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

1.32

1.772.08 2.31

2.542.87

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 64.268.8

76.180.9

76.475.0 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

Pokerstars

Bet365

bwin.party888

Sportingbet

Betfair

PaddyPower

Ladbro

kes

Willi

am 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 operators

Consumer protection

Money for society (fiscal arguments and good causes)

Threats

Offshore operators without license offer a wide range of products:Lottery, Casino, Poker, Sportsbetting

No limits for wagers and age

Higher payout percentage

No taxes

Offshore 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

illeg

al

Fight against illegal operators

Combined measures – UIGEA as role model:

Strong legal framework and severe sanctions

IP/DNS blocking together with payment blocking

Banning illegal advertising

Setting up black lists (white lists)

Public information about illegal gambling and operators

Coordination between national authorities

Fiscal arguments

Comercial online

operators

European 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 regulation

Subsidiarity principle: states hold primary competence to regulate gambling

No mutual recognition

Responsibility for consumer protection lies with the member state

Internal 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