WYOMING LOTTERY CORPORATION BOARD MEETING September 29 2015

WYOMING LOTTERY CORPORATION BOARD MEETING September 29, 2015

AGENDA • Judiciary Committee – Projected Sales • Retailer Forum Schedule • Marketing Update ü Cowboy Draw ü Powerball • Research • Debit Card • Problem Gambling BOARD MEETING 9/29/15 11/3/2020 2

ADDRESSED JOINT JUDICIARY COMMITTEE QUESTION “What would revenues be with additional products added to the portfolio and in particular, Scratch? ” BOARD MEETING 9/29/15 11/3/2020 PAGE 3

COST OF GOODS SOLD CHART Transfer to State 0. 74% Current Portfolio Breakdown Operating Budget 21. 65% Risk Coverage (Net Cost) 1. 04% Validation (1% of Cashes) 0. 18% Prize Pool Intralot Retailer Commission Validation (1% of Cashes) Retailer Commission 6. 00% Prize Pool 58. 49% Risk Coverage (Net Cost) Operating Budget Transfer to State Intralot 11. 89% BOARD MEETING 9/29/15 11/3/2020 4

WITH PRODUCT A - SCRATCH Operating Budget 5. 82% Risk Coverage (Net Cost) 0. 28% Addition of Scratch Games Transfer to State 9. 97% Print Costs 1. 27% Prize Pool Retailer Commission 6. 00% Intralot Retailer Commission Validation (1% of Cashes) 0. 16% Intralot 11. 89% BOARD MEETING 9/29/15 11/3/2020 Print Costs Prize Pool 65. 00% Risk Coverage (Net Cost) Operating Budget Transfer to State PAGE 5

WITH PRODUCT A & B (ADDITIONAL DRAW GAME) Operating Budget 6. 00% Risk Coverage (Net Cost) 0. 27% Print Costs 1. 22% Retailer Commission Liability 6. 00% Addition of Scratch and A New Draw Game Transfer to State 10. 28% Validation Liability (1% of Cashes) 0. 16% Prize Pool Liability Intralot Liability Retailer Commission Liability Validation Liability (1% of Cashes) Print Costs Intralot Liability 11. 89% BOARD MEETING 9/29/15 11/3/2020 Prize Pool Liability 64. 63% Risk Coverage (Net Cost) Operating Budget Transfer to State PAGE 6

RETAILER FORUM SCHEDULE 10/26/15 – Cheyenne (two sessions 10 a. m. & 2 p. m. ) 10/27/15 – Afternoon travel day 10/28/15 – Casper (two sessions 10 a. m. & 2 p. m. ) 10/29/15 – Travel to Buffalo - Afternoon session 2: 00 p. m. 10/30/15 - Travel back to Cheyenne 11/2/15 - Travel to Rock Springs 11/3/15 - Rock Springs – 2: 00 p. m. session - Travel to Evanston 11/4/15 - Evanston (two sessions 10 a. m. & 2 p. m. ) 11/5/15 - Travel to Lander 11/6/15 - Lander 10 a. m. session - Travel back to Cheyenne BOARD MEETING 9/29/15 11/3/2020 Week 1 Week 2 7

$1, 000 Jackpot Highlights ü Record sales week since Cowboy Draw go-live = $384, 865 ü 3 rd highest week in portfolio sales = $615, 028 ü In one week = thirty-one $1, 000 winners! ü FREE Press i. e. , TV, Radio, Print ü Industry News ü PGRI printed our press release ü Lottery Insights (NASPL) ü Chatter from the states around us BOARD MEETING 9/29/15 11/3/2020 PAGE 8

MARKETING New campaign to support Powerball Matrix change: 1. Multi-channel campaign (TV, radio, print [widgets], instore, digital, social, UW) 2. October 4 th 3. Statewide tour 4. Promotion BOARD MEETING 9/29/15 11/3/2020 PAGE 9

POWERBALL Focus is on BIGGER jackpots; opportunity to win more often with better odds. BOARD MEETING 9/29/15 11/3/2020 10

POWERBALL CAMPAIGN BOARD MEETING 9/29/15 11/3/2020 11

POWERBALL CAMPAIGN BOARD MEETING 9/29/15 11/3/2020 12

POWERBALL CAMPAIGN BOARD MEETING 9/29/15 11/3/2020 13

POWERBALL CAMPAIGN BOARD MEETING 9/29/15 11/3/2020 14

POWERBALL CAMPAIGN UW Tailgate BOARD MEETING 9/29/15 11/3/2020 15

POWERBALL CAMPAIGN BOARD MEETING 9/29/15 11/3/2020 16

POWERBALL CAMPAIGN BOARD MEETING 9/29/15 11/3/2020 17

UW PROMOTIONAL OPPORTUNITY BOARD MEETING 9/29/15 11/3/2020 18

POWERBALL CAMPAIGN BOARD MEETING 9/29/15 11/3/2020 19

POWERBALL CAMPAIGN BOARD MEETING 9/29/15 11/3/2020 20

POWERBALL CAMPAIGN BOARD MEETING 9/29/15 11/3/2020 21

STATEWIDE TOUR BOARD MEETING 9/29/15 11/3/2020 22

POWERBALL CAMPAIGN BOARD MEETING 9/29/15 11/3/2020 23

POWERBALL CAMPAIGN BOARD MEETING 9/29/15 11/3/2020 24

RESEARCH ACTIVITIES October ü Focus Group Testing ü Retailer Forum November ü Tracker Study December ü Specification Review & Agreement to changes in the Back Office System (BOS) BOARD MEETING 9/29/15 11/3/2020 25

DEBIT CARD History § Retailers complaining that they are losing sales because players don’t carry cash § Tracker study results § Facebook Problem § Leaving sales on the table § Costs associated with Debit card transactions § Concerns pertaining to social responsibility BOARD MEETING 9/29/15 11/3/2020 26

DEBIT CARD Debit Card Research § Unlike credit and charge cards, payments using a debit card are immediately transferred from the cardholder's designated bank account, instead of them paying the money back at a later date. (Wikipedia) § In many countries, the use of debit cards has become so widespread that their volume has overtaken or entirely replaced checks and, in some instances, cash transactions. (Wikipedia) § Online debit cards require electronic authorization of every transaction and the debits are reflected in the user’s account immediately. The transaction may be additionally secured with the personal identification number (PIN) authentication system; some online cards require such authentication for every transaction, essentially becoming enhanced automatic teller machine (ATM) cards. (Wikipedia) § Consumer protections vary, depending on the network used. Visa and Master. Card, for instance, prohibit minimum and maximum purchase sizes, surcharges, and arbitrary security procedures on the part of merchants. Merchants are usually charged higher transaction fees for credit transactions, since debit network transactions are less likely to be fraudulent. (Wikipedia) BOARD MEETING 9/29/15 11/3/2020 27

DEBIT CARD The Durbin amendment, part of the Dodd-Frank financial reform bill, caps the amount banks can charge retailers for swiping their debit cards. The cap limits the fee to an average of 24 cents per transaction instead of the previous industry average of 44 cents. The new limit took effect in the summer of 2011. (Banktech. com) BOARD MEETING 9/29/15 11/3/2020 28

DEBIT CARDS Concern presented by some retailers: § High transaction fees imposed by banking institutions § 1. 5% to 3. 4% per transaction Options that some retailers have imposed to overcome high fees: § Imposed minimum transaction amounts; i. e. , Debit Card usage allowed when total sale is $10. 00 or more § Cash only – installed ATM machines § Increased cost on items to increase overall margins BOARD MEETING 9/29/15 11/3/2020 PAGE 29

DEBIT CARDS Options Allow for Debit Card use to pay for lottery products. § § One transaction that sometimes will include other items Convenient for our players Majority of retailers will appreciate the sale Increase cost to retailers may pose hardship Continue to disallow Debit Card purchases § Leave sales on the table because players don’t always carry cash § Restrict retailer opportunities to increase sales; disappointed consumers BOARD MEETING 9/29/15 11/3/2020 PAGE 30

DEBIT CARDS Recommendation § Allow for Debit Card purchases to align ourselves with today’s preferred market of payment § Because of the banking fees that may negatively affect a portion of our retailers (mom/pop), allow retailers to set minimum Debit Card transaction amounts. § Consider lobbying for a statute change that gives the board of directors the power to set commission rate. BOARD MEETING 9/29/15 11/3/2020 PAGE 31

PROBLEM GAMBLING Stakeholder Inclusion 1. Expanding the group a. Charles Moore, OTB b. Jenni Wildcat, Tribes c. Michelle Panos, Governor’s Office 2. Re-visiting Charter 3. Leveraging information learned at the last NCPG conference BOARD MEETING 9/29/15 11/3/2020 32

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PROBLEM GAMBLING NCPG lessons learned in stakeholder management: • 4 -step approach; Define 1. 2. 3. 4. Purpose Who to Engage How to Engage Evaluation BOARD MEETING 9/29/15 11/3/2020 PAGE 34

PROBLEM GAMBLING In defining the purpose…. Ø Identify why engagement is important for your policy, project or service Ø Identify what outputs or outcomes you want to achieve by undertaking stakeholder engagement In defining who to engage…. Ø Create a list of relevant stakeholders Ø Organize stakeholders by skills/interests/assets BOARD MEETING 9/29/15 11/3/2020 PAGE 35

PROBLEM GAMBLING In defining the engagement…. Ø Choose suitable method of engagement Ø Plan engagement logistics (timing, resourcing and responsibilities) Ø Determine key messages to communicate Ø Consider stakeholder engagement risks When considering evaluation… Ø Develop performance measures to assess each stage of the engagement process Ø Evaluate the planning process and determine its effectiveness Ø Determine if the engagement plan produce the intended outputs/outcomes BOARD MEETING 9/29/15 PAGE 36 11/3/2020

PROBLEM GAMBLING Lottery team will continue to… Ø Interact with the DHS team and others Ø Define the relationship and level of engagement through the documented, agreed upon charter Ø In concert with team members, define all relevant strategies that allow the team to move forward BOARD MEETING 9/29/15 11/3/2020 PAGE 37

ANY QUESTIONS? BOARD MEETING 9/29/15 11/3/2020 38