From Lottery Games to Slot Machine Games: The Growing Momentum of Internet Gaming

July 31, 2013

Gaming Spectrum

Green Gaming Red Gaming

Rewards & Loyalty

Draw Games

Electronic Instant Tickets

Bingo

Poker Casino

LOTTERY CASINO

Sports

iLOTTERY iGAMING

Social Games & Virtual Goods

VS

Broader potential audience,chance-based experience• 10-minute or less play dynamic• Lower payout %, low volume• Direct connection to retail product is

critical (e.g. hybrid game)• Points + rewards is engagement currency• Player development through up-sell &

cross-sell

Narrower potential audience,session-based experience• 60-minute or more play dynamic• Higher payout %, high volume• Can be independent from in-venue

product• Cash + free play is engagement

currency• Player development through bonusing

“I LOST” “I DIDN’T WIN”

For Social: Implications are Different

SOCIAL GAMING

Global Gaming Industry

• Worldwide gaming sales of $350 billion*• Casinos operate in over 100 countries;

more than 3,500 casinos**• More than 4,300,000 slot machines

worldwide**• Online gaming annually generates almost

$30 billion in win*- Sports = $14.8 billion- Casino = $7.1 billion- Poker = $4.0 billion- Bingo = $2.1 billion

* H2 Gambling Capital** Bank of America Merrill Lynch Gaming Primer 2013

U.S. Gaming Industry

• US 2012 total gaming revenue $64 billion*• Las Vegas Strip 10%• US Regional 47% • Native American 43%

• Over 800 casinos in the U.S. in 39 states*• 16 states with commercial casinos (~ 450 Casinos)• 24 states with tribal casinos (~ 425 Casinos)• ~900,000 slot machines in North America

• US iGaming Sales • Currently estimated at $3.1 billion**• Pre-UIEGA sales estimated at more than $6.0 billion**

* Bank of America Merrill Lynch Gaming Primer 2013** H2 Gambling Capital

Social Casino Gaming

Why It’s Important

Source: Casual Games Association (CGA), May 2013

Social game audience estimated to be 700-750m people Social casino audience currently at ~170m

Why It’s Important

Source: Casual Games Association (CGA), Macquarie Research, May 2013

UK Study: Majority Play For Fun Or Money

42% play for money only

56% play for fun only

2% play for money

and for fun

22% of respondents play poker online either for fun or for money Of those …

52% play for money only

46% play for fun only

3% play for money

and for fun

27% of respondents play casino games online either for fun or for money

Of those …

55% play for money only

42% play for fun only

3% play for money

and for fun

29% of respondents play bingo online either for fun or for money Of those …

Source: KantarSport Research Jan 2012

Social Considerations

• Session-based of casino games nature match well with social model

• Proven real-money casino themes translate best into engaging social games

• But, are social players a source of future real-money patrons?

SOCIAL LOTTERY

Global Lottery Industry

Global Lottery Snapshot

• ~180 global lottery jurisdictions*

• ~$275B of revenues generated in 2012*

­ Draw sales ~$200B­ Instant sales ~$75B

• Less than 15% of lotteries selling products online**

*Source: Lafleur’s Lottery Almanac.** Company estimates.

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

­$30­ ­$35­ ­$39­ ­$41­ ­$48­ ­$58­ ­$61­ ­$63­ ­$65­ ­$71­ $76.0

­$110­­$125­

­$148­ ­$141­­$154­

­$166­ ­$165­ ­$177­ ­$181­­$191­

­$199­

­$140­­$160­

­$187­ ­$182­­$203­

­$224­ ­$226­­$240­ ­$246­

­$262­­$275­

Instant­Tickets Draw­Games

Global Lottery Retail Sales ($ in billions)*

U.S. Lottery Industry

• 44 lotteries, including the District of Columbia

• ~$70B in annual revenues*

– 54% instant tickets– 46% draw games

• 147 million Americans play lottery games**

• Lottery websites are top visited in their geography

• Today, just three lotteries are active with internet sales: IL, GA & MN

* Source: Lafleur’s Lottery Almanac.**Source: SGI’s State of the Industry FY’12.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

$16.3 $18.4 $20.4 $22.9 $26.0 $28.3 $29.7 $30.5 $30.3 $30.7 $32.1$36.9

­$19.4­­$20.4­

­$20.8­­$22.0­

­$21.4­­$23.3­ ­$22.7­

­$22.9­ ­$22.7­ ­$23.5­­$23.4­

­$26.6­

­$35.7­­$38.8­

­$41.2­­$44.8­

­$47.4­­$51.6­­$52.3­

­$53.3­­$53.1­­$54.2­­$55.5­

­$63.6­

Instant­Tickets Draw­Games

U.S. Lottery Retail Sales ($ in billions)*

Social – The Basics

Today, virtually all lotteries are actively leveraging social mechanics:

• Interactive 2nd Chance promotional games

• Mobile 2nd Chance games

• Internet-based loyalty and rewards programs

Example: Monopoly Jackpot

• Multi-State Linked Game• Every non-winning Monopoly

ticket provides a second chance to instantly win

• Players scan 2D code on scratch ticket to access website on mobile

• Players collect properties to achieve a “monopoly” for a chance to win one of 10 rolling cash jackpots or qualify to win a progressive cash jackpot - up to $1 million!

Concept Art

16

iLottery – The Basics

Draw Games Instant Games

Instant Games – Stage 1

• Basic Play – Plays like a printed game– Very simple play action– Game reveals an outcome– Shared prize pool

Instant Games – Stage 2

• Extended Play– Adds interactive mechanics

(e.g. player choice)– Provides bonus features– Ideal for licensed brands

Instant Games – Stage 3

Social Play– Player choice– Collections– Power Ups– Continuity– Multiplayer– Leaderboards– Points / Micro-Wins– Progressive Jackpot

Social – Next Steps

• Leverage social sharing

• Create lottery social games

• Play with friends­ Team-Play Draw­ Multi-Player Instants

• eInstants – “Stage 3”

Social Considerations

• Lottery player dynamics match well with social model

• Social mechanics important to next generation real-money lottery games

• eInstant “Stage 3” games will emerge as a major market opportunity

Sciplay.Studio

World­leader­in­supplying­iLottery­instant­games­to­

lotteries­and­the­know­

how­to­make­them­work

An­innovator­in­touch-games­for­

lotteries­that­bridge­the­

gap­between­social­and­online,­mobile­gaming

Creates­game­play­products­

that­represent­emerging­genres­and­advanced­business­models

30­years­of­gaming­

experience­and­a­deep­understanding­of­casual­and­social­gaming­on­the­internet

Leading­provider­of­casino,­slot­and­social­themed­games

The­most­experienced­provider­of­lottery-specific­

interactive­content­in­the­industry

Culmination­of­more­than­12­years­experience­developing,­deploying­and­operating­internet-based­solutions­for­the­real-money­gaming­industry

Questions?