Friedrich Stickler, President, The European Lotteries

The final countdown

Overview

The global market

Two different models: state lotteries vs. private operators

The fight against illegal operators

The gaming market

GGR online worldwide ($bn)

$ bn

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012P 2013E 2014E 2015E

0

5

10

15

20

25

30

35

40

45

8.811.9

15.719.6 20.9

24.026.7

29.4 30.532.6

35.839.6

43.3

GGR State Lotteries online worldwide ($bn)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012P 2013E 2014E 2015E

0

1

2

3

4

5

0.23 0.45 0.630.93

1.321.77

2.08 2.312.54

2.87

3.46

4.20

4.77

$ bn

GGR landbased worldwide ($bn)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E

0

50

100

150

200

250

300

350

400

450

240.3263.1 278.2 296.5 315.9 321.7 318.9 327.3

357.8 377.4 390.3 399.4 405.6

$bn

GGR landbased North America ($bn)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E

0

10

20

30

40

50

60

70

80

90

100

62.1 64.2 68.876.1

80.976.4 75.0 77.4 82.3

87.1 90.1 91.8 92.9

$bn

GGR Offshore Online Gambling US ($bn)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

0

1

2

3

4

5

6

2.4

3.5

4.6

5.2

4.3

3.8

4.8 5,0

3.73.5 3.4

3.3 3.3

$bn

European gaming marketonline and landbased 2011

11,8% Online

88,2% Landbased

Consumer policies

% of „legal GGR

SboBet

Bodog

Betsson

Unibet

Pokerst

ars

Bet365

bwin.party 888

Sporti

ngbet

Betfair

PaddyPower

Ladbrokes

William Hill

Lotterie

s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

10% 10% 15%25% 30% 35%

45%55% 60%

75%85%

95% 97% 100%

% of operators checking Identity, Age, Bank accounts

Identity Age Banking accounts0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%90% 90%

60%

47%

60%

33%

Lotteries

Non Lotter-ies

Playing with multiple playing accounts

EL and WLA members20 Operators

20% Yes

80% No

Non Lotteries15 Operators

7% No

93% Yes

Monthly deposit limits

No Limit40%

Over €1m27%

€100k to €1m 13%

€5k to €10k13%

€1k to €5k 7%

Deposit Limits Non-Lotteries15 operators

Bwin.fr

Bodog, Pokerstars

Bet365, Sportingbet

2/3 of commercial operators allow deposits over €1m

Fight against illegal operators

Defending the classic lotterymodel

Fight against illegal operatorsConsumer protectionMoney for society (fiscal arguments and good causes)

Threats

Offshore operators without license offer a wide range of products:Lottery, Casino, Poker, SportsbettingNo limits for wagers and age Higher payout percentageNo taxesOffshore operators acquire customers without licence

Growing competitive disadvantage for authorised

providers

authorised provider comercial

operator

Fight against illegal operators

15.000 existing websitesAnnual revenues exceeding €12 billion in 2013

12.500 without a license = unauthorised

500 licensed operators in Malta

Source: greenpaper on online gambling, european commission 2011

5 times more operators without a license than licensed operators

illega

l

Fight against illegal operators

Combined measures – UIGEA as role model:Strong legal framework and severe sanctionsIP/DNS blocking together with payment blockingBanning illegal advertisingSetting up black lists (white lists)Public information about illegal gambling and operatorsCoordination between national authorities

Fiscal arguments

Comercial online

operatorsEuropean Lotteries

average tax total revenues 0,5% – 1% 25%

20% (offshore 1%-2%) 65%average tax from GGR

Online Regulation in Europe

Some states without regulationSubsidiarity principle: states hold primary competence to regulate gambling No mutual recognitionResponsibility for consumer protection lies with the member stateInternal consistency of a Member States gambling policy is a national duty

Online Regulation Systems

MonopoliesState monopolies – Germany, PortugalPrivate monopoly (concessions) – Austria, Great Britain

Liberalized markets with licenceslimitated or unlimited number of licences

Free license Systemse.g. Malta (for international market except Malta)

Prohibition

How to forge a united front

Common aim

!! Guarantee a sustainable future for lotteries !!

How to forge a united front

Enter partnerships and strategic alliances with stakeholders

The role of politics

Communication and lobbying