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Rick Weil President, Sciplay

A World of Possibilities: U.S. iLottery & iGaming. Rick Weil President, Sciplay. THE LOTTERY UNIVERSE IS EXPANDING – BUT NOT OUT OF CONTROL iLOTTERY JUST MEANS BRINGING INTERNET & MOBILE CHANNELS INTO THE LOTTERY WORLD. ECOSYSTEM STAYS THE SAME. LOTTERY OVERSIGHT. GOOD CAUSES.

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Rick Weil President, Sciplay

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  1. A World of Possibilities: U.S. iLottery & iGaming Rick Weil President, Sciplay

  2. THE LOTTERY UNIVERSE IS EXPANDING –BUT NOT OUT OF CONTROLiLOTTERYJUST MEANS BRINGINGINTERNET & MOBILE CHANNELS INTO THE LOTTERY WORLD

  3. ECOSYSTEM STAYS THE SAME LOTTERY OVERSIGHT GOOD CAUSES RETAILERS STATE LOTTERY PLAYERS SUPPLIERS

  4. GAMING SPECTRUM Extensive 'player segmentation' research has shown that, just like in the offline world, players view lottery as distinctly different than gaming iLOTTERY iGAMING Green Gaming Red Gaming Loyalty & Rewards Programs Social Games + Virtual Goods Draw Games Electronic Instant Tickets Bingo Poker Casino Sports The global Green Gaming market was valued at approximately US$5.35bn in 2010. Growth is expected to reach 23.6% of total global interactive gaming by 2015, with a value of US$9.67bn.

  5. CENTRAL GROWTH OPPORTUNITY EU player research supports the importance of an online channel as a central growth opportunity TOPLINE RESULTS INTERNET IS AN IMPORTANT CHANNEL FOR NEW SEGMENTS, ESPECIALLY YOUNGER PLAYERS Finding: 57% are in 18 – 44 Age Group INTERNET GAMING HAS NOT CANNIBALIZED RETAIL LOTTERY SALES; THIS IS VERY CLEAR Finding: Retail Sales Grew at 2X rate for Lotteries with Internet ONLINE PURCHASES ARE INCREMENTAL TO OFFLINE FINDING: 60% Report that EIT Purchases are in Addition to Retail Play EU TRENDS TRANSLATE TO US LOTTERY MARKET FINDING: More Than 45% in U.S. Report They Would Like to Buy Lottery Online

  6. RETAIL IMPACT In the EU market there is more sales growth for lotteries with internet presence; an online channel supports retail growth & serves as a promotional tool to drive players back to retail. Lotteries With Internet Presence 2% Internet Sales 6% 4% Retail Sales Lotteries With Internet Presence 2% Internet Sales 3% 1% Retail Sales Lotteries Without Internet Presence Lotteries Without Internet Presence 1% Retail Sales 1% Retail Sales DRAW GAMES 5 YR CAGR GROWTH INSTANT GAMES 5 YR CAGR GROWTH Sources: Sciplay Analysis, MECN Lottery Benchmarking Report

  7. INTERNET CAN INCREASE RETAIL REVENUES Draws new consumers to the games and grows retail sales Lottery customers buy on average 50% more items in-store than non-lottery customers Drives new growth; does NOT cannibalize traditional lottery retail sales UK National Lottery retail commissions (a proxy for retailer sales) increased by more than 8% from 2003-2011 while they launched iLottery products Retail sales grew—instant games grew 20% in 2011  Serves as a complementary lottery sales and marketing channel – NOT a replacement channel Italian Lottery increased instant ticket sales from €408 million to over €10 billion over an 8 year period while expanding all their online products including Lottery games, Sports Betting, Poker, Casino games and rolled out 25,000 VLTs Provides a social experience Facebook (of course), Checking In on Four Square is a good example for retailers Reward Retailers for driving sales on the Internet

  8. MULTIPLE OPPORTUNITIES TO ENSURE SUCCESS

  9. CRITICAL COMPONENTS A HOLISTIC APPROACH Serving all stakeholders and growing the Lottery holistically across internet and retail USE OF ALL THE TOOLS Differentiate with engaging content, more win opportunities, and embedded retail presence SECURITY & INTEGRITY Player trust is more important than ever

  10. THE RIGHT FOUNDATION Player and retailer engagement ties everything together Online Convenience Draws New Participation Purchase at Retail Unlocks More Online Opportunities Online Promotion and eCoupons Drive New Trips to Retail

  11. PROVEN GLOBAL PARTNER 3500 EMPLOYEES 40 YEARS EXPERIENCE 120 GAMING CUSTOMERS ON SIX CONTINENTS A proven & responsible supplier to the Global Lottery Industry DISTRIBUTION THRU 280 THOUSAND POINTS-OF-SALES WORLDWIDE LAUNCHED 400+ U.S LOTTERY MICROSITES MORE THAN 100 INTERNET GAMES DEVELOPED REVENUES OF 878 MILLION (2011) CAPACITY TO PRINT 45 BILLION INSTANT TICKETS ANNUALLY 35 LOTTERY CSP + SYSTEM OPERATIONS WORLDWIDE

  12. BEST PRACTICES • Draw Games • Daily/weekly games are most common for launch • Higher frequency offer better sales growth (Keno, etc.) • Instant Games • Simple scratch to start • Leverage paper/offline liquidity to maximize play • Migrate to instant win with higher payout % • Web Presence • Shopping cart model • Rewards Club as foundation for engagement • Marketing • Connect internet with bricks & mortar retail • Traditional web techniques (e.g. affiliate, etc.) • Funding Options • Credit, debit, prepaid, voucher, etc. • Winnings deposited in eWallet

  13. HOW WILL YOUR LOTTERY GET THERE?

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