What happened

Scientific Games Corporation (NASDAQ:SGMS) -- printer of lottery tickets and seller of electronic gambling machines -- hit the jackpot after reporting third-quarter earnings today. Shares of this gambling facilitator are up 21.4% as of 11:30 a.m. EST despite the company reporting a big GAAP loss -- mostly because its pro forma loss was less than expected.

Scientific Games reported an "adjusted loss" of $0.14 per share for its fiscal third quarter, less than the $0.18 loss that Wall Street had predicted .

Playing cards and poker chips on a table.

Okay, cards on the table: What's the real reason Scientific Games stock is up so much today? Image source: Getty Images.

So what

Calculated according to GAAP accounting standards, of course, the loss was much bigger. As revenues grew 7% year over year to $821 million, Scientific Games took a $338.7 million charge to earnings to account for restructuring costs and a lost court battle in Q3. This charge exacerbated the loss Scientific Games would have otherwise incurred, with the result that "earnings" for the quarter were negative $3.85 per share.

Now what

Still, big as it was, the loss was less than investors had been prepared to see, and that alone probably would have helped to generate a positive reaction in today's trading. Adding to investors' enthusiasm was a comment made in the earnings release, to the effect that "the Company is considering a possible initial public offering of a minority interest in its social gaming business in 2019. ... The Company anticipates that the proceeds from the IPO would primarily be used to repay debt."

This potential for a cash influx that might whittle away at Scientific Games' mammoth $8.9 billion debt load (the company itself has a market cap of only $2.4 billion) gave investors a second reason to cheer this morning -- and, I suspect, is the main reason behind the stock's meteoric rise today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.