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Multi-Jurisdiction Games “The World Is Not Enough”

Multi-Jurisdiction Games “The World Is Not Enough”. Presented By: Brian George President & CEO Supreme Ventures Limited. Industry Overview. Gaming Industry Lottery Market (numerical games, instants) – Top Player Betting Market (sports, financials) Casinos and Video Lottery Games

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Multi-Jurisdiction Games “The World Is Not Enough”

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  1. Multi-Jurisdiction Games“The World Is Not Enough” Presented By: Brian George President & CEO Supreme Ventures Limited

  2. Industry Overview • Gaming Industry • Lottery Market (numerical games, instants) – Top Player • Betting Market (sports, financials) • Casinos and Video Lottery Games 2007-2011 Total Worldwide Lottery Per Capita Sales (Excluding VLTs and Instant) • 2011 Worldwide Lottery Sales - US$190.5 Billion • 2010 Worldwide Lottery Sales – US$180.6 Billion • Excluding VLTs and Instant • % Change Increase– 5.5% Source: La Fleur’s

  3. Industry Overview 2007-2011 Total Lotto/Spiel Sales Source: La Fleur’s

  4. Industry Overview 2011 Total Worldwide Lottery Sales 2011 Worldwide Lotto/Spiel Sales Lotto/Spiel • Games Include: Lotto/Spiel, Numbers, Keno, Toto, Bingo, Draw, Instant/Pulltab Source: La Fleur’s Annual Report 2012

  5. Industry Overview • First Half of 2012 Sales by Region • Despite the financial crisis over the past few years lotteries worldwide continue to grow and perform strongly over the first half of 2012 (January- June) • Increase of 10.7% Source: World Lottery Association

  6. Industry Overview US$ • 2011 Top 10 Worldwide Lotteries (Lotto&Spiel) by Per Cap Sales Source: La Fleur’s Annual Report 2012

  7. Population 8.8M Population 19.1M Industry Overview US$ Population 8.8 M $65.56 $63.58 2011 Top 10 US State Lotteries (Lotto&Spiel) Showing the Contribution of Multi-jurisdictional Games by Per Cap Sales Population .6 M $57.88 Population 19.5 M Population 19.1 M $46.88 $46.43 Population 12.7 M Population .9 M $43.40 Population 1.1 M $43.80 $42.59 Population 1.3 M Population 3.6 M $42.46 Population 6.6 M $41.58 Source: La Fleur’s Annual Report 2012

  8. Challenges in the Industry • Jackpot Fatigue • Players no longer excited by the prospect of winning available jackpots. • Players demand higher jackpots • Will pay higher price for bigger jackpots • PowerBall January 2012 – Cost of ticket increased US$1 to US$2 • Gaps in Customer Gaming Market • Traditional lottery player – 35-65 years old • Product offerings do not appeal to all target markets • 18-35 demographic is shrinking and lacking motivation to buy within industry • A key market, “tech-savvy” consumers – to find a way to communicate and buy

  9. Challenges in the Industry • Keeping up with Technology • Last 15 years- internet / PC based era • Technology continues to advance • Rapid growth of smartphones and tablets worldwide • Lotteries have to keep moving and growing with technology • Reach its potential market • Gain its most profitable returns • Regulatory Restrictions • Example: In Brussels there are legal and legislative battles underway on the issue of cross border gambling

  10. Adapting to the Challenges • Possible increase of customer base to reach a broader market by bridging demographic gaps through new technology and communication channels such as mobile gaming. • Introduction of lotteries in the mobile gaming industry will create many profitable opportunities such as: • Creating more options and exciting ways for consumers to choose and buy • Expansion of multi-jurisdictional games

  11. Multi-Jurisdictional Games • Multi-Jurisdictional Games • A group of lottery jurisdictions offering the same game • Provides more excitement • Larger pool, larger jackpots • Examples: • Europe – Euro Millions • North America • Mega Millions • PowerBall • Caribbean – Super Lotto • Challenges • Laws and regulations within the game and geographical restrictions • Providing games that deliver excitement and appeal to a more diverse consumer base • Cannibalization

  12. Multi-Jurisdictional Games - EuroMillions • Europe – EuroMillions started February 2004 • European Countries • February 2004 -U.K, France, Spain, • October 2004-Austria, Belgium, Luxembourg, Portugal ,Sweden 2007 – 2011 TotalEuroMillions Per Capita Sales • Total EuroMillions Sales 2011- £5.958 Billion • Total EuroMillions Sales 2010- £4.346 Billion • % Change increase – 37.11%

  13. Multi-Jurisdictional Games - EuroMillions • Top 5 EuroMillion Jackpots won: • August 2012, €190million, 1 winner, U.K. • July 2011, €185million, 1 winner, Scotland • February 2006, €183million, France and Portugal • March 2011, €138.2million, 2 winners, Belgium and Portugal • October 2010, €129.8million, 1 winner, U.K.

  14. Multi-Jurisdictional Games - EuroMillions United Kingdom EuroMillions Per Capita Sales versus Total EuroMillions Per Capita Sales 2004-2011 • 2011 UK EuroMillions Sales - £1.666 Billion • 2010 UK EuroMillions Sales - £1.056 Billion • % Change increase – 57.85%

  15. Multi-Jurisdictional Games - EuroMillions United Kingdom Product Portfolio 2005 vs. 2011 2011 - £6.503 Billion • 2005 – £5.013 Billion

  16. Multi-Jurisdictional Games - EuroMillions United Kingdom % Change 2005 Vs. 2011

  17. Multi-Jurisdictional Games – North America MEGA MILLIONS ONLY POWERBALL ONLY BOTH MEGA MILLIONS & POWERBALL • North America – Mega Millions & PowerBall

  18. Multi-Jurisdictional Games – MegaMillions • North America – MegaMillions started August 1996 • Started with 6 Jurisdictions • Georgia, Illinois, Maryland, Massachusetts, Michigan, Virginia • Currently available in 42 states along with District of Columbia and U.S Virgin Islands • Top 5 MegaMillionsJackpots won: • March 2012, $656 Million, 3 winners Kansas, Illinois, Maryland • March 2007, $390 Million, 2 winners New Jersey, Georgia • January 2011, $380 Million jackpot, 2 winners Washington State, Idaho • August 28, 2009, $336 Million jackpot, 2 winners California, New York • March 2011, $319 Million, 7 winners, New York

  19. Multi-Jurisdictional Games – MegaMillions MegaMillions Per Capita Sales Vs. Total US Lottery Sales 2006-2011 • Total Sales 2011 US$3.236 Billion • Total Sales 2010 US$3.078 Billion • % Change Increase – 4.23%

  20. Multi-Jurisdictional Games – MegaMillions 2011 Top 10 MegaMillions States by Per Capita Sales

  21. Multi-Jurisdictional Games – PowerBall • North America – PowerBall started April 1992 • Previously known as Lotto America • Started with 15 Jurisdictions • District of Columbia, Delaware, Idaho, Indiana, Iowa, Kansas, Kentucky, Minnesota, Missouri, Montana, Oregon, Rhode Island, South Dakota, West Virginia, Wisconsin • Currently Available in 44 Jurisdictions • Top 5 PowerBall Jackpots won: • February 2006, $365million, Multiple Winners, Nebraska • August 2012, $337milloin, 1 winner, Michigan • February 2012, $336.4, 2 winners, Rhode Island • March 2008, $276million, 1 winner, West Virginia • August 2009, $259.9million, 1 winner, South Carolina

  22. Multi-Jurisdictional Games – PowerBall 2011 Top 10 PowerBall States by Per Capita Sales

  23. Multi-Jurisdictional Games – PowerBall PowerBall Per Capita Sales Vs. Total US Lottery Sales 2006-2011 • Total Sales 2011 US$3.107 Billion • Total Sales 2010 US$3.228 Billion • % Change decrease – 3.74%

  24. Multi-Jurisdictional Games – MegaMillions &PowerBall MegaMillions & PowerBall Sales as % of Total US Lottery Sales 2006 Vs. 2011

  25. Multi-Jurisdictional Games – MegaMillions &PowerBall MegaMillions& PowerBallPer Capita % Sales Change 2006 Vs. 2011 • In 5 years – slight increase • Maturity stage in product life cycle • Needs innovation, “new life” – to increase and grow profits

  26. Multi-Jurisdictional Games – MegaMillions & PowerBall Total Multi-Jurisdictional Us Games Sales Per Capita Vs. Total US Lottery Sales 2006-2011

  27. Multi-Jurisdictional Games – SuperLotto • Caribbean- Super Lotto started August 2009 • Only muliti-jurisdictional game currently operating in Caribbean, Central and South America • Available in Dominican Republic, Jamaica, Barbados, Anguilla, Antigua, and Barbuda, Bermuda, St Kitts and Nevis, Barbados, St Marteen and United Virgin Islands. • 2011 Total SuperLotto Sales- US$14.477 Million • 2011 SuperLotto Per Capita Sales- US$ 5.17 • Super Lotto Jackpots won: • October 2010, J$467 Million/ US$5.4 Million St. Maarten • September 2011, J$387 Million (split price) won J$232 Million / US$2.6 Million, Jamaica

  28. Multi-Jurisdictional Games – United States vs. Jamaica Multi-Jurisdictional games represent 60% in the US Multi-Jurisdictional game represent 31% in Jamaica • Opportunity for growth in country • Tremendous opportunity for growth in SuperLotto • Trinidad & Tobago, Central & South America • The expansion of multi-jurisdictional games would allow this region to become a player in the world stage of multi-jurisdictional lotteries and give the region leverage with negotiation and participation with other multi-jurisdictional lotteries

  29. Multi-Jurisdictional Games • How do we increase sales among existing jurisdictions? • How do we increase sales across multi-jurisdictional games? • How do we address the consumer buying industry to penetrate for more reach in existing games whilst expanding regions? • Key ideas: • Expand total revenue • Increase per cap sales with an increase in contribution without cannibalization • Expand reach of customers (population base) • Change value propositions • Are we going to need to increase region? Or increase how we market?

  30. Multi-Jurisdictional Games will inevitably lead to a “Worldwide Lottery” • Tremendous opportunity to expand multi-jurisdictional games • The present reality of mergers, partnerships and acquisitions is helping to create a foundation • Enables lottery companies to meet the increasing demand for innovative gaming products. • Individual jurisdiction lotteries and current multi-jurisdictional games will reach a point of jackpot fatigue • Tipping point of an increase pool and jackpots “Multi-jurisdictional lottery games are not only inevitable but necessary for growth in the lottery industry.”

  31. Multi-Jurisdictional Games will inevitably lead to a “Worldwide Lottery” • Establishing a worldwide lottery, which can and will exist with the growth of the mobile industry. • Customers want better chances/odds of winning • worldwide lottery will increase chances of winning, bigger jackpots • Increase profit for the lottery companies (customers will increase their spend when the jackpot it high). • Attracting public participation to the global game by focusing on the good causes/ public funded projects that will benefit from additional revenue, • Generated through the larger pool of funds.

  32. Multi-Jurisdictional Games will inevitably lead to a “Worldwide Lottery Jackpot” • 2011 Worldwide Lottery Sales Potential future growth in these markets especially due to their large population size

  33. Potential “Worldwide Lottery” Market 7 Billion

  34. Multi-Jurisdictional Games will inevitably lead to a “Worldwide Lottery Jackpot” • Maximum Generated Jackpots: • Mega Millions - US$656 Million • Powerball - US$364 Million • Euro Millions - US$257 Million • Super Lotto - US$5 Million • If all four of these were to be combined on a Per Capita basis, a possible worldwide lottery jackpot, based on a population size of 7 billion, would potentially generate US$12.177Billion • The additional contribution to the pool of funds would also be significantly increased when Africa, China and India are factored in

  35. Multi-Jurisdictional Games will inevitably lead to a “Worldwide Lottery Jackpot”

  36. Multi-Jurisdictional Games will inevitably lead to a “Worldwide Lottery Jackpot” • Benefits for participating countries • Opportunity for retailer expansion • Increased employment • Increased agents commission • Increased taxes collected in the country of residence of the winner • Increased revenue to be used for “Good Causes” • Larger players in the industry who have access to more resources/funds can boost the growth of the industry by investing in smaller lottery companies/partnerships • Provide design support • Marketability of new/other games, • Functional and technological modernization of the draws in the smaller operations/territories • Example: The new partnership of Spain’s State Society State Lotteries (SELAE) and LoteriaNacional de la RepublicaDominicana will introduce the lottery “El Gordo de la Primitiva” in Dominica Republic, February 2013 • 8 Award Categories • Guaranteed minimum weekly prize of US$6.48M • Possibility to accumulate prizes up to US$51.87M

  37. Creating more exciting options for consumers to choose and buy • These incentives might not be enough. • To fully maximize the potential of multi-jurisdictional lottery mobile money cannot be ignored. • Allows lotteries to expand their reach without proportionally increasing their cost. • New way of consumer access. • Mobile creates access • It will continue to help to grow the lottery industry by being able to drive the expansion of territories through the idea of mobile money • Mobile Money • Is the ability to use your cell phone to transact business • A treasury function/management which creates a electronic account/wallet that can be credited or debited through your cell phone

  38. Creating more exciting options for consumers to choose and buy • The growing mobile industry contributes to the increasing growth of mobile gaming • At the end of 2011- 6 billion mobile subscriptions worldwide • 87% of the world population of 7.043 Billion. • It will bridge the gap between demographics and tap into the 18-35 demographic • Technology enable operators to turn every player user interface into a medium to provide consumers with the entire portfolio of games • It will benefit all: • Content Providers- by giving them the widest exposure of games • Distributors – by enabling them to sell more products and deliver better value to their customers • Consumer – giving them more options, making it easy to exercise their freedom to choose • The ultimate consumer trigger in the buying process

  39. Multi-Jurisdictional Games will inevitably lead to a “Worldwide Lottery Jackpot” • How should Lottery companies/participating countries prepare themselves and players for someone to wake up a billionaire: • Lottery companies would need to consider the possibility that potential players may think that such large jackpots are impossible to conceive and win, and hence may choose not to participate. • September 3, 1988 the largest single lottery jackpot in world history, to that date, was won in Florida (Winter Springs) for US$55.16M • in 2012 there was a winning Mega Millions jackpot of US$656 Million (now the largest winning jackpot in American history) • Participating Lottery companies would also need to consider if such a collaboration could be so big that it could fail, perhaps because of challenging regulatory issues, legal and legislative concerns which would have to be tackled • Lottery companies could also, for jackpot winners, direct them to financial institutions and advisors who would be able to assist and advise them with making wise decisions with their new found and massive wealth.

  40. Multi-Jurisdictional Games will inevitably lead to a “Worldwide Lottery Jackpot” • Is it possible for a jackpot to be too big? • Is it possible for it to be so big that it is a set up to fail? • Would jackpots so big lead to the participating jurisdictions being forced to think differently on how they payout winning prizes? • Could a higher percentage of payments go to lower tiered prizes to help generate excitement and participation to the “Worldwide Lottery” game? • Do subsidiary prizes now become more important in keeping interest? • Can we now create multiple lower tier millionaires?

  41. “The World Is Not Enough”

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