, reputation, and contacts in the
lottery industry by pursuing joint ventures and considering acquisitions which
will provide access to lottery related products and services that the Company
does not currently provide. In January 1997, the Company signed a letter of
intent to purchase Tele Control, an Austria based company providing on-line
lottery and transaction processing to the European market. The Company is
presently evaluating various opportunities to enter other areas of the lottery
business by either utilizing its in-house expertise or by acquisition of, or
combining with, another entity engaged in such areas, or some combination of
the foregoing.

PRODUCTS AND SERVICES
     In 1974, the Company introduced the first "secure" instant game ticket.
Today, instant tickets manufactured by the Company are typically printed on
recyclable ticket stock by a series of computer controlled presses and ink-jet
imagers and are believed by management to incorporate the most advanced
technology and security currently available in the industry. Tickets range in
size from 1.5 inches by 3 inches to ticket sizes as large as some greeting
cards; tickets are normally played by removing a coating to determine if they
are winning tickets. The Company markets tickets to domestic lottery
jurisdictions, foreign lottery jurisdictions and commercial customers. The
Company has contracts with 24 of the 39 states/jurisdictions in the U.S. which
currently sell instant lottery tickets. These domestic contracts are typically
at a fixed price per thousand tickets and typically range from one to three
years in duration, although they usually have one or more extension options.
Customers of Scientific Games have exercised extension options in domestic
lottery contracts with the Company a majority of the time. In 1996, the Company
sold approximately 7.2 billion tickets. Such instant ticket sales included more
than 50% of all instant lottery tickets sold by all companies to domestic
lotteries and approximately twice as many instant tickets as were sold by the
Company's next largest domestic competitor.

     The Company currently manufactures tickets for the promotional game
market. 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. In the past, Scientific Games was not in a position
to penetrate this market fully because of, among other factors, very short lead
times and plant capacity constraints. The Company believes its installation in
1995, in the Georgia Facility, of an additional press better suited to shorter
press runs than its two existing gravure presses provides it with the capacity
and flexibility necessary to better compete in this



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market. The Company's promotional game operations also have expanded as a result
of its acquisition of SGIL in October 1996 whose sales are approximately 50% to
promotional game customers.

     Scientific Games pioneered the idea of cooperative services as a means of
reducing the operating costs of lotteries while increasing lottery revenues and
is the only instant ticket manufacturer which has a separate lottery ticket
cooperative support services business to supplement its manufacturing
operations. Cooperative services consist of lottery ticket distribution and
support services involving the performing of selected key sales, distribution,
marketing and/or data processing services for lottery jurisdictions. While most
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 has cooperative services agreements with the
states of Georgia, Maine, Nebraska, and West Virginia and is currently
finalizing contracts with the states of Florida and Pennsylvania. Under
cooperative services contracts, the Company typically provides selected
management, distribution services and/or data processing for the jurisdiction's
instant lottery game business and is paid a percentage of the lottery's total
instant ticket revenues. Customers select those services which they desire to
privatize from a menu of services offered, including: designing and installing
game management software, ticket production, telemarketing, field sales,
accounting, ticket distribution, sales staff training, estimating ticket needs,
managing staff, advising with respect to security, ticket validation, and
provision of computer hardware, validation terminals, SciSan Technology
validation units, maintenance, communication network and sales agent hot-line
service. Cooperative services contracts can be associated with large conversion
costs for the lottery, as the lottery would have to hire and/or retrain its
staff and redesign and install a software system to control the instant ticket
lottery business.

     In addition to laminated scratch off instant tickets, the Company's
business also includes the manufacture and sale of pull-tab tickets, a business
the Company entered through the June 1994 acquisition of the assets of GameTec,
a pull-tab manufacturer located in Albert Lea, Minnesota.  The Company
currently sells pull-tab tickets to five lotteries in the U.S. and to
distributors who sell them to charities.

     In January 1997, the Company announced that it had signed a letter of
intent to purchase Tele Control, a subsidiary of Autotote Corporation. Tele
Control is an on-line lottery and transaction processing company in Vienna,
Austria currently serving the European market. Scientific Games' predecessor
company developed and operated on-line systems from 1985 until 1991. During
that period, Scientific Games supplied and operated systems in Iowa, Maine, New
Hampshire, Vermont and West Virginia.

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 and ticket validation software technology and Terra 2000(R) tickets.
The Terra 2000(R) ticket is a recyclable and biodegradable paper ticket which
meets the rigorous security standards demanded by the lottery industry.  The
Company's latest innovation is SciScan Technology(R), 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. This
technology will also open other opportunities for advanced ticket play-styles
and may also have applications in other industries where currency, check,
credit and debit card and bearer documents verification is required.

     Certain technology associated with these innovations 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 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. 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.

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CUSTOMER SERVICE
     The Company has an active professional Customer Service Department which
works closely with its account managers, the lotteries, and Scientific Games'
Graphics and Game Programming Departments in the area of initial 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 the Company's customer service
representatives.  This information, when approved by the lottery, becomes the
technical manufacturing specifications for specific 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, 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 analyses 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 are believed to have the broadest consumer appeal of any
lottery product. 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. The most successful lotteries have found
that instant lottery products are largely an impulse item which must be
marketed like other consumer products.

     Sales of instant lottery tickets 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 officials 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 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, bar coding and additional layers of
protection. 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.

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

     The Company's dedicated computer-controlled printing process is
specifically designed for producing instant lottery game tickets for
governmentally sanctioned lotteries and high volume commercial games. The
process

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is not a business forms press or a direct mail press temporarily diverted to
lottery work. The Company's 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 a cooperative services contract with
Scientific Games.

     Paper and ink are the principal raw materials consumed in the Company's
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, 1996, the Company had approximately 1,022 full-time
employees. None of Scientific Games' employees are represented by a labor union
and the Company believes that its employee relations are good. At the
California Facility (See "Properties"), ticket packaging is performed by a
MBE/W (minority business enterprise/woman) owned subcontractor, the employees
of which are unionized. Scientific Games is, at present, the subcontractor's
only customer. Tele Control's employees are represented by Worker's Councils as
is typical in many European companies.

EXECUTIVE OFFICERS
     The following table sets forth certain information regarding the executive
officers of the Company as of March 1, 1997:


<TABLE>
<CAPTION>
        NAME          AGE                POSITION WITH THE COMPANY
--------------------  ---  -----------------------------------------------------
<S>                   <C>  <C>
William G. Malloy...  50   Director, Chairman, President and Chief
                           Executive Officer
William F. Behm.....  51   Director and Executive Vice President
Thomas F. Little....  52   Senior Vice President-International
Cliff O. Bickell....  54   Vice President, Treasurer and Chief Financial Officer
C. Gray Bethea, Jr..  52   Vice President, Secretary and General Counsel
David A. Bausch.....  62   Vice President
James R. Culver.....  64   Vice President-Marketing and Sales
John J. Kriz........  55   Vice President-Manufacturing
Terry D. Mangold....  56   Vice President-Instant Game Services
</TABLE>

     WILLIAM G. MALLOY transferred from the corporate staff of Bally
Manufacturing Company to the Company in 1987 and became President and Chief
Executive Officer in 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 sales business, the instant ticket cooperative 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 has over twenty years of
experience in the coin-operated amusement and gaming industry.

     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, and the development of the Company's new
environmental instant ticket. He is co-named as the inventor of  several 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-International in 1991. Mr. Little has overall management
responsibility for Scientific Games' international marketing and sales efforts.
He is also responsible for the Company's marketing and sales efforts in the
commercial game industry. 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.

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     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, governmental affairs, and contract preparation. 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 firm of Smith, Gambrell & Russell in Atlanta, Georgia.

     DAVID A. BAUSCH joined the Company in 1988 and has served as Vice
President since that time. Mr. Bausch has overall management responsibility for
Scientific Games' efforts in software systems development, video lottery
operations, and cooperative services operations. Prior to joining Scientific
Games, Mr. Bausch served as Deputy Director of the Illinois Lottery where he
implemented both its instant and on-line games. He was more recently the
Assistant Secretary of the Florida Lottery where he was responsible for that
lottery's overall start-up and ongoing operations.

     JAMES R. CULVER joined the Company in 1984 as an Account Executive and was
promoted to Vice President-Marketing and Sales in 1990. Mr. Culver has overall
management responsibility for Scientific Games' North American marketing and
sales efforts. In addition, he is the Company's Public Relations Officer. Prior
to joining Scientific Games, Mr. Culver was with the Michigan Lottery for over
eight years where he served as Marketing Director and later Acting Director.
Mr. Culver has over twenty years of lottery experience specializing in all
phases of marketing including, advertising, promotions, sales training and
motivation. He is the developer of several industry standards including the
Scientific Games Key Account Program which is currently used by several
lotteries as a model of key account and chain store sales management. Mr.
Culver also has twelve years of television experience both as a producer and
performer and regularly speaks at lottery trade shows and conferences.

     JOHN J. KRIZ joined the Company in 1990 as Vice President-Manufacturing.
Mr. Kriz has overall management responsibility for Scientific Games' instant
ticket printing operations. Prior to joining Scientific Games, Mr. Kriz spent
twenty-six years with Ringier American (formerly W. A. Krueger Co.) in various
executive, operational and technical positions. As Vice President for
Manufacturing Services, Mr. Kriz directed all manufacturing activities for
three divisions for this major publication, commercial and book printer. His
experience includes the design, construction and implementation of printing
operations.

     TERRY D. MANGOLD joined the Company in 1975 and was promoted to Vice
President-Instant Games Services in 1987. Mr. Mangold has overall management
responsibility for Scientific Games' instant ticket game programming
operations, i.e., the generation of games with the proper distribution of
winning and non-winning tickets. Prior to joining Scientific Games, Mr. Mangold
was responsible for computerized systems at First National Bank of Atlanta.

     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 1997, and beyond, to differ
materially from those expressed in any forward-looking statements made by, or
on behalf of, the Company:


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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 statues 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, ticket prices, types of games played and marketing strategy, all of
which can affect the Company's operating results.

     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 generally retains governmental affair representatives is
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 on contract proposals to lottery authorities.
Scientific Games also makes campaign contributions to various state political
parties and 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.

LOTTERY CONTRACTS:  PROCUREMENT PROCESS AND REQUIREMENTS
     Lotteries in the United States typically select an instant ticket 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.  The Company believes that the quality
of its personnel, technical expertise and manufacturing efficiency give it many
advantages relative to the competition when responding to state lottery RFPs.
However, many lotteries still award the contract to the vendor with the lowest
price. Contract awards by lottery authorities in the United States are
sometimes challenged by unsuccessful competitors which can result in costly
legal proceedings for all concerned.

     The Company's domestic lottery contracts typically contain provisions for
payment of liquidated damages for late delivery of tickets or delivery of
defective tickets, which in the aggregate could result in several million
dollars or more per day in penalties to the Company. Although the incurrence 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
paid any material liquidated damages under an instant lottery contract,
although it has on occasion negotiated customer allowances which management
does not consider material.

     Substantially all of the Company's revenues are derived from its lottery
and service contracts. The Company's domestic lottery contracts typically have
an initial term of from one to three years and usually provide the customer
with options to extend the contract one or more times under the same terms and
conditions for additional periods generally ranging from one to three years.
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. Lottery contracts
to which the Company is party typically contain exacting implementation
schedules and performance requirements. Failure to meet these schedules and
requirements can result in substantial monetary liquidated damages, as well as
possible contract termination.

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<PAGE>   9

     The Company maintains a bonding program for its bid bonds, litigation
bonds and performance bonds through various insurance companies. As of December
31, 1996, $47.3 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.

     Lottery contracts of the Company 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 the Company's contracts
will be extended or that the Company 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
derived by the Company thereunder, the termination, expiration or failure to
renew one or more instant lottery contracts could have a material adverse
effect on the Company's business or prospects.

MARKETS
     With 38 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. Contrasted with the domestic
market, the international market is far from mature, with various countries
viewing lotteries as a source of revenue for a variety of governmental
programs.

     In 1996, only one state, Georgia, accounted for more than 10% of the 
revenues of the Company. The Company has two domestic contracts which are 
scheduled to expire in 1997. Management believes new contracts for those states
will be awarded through a competitive procurement process in which the Company
will participate. The Company's management estimates that these two states had
aggregate ticket sales equaling approximately 5% of the Company's ticket
shipments in 1996 and that these two states represented approximately 2.7% of
the domestic lottery retail sales of all instant tickets in 1996. In contrast,
management believes that lottery contracts with seven states currently serviced
by its competitors also will expire or extensions will not be granted in 1997
and expects that new contracts for such states will be awarded through the
competitive procurement process in which the Company also expects to
participate. The Company's management estimates that these seven states
aggregate ticket sales equaling approximately 26% of all domestic lottery
instant ticket retail sales in 1996. The Company estimates that the retail
sales value of its domestic customer base was in excess of 50% of total
domestic instant ticket retail sales in 1996.


COMPETITION
     The instant lottery business is highly competitive, and the Company
business faces competition from a number of domestic and foreign instant and
pull-tab manufacturers and other competitors.

     In particular, Scientific Games currently has two primary domestic instant
lottery ticket competitors:  Dittler Brothers, Inc. ("Dittler") and Pollard
Banknote Limited ("Pollard"), which purchased a competitor, Webcraft Games,
Inc. in December 1996. In addition, several Canadian owned companies provide
limited competition for instant tickets in the United States. The Company
estimates that the retail sales value of its domestic customer base was in
excess of 50% of total domestic instant ticket retail sales in 1996 -
approximately twice as many 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 be allowed to operate in the U.S.
market.

     Internationally, there are many instant lottery ticket vendors which
provide competition to the Company, including, among others, BABN Technologies
(a subsidiary of Group Francois-Charles Oberthur), Pollard Banknote Limited,
government owned printers in Scandinavia, GPS Honsel, Ciccone Y Limos, Dittler,
Creative Games International Inc., and various other vendors.


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<PAGE>   10


     Both in the domestic 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 and the satisfaction of various other requirements and
qualifications imposed by specific jurisdictions.

     Scientific Games' position as a leading worldwide producer of instant
lottery tickets and its reputation as a developer of state-of-the-art
technology and marketing concepts, as well as its experience in the industry,
are believed to enhance significantly the Company's 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. The Company's business could be adversely affected should its
competitor's research and development activities result in reduced
technological differentiation between the products of the Company and its
competitors. Similarly, in the event technological developments materially
reduce the capital investment required to finance secure lottery ticket
printing operations, the Company's business could be adversely affected by
increased competition. Management does not anticipate any material reduction in
the level of capital financing required for entry into the lottery ticket
product business in the foreseeable future.

     In the cooperative services business, the Company believes it has no
current competitor in the U.S. market which both produces instant lottery
tickets and offers a full range of cooperative services to state lotteries.
Competitors have typically either manufactured only instant tickets or provided
only certain services which comprise cooperative 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 be
considered a competitor or potential competitor in cooperative services. 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:  GTech Corporation and Video Lottery Technologies,
Inc.

     The Company's pull-tab ticket business is subject to competition from a
number of competitors. Pull-tab tickets are primarily marketed to the charity
industry. Although the Company is not a significant supplier of pull-tab
tickets, it currently has 5 contracts with state lotteries for pull-tab tickets
and, the Company believes it is desirable to offer pull-tab tickets to its
lottery customers to maintain a full range of products and services.

POTENTIAL FLUCTUATIONS IN OPERATING RESULTS
     The Company's operating results may vary significantly from period to
period. Revenues and capital expenditures may be difficult to forecast because
the Company's 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.

     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 lottery tickets and the provision of
cooperative services. In addition, operating results may be affected by
utilization of overtime labor and the Company's ability to smoothly generate
new and/or upgraded production equipment with its existing production
operations. Revenues from the sale of tickets, cooperative services, software
and hardware development may be recognized based upon ticket shipment, a
percentage of the lottery's sales to the public, a contracted price or any
combination of the foregoing. Accordingly, quarter to quarter fluctuations in
revenues may be expected.

     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 the Company's operations over extended
periods and may result in fluctuations in the Company's quarterly financial
results.


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<PAGE>   11


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 the Company's actual
results and could cause the Company's actual consolidated results for the first
quarter of 1997, 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 the
Company's products, and the resulting effects on margins, the Company's actions
in connection with continued and increasing competition in many product areas,
including, but not limited to, price competition and fluctuating demand for
certain lottery tickets 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 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
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 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;

                                       11


<PAGE>   12


     The effects of changes within the Company's organization or in
compensation and benefit plans; any activities of parties with which the
Company has an agreement or understanding, including any issues affecting any
investment or joint venture in which the Company has an interest; the amount,
type and cost of the financing which the Company has, and any changes to that
financing; and

     The ability to integrate acquisitions into the Company's 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 time frames
or at all.



                                       12


<PAGE>   13



                                 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 Amendment No. 1 to its report on Form 10-K to be signed on its 
behalf by the undersigned, thereunto duly authorized in the City of Alpharetta,
and State of Georgia on this 10th day of June, 1997.

                                        Scientific Games Holdings Corp.



                                        By: /s/ C. Gray Bethea, Jr.
                                            ----------------------------
                                        C. Gray Bethea, Jr.
                                        Vice President and Secretary
                                        

     
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