IMGL PANEL

Today’s Mainstream Casino Gamer… Tomorrow’s EGM and Interactive Audience…

Concentrates over 50 Skews female Grew up with typewriters Learned computer skills as an

adult 1st experience with slots were

though physical reel games

Grew up in the digital age Mobile device centric Plays some genre of computer games Demands high-fidelity multimedia

experiences Computer and game literate

Electronic Games: A STORY OF TWO MARKETS…

This demographic is well understood and serviced

This demographic is virtually untapped

• Generation X• Born 1960 – 1980 (34 to 54 now, 64 to 44 in 2024)• Approximately 84 million people in the US

G e n e r a t i o n X & M i l l e n n i a l s : A s c e n d a n t

• Millennials• Born 1981-1996 (18 to 33 now, 28 to 43 in 2024)• Approximately 77 million or 25% of the US population

G e n e r a t i o n X & M i l l e n n i a l s : A s c e n d a n t

G e n e r a t i o n X & M i l l e n n i a l s : T h e N e x t G a m i n g P a t r o n s

T h e G o o d N e w s … T h e y L i k e U s .

Age 21-35 Age 36-49 Age 50-64 Age 65+ Age 21-39 Age 40-49 Age 50-59 Age 60+

39%

34% 36%

28%

Casino Visitation Rates by Age US Casino Gaming Acceptability by Age

54%

50%45%

41%

Source: AGA State of the States, 2012

B u s i n e s s A p p r o a c h 2 0 1 4T h e P ro b l e m – D i s c o n n e c t !

2% 13.40%

28.30%56.30%

21-34 35-44 45-54 55+Casino Visitation (% of each age group)

Source: VP Communications Inc. and Peter D. HartReprinted from 2013 State of the States AGA Survey of Casino Entertainment

39%34% 36%

28%

Age 21-35 Age 36-49 Age 50 -64 Age 65 & Over

Source: Sandy C. Chen, Stowe Shoemaker, Dina Marie V. Zemke, (2013) "Segmenting slot machine players: a factor-cluster analysis”

Slot Machine Engagement

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

00 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96 100+

Source: US Census Bureau as of July 2013

United States Population Estimates

Additional Estimates of 55+ Slot Engagemento Age 56-60 – 90%o Age 61-65 – 75%o Age 66-70 – 65%o Age 71-75 – 45%o Age 76 – 80 – 25%o Age 80% and up – 10%

7

8

According to Flurry Analytics, the US consumer spends 2 hours 38 minutes per day on smartphones and tablets…that equals 41 minutes playing games per day!

W h a t A r e T h e y D o i n g ?

G e n e r a t i o n X & M i l l e n n i a l s : G a m i n g E n t e r t a i n m e n t

Less Attention

Most Attention

Chess

Watching video

Blackjack

Poker

Slots

Posting social status

Blogging

Watching social feeds

Making videos

Casual Games

Strategy Games

MMO/MOBAs

More Participation

Less Participation

Skill Games

Baccarat

B u s i n e s s A p p r o a c h 2 0 1 4C l a s s i c C a s i n o Po p u l a t i o n D e c l i n e

When aging the United States population and extrapolating for casino visitation and slot machine engagement, the Classic Casino Population is expected to decrease 35% from 2014 to 2033.

(50.0%)

(45.0%)

(40.0%)

(35.0%)

(30.0%)

(25.0%)

(20.0%)

(15.0%)

(10.0%)

(5.0%)

–

–

5.0

10.0

15.0

20.0

25.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

Cum

ulat

ive

% C

hang

e

MM

s of P

eopl

e

United States Classic Casino Population(Casino visitors age 21+ who play slots)

Classic Casino Population Cumulative % Change

10

B u s i n e s s A p p r o a c h 2 0 1 4S k i l l G a m e s P l ay Po p u l a t i o n I n c re a s e

Meanwhile, under the same methodology, the currently under-engaged SWig Population is expected to increase 59% over the same period.

–

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

–

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

Cum

ulat

ive

% c

hang

e

MM

s of P

eopl

e

United States SWig Population(Casino visitors age 21-49 that do not play slots)

SWig Population Cumulative % Change

11

B u s i n e s s A p p r o a c h 2 0 1 4A n n u a l U n i t e d S t a t e s Re ve n u e

In order to compensate for a decreasing Classic Casino Population, Operators will at minimum need to engage 12.3% of the SWig Population to offset the projected decline in Classic Casino Population revenues.

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

–

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

% S

Wig

Eng

agem

ent

Annu

al U

.S. R

even

ue ($

B)

Annual United States Revenue(Assuming a static $99B market)

Classic Casino Population SWig Population Cumulative SWig Engagement Required

12

B u s i n e s s A p p r o a c h 2 0 1 4C l a s s i c C a s i n o a n d S W i g Po p u l a t i o n

However, the relative size of the SWig Population to the Classic Casino Population creates a substantial market opportunity.

–

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

MM

s of P

eopl

e

United States Classic Casino and SWig Population

Classic Casino Population SWig Population

13

B u s i n e s s A p p r o a c h 2 0 1 4A n n u a l U n i t e d S t a t e s Re ve n u e

If Operators could monetize the residual SWig Population, the potential revenues could far exceed the existing United States market.

–

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

$400.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

Annu

al U

.S. R

even

ue ($

B)

Annual United States Revenue(Assuming full monetization of SWig Population)

Classic Casino Population Engaged SWig Population Residual SWig Population

14

The Answer is right in front of us: Hybrid Games

HYBRID GAMES

SkillChance

• Hybrid Games provide elements of Chance and Skill

• By providing a chance component, a sizeable portion of player return can be at parity, leaving an element of skill to tip the balance on player benefit

• Provides a more inclusive product incorporating player achievemento Chance provides an element of excitemento One not need be a “Ninja Master” to have real opportunity to win

• A significant chance component provides for precisely understood economics for banked games

Hybrid Games – RTP method

for Hybrid Games• Chance RTP would be controlled by a traditional RNG + Par Sheet + Paytables

approach• RTP for a pure skill game aspect of the hybrid game must be known within a

range• RTP for a blended skill/chance aspect of the hybrid game can be precisely known• Given the RTP of two domains are known, the hold range or a precise hold on a

banked skill game can be determined (popular with Operators)

SKILLRTP

end