© Blackhawk Network Inc. Confidential and not for replication or distribution. 1

May 25, 2019

Blackhawk Network’s Lottery CategoryLa Fleurs DC Conference

© Blackhawk Network Inc. Confidential and not for replication or distribution. 2

Blackhawk Operates a Massive Distribution Network…

20% of gift cards sold in the US come from Blackhawk Network

• Direct POS integrations with 60,000 locations in the US

• Partnered with 90% of grocery in the US

• 100M+ consumers visitors daily1

• $22B annual Total Dollar Volume2

1. Number of visitors across all of Blackhawk distribution channels; 2. Sales measured by prepaid card load value

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Dedicated Lottery Team

• Dedicated team of over 20 professionals focused on delivering leading in-lane lottery products

• Recently joined by Tony Molica, someone who is a familiar face to many of you in this room, given his 34 year long lottery career, including serving as former director of CA and WA state lotteries

Demonstrated Experience

• Proven, relevant experience with the successful launch of Quick Ticket in Canada over a year ago

• Developed key learnings about promotions, consumer behavior and in-lane security considerations

Intellectual Property

• Issued patents on QuickTicket in the US and Canada

• Pending Patents on a number of other features and enhancements

…and is Uniquely Positioned to Support Lottery in Lane

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Massive Incremental Lottery Opportunity in Our Network

By Optimizing First For The Consumer…

Reach Casual Players• ~4% of lottery sales versus 25%–30% of the adult population

• Won’t make a dedicated trip or visit a kiosk/service desk

• Most likely to buy if already paying for other goods

• Open to buying when prompted

+

Strategy• Drive in-store awareness by

merchandising in-lane and other high traffic areas

• Allow for 1 step check out

• Create convenient lottery destinations

Eliminate Friction at Multi-Lane Retailers• Players don’t purchase because:

– Requires two checkouts

– Merchandised only post check-out

– Low awareness compare to C-stores

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Massive Incremental Lottery Opportunity in Our Network

…And Optimizing For Retailers

Retailer Challenges• Today’s method for how

merchants sell and merchandise lottery does not allow for transformative growth

• Service desk and kiosk are a chokepoint and space is shrinking

• Labor and accounting procedures are a barrier

• Limited awareness in-store

• Data-driven consumer marketing/engagement limited because lottery purchases that aren’t captured

In-lane Lottery Benefits• Able to “meet the customer

where they are”

• Capture shopper data

• Not limited by service desk space/resources

• Increase overall lottery awareness and sales

Enhanced Retailer Support• Provide check lane presence: ‘Ocean

Front Property’

– 9M households pass through Kroger check lanes everyday

• Leverage data to drive greater consumer engagement

• Drive cross-marketing promotions outside of jackpot (holidays, gifting, etc.)

• Provide supplemental locations creating a destination to increase incremental sales (floor displays, shippers, towers)

+

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“Ocean Front Property”—Creating a Lottery Destination

Free-standing Lottery Fixture

Checkout Counter Check Lane Approach App Offer

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Frequency, Frequency, Frequency

0%

10%

20%

30%

40%

50%

60%

70%CHANNELS USED ‘ALMOST EVERY TIME’ WHEN

SHOPPING FOR FOOD AND BEVERAGE Trips to a Grocery Store Per Week

Single Household

1.6X

Dual Household

2.2X

Source: FMI U.S. Grocery Shopper Trends, 2018

The dominance of Grocery in the US

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Building on the Success in Ontario: QuickTicket 2.0

1. Source: Explorer Exit Interviews, Aug. 2017; 2. %s represents sales growth of 1H2018 vs 1H2017

Product Evolution Based on Success & Lessons Learned from QuickTicket in Ontario

• Majority of consumers preferred QuickPicks printed on ticket, instead of grocery receipt

• In US survey, 87% indicated a high interest in purchasing with over half saying they would purchase every week

28.3%

54.0%

19.3%

33.0%

Grocery accounts without QT Grocery accounts with QT

Lotto 6/49 & Lotto MAX All Lottery

Success of QuickTicket in Ontario

VS.

26%

lift

AWARENESS EFFECT

In-lane presence driving 9% sales

increase across all lottery products

in store

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QuickTicket Consumer Flow

Consumer tenderspayment and the Cashier

scans barcode to activate the ticket.

2

Redeem at any authorized lottery

terminal.

5

Consumer takes a Quick Ticket off the J-hook.

1

Consumer checks if the ticket is a winner, at a

terminal, ticket checking app or any other method

4

After purchase, the consumer scratches

to reveal theirQuickpick numbers.

3

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Automatic Win Notification Feature

Scan the QR code to verify what draw you are entered in and enroll in automatic prize notifications

77% of survey respondents indicated that Automatic Prize Notification would make them even “more likely to purchase”

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ScanActiv

Cashier scans a c128 barcode issued by

BHN to activate the ScanActiv card

Consumer picks up a ScanActiv card at the

register or the Gift Card Mall

Consumer plays and unlocks instant

games—similar to a scratcher experience

—all from a mobile device

Consumers can use winnings to play

again or redeem in store for cash, PayPal

credit or an eGift

After purchase, the consumer scratches

to reveal and scan the QR code

1 2 3 4 5

© Blackhawk Network Inc. Confidential and not for replication or distribution. 12

Additional Products

Print-On-Receipt (NASPL API)

• In addition to QuickTicket, Blackhawk will offer the Print-On-Receipt use case of for state lotteries and retailers who prefer that consumer experience

Non-Cash Redemption Opportunities

• Retailers challenged with on-hand cash-requirements necessary for redemptions

• Consumers prefer receiving higher tier winnings from participating retailers instead of having to travel to lottery office to collect winnings.

• Lottery officials wish to decrease labor demands by having retailers perform more higher-tier cashing

• Blackhawk can provide any retailer with the ability to pay out winners on a Visa Prepaid card, eliminating the retailers’ cash on hand challenges

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Thank You