Chalkline SportsJanuary 2017

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SPORTS BETTING IN THE USA 2016 Recap and 2017 Outlook

Sports Betting in the USA: 2016 Recap and 2017 Outlook

2016 was a year of significant traction for sports betting industry stakeholders in America.• Land-based casinos and the American Gaming Association actively addressed sports betting.

• Political will slowly built momentum behind regulated sports betting and supporting legislation.

• Professional sports leagues embraced Las Vegas as a franchise location.

In 2016, the American Consumer continued to wager on sports, and followed European trends.• Mobile wagers accounted for 25-40% of legal sports betting handle. (Europe = 70%)

• Live-in-play wagers accounted for 5-20% of all legal sports betting handle. (Europe = ~75%)

• The majority of all legal wagers in the US were made on football. (Just like Europe, but a different shaped football. :)

Looking to 2017, Sports Betting growth will accelerate on several fronts.• Mobile search and content will impact more sports betting micro-moments for US Consumers.

• Professional sports teams and media companies will continue to build on sports betting business opportunities.

• Increased media attention on sports betting will prompt increasing political consideration for regulation.

EXECUTIVE SUMMARY

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Sports Betting in the USA: 2016 Recap and 2017 Outlook

States that are ExemptDelawareMontanaNevadaOregon

Fun Fact #1Nevada is the only state in the US that allows betting

on professional and collegiate sporting events.

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A BRIEF HISTORY OF SPORTS BETTING IN THE US

The Professional and Amateur Sports Protection Act of 1992 (PASPA) effectively makes sports betting illegal in the US with a few exceptions.

Sports that are ExemptParimutuel Horse RacingParimutuel Dog Racing

Jai Alai

Fun Fact #2US$3B was wagered legally and online

on horses in the US in 2016.

What this all means to US Sports Bettors: Every sports book NOT licensed in the State of Nevada is operating illegally,

and all sports bets placed with these books are also illegal.

Sports Betting in the USA: 2016 Recap and 2017 Outlook 4

2016: KEY PLAYERS IN US SPORTS BETTING

American Gaming AssociationCasino Groups & Sports Books

Professional Sports Leagues Politicians

Sports Betting in the USA: 2016 Recap and 2017 Outlook 5

2016: KEY PLAYERS IN US SPORTS BETTING

Professional Sports Leagues

Dominate all forms of US-based Gaming

Require new revenue streams

Fund the American Gaming Association

Sports Betting is top priority

Launched www.sportsbettinginamerica.com

David Stern headlined G2E Conference

Supported PASPA in 1992

Have invested in Daily Fantasy Sports (DFS)

Establishing teams & events in Nevada

Introducing legislation in multiple states

Need new tax revenue streams

Need new jobs in their states

Politicians

American Gaming AssociationCasino Groups & Sports Books

Sports Betting in the USA: 2016 Recap and 2017 Outlook 6

2016: CASINO GROUPS & SPORTS BOOKS

Land-based casinos increased support for regulated sports betting in the US in 2016.

“But my view is — and I hope to speak to the President-elect and to Congress on these topics — let’s regulate, and let’s be consistent in our regulation and give the American

public what it wants, which is this transparent and seamless connectivity between bricks-and-mortar gaming and other forms of gaming that are completely safe, if

they’re regulated…”

-- Jim MurrenCEO, MGM Resorts International

December 2, 2016>> Watch the full video interview hereJim Murren

4%

55%

0%

10%

20%

30%

40%

50%

60%

Overall Growth (2011 – 2016)

Casino Games Sports Betting

$2.9

$3.5 $3.6$3.9

$4.2$4.5

$0

$1

$2

$3

$4

$5

2011 2012 2013 2014 2015 2016

Bill

ion

s

Annual Sports Betting Handle (Nevada)

Sports Betting in the USA: 2016 Recap and 2017 Outlook 7

2016: PROFESSIONAL SPORTS LEAGUES

NHL’s Golden Knights begin play in 2017.

Former NBA Commissioner headlines American Gaming Association conference in September.

The NFL’s Oakland Raiders explore move to Las Vegas; plan stadium development in 2017.

Sports Betting & Professional Sports

NFL games played at Wembley Stadium (London) where sports betting is legal, saw an average of

10X the handle of US regular season games.

Fan Duel and NBA partnered for "in Play" daily fantasy product that looks and feels a lot like gambling.

In 2016, legal wagers on MLB surpassed $1B for the first time.

Sports Betting in the USA: 2016 Recap and 2017 Outlook 8

2016: AMERICAN GAMING ASSOCIATION IS FOCUSED

Sports Betting in the USA: 2016 Recap and 2017 Outlook 9

2016: POLITICIANS

US election results in November could mean a more favorable political environment.

“I’m OK with [sports betting and daily fantasy sports] because it’s happening anyway. Whether you have [legalized sports betting] or you don’t have it, you have it.”

-- Donald TrumpPresident of the United States

November 2015

In 2016, states such as NJ, NY, WV, LA, MS & WI continued to push for regulated betting.

Sports Betting in the USA: 2016 Recap and 2017 Outlook 10

ALSO…AMERICANS CONTINUE TO BET ON SPORTS

The US Consumer

In 2016, nearly 30,000,000 Americans wagered over $150,000,000,000 on sports. (AGA)

47% of Super Bowl 50 viewers, 41M people, have bet on the Big Game

at least once.

Americans wagered $9.2B on the NCAA Tournament in 2016.

40 Million Americans filled out NCAA Brackets.

Americans wagered $4.2B on Super Bowl 50.

And 97% of all bets placed in the US are done so illegally.

Sports Betting in the USA: 2016 Recap and 2017 Outlook 11

MAINSTREAM MEDIA IS COMING AROUND

Even Disney-owned ESPN now lists odds as they advertise upcoming games.

Sports Betting in the USA: 2016 Recap and 2017 Outlook 12

WHAT STAKEHOLDERS SAID IN 2016

Mark Cuban, Owner, Dallas Mavericks

“Hopefully, the stupidity and hypocrisy in a few states will be cleared up in the courts shortly.”

January 2016, The Big Lead/USA Today

David Stern, NBA former Commissioner

“Every dollar that is wagered illegally, it’s safe to say, ends up somewhere unsavory.”

September 2016, Global Gaming Expo in Las Vegas, NV

Joe Asher, CEO, William Hill USA

"I'm all for daily fantasy sports betting, just like I'm for other forms of sports betting. I think they should be legal and regulated. But let's be real -- [it] is gambling and it should be regulated as such."

August 2016, ESPN.com

Sports Betting in the USA: 2016 Recap and 2017 Outlook

Mobile will surpass 50% of all Nevada sports betting handle.It currently stands at ~25-40%, according to various Vegas operators.

2017 won’t be as bad as 2016 for sports books when it comes to calling major political events. No more Brexits on the horizon, and Trump’s already in the White House.

Regulated sports betting will outpace daily fantasy growth.This one could be close, depending on how regulatory conditions impact DFS evolution.

One Stadium in the US will take in-venue bets.It may be “Daily Fantasy Sports Betting” but it’ll happen.

One major professional sports team will sign a sponsorship with a sports betting company.Here’s looking at you, NHL!

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FIVE PRIME PREDICTIONS FOR THE USA IN 2017

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Connect with us in 2017

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