Consumer Confidence, Gaming Confidence and Surviving in Recessionary Times.

Canadian Gaming Conference

April 29, 2009

Richard Leigh-Bennett, CMRP

Proprietary Warning

The information contained herein is proprietary to Harris/Decima and may not be used, reproduced or disclosed to others

except as specifically permitted in writing by the originator of the information. The recipient of this information, by its retention

and use, agrees to protect the same and the information contained therein from loss, theft or compromise. Any material or

information provided by Harris/Decima and all data collected by Harris/Decima will be treated as confidential by Harris/Decima

and will be stored securely while on Harris/Decima’s premise (adhering to industry standards and applicable laws).

Toronto Ottawa Montreal Vancouver2345 Yonge Street 160 Elgin Street 1080 Beaver Hall Hill 21 Water StreetSuite 405 Suite 1820 Suite 400 Suite 603Toronto, Ontario Ottawa, Ontario Montreal, Quebec Vancouver, British ColumbiaM4P 2E5 K2P 2P7 H2Z 1S8 V6B 1A1

t: (416) 962-2013 t: (613) 230-2200 t: (514) 288-0037 t: (604) 642-2295f: (416) 962-0505 f: (613) 230-9048 f: (514) 288-0138 f: (604) 642-2549

3

Outline

• Consumer Confidence

• Things were fine until 2008 and hopefully they will get better.

• Entertainment Activities

• Yes, the economy stinks but I still need to be entertained.

• Lottery Behaviour

• The dream is still alive.

• Casino Participation

• A glimmer of hope in all that neon.

• Marketing Opportunities.

• Things will get better and those who are positioned at the front will reap the benefits when the economy turns.

Consumer Confidence:Things were fine until 2008 and hopefully they will get better.

5

Summary

• After 2 years of relative stability in 2006 and 2007, Consumer Confidence trended downward through 2008 and is now showing a slight recovery in the first quarter of 2009.

• Negative sentiments have risen through 2008 and positive ones have dropped, however all sentiments have seen slight reversals in early 2009.

• Whether this can be sustained is the big question.

6

Harris/Decima-Investors Group Consumer Confidence Index

50

60

70

80

90

100

U.S. Canada

7

Harris/Decima-Investors Group Consumer Confidence Index – Feb 2009

67 67 67

74

68 6661

0

20

40

60

80

National BC Alberta Man/Sask Ontario Quebec Atlantic

8

Negative Sentiment

0%

10%

20%

30%

40%

50%

60%

70%

80%

Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09

Bad time to make major purchase Canadian economy worse off in five years

Canadian economy worse off next year Personally worse off next year

9

Positive Sentiment

0%

10%

20%

30%

40%

50%

60%

70%

80%

Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09

Good time for major purchase Canadian economy will be better in five years

Canadian economy will be better next year Personally will be better off next year

Entertainment Activities:Yes, the economy stinks but I still need to be entertained

11

Participation Summary

• Canadians are still participating in many entertainment activities.

• Nine out of ten Canadians have been to a restaurant in the past three months and plan to go in the next three months.

• More than one-half have purchased an online lottery ticket and approximately one-third purchased an instant or scratch ticket. These habits have not changed in the past 3 months and are unlikely to change in the next 3 months.

• Just over 10% have gone to a casino in the past 3 months. Intention to visit a casino is about 5 percentage points higher than past visits.

• The more likely Canadians are to participate in each of these activities, the more likely they are to participate more frequently.

• Most Canadians go out to restaurants and they do this more frequently than they do other activities. Just under half of Canadians went out to eat more than five times in the past 3 months while about one-quarter have purchased a lottery ticket 5 or more times in the past three months.

• Don’t assume anything is universal.

• There will be cutbacks but some will not change their behaviour.

1212

Past Participation in Various Entertainment Activities

Q1. In the past three months, have you purchased any of the following?Base: March 2009 teleVox (n= 1,015); January 2009 teleVox (n=2,207); June 2008 teleVox (n=1,010).

1313

Future Participation in Various Entertainment Activities

Q3. Over the next three months, how likely are you to purchase any of the following?Base: March 2009 teleVox (n= 1,015); January 2009 teleVox (n=2,207).

1414

Past Participation in Various Entertainment Activities(Base All)

Q2. In the past three months how many times have you participated in the following activities?Base: All respondents (n= 1,015). * Caution: Small sample size.

1515

Future Intentions for Various Entertainment Activities

Q5. Compared to last year, how often do you think you will participate in the following activities?Base: Likely to participate in at least one of the activities (n=992).

+2

0

-5

-2

0

+1

0

+8

% Change

Lottery Behaviour:The dream is still alive.

17

Lottery - Summary

• Taking all lotteries together (online, instant scratch and sports) there is little change in reported behaviour over the past 6 months.

• The more frequent a purchaser you are the more likely that you will continue to purchase.

• Those purchasing 1-2 times in the past three months are most likely to be dropping out.

• Younger Canadians and those living in the Prairies are least likely to be purchasing and least likely to continue in the next 3 months.

• Atlantic Canadians and Quebecers are most likely to be ahead of the curve for past and future purchase.

1818

Net Lottery Purchase – Past 3 Months vs. Next 3 Months

Q1a/b/c. Have you purchased a weekly or bi-weekly lottery ticket/sports lottery ticket/instant scratch ticket in the past three months? / Q3a/b/c. Over the next 3 months how likely are you to purchase a weekly or bi-weekly lottery ticket/sports lottery ticket/instant scratch ticket?Base: January 2009 teleVox (n=2,207); June 2008 teleVox (n=1,010).

1919

Recent Lottery Players – Likelihood to Purchase Lottery Tickets in Next Three Months

Q3a. Over the next 3 months how likely are you to purchase a weekly or bi-weekly lottery ticket?Base: Purchased a weekly/bi-weekly lottery ticket, a sports lottery ticket and/or an instant scratch lottery ticket over the past 3 months; March 2009 (n=631); January 2009 (1,349).

2020

Past Lottery Purchase and Future Intent by Region and Age

Q1a/b/c. Have you purchased a weekly or bi-weekly lottery ticket/sports lottery ticket/instant scratch ticket in the past three months? / Q3a/b/c. Over the next 3 months how likely are you to purchase a weekly or bi-weekly lottery ticket/sports lottery ticket/instant scratch ticket?Base: January 2009 teleVox (n=2,207); June 2008 teleVox (n=1,010).

Casino ParticipationA glimmer of hope in all that neon.

22

Casino - Summary

• While past behaviour seems unchanged since June 2008, the intention to go to a casino/racetrack in the next 3 months has risen steadily from 14% to 18% over this time period.

• The more frequent casino patrons are the most likely to continue to visit.

• Those visiting 1-2 times in the past three months are most likely to be dropping out.

• Younger Canadians are more likely to report they intend to go to a casino in the next three months.

• Atlantic Canadians and Quebecers are most likely to be behind the curve for past and future casino visits.

2323

Casino Visitation – Past 3 Months vs. Next 3 Months

Q1e. Have you visited a casino or racetrack in the past three months?Q3e. Over the next 3 months how likely are you to visit a casino or racetrack with slots?Base: March 2009 teleVox (n= 1,015); January 2009 teleVox (n=2,207); June 2008 teleVox (n=1,010).

2424

Recent Casino or Racetrack Visitors – Likelihood to Visit in Next Three Months

Q3e. Over the next 3 months how likely are you to visit a casino or racetrack?Base: Visited a casino or racetrack over the past 3 months AND are definitely/very likely/somewhat likely to revisit in next three months; March 2009 (n=93); January 2009 (182); June 2008 (n=64).

2525

Past Casino Visitation and Future Intent by Region and Age

Q1e. Have you visited a casino or racetrack in the past three months?Q3e. Over the next 3 months how likely are you to visit a casino or racetrack with slots?Base: March 2009 teleVox (n= 1,015); January 2009 teleVox (n=2,207); June 2008 teleVox (n=1,010).

2626

Future Intentions for Casino Visits

Q4. How many times do you plan to visit a casino or slots facility over the next three months?Base: Visited a casino or racetrack over the past 3 months; March 2009 (n=133); January 2009 (253); June 2008 (n=116).

Marketing Opportunities.Things will get better and those who are positioned at the front will reap the benefits when the economy turns.

28

Marketing Opportunities

• The gaming market is not suffering as much as other industries because low-cost entertainment options are sought out in recessionary times.

• Don’t assume anything is universal.

•At the high end of the market there will be a segment who are relatively unaffected by the recession and will not change gaming behaviour or will even play more.

•There is a mid-market that is also unaffected because the recession has not hit them as hard.

•At the low end, there will be players who will be looking for the best bargain and others who will cut back either on quantity or frequency.

• Survival in recessionary times is about more than cutting prices, reducing spending and hoping you can hold out long enough for the recovery to gain traction.

29

Marketing Opportunities

• Key Focus for Survival:

•Focus on being efficient and using those funds to add value for customers.

•Focus on the value of customer loyalty – it cannot be overstated during recessionary times.

•Focus on maintaining share-of-mind during an economic downturn because it costs less than rebuilding it later on.

•Focus on weak competitors who are cutting back on marketing expenditures. Identify why players buy from them or go to their casino and develop offerings that provide those qualities.

• Segmentation and targeting are the starting points to define what customer value really means. Once defined, the challenge is to find ways to reduce costs without destroying quality in the process.

31

THANK YOU

Richard Leigh-Bennett, CMRP

EMAIL: rleighbennett@harrisdecima.com

PHONE: (613) 230-2200