New National Lottery Game Summit #3 Report V2 Game Design & Experience Analysis October 22, 2011

1. New National Lottery GameSummit #3 Report V2Game Design & Experience AnalysisOctober 22, 2011

2. Summit 3: Summary Date: October 12, 2011 Location: BWI Airport In Summit 3, the team successfully made a sufficient number of decisions related to game design and game experience as to allow a subset of the group to produce a concept deck to be presented at NASPL later this month. The decisions made by the group are captured in this report. At NASPL, members of the committee will begin sharing a concept deck containing the general game direction with Mega Millions and MUSL groups to gauge initial reaction and begin to build a wider awareness of our work to date. In addition, the group was presented with a concept for a national TV show linked to a lottery game by MDI/Endemol/NBC. The core team reviewed and evaluated the concept, deciding to forgo any immediate pursuit of the concept. The next Summit will be held on Wednesday, November 30 in Chicago, IL.

3. Attendees Margaret DeFrancisco (GA) Arch Gleason (KY) Chuck Strutt (MUSL) Stephen Martino (MD) Matt Phillips (Phillips+Co.) Julie Boczkowski (Phillips+Co.) Michelle Carney (GTECH) Jim Kennedy (SG) John Pittman (Intralot, by phone) Fivi Rondiri (Intralot, by phone) Connie Laverty (GTECH) Gordon Medenica (NY, by phone) Jim Scroggins (OK) Lori Denton (Intralot) Rebecca Hargrove (TN) Leslie Badger (SG) Gary Grief (TX) Buddy Roogow (DC) Don Sawatzky (Pollard)

4. Game Design

5. Game Design Game Design Decisions DECISIONS: Game will be a “hybrid game” – instant component plus a draw based component. Game will be positioned as a two-part game, not a game with a second chance. Draw game entry is available on the internet only. $5 price point 65% payout Design the base game for payment of instant prizes up to $600 at retail. Feel & play like a game Build in a national marketing budget Build as a national platform with the ability to localize (enhance) prize structures for instant wins Odds may vary slightly state by state, but states agree to not mention this difference in marketing. No rolling jackpot, but will need to put drawing prizes / amounts won in front of consumers Positioning (e.g. More Million Dollar Winners) will be critical – will need consistency This is a stepped process - there will be many evolutions of this game, will not be the end all, be all and that many future games to come (“This is step 3 of 10”)

6. Game Design Open Questions / Issues Is Sept 2012 the right launch date? (Vendors developing timeline to help assess) Some states can’t pay ad fee out of prize pool… can you treat as “new” and get extra funding? Can each lottery elect to supplement the instant ticket prize pool should they wish to pay out more than 65% and/or improve odds? How many states have greater than 65% payout on $5? (Highest state is 72%-Mass.) Many smaller states are not able to offer $1MM top prize on their instant games Can marketing money come from different place? How could in state prizes work? Marketing budget - size and rules Who coordinates sponsorships?

7. Game Design • How does the draw occur? • DECISION: • Need feedback in consumer research – imbed in total concept, should test and not tell them it’s from the lottery • Ideas discussed: • TV game show • Weekly website draw • Weekly broadcast draw • Weekly + Monthly or quarterly bonus prizes awarded on location events

8. Game Design After reviewing the TV concept, the group agreed to proceed with the National Game process as is, with the TV show as a potential future additional element. Options considered Develop Game A and TV together Develop as two separate projects; developed separately Develop Game A (keeping options open) and decide later on TV show element separately (Selected direction)

9. Game Experience / Marketing

10. Game Design • Game Mechanics/Interactive/Social Options • DECISIONS: • Agreement: These are not mutually exclusive • Additional review needed - all in play for now • Ideas Discussed: • Option 1: Basic Second Chance: Player enters unique code and auto entered into weekly drawing, also giving access to fun games • Option 2:Token/Entry: Player enters unique code and receives some kind of token to spend as they wish on prizes. scavenger hunts • Option 3: Grouping: Player enters code and selects to join a group and earn points in games and points earn them additional entries into the drawing (may have some legal issues) • Option 4:Link with a Friend: By linking tickets with one friend, each benefits if the other wins. (e.g. b/c Dave won $1000, his friend Sarah wins $200 on top of his) • Option 5:Social and Real World Actions Earn Extra Entries : When player takes • interactive steps (linking tickets with a friend online or scanning logos at • retail, he gets entered into additional prize pools.

11. Game Experience / Marketing Modern Brand Inspiration The group discussed defining a unique brand experience for the new game that would set it apart from existing norms of the lottery industry. A key source of inspiration can be other vibrant consumer brands. Perhaps the best muse for our work is another brand that reinvented an entertainment form with a long, well-established history: Cirque du Soleil.

12. Game Experience / Marketing • Sponsorship • Criteria discussed: • Nationally known • Nationally available • Widely appealing • Widely trusted • Smaller items that could be used as low tier prizes • Offer gift certificate/gift cards or objects/experiences • DECISION: Agree with above criteria • QUESTIONS: • Who will obtain sponsorships and manage prize fulfillment? • What types of sponsors and which brands specifically do we want to target (need market validation) 

13. Game Experience / Marketing Participation / Licensing Fee (aka “Marketing Budget”) • Discussion points: • 1.1% of project sales: will be like an entry fee, included in current game design, will cover marketing / advertising, POS, administrative, agency fees • Can take it from wherever you want in your budget (e.g. ad agency, prize pool, new game development, etc) • POS will be an easier sell than TV • Careful with wording: “marketing” and “advertising” could scare people off • Sponsors will likely want advertising • Maybe call it a licensing fee of being part of the New Game group, price of entry • 1.1% was median • QUESTIONS: • How do you ensure equal distribution / benefits by state? • What if it’s 1.25% but you guarantee 0.15% goes to your state

14. Game Experience / Marketing • Ticket Format & Design • DECISIONS (for Sept 2012 Launch): • Scratch card • Needs to be vendible (constraints on width, not length) • Potentially design two different sizes (e.g. vendable and Olympic size) • Could be horizontal layout • Display it differently • Unique shape • Non-traditional size • Looks different at POS • Perforated • Agree that plastic card is longer term and should be explored down the road, but not for Sept 2012 launch • QUESTIONS: • Can you perforate between tickets as well as the bottom of the ticket (vendors confirming) • Make 2 versions – vendible v. not-vendible • Additional Ideas discussed: • Scratch card – non-traditional size, unique printing, perforation, looks dif at POS • Plastic card (like a gift card) – is it technically feasible (likely down the road) • Event ticket inspired (e.g. Olympics)

15. National TV Show Presentation

16. National TV Show Presentation AnalysisThe group agreed to pass on the immediate TV show proposal. The 45 day window, as presented, was too short for decision making by lotteries. In addition, lotteries will be required to launch a competitive RFP process. • CONs: • Need to look at other options, distribution is the challenge • Is buy in needed from all affiliates / constituents? • Up against Sunday football and 60 Minutes • Timing– 45 days is too short, probably have to start in Jan ‘13 or wait until Sept ‘13 • Difficulty of synching up printing of tickets and predicting success • Fall ’12 – elections (or is that a pro – ad revenue will be at a premium??) • PROs: • Excited about coverage, true national game backed by strong partners (NBC) • Like TV show idea • Benefit from national presence in selling more tickets • Several states have had long term success with TV game shows • Built-in base for FB with TV Show to drive ticket sales • Got to see scale and scope by seeing professional production company • Social media and website experience well-considered • Bottom Line • 45 days too short for this package • Need to RFP to get the best ideas / production rates • Ticket sales will be negatively affected if TV game show is not successful 16

17. National TV Show Presentation • MDI / NBC Universal / Endemol – TV Concept Presentation • Background on Endemol • Producers behind hit TV shows like Deal or No Deal (DND), Big Brother, Fear Factor, WipeOut, Extreme Makeover Home Edition • In addition to content creation, sales/marketing relationships • Worldwide experience in gaming Camelot, Games Media, 888, Atronics • Relationships with all the broadcasters, TV stations, major advertisers • Syndication - 208 markets total • Tribune – largest anchor group (39.2% of the US – focus on largest cities) • Sinclair - 20.6% of US (east coast/Midwest) • Local TV – 10% US – Tribune programs many of the Local TV • Their recommendations: • Broadcast Syndication – gain nearly national distribution, avoid states which do not allow lotteries • 1 hour show, Sunday, 7 pm slot • Goals – new playership, interactive, online, national, net profit growth • Their Concept – 10 Steps to a Billion • Weekly, non-winning ticket – 2nd chance drawing • 100 people drawn at random to attend taping, step on squares, play along at home, • Grand finale – top 10 rejoins, 1 participates. • Winners from each participating lotteries. 17

18. National TV Show Presentation • Interactive/social media • Opportunity for people to play along at home • FB game, mobile game, Twitter feed, FB page • Unique game card that you print, play along with contestant – winner at home, announce next week on the show (meaningful, but not millions) • Could secure sponsor to all players (e.g. 25% off Subway) • Maybe extra game boards if you buy a lottery ticket and have a code • FB game – real world prizes with retailers, each lottery ticket provides one free play • FB Fan page – update on winners, background on contestants, community conversation, rooting for contestants, announce winners • Twitter – encourage players to tweet about the show, their winnings, ticker across bottom of screen of TV show • Website – 10stepstoabillion.com, similar to FB page • Mobile app – play along with show • Branding/Marketing • TV, radio, web banners, website development, sponsorship promotions, local retailer (e.g. take lottery ticket into retailer for promo’s/discounts) • Financials • Fee ranging from 3.95% - 4.95% sales • Fee covers, 39 productions, contestant recruitment, insurance for $1B prize, web development, prizes • All national ad revenue will be returned to participating lotteries • Ad Revenue Examples – DND - $68MM, L&O: Crim Intent - $37MM, L&O: SVU $13MM 18

19. Next Steps

20. Next Steps • Action Plan for Indianapolis (NASPL) • Margaret, Arch and others to present an approximately 10 page high level deck (Phillips+Co. and vendors to rough out, work together, deliver mid to late next week) • Share with Joint Development Committee, MUSL and MM groups. • Presentation Ideas: • Could show line art, demo the consumer experience, maybe just show a silhouette. • Show collage of inspiration brands, • Take a straw poll – here’s what we’ve done, here’s what we think, based on what you’ve seen today, how many have seen enough that they want them to continue? • Have a disclaimer – available to whoever can participate, can be scaled by state. • 1st presentation – Mon, Oct 24th • Beyond Indianapolis • Testing Approach: Phillips+Co. and vendors to draft qualitative research approach (get ready by Nov, test in Dec) • Develop Project Timeline: Michelle & Leslie - build out timeline to launch Sept 2012 • Next meeting: Wednesday, November 30 – Chicago

21. New GameProject Plan: From Concept to Development

22. New GameProject Plan: From Concept to Development

23. New National Lottery GameThank You.

24. Appendix

25. Game Design • The Core Team discussed the Pros & Cons of Rolling Jackpot v. Fixed Prize • Pros of Rolling Jackpot: • Provides tension • Difficult to differentiate without one, plus more clunky • Lack of rolling jackpot could be a problem in bigger states • Cons: • Already have 2 big games – shouldn’t compete with PB & MM • Key to game is many, many $1MM winners • DECISIONS: • No rolling jackpot, but will need to put prize amounts and winners in front of consumers • Positioning (e.g. More Million Dollar Winners) will be critical – will need consistency

26. Appendix • Summit 3 Agenda • October 12, 2011 • Hilton Baltimore BWI Airport • 1. TV Concept Presentation • Welcome & Review Project Goals • 3. Review Game Design from Summit #2 - summarize joint vendor presentation. • 4. Game Design Discussion & Decisions - Prize structure, instant/drawing design, operational issues, research, project management, etc. • 5. Review Game Experience Elements - Internet, social media, mobile aspects of game experience • 6. Game Experience Discussion & Decisions - legal and technical feasibility, sort ideas onto timeline based on actionability • 7. Discuss Next Action Plan for Indianapolis 26

27. National TV Show Presentation Questions / Comments Posed to MDI/NBC/Endemol from the Committee • How many contestants per show? A: There would be rollover (like DND) – depends on how long they want to stay, could have association with state lotteries – syndication lends itself to promoting local winners • How do you build excitement going square to square? Should weekly prize be more? A: Excitement is trying to gauge how much you’re winning from row to row, more you step on, more you when. Host will be critical. Engagement from home – screaming at TV, like DND. Greed. • Timing for decision: A: Assuming Sept 2012, very little time – 1-2 months. • How do you gauge certainty of success and what do you do if it’s not successful? A: Past history of lottery game shows – surprisingly good, stations will have to take the show for the whole year, feel risk is minimal. Won’t know until it’s on the air. Respectable track record. Feel like the lottery play will also help boost ratings. • What is their fee? A: ~4%-5% sales – all production, talent, insurance, all included less ad revenue. Prize expense - $20MM (includes insurance). • Public procurement is an issue – several states not contractually bound to MDI 27

28. National TV Show Presentation Internal Questions / Comments (not posed to MDI/NBC Universal /Endemol): • Are NBC Universal, Endemol, etc connected? Can we look at other production company? • Where does TV show fit? (upon launch of game or later on?) • Is it a one time shot…or do you develop new show each year? • Could keep national game and TV show development separately • Where is TV, internet, etc going to look like in 5 years? • How does it fit in the procurement process they have to go through? • More important for the game to be successful v. the show • Any evidence/research on impact on UK national lottery brand?? (would be important for national retailers like Wal-mart, Walgreens) • How do financials work v. the model that was run – game needs to sustain itself w/o the show • Is 10 Steps to a Billion the most compelling game to meet all the criteria? • Can get a similar effect as the national marketing campaign? • Does younger demo watch game shows?? (would be interesting to understand DND demo’s in its peak) • Can show sustain 39 weeks? Can in-store sustain 39 weeks? • Instead of one games sustain 39 weeks – should it be 3 games? • What brand are we promoting? Are we leveraging our brand or just 10 Steps to a Billion (which is all about greed?) 28