2014 C-Store Lottery: Voice of the Retailer; A

2014 C-Store Lottery: Voice of the Retailer; A Call to Action September 11, 2014 You Can Spell Success With Three Cs The 3 Cs of Succcess in Lottery Category Management Collaborative Effort Consistent Reporting 2 Does your company see growth potential for lottery in your stores? And how does lottery compare to other vendors? Consistent over the years of the survey is an overwhelming optimism Lottery stacks up well compared to other C-Store vendors regarding lotterys growth potential 100.0% Lottery NonLottery 75.0% 50.0%

Yes No 25.0% 0.0% r Ve d fie s ati yS d fie s ti Sa N tr eu al d fie s

ati ss Di Source: Scientific Games C-store Lottery Retailer Survey 2014 3 Do you sell all the games that are offered by the state lottery; number typically sold? Concerns about space and inventory management are determinants in number of games carried 35.70% 64.30% Yes No 7.11% 7.11% 50.05% 35.74% 16 24 32 40 Other Source: Scientific Games C-store Lottery Retailer Survey 2014

4 Do some stores out-perform others in lottery sales and why? All but one retailer answered Yes and when asked to explain the differences the most often cited reasons were Demographics/Location 62% In-store execution 31% Other 7% Source: Scientific Games C-store Lottery Retailer Survey 2014 5 The Voice of the Retailer: Lottery IS a category and we need to treat it as such Category managers are business managers who need your support

Merchandising A portal to know site/demographics how different will state be vs. individual site Would like more data and help w/ designing the best planogram, stores work better with planograms Marketing material delivered timely for proper store placement Information on displays that fit retailers merchandising policies Promotions Advanced notice of promotions; helps with educating sales clerks as well as promotion planning What and when new games are being launched, more advanced notice Data

It would be great to see granular data on purchasing habits by region Heavy ticket buyer most faithful, how do you leverage that? Dive into data and analytics Data is key to take back to upper management to show that it is an important category and drives sales in other categories Source: Scientific Games C-store Lottery Retailer Roundtable 2014 6 I am concerned about lottery games being sold via the internet Agree/Disagree? Three fourths of respondents are concerned about internet sales of lottery games Not Applicable Strongly Agree

Agree Neutral Disagree Strongly disagree 0.0% 25.0% 50.0% 75.0% 100.0% Source: Scientific Games C-store Lottery Retailer Survey 2014 7 Which of these services could lotteries offer that you believe would help your inside store sales? Ads and product rewards are the two most popular service ideas Response Percentage Place ads for my store on the lottery's loyalty club web pages

61.5% Put in-store coupons into a state's lottery loyalty program 38.5% Put actual product into a state's rewards program (i.e. branded beverages, branded gas cards, etc. 61.5% Promotional opportunities to tie in with brands that lotteries work with (i.e. Harley Davidson, Monopoly, etc.) 38.5% Source: Scientific Games C-store Lottery Retailer Survey 2014 8 The Voice of the Retailer: Share best practices so we can work better with lottery Multi-state retailers especially are interested in greater collaboration with their lotteries

Knowledge Whats going on in the market? If we know we might be willing to invest our own money How does a lottery shopper make decisions? Explore opportunities of shopper data tree Lottery sales slowest during retailers most profitable time of year (May Aug)? How do we align? Education Helpful to know ahead of time what innovations lotteries have at their disposal Best practices what works best Displays Smaller displays and/or different POP options more in line with retailer strategy

Willing to invest in equipment that matched our store design We would buy it if we knew it would sell more/make more money Technology Loyalty, web, second chance drawing that are connected to their websites and retailer objectives Take that customer use their tickets to go to your website give them coupon while there. Source: Scientific Games C-store Lottery Retailer Roundtable 2014 9 What is the single biggest issue that you have with lottery products today? The number one issue is a bad news, good news one: There are lines because there are customers. An ongoing challenge seems to be how to conclude the transactions more quickly Lines created at my checkout cou... 63.6% Time to reconcile POS sales / paid outs / lottery repor...

18.2% Theft of tickets / financial ... 18.2% Source: Scientific Games C-store Lottery Retailer Survey 2014 10 The Voice of the Retailer: We need to get Lotteries together on their accounting procedures Large c-store retailers are desperate for data and clamoring for consistency Reports Make data available Create a data repository Granular data on purchasing habits by region

Are we overshared with lottery in our zip codes? Do we have our fair share of lottery in our area? EDI10 website, love the idea of portal Accounting Accounting solutions Invite accounting people to talk about pain points How to create a wins for accounting Frustration that industry does not have same protocols, i.e. start dates Source: Scientific Games C-store Lottery Retailer Roundtable 2014

11 Call to Action The 3 Cs of $uccce$$ Category Management Deliver market-level data through a retailer portal Work with retailers to develop market-specific (if not store-specific) POGs Increase lead time on marketing material, new games & promotions notice Provide information for category managers to use in order to sell lottery internally Collaborative Effort Support retailers internet strategies by leveraging lottery Provide retailers data/information on lottery player behaviors/preferences Source display solutions that retailers want Consistent Reporting Develop solutions to retailers accounting pain points Work toward standardized reporting for all jurisdictions 12 No part of this report may be circulated, quoted, or reproduced for distribution outside Impact 21 Group without prior written approval 13