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IAGR Conference 2014 Philadelphia October 2014

IAGR Conference 2014 Philadelphia October 2014. Horserace betting in France. L egal framework Pari mutuel is the only legal form of betting on horseracing in France.

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IAGR Conference 2014 Philadelphia October 2014

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  1. IAGR Conference 2014 PhiladelphiaOctober 2014

  2. Horserace betting in France • Legal framework • Parimutuelis the only legal form of betting on horseracing in France. • Between 1881 and 2010, only horse racing associations (nonprofit) were allowed to organize betting on horseracing : • On racetracks only until 1931, • Off-track since 1931, through PMU. • In 2010, the law opened the French online gambling market (horserace betting, sports betting and poker) to competition : • Horseracing associations keep the monopoly for on-track betting and, though PMU, betting in retail networks, • 8 operators (including PMU) offer online betting on horse racing. • Offline and online gambling markets are now regulated by different laws and monitored by supervision bodies, of which ARJEL regulates online gambling. 2

  3. Horserace betting in France • The market • In 2013, horserace betting accounted for : • € 9.93 billion handle • 23% oftotal gambling expenditures in France in 2013 3

  4. PMU, a company created to fund racing • Created in 1930 by French Horseracing Associations, PMU is a leisure company whose role is to conceive, market, totalize and promote bets on horse races for their account. • Since 1985, PMU has been an Economic Interest Group (EIG), now made up of58 horseracing associations • Diversified into online sports betting and poker in 2010 • Returns its whole profit to its members • PMU’s activity is closely supervised by the State • PMU is run by a Board of Directors which gathers : • PMU’s Chairman & CEO and PMU’s Managing Director, • 4 representatives from State Departments (2 for Finance and 2 for Agriculture) • 4 representatives of the Horseracing Authorities (2 for France Galop and 2 for SECF). 4

  5. PMU net income / return to the industry (M€) 614 5

  6. N°1 Horserace betting operator in EuropeN°2 Horserace betting operator worldwide € 10.4 billion handlein 2013 € 854 million paid to the horseracingsector in 2013 6

  7. PMU’sOffer • €9,6 bnstakes (-1.8%) in 2013 • 15,371 races in 2013 • Export : + 94% • 85% marketshare • Horserace betting • Retail network • Online on PMU.fr • Abroad in common pool • Sports betting • Online on PMU.fr • Poker • Online on PMU.fr • €199 million stakes (+22.4%) • 24% marketshare • 30+ sports • Live betting : 47% of stakes • Cashgame et tournaments • €569,9 million stakes (+ 10%) • N°3 operator • 9% marketshare 7

  8. Cross sellingis key to attract new customers 8

  9. PMU’sretail network 12, 200 retailoutlets in France and overseasterritories • Mainly in cafés, bars, tobacco shops, restaurants • Diversification : Newsagent’s, gas stations, local shops… and fully owned Betting shops (« PMU City ») 9

  10. PMU.fr • PMU.fr is the N°1 betting site in France • 44% marketshare, €1 billion turnover • N°1 for horserace betting with 83.6% marketshare (Gross Product) • 35% of sports betsare registeredthrough mobile • Cash gameavailable24/7 for poker players 10

  11. International activity French races offered to foreign punters • Foreign races offered to French punters to supplement national racing offer • 31 contracts for betting on French races in PMU’s Pool : €638 million handle in 2013 (+94%) • Contracts for separate pool betting in 37 countries (>€ 1 Bnhandle) • 2,585 foreign races from 27 countries in 2013 • € 549 million handle (+12%) 11

  12. PMU’s international contracts * * * * * * * * * * * * * * * * * * * * * * * * Common pool * * * Separate pool * * * CP & SP Import *

  13. Digital innovation is at the core of PMU’s activity PMU.FR app Adaptedlayout for smartphones, IOS and Android tablets PMU.FR website Enhanced user-friendly design INFO.PMU.FR website Horse racing information website for offline bettors MYPMU app Speciallydesignedapp for offline bettorswith all horse racing information Touchscreens Displaying live information in points of sale Touch tables To learnwith the« Play for fun » option or to bet for real at PMU events 13

  14. Powerful IT solutions • IT accounts for 40% of PMU’s operating costs • 2500 transactions per second, amongwhich 90% come fromPMU’s 12,200 retailoutlets • 50% of turnover comesfrombetsregistered in the last 10 minutes before the start of each race • EASY Project over 5 years, budget > € 50M • Reduce the Time to Marketfrom18 to 9 months to launch a new bet • Makeit possible to operate 24/7 14

  15. Corporatesocial responsibility 15

  16. PMU vision for 2020 People & culture Change into an agile and attractive organization, turned towards innovation Retail & outlets CAGR : +1 % through new retail formats Customers 15 % of the French people will be PMU customers Digital 60% of the growth in France through digital channels PMU 2020 International 10 % of net margin outside France Offer & products Competitive positioning on every authorized segment to become a reference actor of the gambling market 16

  17. Is horse racingreally a dying business?

  18. Revenue sources of major sports 18

  19. Competition trend : sports betting surpasses horse betting in 2014 CAGR 2013/2017 : 3.3% CAGR 2009/2013: 5.5% CAGR 2013/2017 : 7.5% CAGR 2009/2013: 0.8% CAGR 2013/2017 : 1.2% CAGR 2009/2013: 4.3% 19

  20. A broad range of issues to renew horse racing 20

  21.  benoit.cornu@pmu.fr@benoitcornu

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