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Final Binding Offer List of Redacted items Certain information has been redacted from this copy of the Final Binding Offer. The redacted information is exempt from public disclosure under the Freedom of Information Act as commercial or financial information which is proprietary, privileged, or confidential and disclosure would cause competitive harm (5 ILCS 140/7(1)(g)). The following information has been redacted: 2.5 ONLINE GAMES Figures showing a product development and needs assessment tools. 2.6 INSTANTS Information describing game development and game design processes. 2.7 LOTTERY RETAILERS Information describing retailer and sales team assessment mechanisms. 2.8 E-COMMERCE Information depicting and describing website development processes. 2.9 MARKETING Information describing marketing strategies. 2.11. OPERATIONS Figures showing business and technology integration and platforms. APPENDICES Surveys and reports containing confidential market information. The information generally described above is proprietary, privileged, or confidential commercial and financial information used by Camelot Illinois, LLC, or its affiliates, in the conduct of its business in the U.S. and elsewhere. Disclosure of this information would cause competitive harm to Camelot Illinois, LLC and/or it affiliates. Camelot Illinois Response to Step 2 of the RFP Illinois Lottery Private Manager i Table of Contents Appendices Appendices A1-A11 Appendix A1 San Francisco LSR Pilot Survey Example Appendix A2 References and Letters of Intent Appendix A3 Loyalty Program Appendix A4 Recruitment Document Pack Appendix A5 GBGC Interactive Lottery Report Appendix A6 Rabin Player Focus Group Appendix A7 Rabin Player Focus Group Appendix A8 Rabin Non-Player Focus Group Appendix A9 Rabin Non-Player Survey Appendix A10 Experian Simmons Player Participation and Profiles Appendix A11 Material from UK Perfect In-Store Execution (PIE) program Camelot Illinois Response to Step 2 of the RFP Illinois Lottery Private Manager 1 Table of Contents This page intentionally left blank 2 Camelot Illinois Response to Step 2 of the RFP Illinois Lottery Private Manager Appendix A1 Appendix A1 has been redacted as it contains confidential information. Camelot Illinois Response to Step 2 of the RFP Illinois Lottery Private Manager Arthur L. Gleason, Jr., WLA President c/o Kentucky Lottery Corporation 1011 West Main Street Louisville, KY 40202 502-560-1551; email@example.com July 16, 2010 Mr. Thomas Morsch, Managing Director Scott Balice Strategies 20 North Wacker Drive, Suite 2200 Chicago, IL 60606 Dear Mr. Morsh: In my role as the President of the World Lottery Association, I have had the pleasure to work closely with Camelot and its outstanding management team over the last five years. Camelot has been a pioneer within the lottery industry in providing consumers with convenient and innovative access to products (e.g. through the Internet, mobile phone, or on web TV) in a socially responsible way – proving that they can maximize returns of funds for good causes and the government, while at the same time protecting the vulnerable. Responsible Gaming and Corporate Social Responsibility (CSR) is one of the most important areas for the WLA and its importance is increasing with the liberalization of markets around the globe and the need to protect the vulnerable. Camelot’s lead in a number of working groups and projects has proven to be invaluable to the WLA and the lottery industry as a whole. Camelot has a longstanding track record in embracing and embedding CSR within their organization and operational processes. It has long been recognized as a leading operator in this field, not only in the lottery world, but also across the entire gaming industry. Camelot has played a pivotal and leading role through its President’s chairing and currently co-chairing of the WLA CSR Committee in the development and integration of the WLA Responsible Gaming Framework, an independent Framework which certifies the maturity of responsible gaming programs in organizations. Camelot’s leadership was again apparent by their ability to, not only achieve the highest level certification in the WLA Responsible Gaming Framework (Level 4), but also its encouragement of other lotteries to follow their example and to gain certification. As a result, more than 100 lotteries worldwide have achieved at least a Level 1 certification, five lotteries have achieved Level 2 certification, three lotteries have achieved Level 3 certification, and 15 lotteries have achieved Level 4 certification. In addition, Camelot has demonstrated excellence and early recognition of the issues that lotteries face in the area of responsible gaming and how to respond to them. The WLA and our members have benefitted greatly from Camelot’s thought leadership in the area of security and probity of operations through its chairmanship of the WLA Security Committee and the establishment of the WLA Security Standards (ISO27001). These standards have been well established for a number of years and without Camelot’s initiative and drive, the lottery sector would not be as advanced in this area as it is now. I have every confidence that Camelot is a highly qualified candidate to operate the Illinois State Lottery, not only with the highest standards of integrity, probity, and social responsibility, but also as a candidate with exceptional commercial and consumer understanding, with the ability to maximize funds for good causes and government public benefit purposes. Please feel free to contact me should you wish any further details. I can be reached through my Kentucky Lottery Corporation office at 502-560-1551 and by email at firstname.lastname@example.org. Sincerely yours, I:\WLA\camelot_illinos.docx Developing a successful Loyalty program for with Camelot Illinois Executive Summary Camelot will launch a best in class Loyalty Program in Illinois supported by emnos, the worldwide gaming and loyalty experts. The Player Club will: – Allow us to capture detailed play data, to manage players as individuals and 'protect' those who need it – Be multi-channel – Be based on best practice U.S. and UK retail, lottery and gaming loyalty programs. The loyalty club will deliver incremental sales to the Lottery via: – Responsibly increasing player frequency – Targeting: being able to treat individual players differently – Cross selling new games / different products Player benefits: – The more frequently you play the better the rewards emnos • 2 Executive Summary The scheme is easy to follow for the customer and retailer 1 FREE SIGN UP 2 3 4 1 wk play = 1 point Start earning Rewards determined Register on the Internet Play in store or on rewards! by frequency the Internet weekly 5 6 7 .. Responsibly grow Benefits for customer Maintain account on customer base and sales on the internet & instore the Internet with targeted rewards emnos • 3 Agenda 1 Overview of Loyalty proposal 2 Current situation & opportunity for Camelot 3 Future trends 4 Loyalty initiative – detailed proposal 5 Summary of recommendation emnos • 4 The Camelot and emnos partnership • Camelot have commissioned emnos to analyse the Illinois market and propose a loyalty club for Illinois Lottery players. • This work was commissioned based on the successful relationship that Camelot enjoy with emnos in the UK, having • worked together on player loyalty for the National Lottery for several years. • Camelot enjoys a player retention (loyalty) rate of 78% in the UK • emnos work with leading retailers (e.g. Kroger) globally as well as a wide range of gaming clients emnos • 5 emnos is a consulting & services specialist – by focussing on customers & loyalty , we drive step-changes in bottom line growth for businesses. 1 emnos Gaming clients 2010 • Founded 2001 emnos • 140+employees overview • 5 European offices • US office (New York) 2 • Customer insights / segmentation • Loyalty strategy & programs Service offering • Digital & multi channel strategy Retail clients • Category management, pricing & promotions strategy 3 • Gaming & leisure centre of Differentiated expertise in UK skills • ~40 SAS data analysts • Integrated analysis/research offer emnos • 6 emnos brings extensive customer loyalty and retail loyalty card experience – both consulting & running programs Kroger USA WH Smith, UK Alliance Boots, UK Tesco UK Air Miles, UK John Lewis Partnership, UK PAYBACK Germany Homebase, UK Carrefour France, Spain Woolworths Australia Nectar, UK emnos • 7 OVERVIEW : Camelot and emnos’s vision is to introduce an award-winning Player Club, operating initially on the Internet & extending into retail via a 'Playercard', which allows us to understand & service players better & leverages our key strategic goals • 4.7million Illinois residents currently play the Lottery – Within them are many types of players, with different incomes, backgrounds and outlooks* • Currently the Lottery does not provide 'rewards' or any benefits to its players – Something that US consumers have come to expect via retailer , bank and airline programs, as well as broader gaming benchmarks ** • Our vision is to introduce an award-winning loyalty program, backed by a retail Player Club that: – Engages players with the Lottery, especially with the Common School Fund – Allows us to capture detailed play data, to manage players as individuals and 'protect' those who need it – Is platform agnostic PLAYER CARD - The customer identifier could be deliver via a plastic card, or mobile MR S SMITH Membership no. 76555 phone app or key fob, or other route – Is based on UK & European 'success' benchmarks emnos • 8 SOURCES; * US TGI Profiling (Alex Fong) ** Appendix I to IV Summary of proposed Illinois Lottery Player Club 1 Simple, points program based on frequency of play Launched initially via the Internet in Year 1 with the ability for 2 limited retail player benefits (eg. manual entry for Second chance) Retail scheme: ''Player Card" to allow tracking of play behaviour to 3 launch in Year 3 Together these initiatives will allow us to manage players '1 to 1' 4 and to responsibly promote Lottery and ensure Player protection Internet portal used to manage account with future in store 5 'screens' to give retail access Innovative benefits range, based on local Illinois & leading brand 6 partnerships emnos • 9 Delivering targeted rewards • This program will deliver targeted rewards and benefits to players and will be free to apply for • Unique bar code for players will be delivered via multiple devices – phone app, key fob, plastic card etc • Online and retail sales will be rewarded. The program will be cost effectively administered via a player account via the proposed new website PLAYER CARD MR S SMITH Membership no. 76555 emnos • 10 VISION: The Player Card & Loyalty Program work together to enable a 1 to 1 customer understanding and multi-channel engagement: Becoming player centric will enable Camelot Illinois to lock in and responsibly grow player value through deeper engagement Insight 'enabler' Capture of player-level data to create deeper actionable insight into player, product and retailer Delivering benefits for our key stakeholders: Player Product Illinois lottery Relevant personalised More cost efficient Existing and new products comms and service operations & marketing; aligned to key players benefits that improve able to target specific driving incremental value player engagement with player types and and stickiness the Lottery responsibly grow spend emnos • 11 Our program will enable us to 'manage' players through the lottery lifecycle and to introduce 'Player Protection' at relevant points Need for/ relevance of Player Protection Player Protection f Reward Loyalty e Drive Cross- sell Evaluation d Encourage and refinement of Up-sell activity to c Encourage improve Early Visits effectiveness and efficiency b Obtain 1st (RoI) Play a Acquire Players Improved targeting as we learn more about players through their customer journey emnos • 12 Benefits to all three main stakeholders: We will be able to treat different players, with different needs and Players different backgrounds & profiles, in a targeted manner Never miss a win Easy & fast Rewards my loyalty Increased frequency of visit / footfall > incremental sales Retailers • Faster route for loyal customers to transact (no lottery play slips to complete) • Incremental sales uplift – and attracting new players / customers • More ‘insight’ on their shoppers (provided via the Lottery operator) Overall, significant shift in the level of consumer insight, enabling more effective marketing, game development and retail partnerships Illinois Lottery • Incremental revenues • Mainly via increased frequency / Less missed plays • Targeting specific player types (infrequents or under-represented segments) • Increased player insight – driving capability for • Responsible growth of player revenues • Targeting of clusters of players • More successful & efficient new product/game development emnos • 13 Agenda 1 Overview of Loyalty proposal 2 Current situation 3 Future trends 4 Loyalty initiative – detailed proposal 5 Summary of recommendation emnos • 14 The Illinois consumer is very promotionally 'savvy' and are rewarded for their loyalty, across most of their main shopping brands: • Cardholders receive discounts on selected items (savings are automatically deducted at the checkout) • Exclusive promotions are available to cardholders Card • Manufacturer discounts can be passed on to cardholders features – Manufacturer coupons are doubled for cardholders include: • e-coupons can be applied to the card and these are automatically redeemed at the checkout • Guarantees on purchase prices (the difference is automatically credited) Stores: emnos • 15 Consumers have also come to expect 'rewards' within the Gaming sector, driven by the casinos The two largest players clubs are: • Harrah's Total Rewards – 40 million members across US - The largest and most widely accepted loyalty scheme – The Idea: 'The more you play in our casino's the more freebies you get in ANY of our casino's' – 4 tier rewards system, Gold, Platinum, Diamond, Seven Stars – See Appendix 3.0 for full case study • MGM Mirage's Players Club – Copycat program – not as cutting edge in use of targeting / ;live' player data – accepted in a dozen casino's worldwide emnos • 16 Agenda 1 Overview of Loyalty proposal & Financials 2 Current situation & opportunity for Camelot 3 Future trends 4 Loyalty initiative – detailed proposal 5 Summary of recommendation emnos • 17 FUTURE TRENDS: both 'push' and 'pull' factors back up our proposal around delivering '1 to 1' service and a targeted marketing capability: PUSH PULL • Consumer expectations of multi-channel • Since mid 1990's , proven success model 'service' for 'growth' retailing businesses – 'Always on' service as norm – Tesco leading UK 'case' – Driven by web innovators – and growth – Other e.g's Kroger USA, Amazon in broadband penetration • Camelot UK & other European lotteries • Fragmenting media landscape and new has proven incremental revenues from channels means that 'broadcast' is multi-channel customers & 1 to 1 becoming less cost effective 'management' – Growth of digital – Online & retail players worth double retail only (Quant research, Oct '08) • Data captured via 1 to 1 is a valuable business asset • Illinois need to continue profit growth & become more efficient operator – Technology enablers- including data management - are coming down in cost – Invest in a 'future' efficient marketing model • Lottery product is 'competitive' with • Requirement to extend 'player protection' other Gaming & leisure spend – and thus across all play channels needs to compete with those offerings emnos • 18 Future technology: - our program will be 'device neutral', so that we can adapt to mainstream technology trends & consumer take-up in the future if appropriate: 1 Playercard via mobile phone • Integration of a contactless chip into a mobile phone • Rollout dependant on retailer take-up of a contactless • Lottery purchases could be made by touching device onto compatible solution and availability of compatible mobiles reader in retail. The ticket would then print on the standard EPOS printer • Likely 'mass' take-up: 2-3 years 2 Contactless payment card • Rollout would be dependant on retailer rollout of a • Contactless micro payment card with games saved directly on card contact less solution in retail • Payment is made via the Micro-payment e-wallet •Likely take-up: 3 – 5 years 3 Electronic paper / dedicated TNL device • Dedicated device similar to an RSA token but with a more advanced • Would expect cost to be low enough in the next 3 - 5 display that is capable of displaying reliably scannable barcodes. years to allow mass production • Device could also have integrated contactless chip • Likely 5+ year timeframe for retailer adoption 4 Biometrics / Fingerprint recognition • Using Biometrics both as a method to positively identify a player and as • Would require a major Bank or Retailer to move to a payment mechanism Biometrics to gain any traction • Could allow rollout of previously age restricted services • Likely take-up: c.10 years future emnos • 19 Agenda 1 Overview of Loyalty proposal 2 Current situation 3 Future trends 4 Loyalty initiative – detailed proposal 5 Summary of recommendation emnos • 20 PROPOSED OBJECTIVES: to create a world class Player club & loyalty program, that sets a benchmark within US State lotteries We have assessed goals for the loyalty initiative across the 3 main stakeholders: Camelot / Illinois Players Retailers To deliver • Increase ease of play & • Increase ease of incremental sales to offer targeted 'rewards' operation / higher the Lottery via: & offers for loyal lottery earnings – Responsibly improving players. – less queues player frequency (less – faster transactions • Desired feedback: missed plays) – 'I never miss a winning – better player insight – Targeting: being able ticket- as it's safe in my account even if I lose my • Desired feedback to treat individual ticket‘ players differently – 'With my Playercard, I can go through the checkout – Cross selling new – 'The Lottery gives me really quickly – and can offers & small rewards like also play on the internet to games / different the grocery stores' make sure I don't miss a products play' – 'Every few months I get an update in the mail on the good causes we help' emnos • 21 Key learnings from the US Lottery Loyalty programs Á All schemes are administered online by the player Á Minimal online transactional functionality across the States Á Only physical Playerclub card is in California Á No evidence of sophisticated targeting or player tracking of their best players Á programs predominantly include 'second chance to win' promotions Á Rewards based programs are run in joint partnership with third parties for prizes (eg. Michigan Pistons, Pennsylvania 'Reeses promotion') Á c10% have mobile capability for receiving results, joining the loyalty program via text and/or receiving rewards via mobile. Á eg. Oklahoma and Florida lottery emnos • 22 Loyalty initiative: we have structured and assessed our proposal from four main viewpoints 1 Players Retail partners 2 • Operations – how rewards are earned • Benefits for retail – Instore & online • In-store operations • Redeeming rewards & account management • Redeeming benefits in-store (eg. snacks, • Key benefits instants) Illinois player loyalty program • Responsible promotion of play • Incremental revenue projections • Raising awareness of Common School Fund • Assumptions • Evidence from research & international • Player Protection benchmarks 3 Illinois State / Good causes Operator financials (Camelot) 4 emnos • 23 PLAYER OPERATIONS: How does the program work ? 'Reward benefits' Intrinsic play benefits – The more frequently you play the – Easier play: Faster through the better the rewards checkout For example: - No need to fill out numbers on play slip – 10 points (or 10 weeks of play) will get you a free can of Pepsi or bag of Doritos's – Never lose a winning ticket – 50 points (50 weeks of play) will get entry into - Your card / online account records a Holiday cruise competition your transaction – Able to donate value of benefits to chosen – No missed plays Illinois lottery ‘Good Causes’. Eg. $2 to Education appeal - Set up continuous play on the internet (eg pay monthly) – Quarterly newsletter updating on latest Lottery donations, good causes and event (via mail or email tbc) – 'Acknowledgement' - Build awareness & lottery profile - a little thank you for playing the Lottery - emnos • 24 PLAYER BENEFITS: we propose an innovative approach, bringing in local State partnerships and broader household brands to make the rewards motivating TWO LEVELS - INSTANT REDEMPTIONS & MONTHLY DRAWS TO WIN!! Redeem in retail Free can of Pepsi or Doritos Free instant ticket Movie/ theatre tickets 10 points 10 points 50 points Chance to win Sports Merchandise Holiday cruise in Florida (10,000 to be won) $50 cash back (5 to be won) (100 to be won) 30 points 25 points 50 points emnos • 25 PLAYER OPERATIONS: we envisage a Player card (plastic with bar code), but also more innovative devices for customers Device agnostic – our aim is to have a unique identifier with the customer, via a barcode • Join via mobile, Text 'join' to 86445 • Check your points balance via email • Rewards voucher codes sent directly to your email • Send out quarterly newsletters via text Tesco's have recently launched an iPhone application where you can use your Clubcard via mobile. We envisage this down the track (Yr 3-5) in Illinois Lottery program emnos • 26 Retail Operations: how does the Playerclub work in an Illinois store? A customer purchases a lottery ticket instore & presents their playercard on transaction, 1 ticket per week = 1 point The shop assistant swipes the card & the customers account details come up on screen Screen prompts – 'would you like to cash your points in now? Keep saving Cash-in points Larger rewards are redeemed A till receipt prints out the online (instant cash draws, reward (eg. free can of Pepsi, movie tickets, sports Doritos, free instant merchandise) OR to go in the draw for larger rewards go online (instant cash draws, movie tickets, sports merchandise) emnos • 27 UK National lottery research with retailers indicated multiple benefits from a 'card' program: Represent 42% Potential benefits to retailers from 1 to 1 'card': TNL value Source : emnos store interviews, 2009 50 different UK locations emnos • 28 Player protection and responsible promotion of play By collecting play data, the Club and retail card enables the Lottery to play a bigger role in helping customers play responsibly and within their means. There are 3-4 potential initiatives in this area: • Defining of and tracking of 'problem' play behaviours – Flagging via a monthly report to the Board – Volumes of players and actions taken • Responsible development of play – by targeting new player groups or higher income demographics – By better knowing our CURRENT players but also new demographics, we can responsibly manage up play (vs other leisure or gaming spend), as in the UK Lottery • Setting voluntary play 'ceilings', administered via the Club emnos • 29 U.S PEERS: Michigan scheme is a rewards-driven 'Playerclub' with a 'second chance' lottery draw for players to win points and prizes • Players register free for the club on the website – Online administrated • Players enter the ticket code of their non winning lottery ticket and are credited a number of points • Points can be redeemed towards further games or using the reward catalog ($1 ticket = 1 point) • Prizes include cash draws, hotel packages, sports merchandise • No retail card – retail tickets have to be entered on site manually emnos • 30 US PEERS: Oklahoma offer a well developed Player Club, combining rewards, information & a more community driven approach • Register free on the website • Information based – Mobile and email alerts for winning numbers, news and game updates • Points & Rewards – Second chance draws for members • Community – Sense of website community presence e.g. watching videos, fun stuff • Other promotions – Additional special promotional offers for members emnos • 31 Players Club benchmarks : New South Wales, Australia A paid for scheme with 1, 3 and 5 year membership options emnos • 32 Agenda 1 Overview of Loyalty proposal 2 Current situation & opportunity for Camelot 3 Future trends 4 Loyalty initiative – detailed proposal 5 Summary of recommendation emnos • 33 IN SUMMARY: our recommendation for a staged investment: 1 2 3 4 Today: no loyalty Player Club Player Club Playercard launched program launched (web) Mobile app. launch across retailers • Limited online • Online Loyalty • Join via mobile, • Playercard used promotions program eg. Text 'join' to to track sales – – e.g. "Turn up – collect points 86445 potentially both the Pink" and redeem of Lottery and Breast Cancer for rewards • Check your FMCG products campaign points balance – based on via email • Mirrors the – "Millionaire frequency of unique customer raffle" play • Rewards bar code voucher codes • No clear view on • Online 'hub' for sent directly to retention metrics account your email or which players management are 'valuable' for • Send out the Lottery quarterly newsletter via email emnos • 34 Executive Summary Camelot will launch a best in class Loyalty Program in Illinois supported by emnos, the worldwide gaming and loyalty experts. The Player Club will: – Allow us to capture detailed play data, to manage players as individuals and 'protect' those who need it – Be multi-channel – Be based on best practice U.S. and UK retail, lottery and gaming loyalty programs. The loyalty club will deliver incremental sales to the Lottery via: – Responsibly increasing player frequency – Targeting: being able to treat individual players differently – Cross selling new games / different products Player benefits: – The more frequently you play the better the rewards emnos • 35 Appendix A4 Appendix A4 has been redacted as it contains confidential information. Camelot Illinois Response to Step 2 of the RFP Illinois Lottery Private Manager 1 Appendix A5 Appendix A5 has been redacted as it contains confidential information. Camelot Illinois Response to Step 2 of the RFP Illinois Lottery Private Manager Illinois Lottery Player & Game Opportunity Research & Analysis Summary Report Prepared for by July 27, 2010 RRC 5204 Table of Contents Page Objectives 2 Methodology 3 `Executive Summary & Implications 5 Detailed Findings General Findings 16 Draw-Based Games 28 Scratch-Offs 48 Internet 59 Social Responsibility 72 1 Objectives z Undertake research into the Illinois Lottery market and develop an understanding of the existing player base to identify trends and insights to improve player understanding and sales performance. 2 Methodology z Focus groups were conducted in 3 locations in the Chicago, IL metro area: downtown Chicago, Oak Park, and Oakbrook. z For each group, 10 people were recruited. In most groups, 8 people participated. For some groups there was a poorer show-rate. z Groups lasted just under 2 hours each and were held in the afternoons and evenings. z The table on the following page outlines the group number and composition. 3 Methodology (cont’d) Draw-based Games Number of Groups Weekly players 2 Occasional players 2 Lapsed/reduced players who are younger with income under $50k 1 Lapsed/reduced players who are older with income under $50k 1 Lapsed/reduced players with income of $50k+ 1 Mostly play pick 3 or pick 4 occasional 1 Mostly play pick 3 or pick 4 weekly 1 Instant/Scratch-Off Games Weekly players who spend $1-3/week 1 Weekly players who spend $5+/week 1 Occasional players 2 Internet players Mid-heavy players, mixed games, use the internet regularly and have 1 made a purchase online Total 14 4 Executive Summary & Implications 5 Executive Summary General Findings z Playing is public, winning is private. While this was z Current advertising is unbalanced and appears to be more of a sentiment among DBG players, it also effective for big jackpot games only. seemed to be prevalent among scratch players as z Building awareness of the products is as important as well. any product attribute or benefit. z There is excitement in being part of a big jackpot drawing. However, people prefer to be alone to absorb z There is no recall of any current brand identity. the outcome. “You’ve got to be in it to win it,” a slogan that has z An important exception is office pools, when being part not been advertised for many years, was really the of a group/crowd is part of the draw. only thing they recalled. z The simplicity of playing DBGs is a driver to some. z Distribution points are not a perfect fit with all current Any games (scratch included) that are too or potential player lifestyles. complicated are a turn-off. z Pay-at-the-pump and less frequent visits to other z “Throw me a bone” is a common sentiment across convenience stores (C-stores) suggests that the current strategy may need re-thinking. all types of games. Even from small winnings, a portion is reinvested. z Video Lottery Terminals (VLTs) are not an automatic win with concerns about poor security and a less Draw-Based Games (DBGs) attractive social setting. z Raffles are seen as a great value and a great z In all game types, multipliers are attractive. This is chance to win, but awareness appears to be quite consistent with some players’ love of bonus rounds low. in casino slots. z DBGs strike a chord of democracy, because z Second chance drawings seem to add value for everyone feels that they have an equal chance to some; a few feel they are inconvenient. win regardless of who they are or where they live. z Lapsed players are turned off because they keep z $100M jackpots get attention but if players don’t win playing but do not win. Although money prizes are something, even a small prize periodically, they burn preferred, they may be incentivized to play with non- out. monetary rewards. z People recognize that Lotto includes people in Illinois only, and that is a plus. 6 Executive Summary (cont’d) Draw-Based Games (cont’d) z Pick 3 and Pick 4 players, when playing those z Those who play Little Lotto do so because they feel games, are unlike other Lottery players in terms of the odds are better than other games. play style and preference for picking specific, meaningful numbers and their disciplined playing z Fantasies of winning are motivated by specific regularity. purposes. z When playing other games (scratch or DBG), they mimic z People play to satisfy both rational (e.g., practical and other player types (such as a preference for quick pick). altruism) and irrational (e.g., quit work and travel) motivations. z Many players give and receive tickets as gifts. Scratch-Offs z A significant segment of players have a deep and z Top criteria for playing include type of game/play long emotional involvement with their games, style, top prize/price of ticket, and odds of winning. particularly Pick 3 and Pick 4. z Theme, card design, images, color, etc. are further down z Game playing is associated with a pleasant time in their on the list. lives or is passed from one generation to the next. z For many, the initial winning experience serves as at least a short-term template for how and what they will z Mega Millions and Powerball are not clearly play. distinguished from one another. This was a z The licensing of recognizable brands from pop universal finding. culture seems to increase players’ comfort with z Players want to hear about winners who are “like selecting a game. them” and live or work nearby. This motivates them z Playing process is used as a quick fix and winning, to play more. even small amounts, generates an “inside joy”. z Office pools have a multiplier effect on participation z Annuity-type prizes are very attractive such as Win and generate a broad range of motivations for for Life which is hugely popular. playing (e.g. fun, social, share a common dream, etc.). z There is value in extended play games. They provide a higher level of satisfaction among those z Players feel that DBGs are more honest than scratch who play them. cards because the draw is public. 7 Executive Summary (cont’d) Scratch-Offs (cont’d) Internet z Internet Lottery smashes the barrier of actual and z A name or theme that in any way denigrates perceived inaccessibility. the player or decision-making process will z Experience with other online shopping creates an have limited appeal. expectation that online Lottery playing will be more z Games that are designed around specific convenient, engaging (dynamic multi-media segments’ wants/needs should be well- experience), relevant, and could include targeted received. promotions. z Some players feel that better odds can be z There is broad concern about security. The security found by buying in specific outlets and concerns include hackers, scammers, and tracking playing new games. of personal information. z People don’t like the mess associated with Scratch- z Players want complete control over all their online Offs. Lottery activities. z There is satisfaction with winning prizes at any level. z Social media represents a major untapped The threshold for making people feel like they’ve opportunity for the Lottery, particularly among won something good (the “broad smile threshold”) is younger players. $50. z Without retailer presence, players lose the ability to ask for assistance on how and what to play and a point-person to resolve issues. 8 Executive Summary (cont’d) Social Responsibility z Virtually no one had a clear understanding of how the Lottery proceeds are allocated. z Their desires suggest that the percentage currently being allocated is right on. z People want complete transparency. z Because Lottery is seen as a faceless agency, players are confused about who runs the Lottery. Many believe that politicians run it. 9 Implications Marketing Communications Marketing Communications (cont’d) z A strategically-focused integrated marketing z Due to the highly desirable nature of raffles, it is communications plan is required to build the Lottery essential that the Lottery increase awareness of such brand and create demand for products which are games. clearly differentiated within the Lottery portfolio. z There is significant revenue opportunity in promoting z Some existing Lottery equities (e.g. lottery balls) appear to specific Illinois-only jackpot games (e.g. Lotto and Little have the potential to be exploited. Lotto). Media should be used (TV and radio) to drive sales of specific games and Instant tickets. z Given the impulsive nature of most Lottery purchases, z Promoting tickets as gifts can be used to bring new effective integrated communications must include players into the franchise. clear, behaviorally-focused strategies and attention- z A message that recognizes the emotional involvement getting executions for specific products. of Pick 3 and Pick 4 players would likely bring more z Additionally, a more player-engaging approach to POP people into these games and appeal to those who communications could maximize sales opportunities when started and continue to play for these reasons. lines are long. z There seems to be an opportunity for big/small jackpot/ z Reasons to play individual games must go beyond size payoff product bundling – e.g., Mega & Lotto; of the jackpot. Powerball & Pick 3 or Pick 4 - due to players’ desire to “cover all their bases.” z With proper strategic segmentation, current individual game attributes could well be distinct enough to provide the z It’s important to promote a diverse group of winners so basis of differentiation on both attributes (play style, jackpot that Lottery players can see themselves among the size, odds) and benefits. winner pool. z Televised drawings and shows featuring winners can play z Because big jackpot signage is intrusive, there is an a productive role in an integrated marketing opportunity to use this communication as a platform to communications strategy. z Attention must be paid to all elements including on-screen cross-promote other games. talent and positive impressions. z Additionally, Lottery should create channels to maximize z Messaging that emphasizes the democratic nature and viewer involvement in the Lottery drawings. simple-to-play attributes of DBGs could be very z Lottery should encourage its media partners to continually publicize the Lottery drawings on TV. effective. 10 Implications Marketing Communications (cont’d) Distribution z The Lottery should leverage the credibility of non- z A holistic retailer plan with easy-to-understand POP, more appealing ticket display and Instant Ticket paid media in getting across its side of any story. Vending Machines (ITVMs), kiosks in untraditional z This could include initiatives related to social locations, and better retailer sales and issues-related responsibility, winner news, etc. – anything to which training will yield big returns. players are sensitive. z Potentially the retailer plan should be modified to accommodate various types of retailers. For example, C-stores with gas may require vending machines or intrusive signage at the pump. Player Segmentation z More intrusive, quick-to-read, “How to Play” materials should generate incremental trial of unfamiliar games z Players (particularly those playing the big jackpot and Instant tickets. games), appear to follow a “Lottery playership z These materials may provide welcome information (and capitalize on cross-sell opportunities) particularly in lifecycle” with specific phases associated with those cases where lines are long. distinct attitudes and playing behavior -- from initial z VLTs may represent an opportunity for incremental trial through ongoing participation to exhaustion and revenue but their introduction will require careful burnout (for lapsed players). management. Some cannibalization of Instants z Achieving a deeper and more definite understanding of should be expected. this model may provide significant benefits in product z Every time a player enters a retail establishment development, distribution strategy, and marketing they should see a display of winners and winning communications. tickets. z This display should be consistent from retailer to retailer and easy to understand to help players quickly make sense of this information. 11 Implications (cont’d) Product Development Product Development (cont’d) z The development of multipliers, second chance, and z Since giving and receiving tickets as gifts is so other bonus-type games and promotions should be common, it makes sense to develop a series of gift approached aggressively and systematically as they tickets (scratch-off and DBGs) for holidays and are highly likely to increase sales. birthdays. z It is possible that immediately identifiable Second z For scratch-offs and raffles, the Lottery should have Chance or bonus play creative elements (e.g., logos, “branding”) might aid in maximizing awareness of these an on-going process to anticipate and identify games and promotions over time. winning licensing opportunities from pop culture. z Entering second-chance drawings should be made as z Although they may be eye-catching, the Lottery quick and hassle-free as possible. z Pick 3/Pick 4 players in particular are likely to be more should be vigilant to avoid using insulting or engaged, motivated, and excited by increased denigrating game names as this could have a awareness of bonus promotions. negative effect beyond game sales. z Due to the highly desirable product attributes of z Games that attack barriers head-on may lower price- raffles, we recommend further development of these and convenience-related obstacles and can present types of games. Lottery as a solution to players’ concerns. z For example, with higher gas prices leaving less change z Over time, there may be opportunity to develop other in their pockets, a game that rewards players with free Illinois-only games due to the highly effective appeal gas, appears to have tremendous appeal. resulting from limiting the pool of players. z Additionally, it would be wise to develop games that z A portfolio or suite of purpose-designed games (e.g. are designed around themes that are appealing to a pay your mortgage, and annuity games like Win for specific segment’s wants/needs. Life) should have appeal to Instant players. These z Younger players have a somewhat negative perception games speak to players’ irrational and rational of the Lottery. It makes sense and is desirable to build desires. games and prizes around themes and prizes that people z Special promotions along these same lines (e.g. Beat in their cohort enjoy. Some starter ideas include: the Tuition Blues) for DBGs could have similar appeal. z Prizes: iPods, concert tickets z Games: tie-ins with Pitchfork, Facebook, etc. z The Lottery should investigate methods of refreshing z Themes: around important and topical sporting events such as NCAA March Madness; big music events like and building the inventory of extended play games Lollapalooza; and, around the success and excitement like Bingo as a way to keep this specific segment of of winning local teams, like the Chicago Blackhawks players’ attention and interest. 12 Implications (cont’d) Product Development Internet z Lottery should test the impact of a cleaner way to z An integrated plan needs to be developed that reveal numbers on scratch tickets such as pull tabs. includes multi-media dimensions (e.g. music, video, This should be a lower priority and may be evaluated and interactive games), the products to be offered for the long-run. (people expect the same but more), the z Lottery should consider the development and communications strategy, potential link exchange advertising of “tax free” jackpots, as this concept with other trusted sites, significant security appears to be attractive to many players. z Despite the fact that players understand that this would components, a help desk (including live contact), actually be an after-tax number. online subscriptions, user-generated content, age verification, levels of player control, tie-ins with social Prizes media especially Facebook (including game z Creating a prize structure for some games that offers development), and online office pools. more and lower level prizes will impact adoption, z Players want the site to be limited to Illinois lapsed player reclamation, long-term loyalty, and residents. bottom line results. z A similar approach should be taken to develop a z Although we need quantitative data to verify this, if the mobile offering particularly for younger audiences, Lottery wants to increase word-of-mouth advertising, z Requirements include: speed, low RAM consumption, they should increase the number of prizes awarded and minimal opportunity for data error. between $200-$5,000. z We expect that a a model segmented by prize level and Office Pools player type can be developed and used to maximize the z Office Pools represent a big opportunity. The Lottery different degrees of buzz opportunities. z For the big jackpots, since prize pools under $50M should develop initiatives to maximize the marketing seem to be less stimulating, it may not be worthwhile to efficiency (due to the potential viral impact) and pour money into advertising when prizes fall below that revenue of office pools both online and offline. level. 13 Implications (cont’d) Social Responsibility Social Responsibility (cont’d) z Total budget transparency is essential, including z Due to a poor track-record of privatization in Illinois promotion of public audits from trusted firms. (and specifically the city of Chicago), players are z The Lottery must seek ways to aggressively very cautious about transferring control of the Lottery communicate with the public to build awareness that to a private corporation. the Lottery is fulfilling its mission of contributing z A proven track-record record will be essential in selling significant funds to Illinois schools. privatization of the Lottery to the people of Illinois. z It must separate itself from the (political) body that is spending the money. z Seeing tangible results of Lottery proceeds creates credibility. z Lottery should develop a communications plan, with an emphasis on P.R. and place-based media (like events, plaques, etc.) to show how the proceeds are being used in local neighborhoods. z Players do not perceive responsible gaming as a Lottery priority. And, it lies with the players to play responsibly. z Instead of “call for help” as a responsible gaming tagline, it may be more effective to say something along the lines of “responsible gaming is everyone’s responsibility”, along with displaying the 1-800 help line. z As part of expressing the Lottery’s interest in helping players make good decisions with big winnings, it should consider providing recommendations (and/or lists without endorsement) for financial planning and assistance resources. 14 Detailed Findings 15 General Findings 16 Current advertising is unbalanced and only effective for big jackpot games z Almost all respondents perceive that all of the advertising (including billboards, TV and radio commercials, POP, etc.) is devoted exclusively to the big jackpot games (Powerball and Mega Millions). z These messages are most noticeable when those jackpots are large. Respondents believe that the most money is spent on this type of advertising, especially when the pots get extremely large. But there was always a desire for more advertising of large jackpots. z To most respondents, the other games (DBG and instants) do not seem to be advertised at all. z This has a negative impact on high potential games like raffles and Lotto. z These other games seem to fulfill some important players’ desires, which are: higher odds, local winners, perceived as more/smaller prizes and easy to play. z Building awareness of the products is as important as any product attribute or benefit. z In the past, games/tickets that were featured in TV or radio advertising, sold at higher levels than those that were not featured. z An integrated marketing communications plan will be essential to building a strong and diverse product portfolio and profitable business. 17 The Illinois Lottery image is a mess z When asked about what words or images they associate with the Illinois State Lottery, there was virtually no playback about the Illinois Lottery brand. z “You’ve got to be in it to win it,” an old slogan from many years ago, was the only as tagline played back on an unaided basis in every group. z Respondents played back low level product/game attributes (e.g. big jackpots), emotions related to winning or not winning a big pot (“it’s about the dream”) and images of corruption (see Social Responsibility). z There was no consistent brand identity or key idea played back. z Some of the Lottery’s equities are strong and can be recalled by different types of players. For example, even younger, occasional players recall the plastic Lottery balls. z These equities can be leveraged if handled in a contemporary way. z U.S. marketing success stories indicate that creating a robust brand entity can have a dramatically positive impact on revenue and business stability. (Strong examples in the U.S. include Nike, Apple, and Coca-Cola.) z Currently , the Illinois State Lottery does not appear to have any clearly perceivable brand identity. 18 “You’ve Got To Be In It To Win It” z This line was repeated, unprompted, in every group. z It appears to have become a player’s mantra. z Seemingly it represents: z Hope and optimism z Not wanting to “miss the boat” z Large return for small investment 19 Distribution points are not a perfect fit with all player lifestyles z For many occasional players the Lottery ticket is an add-on purchase. It’s a secondary consideration when going into current C-stores (with or without gas). z For younger players and those who have C-stores in their office complexes, visiting these outlets is not a problem. It’s a regular part of their lives. z But this is not true for everyone. z Gas station C-stores have become somewhat of a dinosaur with the move toward pay-at-the-pump. z Most people prefer to pay for their gas at the pump due to speed and convenience and are, therefore, not going into the stores as often as before. This has led to reduced spending on Lottery. z The idea of a Lottery vending machine at the pump was highly desirable. z An added advantage to this strategy is that it divorces Lottery ticket purchase from the “spare change” dynamic. 20 A holistic retailer plan could yield a significant boost in sales z In some cases, the retailer has an important impact on players. For these the retailer can be a trusted resource. z Some people trust local retailers to recommend and help them pick their games. z The retailer often offers proof that someone has won. People ask which games have been winning. z Players like to see the tickets on display, although for the most part, players indicate that ticket displays rate only 5 on a scale of 1 – 10. z There is an opportunity for retailers to provide education to players so that they may present game choices in a simplified way. z This would require better POP materials outlining the games and easy ways for players to consider odds and payouts. z It also would require some level of retailer training. z Long lines at the counters can be a deterrent to playing. z This is why vending machines for scratch tickets are growing in popularity. z However the machines are not especially inviting. More can be done with them to engage players. They also do not give change, and this is an issue for some. z Lines can also be a stimulant. They can remind people to play. It may also indicate that the jackpot maybe growing for the big games. z Some respondents expressed the desire to have access to kiosks/vending machines in non-traditional retail locations. z One such example was adding vending machines in malls. 21 Video Lottery Terminals (VLTs) are not an automatic winning fit z They are “not quite the Lottery.” Many people perceive that VLTs are more like casino slot machines than standard Lottery products. z Casinos are the 2nd most popular type of gaming with the slot machines as the primary focus. Although they are popular they not frequented as often as playing the Lottery. z In that VLTs are planned to be located where people go to drink alcohol and socialize, it is seen as potentially disruptive and dangerous. z This is different from casinos because people go to casinos with the primary purpose of gambling; drinking is secondary. They may make more sense at racetracks or OTB. z Issues surround: z Security with people who have been drinking and may be unhappy with losing z “It’s not like Vegas” where they have trained security personnel to deal with these types of patrons. z Over-spending because of drinking. z Lottery may be seen as “horning in” on existing illegal enterprises. z Many say that the currently installed base of “for entertainment only” video poker machines are actually used for gambling with under-the-table payouts by bar owners. z Some believe that many bar owners would not want VLTs, as the current “take” may be higher than that from Lottery VLTs. z VLTs may represent an opportunity for incremental revenue, but their introduction may need careful management. z It requires a positive tie-in with current Lottery portfolio of games. z These funds are seen to potentially cannibalize Instant tickets or other gambling forms. 22 The simplicity of playing DBGs is a driver to some z When games start getting too complicated, people get discouraged. z The simpler the game, the better, for inexperienced players. z This suggests that an entire suite of games could be developed for the inexperienced player. z These games should be simple to learn, simple to play, and easier to win. z Some people like playing the DBGs because “you don’t have to figure it out.” Some of the scratch-off games can be seen as fairly complicated if “you’re not familiar with them”. z We found that, particularly with younger players, the DBGs were seen as a step up from what they played when they were younger (scratch-offs). 23 Multipliers are attractive z There is a desire to play games that have the opportunity to multiply winnings. z When respondents talked about their favorite slot machines at casinos, most of the top games included a bonus round that involved the potential for a multiplier. z This idea extended into their top scratch card game picks. Among the top favorites were: z Triple Winning z Double Red-Hot 7s z Triple Your Luck z This is also true for the DBGs. z Awareness of the opportunity for a multiplier effect was higher for Powerball than Mega. z Most of those who were familiar with the phrase Power Play, were not sure how it worked. z Nevertheless, the concept of a multiplier was appealing for the DBGs as well. 24 Second chance drawings add value z Awareness of these opportunities is inconsistent. z When they learned of these promotions, they were surprised and many were excited. z This is true for some of the DBGs games and scratch-offs. z There were many who said that they would play more if they knew that they would have a second chance because it was free of charge – “why not?” z There were a few nay-sayers among those who do not or would not participate: z “It’s a hassle to go online and enter all your numbers.” z They don’t want to save their tickets. z It infringes on their privacy and anonymity. 25 Lapsed players appear to be more active and have diverse interests z When asked what they do for fun, many mentioned the outdoors and participatory sports. z Their focus was not on gambling (unlike core players). z Their play style is less systematic and less planned. z They are concerned about becoming addicted to gambling and this restricts their expenditure and frequency of play. z They are more likely to have a fixed gambling budget. z They are more likely to play a game for short period of time and then move on to another game or quit. z Even if they win immediately, they may not stay. z Some do engage in other gambling activities but do it more for the social interaction than for the gambling “fix”. z In order to stay in the game, they need more frequent rewards and more substantial rewards. z Recouping at least their investment was important to some. z They want to be incentivized to play and it doesn’t have to be money. z They don’t want another Lottery ticket but they’ll be happy with other kinds of rewards. 26 Playing is public; winning is private z Standing in line to buy a ticket or walking down the street with a big jackpot ticket in-hand as the jackpot grows is part of the excitement of playing. There’s some degree of pride involved. z This is why office pools are attractive as well. It makes people feel like they are part of something big. z In fact, office pools are another reason why some people started playing. They don’t want to feel left out. z Except for the office pools and scratch-offs that they do right at the counter, the winning is generally private. z They want to get the news when they are alone (not in a big group). z Potentially they can better deal with their disappointment in private. Or, if they have won, it gives them time to figure out what to do next. 27 Draw-Based Games (DBGs) 28 DBGs strike a chord of democracy z “Anyone can win, it’s a democratic game.” This type of comment was heard over and over. z It makes people feel that they have an equal chance of winning regardless of race, socio-economic status, where they live, etc. z It may be their only opportunity to dig their way out or make a difference in their lives. z The thought of someone down on their luck winning the jackpot was extremely positive. It also reinforced their feeling that “anyone could win, even me”. z Messaging that has this type of appeal could be very effective. 29 People play to satisfy the rational and irrational desires Rational Irrational Fantasy Work Practical Altruism & related Freedom Never Buy the big Pay off Pay for Help family Charitable have Travel Ticket items loans college friends giving To work (Fiji, Tahiti) (house, boat) again 30 People have specific purposes for the money in mind when they dream of winning z Many respondents play with a specific purpose in mind. z Many of the dreams related to the large pots included paying off loans (e.g. mortgages, car loans, student loans, etc.) z Games designed around specific purposes seem to be appealing. z Games could be created around paying off a number of loan-types. z A lot of people mentioned the dream of travel. z Games that would reward people with tickets or other types of trips are also a desirable twist on the prizes offered. It doesn’t always have to be cash. z Also, people are realistic about the jackpot sizes and pre-calculate what their winnings would be after paying taxes if they won. z A few people mentioned that it would be nice to have the Lottery pay their taxes for them and just promote the after-tax prize. z Or they could just position it as though the Lottery is paying their taxes for them. z This is commonly done at retail for purchases like cars and furniture or other high ticket items. 31 Dreams and fantasies z The big jackpot games give them the license to fantasize. z Why do they keep playing? z They want to be able to brag. z It’s an inexpensive way to chase a dream. z It’s life-changing. They want to change their lives. z To some it’s their only hope. z Financial security z Many wanted the freedom to help their friends and family. 32 However, burn-out is a real concern A ticket before the Stimulated to play Now it’s their turn to drawing is filled with (seeing billboards, Buy ticket. Put in dream (their ticket is potential. (Like Willy news, signage about pocket. their license to Wonka’s Golden big jackpots) dream). Ticket) People can start Each time someone Without support or relaxing because This happens each else wins the big incentives, there are they’ve got their time the pot hits one, players crash. only so many “crashes” ticket. There’s $100M+. It’s effectively a roller a player can sustain nothing more they coaster ride when before they will give up, can do then but wait the bottom falls out. stop playing, or start and watch. playing another game. z Without rewards, the only way for players to continue playing the big jackpot games over the long- run is to be in “denial.” z It takes a lot of will-power to keep saying “some day, some day.” People have to be strong and stubborn. z If people are not at least rewarded for their determination, they are likely to give up. z It doesn’t mean that they will never come back. There are certain trigger points that might cause them to return regardless of them not winning. But, NOT losing them in the first place should be a priority. 33 $100M jackpots get their attention, but if they don’t win some prize occasionally, they burn out z “Throw me a bone!!” More, smaller prizes keep people playing; it keeps them in the game. z Conversely, not winning anything over a long period of time drains them and causes them to move on to another game. z Smaller prizes going to more people seem to be desired. z They don’t need to win big to keep playing, they just need to win something. z If they win, it not only makes them want to stay in the game, but it often incentivizes them to play more often. z Most people put at least some of their winnings back into the game by buying more tickets. z The big jackpots still draw them in, particularly when they hit around $100 million+. Most players (core and occasional) notice the signs in-store and the big billboards on highways. z When the jackpot hits this level, a buzz begins. People start talking about the jackpot. The really big jackpots are heavily promoted by the media and retailers. People want to become part of it and feel badly if they are not, so they are motivated to buy a ticket. z Because the jackpot signage is noticed and draws them in, there is an opportunity to cross-promote other games. 34 Smaller jackpots have a potentially important place in prize pool z A few indicated that $50 million is worth playing, but there was little interest below that point for PB and Mega. z For other DBGs , the smaller jackpots and perceived better odds have appeal. z While this may or may not be true, it is a key driver to people playing Lotto and Little. z Among occasional players, there is some perception that “I might as well NOT win for the chance at a bigger jackpot.” z “For a buck, I might as well play for the biggest return.” z This leads one to the conclusion that there is a real risk in the smaller pot games being cannibalized by the big games. 35 DBGs appear to be more “honest” because the draw is public z The drawing of the balls is a public process that everyone can watch but no one can “fix” (i.e., cheat to pre-arrange winners). z It gives players a sense of democracy/every person has an equal chance of winning and reflects positively on the Lottery. z It makes the Lottery appear to be honest. With the scratch-offs, it feels more like there may be something going on behind the black curtain that players cannot see. Transparency adds to credibility. z Some liked the game more if they had a positive connection with the person drawing the balls (e.g. attractiveness, likeability). z There were some creative ideas offered about what would make these types of games more fun. One concept that respondents seemed to like was changing up the winning number selection that would be fun to watch on television. z Draw cards out of a deck. z Throw darts at a dartboard z People loved the idea of having players submit their names into a pool to somehow participate in the television drawing. z They liked the idea of seeing the drawings on TV during prime-time. 36 I like to hear about winners “in my backyard” z People are more apt to believe that the dream is possible and will keep playing when they hear about winners who work or live in… z Illinois z Their city or town z Their office building z Etc. z They also like to see people who are in their age range – especially among the younger players. z Many do not believe that young people ever win the big pots. z Hearing about people their age winning the big pots helps them believe that “someone like me can win!” z Women (especially female heads-of-households) and minorities do not recall seeing “themselves” among the winners. z It is essential that the winners be heavily promoted, demonstrating the diversity in the winner pool. 37 The big jackpot game perceptions are blurring z Mega Millions and Powerball are not clearly distinguished from one another. z Everyone knows that they that both cost $1, both include a drawing and have the largest jackpots, but beyond that, there is little awareness about their differentiation. z Some believe that the number and specific states included in each game are different, but are not sure of the exact details. z Because of this confusion, some people play both games just to make sure they are covered on the largest jackpots; however, not everyone is doing this. z Some play “whichever jackpot is higher” but are not particularly loyal to either of the game. z There is a potential opportunity to leverage the confusion and promote playing both games to make sure they don’t miss out on a big pot. z The risk to doing this is accelerated burn-out on the games if they do not win. z Another way players are “covering their bases” is by combining a smaller jackpot game (that has better odds) with one of the big games (PB or Mega). Lotto and Mega are commonly played together. z There is an opportunity to bundle games and promote them in this way. 38 “I play because my mother played” suggests an emotional attraction to the game beyond the prize z Passing the Lottery on to the next generation is a common occurrence. This was much more common with the daily games than any other DBGs. z Many people started playing because they saw their parents or older relatives play. z Those people are generally important parts of their lives. Playing the same games makes them feel close to those people and/or brings back memories. z People are pulled into the game by relatives in multiple ways. As a child, they remember being given an assignment as a treat (scratch off my numbers). Sometimes they are invited to pick a game or a number. They are given a role in the process. z While this may be perceived negatively by some, a message that takes this insight and turns it into a positive would be likely to bring new people into the game and appeal to those who started to play/continue to play for this reason. 39 People recognize that Lotto includes people in Illinois only and this is a plus z Awareness is fairly good that Lotto includes Illinois-only players among Lotto players but not as high among non-players. z This is an appealing aspect of the game – and a reason why some people do not play the big jackpot games. z This plays into the desire for winners to be “in my backyard.” “Someone’s going to win and it could be me” because there is a restricted geographic area where it’s being played. z Promoting this aspect of the game should improve awareness and, therefore, increase Lotto playing. z The jackpot is bigger with Lotto and that is also a reason to play Lotto over Little Lotto for the same bet. 40 Little Lotto’s odds are a key driver to playing z The good odds of winning and fewer numbers in the choice set are among the top reasons why people play this game. z They recognize that the prizes are smaller but feel it’s worth the trade-off. “You can’t be too greedy.” z They have worked out the odds, it’s a reasonable jackpot, and it’s a regularly won jackpot. 41 Daily game players are different than other DBG players z Pick 3 and Pick 4 players are unlike many other DBG players. z Most have not varied the numbers they play and the playing patterns in many years. They are very disciplined. z Some don’t have any knowledge that there are different ways of playing. z Some view themselves as smart players because they are knowledgeable about the methods and ways of playing (e.g. straight, boxed, combo, etc). z Yet, when learning about these alternatives, many who had been unaware felt that they would change their playing pattern. z When these players win, it’s as much about skill as it is about luck. z They don’t want to hear negative things about the Lottery winners because it destroys their fantasies about winning. z There was limited awareness of the Green Ball promotion, but a high degree of interest in it once it was explained. z The main reason why they play one game over the other is due to the 3-digit or 4-digit number they play which has meaning to them (and is easier to remember than numbers for larger jackpot games). z Those who play Pick 3, feel that it’s a smarter game to play because the odds are better. However, for those who favor Pick 4, they feel the trade-off in picking the 4th number is worth it for 10X the prize. 42 More on Daily Games… z When asked about playing more than once a day, a few were concerned about over-spending and possibly becoming addicted. z The evening draw was more popular than the midday. z The midday draw seemed to be more negative because the evening draw was where it all began. z Some saw it as “emotional blackmail” since they would feel badly if their numbers came up when they were not playing. z Others were excited to learn about multiple drawings per day and expressed an interest in them. z There is the potential for incremental revenue by educating players who are unaware of additional ways of playing (e.g. straight, boxed, combination) and the differences between Pick 3 and Pick 4. z Even though they see themselves as different from other players, many still play the big jackpots. The big draws are unifying games across players. 43 Individual methods of picking numbers are based on highly personal symbology z Particularly for the Pick 3 and Pick 4, the chosen numbers are highly personal and meaningful: z “I play my address” z “I play my birthday month and day” z “I play the years my children were born” z They also place a lot of weight on numbers that appear in dreams and those they encounter in random places. z A number(s) that they see multiple times in a day is a “sign”. z Many of these people appear to be highly superstitious. z For these games, they would never use quick pick. z Beyond 3 or 4 numbers, most people do not have a system or have meaningful numbers. For numbers beyond 4 digits, they pick random numbers or pull a quick pick. 44 Raffles are currently significantly under- leveraged z Awareness of raffles appears to be quite low, yet those who play them love them. z They all indicated that they would want more of them despite the higher ticket price ($20). z Players are so connected with this type of game that they recall the holidays when they ran, the characters in them, and the game themes. z This is true for both occasional and core players who have played them in the past. z The passion for this type of game seems to be due to the controlled odds (unique number – only one person can win), ease of play, relatively high number of known winners, and the known number of prize levels/payouts. z Overall it was seen as a good value for the money and a good chance to win a valued prize. 45 Gift-giving is a way to grow business z Many people got started playing because they received a ticket as a gift for a birthday, at a holiday party, or for a holiday gift. z Some people said that this was how they started playing. It got them hooked. z Many players also give tickets as gifts. z They are commonly given as stocking stuffers, for birthdays, etc. z Promoting tickets as gifts brings new people into the franchise. z It’s especially effective if the person wins something on the first play. z For this type of ticket, it would be ideal if the ticket had a high probability of winning. z It also reminds core players about giving Lottery tickets as gifts. z People talked mostly about giving Lotto tickets and scratch cards as gifts over the big jackpot games. z Some pair them together and give both (a suite). z There may be an opportunity for a suite of “happy birthday” Lottery products. 46 Office pools are a win-win z Office pools appeal to a variety of interests: z They are a point of entry for many people z They are a fun, social activity z They bring together those who share a common dream; they’re all in it together z They provide a point of bonding and conversation z People in office pools mostly play the big DBGs. z There is some perception that the big groups always win. z There is a multiplier effect. One person’s excitement can be contagious. z It was described as “a mob mentality.” z When everyone else is playing, it makes those not playing feel left out z Although they feel connected to their co-workers, it doesn’t stop them from playing other games “behind their backs.” z The office pool, drives playing without the win. z The group loss is less disappointing because they are having a good time while playing z There is a big opportunity for office pools online. 47 Scratch-Offs 48 Scratch-off game purchase criteria place physical card characteristics low on the list z Overall, without quantitative data, selection criteria includes (potentially in this order): z Top prize/price of ticket z The type of game/play style z Odds of winning z Theme z Card design/images/colors/size z “Gold is always good” z “Big sized tickets imply big wins” z “Lucky” symbols are attractors to certain players z It is important to remember that none of these factors are considered isolation. z When they see the ticket display, players must quickly make sense of the games to make their choices. To some, it’s overwhelming and confusing. Some suggested that it might be a barrier. z The big font/type that calls attention to the top criteria tend to get the votes for random or new purchases. z There is a perception that the more instant ticket games available, the lower the odds of winning, overall. z For many, the initial winning experience serves as at least a short-term template for how and what they will play. 49 Licensing recognizable brands from pop culture seems to resonate z Casino slots such as Wheel of FortuneTM, MonopolyTM (there was also strong recall of the McDonald’s MonopolyTM promotion), Deal or No DealTM, Double Red-Hot 7s, etc. are among their favorites. z Part of the draw to these games is that players have some knowledge or awareness about how these games are played. This familiarity gives them confidence that the scratch card will provide them with the same experience. z That is why respondents were especially excited when presented with the UK scratch tickets with these themes. z There is a strong association of casino properties with certain instant tickets, particularly when a player has had a winning experience with that licensed ticket identity. z While they liked some of the Illinois games, when forced to choose favorites from the cards displayed, respondents seemed to demonstrate a preference for the UK games overall. z They evaluated each on its face value and what the game meant to them. z There was no evidence that a card being from the UK had a negative impact on their choices. z Nor did a card being from Illinois have a positive impact on their choices. 50 “It’s a quick fix” is a motivator to some z Many people prefer to play the scratch-offs because they know immediately if they have won or lost. z A lot of people do not like to wait for the drawings. z It gives some people a “quick fix.” z They like to and need to play. It’s become a habit. So, the scratch-offs give them a quick way to play and fill that need. z It gives them instant gratification. z Winning the smaller prize amounts is an “inside joy.” They don’t shout it from the roof-tops or tell all their friends, but their own satisfaction is what matters. z Conversely, on lower-priced tickets, they are only a little broken-hearted each time they lose. 51 “Throw me a bone” is a common sentiment among these players as well z More prizes, even small ones, are positively perceived and keep people in the game. z Even winning another ticket keeps scratch card players going. z Many players also reinvest their winnings in additional tickets if they win cash. z So, this strategy can be a win-win. z Experiencing a win on one of the first tickets is crucial to captivating their loyalties. 52 Annuity-type prizes are among the favorites z Win for Life is a hugely popular game. Players like this game because the concept of an annuity prize fulfills a particular dream. z “What could be better? I could get money for the rest of my life.” z To some this could mean not working as hard as they currently work. z It implies financial security and no worries. z This type of prize is especially believable because the prize itself is part of the name. z The name is also very memorable because the prize resonates so well with consumers. z More games like this should do very well. 53 There is value in extended-play games z In general, it seems that players tend to pick and stick with a specific type or set of games. z For example, some like extended play games and prefer games like Bingo, Crossword, etc. and will buy these games first. z Once they have satisfied this preference, they will allow themselves to purchase other types of games. z Those who play this type of game have a slightly different motivation than other scratch-off players. z The extension of the game suspense through the reveal process, multiple ways to win, gives them the feeling that they are not an instant loser. z They want to kill time and in some ways it is a pastime. Some play when they are bored, while commuting, when watching TV, etc. z For some, it’s associated with a sense of accomplishment and skill. z It can feel like they are doing two things at once – engaging in an intellectual activity as well as playing the Lottery. z At the end, if they win, it increases their satisfaction and sense of accomplishment. z It extends their enjoyment and because it does this, it adds value to their purchase. 54 Insulting names are rejected; targeted themes are desired z A game name or theme that implies that they are dumb or are making a bad decision is often rejected. One example of this is was Chimp Change. This name was plain insulting. z Attacking a barrier head-on lowers the obstacle and can present Lottery as a solution to players’ concerns. z For example, with higher gas prices leaving less change in their pockets, a game that rewards players with free gas has tremendous appeal. z Additionally, a game that is designed around themes that are appealing to a specific segment’s wants/needs is likely to be well-received. z Younger players have a somewhat negative perception of the Lottery to begin with – “it’s a game for older people.” “It’s not a cool thing to play.” z However, it makes sense and is desirable to build games around themes and prizes that people in their cohort enjoy. Games can be built around the following: z Prizes: iPods, concert tickets, apparel z Games: tie-ins with Pitchfork, Facebook, etc. z Themes: around important sporting events such as NCAA March Madness, the Superbowl, Fantasy Baseball, etc; big music events like Lollapalooza; and around the success and excitement of winning local teams like the Chicago Blackhawks. 55 A mythology exists around where odds are better z We found that many Lottery players are very superstitious. z People believe that newly introduced games have a higher probability of winning. z We heard this mostly from scratch-off players. z Both occasional and core players shared this sentiment. z At least in part, this explains the popularity of seasonal games. z Players often ask the retailer about new games. z There should be 2 distinct communications programs for new vs. established games – particularly with scratch-offs. z There are a variety of beliefs about where there are better odds related to ticket numbering, new rolls of tickets, rolls of tickets from which many or no winners have been generated, etc. z Doing anything to recognize or promote this mythology could carry significant risk. z They also believe that there are “lucky locations” – where winning tickets have been purchased before. 56 Inconveniences z We frequently heard that people do not like the mess created from scratch cards. Despite the mess, they love scratching. A cleaner way of doing this, such as pull tabs, could overcome this inconvenience. z This is a potential appeal for online scratch cards. z Although not heard often, we did hear that there are no cards designed for left-handed scratchers. 57 Prize Satisfaction z “Smile” prizes ranged from $50 to just under $200 z “Tell a friend” prizes ranged from $300 to under $1,000 z “Create a buzz” prizes ranged from under $1,000 to under $5,000 z This demonstrates that for instants players there is still value – particularly “buzz” or viral potential in the lower prize amounts 58 Internet 59 Internet Lottery smashes the barrier of actual and perceived inaccessibility z Across all segments, convenience came up as a reason why they play (it’s on my way home, it’s in my building at work, etc.); but inconvenience (it’s out of my way, I don’t have time, etc.) also came up as a key barrier or a reason why they stopped playing. z If they have access to the internet, everyone can play. z Many said that they would expect to play more games. z However, due to the relationships they have built at retail and their established current playing habits, they also want to be able to purchase tickets at retail. z They do not necessarily care about retailer commission. It’s more about their habits and control (i.e. they want the flexibility to buy where and whenever they want). z At first, the internet would be viewed as a complementary channel for purchase and playing. Some said that they would “test it.” 60 Experience with other shopping online influences expectations of online Lottery playing z Based on prior experiences online, players believe that playing will be: z More convenient z More engaging z More relevant z And include targeted promotions z They believe that the experience online will involve full multi-media capabilities, and be dynamic and engaging. They expect it to feel more “like Vegas.” z They want music, video, interactive games, 3-D action, broader variety (maybe different than what is currently offered in-store) – all the bells and whistles. z The expect to find virtual scratch-offs, slot-style games, etc. and video bonus rounds. They expect the site to include all the current games and even more. z Another advantage is that online purchasing eliminates all undesirable experiences they have at retail. For example, they can take their time selecting games, picking numbers, etc. z There are no lines and no one behind them putting pressure on them to make their transaction faster. This is especially relevant for the occasional players. 61 Online games lend themselves to quick product and promotion development z Their expectation is that there is more opportunity to make the games more topical and timely. z For example, during the Stanley Cup Playoffs, the Lottery could quickly introduce a new game based on the winning team, round by round. z Players and coaches could promote the game online without much effort. 62 Online subscriptions have huge potential z Few people knew about subscription playing or how it worked. z Once educated, interest piqued. z Even if internet Lottery ends up not being feasible, online subscription has an enormous amount of potential. z However, they want no upfront fees for participation and no on-going fees for playing. z When respondents talked about missing a drawing, many of them showed a lot of emotion and almost fear. z The idea of a drawing without their participation and their numbers being pulled created panic in the room. “If I miss it, I pray that my numbers don’t come in” or they don’t watch the draw or check their numbers. They go into complete denial. z Of course, they are relieved when they learn that their numbers were not pulled. z “You never have to miss a drawing” should be the lead to attract more players to this means of playing. z There was some interest in designing subscriptions for specific purposes. For example, there was interest in a vacation subscription, a hospital visit subscription, etc. -- anything that takes people out of commission for a period of time. z It seems likely that they would also be interested in buying subscriptions as gifts. 63 There is potential to leverage the user- generated nature of the internet z With the popularity of user-generated products, services, communications, etc., the Lottery could hop on the bandwagon. z User-generated games and scratch-card themes, etc. could be very engaging, improve perceptions of the Lottery, encourage new participation, and make the people of Illinois feel that they are “owners.” 64 Concern about hackers and security must be addressed head-on z When asked about playing the Lottery online, some expressed concerns about security – particularly because of the rampant Illinois corruption. z Anything that can be done to demonstrate the security measures used would help alleviate these concerns. z They would also like to know that their money is secure. Money-back guarantees might be necessary. z They want protection and assurances against external events like system crashes. “How would I prove that I had the winning number without a physical ticket?” z Although there are some concerns related to Illinois, they still trust the Illinois State Lottery site more than any other 3rd party site for buying their tickets. z Amazon.com is a trusted site and perceived as user-friendly. This site should be investigated as a process model for the ISL site. z If anything does go wrong, they want to be able to speak to a human being. z There is a concern regarding hackers: e.g., people creating fake/bogus winning tickets, winning the Lottery without actually playing, hacking into their account and person details, etc. 65 More security concerns z They want to be rewarded for winning and losing but they do not want their playing tracked. z They want privacy, period. They want it from the Lottery and from family members who may be snooping around. Multiple levels of security will be necessary. z One of the benefits of playing online is that they like the convenience of being able to print out their own tickets and the security of knowing that if they lose it, they can print it again. 66 As with other online activities, players want complete control over all Lottery engagement z People who are active online are used to being able to control and design what they do online. z This control extends into… z How often they receive emails/reminders/notifications z They want notifications that their bet has been accepted. z How often they play z How long they play (when they start and when they end their engagement) z What games they play z How much money they play z Spending more than they should or have budgeted was a concern to many across all groups. Playing online would give them up-to-the-minute information about their account and budget. z Some recognized that lack of control over spending could lead to gambling addictions. z If all of these qualifications are covered, respondents indicated that overall, they would play more often and spend more money. z They might also play more game types z They expect that determining their winnings will become more seamless and accessible and would like to be able to redeem their tickets online. 67 Leveraging social media is essential in building a strong support among younger players z Most players use Facebook as their primary social medium. z Building a friend base on Facebook would raise awareness, build loyalty, and, potentially, boost playership. z However, “friends” would need incentives to initiate the friendship and more incentives to remain friends. z Examples of desirable incentives included: free Lottery tickets, promotions like buy 10 get 1 free, etc. z Facebook lends itself to organizing and initiating other types of friend pools z There were many young players who said that it would be a lot of fun to do and play Lottery pools. z It was mentioned that Facebook is rolling out its own currency system which would allow Lottery to use a trusted payment system while leveraging the social aspect of the network. z Some would like a game offered only on Facebook (restricted to Facebook members). z Simply by having an online offering the Lottery image is contemporized. z However, having the right kind of presence will draw in younger, more hip players and make it a game for them. 68 Without a retailer present, players lose the ability to ask for assistance z Online, there essentially is no retailer to ask for help. There is no “consultant’ available, which is something many players value. z The “journey” or playing/buying experience is also very enjoyable to some people. Eliminating this type of interaction could be seen as a negative. z Replacing this interaction could be important. Social media lends itself well to this. z The opportunity is to offer different game pickers who players could choose based on some criteria and decide for themselves if they like the game pickers’ choices. This would replace the retailer as consultant. 69 They want it to be limited to Illinois players z They don’t want people out-of-town being able to play Lotto or any other DBGs online. z This controls the odds, could increase participation in-state (“it’s our game”), and they believe it increases their chances of winning. z There’s even more concern online about underage playing. z “How would this be controlled?” z For both of these issues, they want assurances. 70 Mobile implications could be enormous z There seems to be some appetite for playing on their mobile phones. z The appeal is particularly evident for jackpots and younger players. z Major concerns: z It’s got to be fast z It can’t take a lot of machine memory because it could drain their batteries z When they play other types of games they have to limit their game time. z They don’t want playing to involve text messaging due to concerns about typos. z They would want to download a mobile app or have access to “a mobile- friendly site.” z Creating an app for ISL seems inevitable to the younger, more mobile segment. z To some extent, it seems “late.” 71 Social Responsibility 72 Virtually no one had an accurate understanding of how the Lottery proceeds are allocated z When respondents were asked to estimate what percent of revenues went to the Lottery prize pay-out, administration, and good causes (i.e. the Common School Fund), the current perceptions were vastly different from reality. On average, it was perceived to be: Payout Administration Causes Perceptions 39% 39% 22% Reality 65% 5% 30% Desired 51% 16% 33% z The Lottery has been ineffective in their efforts to communicate the reality of their contribution to Illinois schools. This lack of awareness is even true among core players. z There is an opportunity to do a better job of communicating this critical information but cannot be through “media as usual”. z When asked what they would like the allocation to be, the percentage allocated to the schools was approximately the same as what is actually being allocated. What they want, they are currently getting, but they don’t see it. z When told about the current allocation, many found it hard to believe. z This was driven primarily by the fact that the schools are suffering dramatically right now. So, if a lot of money is being put into the Common School Fund, where is it going? 73 Tangible results create credibility z Public relations and other communications showing how the money is being used in local neighborhoods will significantly change perceptions. z The tone of this type of communication must be serious in order for it to be believable. z This message must be delivered via an “unbiased” and trusted source. z Players often cite “the news” as their primary source for opinion-forming information about the Lottery. 74 More transparency about where the money goes could boost Lottery sales z While concerns over where the money is going are not top-of-mind, when addressed head on, they do surface. z Some people became very emotional about this when sharing stories about friends and family losing teaching jobs due to short-falls in the school budget. z The depth of feeling encountered in this area indicates some risk of these types of stories going viral if the issue of Lottery proceeds allocation is not addressed in a way that generates positive awareness. z With the frequent headlines in the news about the school budget short-fall, this was a big concern. z More transparency about where the money goes… z Would reduce concerns about the misuse of funds. z Gives players a reason to buy beside their own self-interest. It makes people feel better about playing and losing. z Separates the Lottery from the rest of Illinois politics and corruption. z Clearly identifies and clarifies the good that’s being done with the money in the Common School Fund. z Transparency would make it feel less like there is less of a conspiracy and build confidence. z They want accountability as well. They want to know who is taking responsibility. A public and well-respected auditor would also be essential to building believability. 75 The Lottery is seen as a “faceless agency” z There was some confusion about who runs the Lottery. z At the end of the day, they were fairly sure that Illinois politicians control the Lottery and the persons who run it. As a consequence, they perceive that it is not run as well as it should be. z And, that the Lottery is run for the benefit of those politicians and not the players or the kids. “It’s lining someone’s pockets.” They do not believe that much more (or the promised percentage) is going to the kids. 76 Responsible gaming does not appear to be a priority for the Illinois Lottery z Many recall the “play responsibly” tagline that is in the advertising. z Most believe that the majority of the responsibility lies with the player – it’s up to the player to control their spending. z Next is the retailer – they expect retailers to stop underage play. But to some, there is a conflict of interest; stopping people from playing would be like “cutting off their nose to spite their face.” z There is some additional concern that unattended vending machines cannot verify age. z They don’t want to have play regulated by an outside entity. It’s not the Lottery’s (or government’s) job. z Essentially, responsible play means “playing within your means.” It means not playing the Lottery when you have to put food on your family’s table. z They believe that players should control their own behavior. z Some see part of the Lottery’s responsibility as advising big jackpot winners on how to go about finding qualified independent financial advice 77 A proven track-record will be essential in selling privatization of the Lottery z While many could understand the potential benefits of privatizing the Lottery, City of Chicago’s recent privatization of parking meters and toll-ways raised concern among respondents. z The news media has reported these steps as a bad deal for the people of Chicago. z Many have also found higher prices and inconveniences as a result of these moves. This leads them to believe that “someone is making a profit off me.” z They also perceive that the organizations running these services are heartless and mercenary. Many of the things about the city that were so desirable and accessible no longer exist. This has left a bad taste in many people’s mouths. z Any organization that is awarded this opportunity to privatize the Lottery will have a significant sales job ahead of them. z A proven track-record, outside endorsements by trusted parties, and total transparency about where the money is going, are mandatory. z Many mentioned that Lottery started out as a noble cause, but was diverted over time. Due to recent prior experiences, they are concerned about a “drift toward evil”. z Positioning could take players back to the roots of the Lottery, which for those who remember, should be a plus. 78 More on privatization… z Some occasional DBG players said that “they don’t care who runs the Lottery so long as they run it honestly and fairly.” z It MUST also produce jobs for Illinois residents regardless of who is managing it. z Among those who are skeptical regarding privatization, there is an opportunity to convince them of the benefits and value of such a course. 79 Illinois Lottery Player & Game Opportunity Research & Analysis Appendix Prepared for by July 19, 2010 In-Group Exercises Type of Gambling Participated in Last 12 Months Most Important Characteristic in (Base) (59) (59) Choosing a Game -- Ranked #1 # % (Base) (23) (23) Casino 41 70 # % Racetrack 17 29 Top Prize 10 44 Internet Gaming 13 22 Odds of Winning 6 26 Other (unspecified) 13 22 Play Style 5 22 Off-Track 10 17 Type of Game 2 8 Type of Gambling Participates in Most Often Most Important Characteristic in (Base) (59) (59) Choosing a Game -- Ranked #1/#2 # % (Base) (23) (23) Lottery 31 53 # % Casino 13 22 Top Prize 16 70 Scratch-Off 9 15 Play Style 14 61 Cards 7 12 Odds of Winning 9 39 Sports Betting 3 5 Type of Game 7 30 Racetrack 2 3 (cont'd) 1 In-Group Exercises (cont'd) Amount of Prize Winning Needed to... % of $10 Spend Allocation by Cost of Ticket Median Middle 3rd Total IL UK (Base) (21) (21) (Base) (8) (8) (8) Make You Smile $50.00 $25-100 % % % Tell a Friend $500.00 $100-1,000 $5 Tickets 44 38 6 Create a Buzz $5,000.00 $2,500-10,000 $2 Tickets 38 33 5 $1 Tickets 18 14 4 Perceived/Desired Allocation of Lottery Proceeds Admini- % of $5 Spend Allocation by Cost of Ticket Payout stration Causes Total IL UK (Base) (59) (59) (59) (Base) (8) (8) (8) % % % % % % Perceptions 39 39 22 $5 Tickets 63 19 44 Desired 51 16 33 $2 Tickets 20 20 0 $1 Tickets 20 18 2 (cont'd) 2 In-Group Exercises (cont'd) IL/UK Favorite Game -- Top 4 IL/UK Favorite Game -- Top 4 (cont'd) (Base) (23) (Base) (23) # # Win for Life (IL) 11 Fabulous Fortune (IL) 2 Monopoly (UK) 7 Gold Rush Jackpot (IL) 2 Double Red Hot 7's (UK) 7 Jumbo Bucks (IL) 2 Rich for Life (UK) 6 Crossword (IL) 2 Go for Gold (UK) 6 Ticket for the Cure (IL) 2 Money Mania Millions (IL) 4 Super Cash (IL) 1 7-11-21 (IL) 4 $75,000 Crossword (IL) 1 Deal or No Deal (UK) 4 Groovy 8's (IL) 1 Triple Winning (UK) 4 Scrabble (IL) 1 $3,000,000 Cash Jackpot (IL) 3 Triple Your Money (IL) 1 Slots of Money (IL) 3 Double Your Luck (IL) 1 Bingo (IL) 3 Time Out Tripler (IL) 1 Merry Millions (UK) 3 Chimp Change (IL) 1 Cars and Cash (UK) 3 James Bond-Quantum of Solace (UK) 1 Triple Your Luck (UK) 3 Indiana Jones (UK) 1 Get Lucky (UK) 3 Triple Payout (UK) 1 Connect 4 (UK) 1 (cont'd) 3 In-Group Exercises (cont'd) Illinois Favorite Game -- Top (Base) (22) # Win for Life 6 Slots of Money 3 $75,000 Crossword 2 Bingo 2 7-11-21 2 $3,000,000 Cash Jackpot 1 Money Mania Millions 1 Gold Rush Jackpot 1 Crossword 1 Scrabble 1 Triple Your Money 1 Time Out Tripler 1 (cont'd) 4 In-Group Exercises (cont'd) Illinois Favorite Game -- Top 4 Illinois Favorite Game -- Top 4 (cont'd) (Base) (24) (Base) (24) # # Win for Life 10 Jumbo Bucks 2 Bingo 10 Groovy 8's 2 7-11-21 10 Domino Doubler 2 Triple Your Money 6 Chimp Change 2 Slots of Money 5 Fabulous Fortune 1 Pot of Gold Bingo 5 Super Cash 1 Crossword 5 Gold Rush Jackpot 1 Scrabble 5 Float Me the Money 1 $3,000,000 Cash Jackpot 4 Pet Talk 1 Money Mania Millions 4 Numerous 9's 1 Double Your Luck 4 Hot Tamales 4 Ticket for the Cure 4 $75,000 Crossword 3 Time Out Tripler 3 (cont'd) 5 In-Group Exercises (cont'd) Illinois Favorite Game -- Bottom 4 Illinois Favorite Game -- Bottom 4 (cont'd) (Base) (24) (Base) (24) # # Crossword 9 Bingo 3 Scrabble 8 Time Out Tripler 3 Fabulous Fortune 7 Super Cash 2 Chimp Change 7 $75,000 Crossword 2 $3,000,000 Cash Jackpot 6 Win for Life 2 Money Mania Millions 6 Ticket for the Cure 2 Gold Rush Jackpot 5 Slots of Money 1 Pet Talk 5 Jumbo Bucks 1 7-11-21 5 Pot of Gold Bingo 1 Domino Doubler 5 Double Your Luck 1 Numerous 9's 5 Float Me the Money 1 Groovy 8's 4 Hot Tamales 4 (cont'd) 6 In-Group Exercises (cont'd) UK Favorite Game -- Top UK Favorite Game -- Top 4 (Base) (22) (Base) (22) # # Monopoly 5 Monopoly 11 Rich for Life 4 Triple Winning 10 Deal or No Deal 3 Rich for Life 9 Go for Gold 2 Go for Gold 9 Triple Winning 2 Double Red Hot 7's 9 Indiana Jones 1 Merry Millions 8 Cars and Cash 1 Deal or No Deal 7 Triple Your Luck 1 Triple Your Luck 6 Triple Payout 1 Get Lucky 5 Get Lucky 1 Indiana Jones 4 Double Red Hot 7's 1 Cars and Cash 4 Connect 4 1 Triple Payout 4 James Bond -- Quantum of Solace 3 Connect 4 3 Honey Money 2 $250,000 Red 1 Mystic Dog 1 (cont'd) 7 In-Group Exercises (cont'd) Frequency of Internet Usage Hours Per Week Spent Online (Base) (8) (Base) (8) # # Everyday 8 0-5 6 Many times a week - 6+ 2 Few times a week - Average (in hours) 5.44 Few times a month - Rarely - Whether of Not Conducts Personal Business at Work Internet Access Location (Base) (7) (Base) (8) # # Yes 2 Home 5 No 5 Work 4 8 Illinois Lottery Non-Player Opportunity Qualitative Research & Analysis Summary Report Prepared for by August 9, 2010 RRC 5210 Table of Contents Page Objectives 2 Methodology 3 Executive Summary & Implications 4 Detailed Findings 12 Barriers 13 Awareness, Attitudes & Behavior 17 Attitudes Toward the Illinois Lottery & Social Responsibility 23 What Would Change Their Minds? 29 Appendix 34 1 Objectives z Undertake research into the Illinois Lottery market and develop an understanding of the non-player segment to identify ways of attracting new players. 2 Methodology z Two focus groups were conducted in downtown Chicago, IL z In each group, 10 people were recruited. Eight people participated in one group and nine participated in the other. z Groups lasted about 2 hours and were held in the evening so both working and non-working men and women could participate. z Respondents were adults, ages 18+ who: z have never played the Illinois Lottery z have played only once or twice in the past 2 years, or z have played longer ago than in the past 2 years. z They also could not be opposed to gambling/playing the Lottery. 3 Executive Summary & Implications 4 Executive Summary & Implications Executive Summary Implications Barriers Some people stopped playing because they did not win It is essential that as many people win as possible, even if enough and felt that nothing would change even if they kept the prizes are smaller. Getting winning tickets into people's playing. hands early on keeps them coming back. Prizes can be as little as a free ticket -- but $50-$100 is a good prize. People perceive that the odds of winning the lottery are It is not easy to understand the odds of each game. Any quite high. The odds are perceived as worse playing the marketing materials that can be put into people's hands lottery than with other forms of gambling (like casino games would help inform potential players, reduce anxiety, and and horse-racing). make it easy to compare across games. The materials should also show the odds of winning the lottery vs. other forms of gambling to help people understand how they compare. People think there is no skill involved in playing the lottery In the player groups, some people talked about the systems as with other types of gaming and this is a turn-off. they use to pick their numbers. Some of the systems are very complex. While this may not seem like a skill, it may make people feel like they are more engaged in the games than they currently feel. It would be similar to the way they feel when doing research on picking numbers at the race- track or when playing poker. Some people are not good with numbers, period. Those Those who are afraid of numbers said that they would like who tend to be "afraid of numbers" have a hard time games that involve matching symbols. For example, one comparing the odds of winning across games. person suggested having something along the lines of a Three Stooges game where you have to match 3 faces of one of the Stooges. (cont'd) 5 Executive Summary & Implications (cont'd) Executive Summary Implications Barriers (cont'd) Some don't like the mess associated with scratch tickets. Pull tabs might alleviate this problem. Some people don't know how to play the games and feel Instructions on how to play various games should be on somewhat intimidated. display in stores. It might also be helpful to encourage "buddy" play. That way friends can help their buddies learn how to play the game. This could be encouraged by promotions like "buy one and get one free" or the second ticket is half off. The long lines in stores are a turn-off in a couple ways: 1) Self-service machines for all games would alleviate this people who don't know how to play are worried about problem. "Help" screens on the machine, as they have on holding up the lines even more, and 2) long lines turn slot machines, would also be a plus. people away who don't want to wait. Other types of gaming like casino games and horse-racing While it is unlikely that playing the lottery will completely are perceived as more glamorous, fun, and entertaining -- replace the social benefits that players get at a casino or at providing more than just a chance to win. the race-track, it is possible to further promote the fun that people have while playing. It would also be helpful to encourage people to host parties built around jackpot drawings or other big lottery events. When playing the sample scratch cards in the groups, It's important to make the scratch cards as easy to some people were turned off by games that were too understand as possible and stream-line the play. complex. While the extended play games were desirable to a few, most were too impatient, wanting to know immediately if they had won or lost. (cont'd) 6 Executive Summary & Implications (cont'd) Executive Summary Implications Barriers (cont'd) Some people play more when they are working in an office Continuing to encourage people to participate in pools with environment where other people in the office are playing. friends outside of their offices. It would help people realize They tend to join and get involved in all sorts of sports that they don't need an office environment to play the pools. When they leave the company they tend to reduce lottery. They can organize a pool themselves. their participation. It's somewhat inconvenient to always have cash on hand to Respondents seemed to like the idea of buying an Illinois play since one cannot pay with credit cards. Lottery debit card that they can easily swipe to play. This could not only eliminate the "cash" barrier but also speed up the lines. (cont'd) 7 Executive Summary & Implications (cont'd) Executive Summary Implications Awareness, Attitudes, and Behavior While all knew about the lottery, awareness of specific It would be wise to better understand what media non- games was fairly limited to name only. Only a couple players consume so that the Illinois Lottery can more people across groups knew details about the games, how effectively communicate with them. Since some of their they are played, what the odds are, and were confident issues relate to low awareness, raising awareness could about the prizes. really pay off. There was vague recall of the lottery advertising, most saying that they thought they remember seeing something on TV. However, no one could recall the "Have a Ball" tagline. In general, the amount of money these people are spending on gaming activities is down. Only a few said that they are spending about the same amount or more. This is due to a variety of circumstances -- only one of whom said it was due to a job loss. While the overall attitudes are not negative to playing, some people have barriers that need to be overcome. A few people have essentially positive attitudes, but need to have some concerns addressed. Games or TV shows that have good awareness would be While many of these games currently exist, it appears that enticing to some people. The familiarity helps them feel not everyone knows about them. More promotion around confident that they can easily figure out how to play the these licenses should yield good returns. game and will enjoy playing as much as they enjoyed their engagement with the board game or TV show. (cont'd) 8 Executive Summary & Implications (cont'd) Executive Summary Implications Awareness, Attitudes, and Behavior (cont'd) Other pop culture icons were also desirable subject matter Quite a few people liked the idea of building a game around for games. a pop star. For example, have a game associated with Lady Gaga and make the grand prize be a trip to a big concert of hers. The top prize doesn't have to be money. A few people talked about how involved they were with and It seems that this sort of game may have similar value for enjoyed playing the Monopoly game from McDonald's. One the Illinois Lottery. Collecting things over time builds of the exciting parts of playing the game included having to tremendous loyalty. collect the pieces over time. It gave them something to work for and a reason to keep returning to McDonald's. There were a number of comments about playing the lottery Anything that could be done to raise the stature of the that indicated that people did not perceive that playing lottery in people's minds would be helpful. Showing would be viewed positively by other people. They called it educated, higher class people as players and winners an "idiot tax." would definitely help. (cont'd) 9 Executive Summary & Implications (cont'd) Executive Summary Implications Attitudes Toward the Lottery and Social Responsibility Most are unsure about who runs the lottery but they know Promoting the low percentage that goes to administration that it has something to do with the State. Without would help build confidence with the body running the prompting, they did not make negative linkages back to lottery. It would also help very much to keep separate the corruption. State of Illinois from the administration of the Lottery given all of the corruption perceptions. They were not particularly aware of where the money goes In order to encourage non-players to get involved in the and had higher than actual estimates for administration -- game, it is essential that the 30% going to good causes be and lower than actual estimates for payouts and good promoted on a regular basis. causes. The actual percentages were VERY appealing and potentially motivating. Knowing that a lot of the money goes to good causes Given the interest in charitable giving, it might be changed their attitudes toward the lottery. They wanted to meaningful to promote something along the lines of know more and said that playing for good causes made it "Everyone wins when you play the lottery. Even if you lose feel less like gambling and more like giving to a charity. the game, you win." Seeing tangible examples of how the money is being used P.R. around how the money is being used in local aids in boosting believability. communities will build good will. It also makes sense to consider building games around specific projects as well as causes. For example, a few people talked about naming games that talk about the recipients, e.g. Computers for Kids or Send a Kid to School. Or, on the ticket it could indicate what neighbor is benefiting from that game. (cont'd) 10 Executive Summary & Implications (cont'd) Executive Summary Implications Attitudes Toward the Lottery and Social Responsibility (cont'd) There was some recall that years ago when the lottery While the money may be going into the Common School started that the money was to go to paying for toll roads. Fund, the schools are still suffering. This is no fault of the Just as with the schools, if the money was supposed to go Illinois Lottery and this should be promoted. to toll roads, they didn't understand why they still have to pay tolls. Outlet Awareness Most knew where lottery tickets were sold and what the closest location was to their home or work. Most do not go into gas station c-stores since they prefer to Promoting the lottery at the pumps may drive more people pay at the pump. into the stores. Also, a vending machine outside near the pumps could encourage playing. In addition to convenience, some people simply do not The idea mentioned before about having a debit card to have cash and want to pay by credit card. If they are swipe would address this problem as well. paying that way, they might as well pay at the pump. But, some don't want to be tempted by other purchases in the store. Some don't like getting stuck behind people who are in line buying lottery tickets. 11 Detailed Findings 12 Barriers 13 “I never win” is among the top reasons for not playing among prior players z Those who had played in the past talked about how they bought multiple tickets and most never won anything. z At that point they felt like they were throwing good money after bad. They believed that they were "not lucky" and would not win, regardless of how often they played. z Poor odds was another frequently mentioned reason for not playing. z When asked about how they know what the odds are, some said that they read the back of the cards. z Others just have a sense of the games having poor odds due to the high number of people who play them (for DBGs). z They mostly talked about the bad odds related to the big jackpots and almost never mentioned any of the smaller prizes that they could win. z They also don’t often hear about people winning or know people who won. So they don't believe people actually win. z Some people referred to the lottery as the “idiot tax” because players are just giving the government their money. z “The likelihood of winning is lower than getting struck by lightning!” z Because they believe that they are not going to win and there is virtually no skill involved, it doesn’t appeal to some people’s needs or interests. z One respondent expressed it another way -- in general, “winning is about being right and/or talented. The money is just a way of keeping score.” 14 Other objections… z Some disliked the mess made from the scratch tickets. It got all over the table and their clothes. z While a negative, it didn’t seem to be a true barrier. z Another objection was that some people are not good with numbers and cannot compare the odds vs. winnings across games. Because of this they don’t know how to choose a game. z Some feel very challenged by this and, therefore, do not play. 15 Some people feel very intimidated or confused about how to play z Some see the long lines (which they say are a turn-off and strongly disliked) and worry that if they don’t know how to play the games, they will hold up the line even more. z A few said that they would feel “silly” if they tried to buy a ticket for any game because they don’t know what to ask for. z They suggested that this “fear” could be overcome in a few ways: z Provide simple, easy-to-use, step-by-step instructions in a visible location. z At POP, provide easy to use odds vs. winnings charts across games. z Allow them to buy all types of tickets from a self-service machine with some sort of screen or sign that could give them instructions. 16 Awareness, Attitudes & Behavior 17 While not doing a lot of gambling, casinos and horse-racing are considered more fun and entertaining z They recognize that other types of gambling can be more glamorous, provide more extensive entertainment and give them an opportunity to socialize -- in addition to providing them with a chance to win money. z Even if they don’t win, they feel like they have received some value for their money because of the other benefits. z Playing the lottery gives them none of these things. After they have spent their money, their entertainment essentially ends. Once they have checked their numbers or scratched their cards they are done. To add insult to injury, they feel like they never win anything. z There is also the perception that the odds of winning are better at the casino or racetrack than with the lottery. z This is, in part, due to the fact that at some point they have won in casinos or at the track; they have never won playing lottery. 18 In general, the total amount of money they are spending on gambling is down z Reasons for spending less on gambling include: z Got married and have to account for the money to someone else. z Have played in the past but didn’t win anything. Since he didn’t win he felt he must not be very good at it so he stopped playing. z Have changed jobs and the people at the new job are not into gambling the way they were at the prior job. z Have less disposable income (lost job). z One person said that the amount of money she’s gambling has gone up as her income has increased. z A few said that the amount of money they are gambling is the same as it was before. They gamble occasionally and it’s usually event-based like during March Madness or the Super Bowl. 19 There is some awareness of lottery games -- but mostly in name only z Non-players can recall some of the lottery game names, especially the big jackpot games like PowerBall and MegaMillions, which were recalled by about 4 in 10 on an unaided basis. z Little Lotto, Pick 3, and Pick 4 were recalled on an unaided basis by about 3 in 10. z Even though some know some of the names, they have virtually no understanding of the games. z A few had a slightly better understanding because they had been players before, worked in a store that sold tickets, or had a parent who played. z In terms of understanding the games, the big drawing games seem pretty self-explanatory in terms of the jackpot size just from hearing the names. z Most said that the names sound like there have BIG jackpots. And a few think that they are multi-state. z The scratch cards sound like they are fun, easy to win, but not a lot of money in prizes. 20 There is some ad awareness but not enough to drive interest or purchase z Many vaguely recall seeing advertising – especially on the big billboards along the expressways. But they also recall some… z TV advertising/sponsorships (highest unaided recall) z The drawing shows in the evenings (woman drawing balls) z In-store displays (c-stores) z Some radio advertising z Some newpapers/magazines z Virtually no one knew the “Have a Ball” tagline. z In general, ad awareness is extremely low. 21 A few saw the glass as half-full z We heard this a few times: “Somebody’s got to win! Why can’t it be me?” z Another woman said that she likes to think positively. “What if I won?” z It seems that she is a non-player not because she thinks she won’t like playing but because she lacks an understanding of the games and has concerns about feeling silly holding up the lines. z A few mentioned that playing gives people hope, and this is a positive. 22 Attitudes Toward the Illinois Lottery & Social Responsibility 23 Perceptions of Illinois Lottery are not clear z Most are unsure about where the money goes or who runs it. They make the link back to the state but it pretty much ends there. z A few were skeptical about the money management due to wide-spread corruption in Illinois. But, without prompting, they did not immediately make a negative linkage between Illinois corruption and the lottery. z Many were interested in more transparency and said that they would play more if they were sure that the money was going where it’s supposed to go. z Full transparency and promotion of all the facts could definitely improve perceptions and potentially boost participation among non-players. z When asked to estimate how the lottery proceeds are allocated (to administration, payouts, and good causes), very few knew the actual proportions and allocated more to administration and less to payouts and good causes than in reality. Administration Payouts Good causes 33% 44% 23% z They never hear about winners, so it was hard for them to believe how much went to payouts. 24 Knowing that the money is going to good causes was especially appealing and potentially motivating z When told that 30% of the funds from the lottery go to the Common School Fund, most were shocked. z Either they had not heard about it at all or had forgotten about it. z Some of the shock was related to the fact that Illinois schools are in trouble. z “If they are getting the money, why are the schools still suffering?” z They liked the concept of the money going to schools because “once I buy a ticket, even if I lose, somebody wins.” z To some it feels like a donation rather than gambling. z Ideas were generated that relate to giving money to charities: z “When I buy a ticket, I could choose a charity/cause of my choice.” z “They could have special games/tickets that are sold for a specific cause, like breast cancer.” 25 Seeing their money at work in tangible ways makes it even more believable z In addition to complete transparency, they would like to see how their money is being used in concrete ways. z For example, they would like to see real improvements that are being made and how much money has been allocated to each improvement, e.g., School Y received new playground equipment which cost $X. 26 Some recalled that the lottery money was intended to fix toll roads z Not many non-players knew about the money being tagged to go to the Common School Fund. z One person thought that it was supposed to pay for toll roads. z They asked: “If the money was supposed to go to fix toll roads, why do we still have to pay tolls?” z This question raised even more skepticism about the use of funds. 27 Most know where to buy lottery tickets and have outlets nearby z They recalled that lottery tickets could be purchased at c-stores, gas stations, grocery stores, liquor stores, drug stores, etc. z And most said that the nearest retailer was no more than 2-3 blocks away. z Many go into traditional grocery stores for their food purchases. Far fewer go into gas stations or c-stores on a regular basis. z They don’t go into c-stores very often because the merchandise is usually more expensive than at regular grocery stores. z They would go into 0-5 times more often if they needed something late at night, didn’t have a regular grocery store nearby, or if the prices were lower. z Most don’t go into gas stations to pay for their gas, but prefer to pay at the pump (2:1 pay at the pump vs. go inside). z Besides simply being more convenient (“I’m lazy,” “I’m usually in a rush,” etc.), some other reasons include: z “I usually don’t have cash and want to pay by credit card, so why not just pay at the pump?” z “If I go into the store, I usually buy things I don’t need.” z “If I go in, I always get stuck behind people buying lottery tickets!” 28 What Would Change their Minds? 29 They enjoyed playing the sample scratch- cards but it wasn’t enough to convert them z Most of the games they played were fun and most said that they were excited to see if they won. z A few of the games were too challenging or confusing – like Match & Win. The numbers they had to match were all scrambled and not easy to match (not organized). z Some liked the longer-play games because they extended the play time. z Others were frustrated with how long they took to play and wanted to know immediately if they had won or lost. z There were very few winning tickets in the groups. And, although, there were a few winners, because there were so few, most were not enthusiastic about playing again afterward. z By not winning in the group, it just reinforced their perceptions that they “never win.” z Some who came close to winning (1 number off), felt very let down when they did not get the last match they needed. This was a turn-off. z One person suggested that with a $2 ticket, players should always win at least a free ticket. z A few talked about how much they would need to win to keep them in the game. z Essentially winning at least as much as their bet would keep them playing. But $50-$100 seemed like a good prize. 30 Board Games or TV shows that are familiar to them are somewhat appealing as scratch card game themes z Some people mentioned liking games like Bingo or Monopoly – and said that, in the past, those were the types of games they were attracted to. z The McDonald’s Monopoly game was fun to play because they would accumulate pieces over time. It kept them coming back to the McDonald's just to collect more game pieces. z Other frequently mentioned games that they enjoy include backgammon, poker, and word games like Scrabble. z Quite a few get involved in betting pools at work or at parties. z For example NCAA March Madness is popular. It’s fun for them because they watch the games and keep track of who is winning over time. “Everyone is consumed with it!” z Getting involved in those types of pools makes them feel part of something bigger. z The Super Bowl is another pool that many people get involved in. 31 What else would make them play more? z Make it easier to do. Give them a way to play that doesn’t involve cash. z Let people buy a debit card that they could just swipe in order to play. z Give them a way to win free tickets with other types of purchases. z A few people liked the idea of including scratch cards with pizza delivery. z Raise their awareness level. z Some of their reasons for not playing related to low awareness. “I just don’t think about it.” z This, in part, could be due to them not frequently visiting outlets where tickets are sold. z “I will think about it more often now that I’m familiar with the games.” z Raise the stature of the game. z Some feel that people who play are less educated. z Promoting winners and providing brief background information on them might make them feel more comfortable with their decision to play. z Increase the number of people winning – even if it means lowering the jackpot sizes. z The highest prizes seem unattainable. Allowing them to win something (and more often) will keep them coming back. 32 To attract new players, non-players would promote the good causes, the “fun,” and make some improvements z Tell them that 30% goes to charitable causes and schools and a small percentage goes to administration. z Just knowing about this changed the minds of at ¼ to ½ of the people in the groups. z Being totally transparent about where the money will be essential. z Promote that “even if you lose, you win. We all win.” z Talk about that “it’s fun to play.” z Make specific game names that talk about the recipients of the money. For example, “Computers for Kids,” “Send a Kid to School,” etc. z Tie games to other licenses they enjoy like Monopoly or a TV show. z Create games that are tied to pop culture icons – like Lady Gaga. z The grand prize could be tickets to her concert. z Create games where players match something other than numbers – like the Three Stooges -- "get 3 Moe faces and you win." z This would appeal to people who are not comfortable with numbers. z Promote how the odds of winning compares with other gambling games (assuming that it’s comparable or better). 33 Appendix 34 Perception of Lottery Dollar Allocation Category Average % Number of Respondents (17) Administration 33 Payouts 44 Good causes 23 35 Unaided Awareness of Games Game # Number of Respondents (17) Power Ball 7 Mega Millions 7 Lotto 2 Little Lotto 4 Pick 3 5 Pick 4 6 Pick 5 1 Illinois Lottery 3 Instant Lotto 1 Note: These games were not pre-listed. Respondents wrote in the names of the games that they knew. 36 Job 5209 Illinois Lottery Non-Player Quantitative Study July 14, 2010 BACKGROUND/OBJECTIVES Prior to this study, Camelot Global conducted extensive qualitative research on the Illinois Lottery player market. The purpose was to develop an understanding of the existing player base and to identify trends and insights to improve player understanding and sales performance. This study was conducted to develop an understanding of the non-player base, what the barriers are to playing, and to help inform the development of questions for a possible follow-up qualitative study. TOPLINE RESULTS Among the 16 reasons tested, In total, the top reason why people do not play the Lottery is their concern over the poor odds of winning. The top 5 reasons include the following: Top 5 Reasons for Not Pla ying Lottery Odds against winning are too high Work too hard for money to lose playing Lottery Never think about playing Never win Do not have enough money to play 0 10 20 30 40 50 60 70 80 90 100 % Odds against winning are a significant issue across all demographic groups. 2 TOPLINE RESULTS (CONT'D) Among those who said they have played the Lottery before, "I never win" is significantly more of an issue for past players vs. the total. A top barrier for “never” players (48% of total) is that they “never think of it” (47%) vs. the total (39%). For those not married (41%) and those with lower incomes (under $50K) (46%), lack of money is higher on the list of barriers. The least often selected reasons, in total, are: Least Often Selected Reasons for Not Playing Lottery Do not hear about people w inning Not convenient to play Have to buy tickets in public See long lines/don't like to w ait Concerned about w hat family, friends...w ill think * Have gambling problem 0 10 20 30 40 50 60 70 80 90 100 % METHODOLOGY 300 interviews were conducted among people in Illinois who: 1) have never played the Illinois Lottery; 2) have played only once or twice in the past 2 years; or 3) have played longer ago than in the past 2 years. The sample included a mix of people in the Chicago metro and non-metro areas of Illinois. We included a variety of ages, genders, ethnicities, marital statuses, those with and without children, and income groups. The study was conducted online using an e-panel. * Less than 1% 3 APPENDIX Among Total Respondents Reasons % Odds against winning are too high 63 Work too hard for money to lose it playing the Lottery 43 I never think about playing 39 Never win/do not win very often 39 Do not have enough money to play the Lottery 32 Do not enjoy playing the Lottery 22 The money just goes to the administration and does not go to good causes or to pay out to the 12 players Do not know how to play/not familiar enough with the games to play them 11 Overwhelming/too many games to choose from 11 Think the game is "rigged" 8 Do not hear about people winning the Lottery/don't believe people win 5 Not convenient to play because there is no place to buy Lottery tickets near home or work 3 I have to buy tickets out in public/no place private to play 2 Always see long lines and don't like to wait 1 Concerned about what my family, friends, or colleagues will think of me 1 Have a gambling problem and cannot play at all * * Less than 1% Camelot Deep dive profiles of lottery players in Illinois 16th of July 2010 General lottery player 2 General Lottery Player Demographics & lottery participation More likely than average to be Middle Youth, Low Income Key facts (Last 12M): Of the adult population: 49% or 4.7m have played the lottery ¾ 9% are regularly players ¾ 39% are occasional/infrequent players Of those that have played any game: ¾ 27% have played daily online game ¾ 55% have played instant game ¾ 69% have played weekly online game Demographics % Index Gender Male 53% 114 • Majority of players have played an Female 47% 88 instant or weekly game in last 12M Age 35-54 43% 123 • More likely to be aged 35-54 Marital status Married 59% 109 Graduated high • Majority are married, have a good Education 67% 108 school/attended college education and are employed full Employment Employed full time 60% 115 time SEL* Level 2/3 51% 113 Children in HH None 60% 104 • They have children and 3 or more No of people in HH 2 34% 110 people in a household 3 or more 54% 96 Source: USA NCS/NHCS 2009 doublebase *SEL (Socio Economic Level) consists of 4 levels based on education and ownership of durables where 1 is the highest and 4 lowest 3 Base: Illinois n=3,145; Total Player=n1,413 Attitudes (Any agree: top 20 sorted by index) % Index My friends often ask for my advice before buying electronic equipment 22% 119 HI-TECH I’m always the first among my friends to have the latest in electronic equipment 14% 116 I love to buy new gadgets and appliances 34% 113 I often notice the ads in the lobbies of movie theatres 38% 115 I read the financial pages of my newspaper 31% 113 MEDIA I like to look for new and interesting websites 35% 113 I cannot resist buying magazines 12% 112 Fast food fits my busy lifestyle 28% 114 I am good at fixing mechanical things 45% 114 LIFESTYLE & Because of my busy lifestyle, I don’t take care of myself as well as I should 49% 113 PERSONALITY I am good at fixing things 58% 112 My friends are more important to me than my family 10% 111 I often go for a drive by myself to gain a sense of freedom 31% 121 I like to get a new car every two or three years 18% 119 American car companies set the standard in automotive engineering 25% 119 AUTOMOBILES A Sport Utility Vehicle (SUV) matches my active lifestyle 27% 118 I like to drive faster than normal traffic 40% 117 I keep up on the latest advances in automobile technology 24% 114 I am possessive about my car 43% 113 I often go on long car trips for vacations 39% 112 Source: USA NCS/NHCS 2009 doublebase 4 Base: Illinois n=3,145; Total Player=n1,413 Media Media Quintiles Index above 120 TV Cable channels (Lwk) % Index Quintiles 1 2 3 4 5 Starz 15% 160 Spike 18% 145 TV 27% 21% 19% 16% 16% American Movie Classics 22% 138 SCI-FI Channel 24% 134 Showtime 16% 134 Internet 15% 16% 14% 18% 13% VH1 15% 133 Oxygen 12% 133 Radio 30% 21% 22% 15% 12% FX 17% 132 WGN America 19% 131 TBS 35% 123 Outdoor 19% 19% 26% 19% 16% Cable programmes(Lwk) % Index Films King of the hill 11% 167 The Simpsons 13% 153 Genre saw in theatre % Index CBS Evening News 10% 145 Action/Adventure 37% 115 House (FOX) 23% 138 Drama 22% 114 Extreme Makeover:Home(ABC 11% 136 Sci-Fi 21% 113 NBC Nightly News 11% 135 Thriller 18% 113 CSI: Miami (CBS) 23% 133 Comedy 33% 107 ABC World News 16% 132 Animation 19% 101 Jeopardy! 10% 130 Family 21% 94 Dateline (NBC) 10% 130 Source: USA NCS/NHCS 2009 doublebase MNQ: Media Neutral Quintiles split the consumers of each medium into 5 equal- sized groups based on their level of consumption of the medium. Quintile 1 refers 5 Base: Illinois n=3,145; Total Player=n1,413 to the heaviest consumers and 5 the lightest consumers Media 2 Internet Print Activities (p30d) % Index Newspaper Titles (AIR) % Index USA Today 9% 119 Download movies 8% 140 New York Times 3% 110 Real estate listings 13% 138 Wall Street Journal 4% 108 Auto shopping/comparing 12% 137 Wall Street Journal(sun/wknd) 4% 103 Send electronic cards 9% 134 New York Times (sun/wknd) 3% 91 Listen to radio stations online 9% 133 Employment search 16% 132 Medical services & info 17% 125 Newspaper Sections % Index Auctions 14% 123 Classifieds 22% 140 Air/Car/Hotel info /reservations 28% 121 Sports 23% 118 Financial info/Stock Trading 12% 120 Movie listings & reviews 13% 117 Entertainment 19% 115 Sites (p30d) % Index General News 34% 111 Careerbuilder.com 12% 149 Cnn.com 12% 145 Magazine Titles (AIR) % Index Hotmail.com 13% 134 The National Enquirer 6% 148 Bestbuy.com 18% 133 O, The Oprah Magazine 7% 137 Abc.com 11% 133 Woman's World 5% 136 Itunes.com 17% 129 Star 6% 133 Ebay.com 26% 128 Consumer Reports 9% 127 Weather.com 19% 124 Good Housekeeping 9% 121 Msn.com 14% 121 People 16% 119 Att.com (AT&T) 12% 121 AARP, The Magazine 15% 109 Source: USA NCS/NHCS 2009 doublebase 6 Base: Illinois n=3,145; Total Player=n1,413 Retail Supermarkets (L4wks) Convenience stores (L4wks) Clothing & accessories (L3M) Schnucks Markets 14% 143 Quick Trip 9% 171 Kmart 19% 136 IGA Markets 6% 135 Circle K 7% 148 Meijer 6% 130 Speedway Meijer 15% 116 9% 145 Wal-Mart 50% 123 SuperAmerica Trader Joe's 10% 114 BP Connect 11% 133 JCPenney 26% 121 Dominick's Finer Foods 26% 112 White Hen Pantry 8% 130 Target 30% 120 Cub Foods 5% 109 7-Eleven 25% 124 Sam's club 10% 119 Wal-Mart super center 61% 107 CITGO Quick Mart 8% 123 Sears 11% 118 Kroger 14% 104 Kohl's 30% 116 Jewel-Osco 51% 102 Carson Pirie Scott 12% 112 Save-A-Lot 12% 94 Macy's 13% 108 Source: USA NCS/NHCS 2009 doublebase 7 Base: Illinois n=3,145; Total Player=n1,413 Sports/ leisure activities Top leisure activities/hobbies (L12M) (by index) Read gaming Go to bars/pubs magazines 30% 118 Tailgating 7% 135 Play bingo 8% 138 8% 134 Top sports activities (participated L12M) (by index) Attended in L12M Comedy club 15% 120 Concerts 34% 112 Dance performances 11% 112 Live theatre 27% 106 Billiards/pool Softball 26% 127 10% 122 Fresh water fishing Motorcycling Theme parks 24% 117 23% 133 8% 123 Source: USA NCS/NHCS 2009 doublebase 8 Base: Illinois n=3,145; Total Player=n1,413 Eating out Restaurants (most often) (by index) Fast food (most often) (by index) Chuck E. Cheese's 6% 140 Taco Bell 21% 123 Red Lobster 14% 131 White Castle 9% 119 Golden Corral 5% 129 Dairy Queen 10% 115 Lone Star Steakhouse & 5% 127 KFC 16% 114 Saloon IHOP (International House 11% 125 McDonald's 60% 112 Of Pancakes) Denny's 12% 119 Panera Bread 9% 111 Chili's Grill & Bar 12% 116 Little Caesar‘s 5% 111 The Cheescake Factory 5% 113 Wendy‘s 16% 109 Applebee's 18% 111 Chipotle 5% 107 TGI Friday's 11% 111 Subway 22% 106 Source: USA NCS/NHCS 2009 doublebase 9 Base: Illinois n=3,145; Total Player=n1,413 Daily Online Game Lottery Players 10 Daily Online Player Demographics & lottery participation More likely than average to be Middle Aged, Low Income Key facts (L12M): Of the adult population: 13% or 1.3m have played the lottery Of those that have played daily draw: ¾ 60% (227) have also played instant game ¾ 63% (190) have also played weekly online game Demographics % Index Gender Male 54% 114 • Tend to be older Age 45-54 30% 164 • Majority are male, married and Marital status Never married 31% 116 Married 54% 99 have children Graduated high Education 73% 118 • Over half are employed but are in school/attended college SEL level 4 Employment Employed full time 59% 113 Temporarily unemployed 16% 191 • Daily draw players are more likely SEL* Level 4 52% 113 to have played other games as Children in HH Yes 47% 112 well in the L12M No of people in HH 3 or more 64% 114 Source: USA NCS/NHCS 2009 doublebase *SEL (Socio Economic Level) consists of 4 levels based on education and ownership of durables where 1 is the highest and 4 lowest 11 Base: Illinois n=3,145; Daily Draw Player n=342 Attitudes (Any agree: top 20 sorted by index) % Index I choose a car mainly on the basis of looks 35% 147 I like to make a unique fashion statement 29% 144 IMAGE Almost every season I buy new clothes in order to keep up with the latest fashions 18% 141 A designer label improves a person’s image 17% 137 I am willing to spend more than I can really afford, to get the clothes that I want 27% 205 On several occasions I have surprised myself by buying clothing brands that I SPENDING 43% 150 normally don’t I spend a lot of money on toiletries and cosmetics for personal use 30% 140 I like to experiment with new clothing styles 38% 142 NEWNESS I am usually the first among my friends to try new food products 26% 138 I am usually the first among my friends to try new clothing styles 15% 136 I like to get a new car every two or three years 27% 184 American car companies set the standard in automotive engineering 37% 180 I keep up on the latest advances in automobile technology 35% 167 AUTOMOBILES Friends and family always ask my advice on what car they should buy 20% 155 Having a vehicle that can handle rough terrain is very important to me 40% 143 I often go for a drive by myself to gain a sense of freedom 37% 142 Money is the best measure of success 32% 142 AMBITION I would like to set up my own business one day 53% 139 I prefer driving a luxury vehicle 47% 146 QUALITY Most everything I wear is of the highest quality 34% 137 Source: USA NCS/NHCS 2009 doublebase 12 Base: Illinois n=3,145; Daily Draw Player n=342 Media Media Quintiles Index above 120 TV Cable channels (Lwk) % Index Quintiles 1 2 3 4 5 Starz 19% 211 BET 21% 172 TV 20% 21% 28% 17% 14% Bravo 18% 170 WGN America 24% 169 HBO 34% 160 Internet 14% 13% 14% 20% 17% CNN(cable news network) 33% 139 TBS 39% 135 Radio 29% 22% 23% 15% 12% Fox news channel 31% 135 USA network 31% 128 TNT 31% 124 Outdoor 16% 17% 26% 17% 23% Cable programmes(Lwk) % Index Films Tyler Perry's House of Payne 15% 310 CBS Evening News - Sunday 15% 285 Genre saw in theatre % Index CBS Evening News - Saturday 19% 274 Thriller 24% 152 Fox News Sunday 16% 268 Sci-Fi 26% 141 America This Morning (ABC) 21% 265 Action/adventure 42% 130 Extreme Makeover:Home(ABC) 20% 236 Drama 23% 116 ABC World News Tonight 27% 191 Animation 20% 104 20/20 (ABC) 28% 187 Comedy 30% 99 60 Minutes (CBS) 26% 158 Family 17% 78 CSI: Miami (CBS) 27% 152 Source: USA NCS/NHCS 2009 doublebase MNQ: Media Neutral Quintiles split the consumers of each medium into 5 equal- sized groups based on their level of consumption of the medium. Quintile 1 refers 13 Base: Illinois n=3,145; Daily Draw Player n=342 to the heaviest consumers and 5 the lightest consumers Media 2 Internet Print Activities (p30d) % Index Newspaper Titles (AIR) % Index New York Times 7% 230 Online gambling 10% 378 USA Today 12% 170 Listen to sattelite radio 6% 183 New York Times (sun/wknd) 4% 122 Employment search 19% 160 Wall Street Journal(sun/wknd) 4% 111 Video game info online 9% 150 Wall Street Journal 3% 98 Download movies 7% 137 Play/download online games 16% 126 Digital imaging/photos online 16% 125 Newspaper Sections % Index Sports 17% 120 Classifieds 27% 174 Medical services and info 16% 117 Fashion 9% 162 Instant messaging 14% 108 Movie listings & reviews 17% 150 Sports 28% 145 Sites (p30d) % Index Business/Finance 21% 132 Hotjobs.com 10% 279 Nfl.com 11% 209 Magazine Titles (AIR) % Index Careerbuilder.com 15% 179 Hot Rod 8% 345 Foxnews.com 8% 167 O, The Oprah Magazine 11% 218 Abc.com 13% 159 The National Enquirer 9% 208 Espn.com 12% 149 Jet 14% 202 Webmd.com 8% 135 Ebony 12% 196 Msn.com 15% 132 Good Housekeeping 10% 142 Ask.com 9% 128 People 18% 137 Dell.com 7% 127 Time 13% 124 Source: USA NCS/NHCS 2009 doublebase 14 Base: Illinois n=3,145; Daily Draw Player n=342 Retail Supermarkets (L4wks) Convenience stores (L4wks) Clothing & accessories (L3M) Speedway IGA Markets 5% 125 12% 208 Carson Pirie Scott 17% 164 SuperAmerica Cub Foods 5% 118 BP Connect 13% 152 Kmart 23% 163 Jewel-Osco 58% 116 CITGO Quick Mart 9% 141 Costco 5% 140 Wal-Mart Super Center 64% 112 Circle K 6% 137 Wal-Mart 45% 113 Meijer 14% 110 7-Eleven 26% 132 Sam's Club 9% 113 Save-A-Lot 13% 107 Quick Trip 5% 101 JCPenney 23% 109 Trader Joe's 9% 104 White Hen Pantry 6% 98 Sears 10% 102 Dominick's Finer Foods 22% 93 Target 25% 100 Whole Foods 5% 81 Kohl's 20% 78 Schnucks Markets 6% 62 Macy's 9% 74 Source: USA NCS/NHCS 2009 doublebase 15 Base: Illinois n=3,145; Daily Draw Player n=342 Sports/ leisure activities Top leisure activities/hobbies (L12M) (by index) Visit state fairs Visit an aquarium 10% 154 15% 132 Go carting Go to bars/pubs 7% 204 36% 139 Top sports activities (participated L12M) (by index) Attended in L12M Comedy club 13% 104 Concerts 26% 85 Dance performances 8% 84 Salt water fishing Volleyball Live theatre 24% 95 7% 184 18% 169 Softball Baseball Theme parks 24% 114 18% 209 26% 179 Source: USA NCS/NHCS 2009 doublebase 16 Base: Illinois n=3,145; Daily Draw Player n=342 Eating out Restaurants (most often) (by index) Fast food (most often) (by index) Chuck E. Cheese‘s 9% 234 White Castle 14% 193 IHOP (International House 16% 172 Popeyes 15% 175 Of Pancakes) Denny‘s 17% 172 Chipotle 6% 137 TGI Friday‘s 13% 136 Subway 28% 133 Old Country Buffet 9% 131 Long John Silver‘s 5% 133 Red Lobster 14% 130 Little Caesar's 6% 124 Outback Steakhouse 7% 122 McDonald's 61% 114 Olive Garden 13% 109 Dairy Queen 9% 114 Applebee‘s 17% 107 Steak 'N Shake 9% 106 Cracker Barrel 6% 76 Wendy‘s 15% 104 Source: USA NCS/NHCS 2009 doublebase 17 Base: Illinois n=3,145; Daily Draw Player n=342 Instant Game Lottery Players 18 Instant player Demographics & lottery participation More likely than average to be Middle Youth, Moderate Income Key facts (L12M): Of the adult population: 27% or 2.6m have played the lottery Of those that have played instant game: ¾ 29% have also played daily online game ¾ 54% have also played weekly online game Demographics % Index Gender Male 49% 103 • Tend to be middle-older ages and Female 51% 97 have completed high school Age 35-54 46% 133 education Marital status Married 54% 100 • Majority are employed full time, Education Graduated high school 51% 126 married, have children and have Employment Employed full time 58% 112 fairly large households of 3 SEL* Level 3 36% 139 people or more Children in HH None 58% 100 No of people in HH 2 36% 116 • Majority have also played weekly draw in L12M 3 or more 54% 96 Source: USA NCS/NHCS 2009 doublebase *SEL (Socio Economic Level) consists of 4 levels based on education Base: Illinois n=3,145; Instant Game Player n=731 and ownership of durables where 1 is the highest and 4 lowest 19 Attitudes (Any agree: top 20 sorted by index) % Index My friends are more important to me than my family 13% 146 I am more likely to buy products from companies that sponsor sports teams and PERSONALITY 16% 121 sports events I like to have control over people and resources 27% 119 A Sport Utility Vehicle (SUV) matches my active lifestyle 31% 131 I like to get a new car every two or three years 19% 127 AUTOMOBILES I often go for a drive by myself to gain a sense of freedom 32% 126 I often go on long car trips for vacations 41% 117 I’ll try any new diet 15% 123 HEALTH & Because of my busy lifestyle, I don’t take care of myself as well as I should 52% 120 LIFESTYLE I’m usually the first to try a new health food 19% 117 I cannot resist buying magazines 14% 130 I often notice the ads in the lobbies of movie theatres 42% 125 MEDIA Advertising helps me choose products to buy for my children 28% 124 The Internet has become a primary source of entertainment for my family 22% 122 I spend less time sleeping because of the Internet 12% 119 I tend to spend money without thinking 26% 122 SPENDING I spend a lot of money on toiletries and cosmetics for personal use 25% 120 I prefer to shop with my friends 32% 119 I often eat frozen dinners 25% 120 FOOD Often I can be swayed by coupons to try new food products 48% 119 Source: USA NCS/NHCS 2009 doublebase Base: Illinois n=3,145; Instant Game Player n=731 20 Media Media Quintiles Index above 120 TV Cable channels (Lwk) % Index Quintiles 1 2 3 4 5 Starz 17% 189 ABC Family 25% 157 TV 30% 21% 17% 14% 18% SCI-FI Channel 27% 156 TBS 41% 143 USA Network 34% 141 Internet 13% 16% 13% 19% 11% TLC 27% 136 Food Network 26% 135 Radio 34% 18% 20% 14% 13% HBO 28% 133 A&E 30% 131 ESPN 24% 127 Outdoor 15% 20% 28% 21% 15% Cable programmes(Lwk) % Index Films King of the Hill 17% 241 Hell's Kitchen (Fox) 12% 199 Genre saw in theatre % Index The Simpsons 16% 188 Sci-Fi 21% 114 The Biggest Loser (NBC) 15% 185 Action/adventure 36% 112 George Lopez (Weekend) 16% 173 Thriller 18% 112 CSI: Miami (CBS) 29% 165 Comedy 34% 111 House (Fox) 26% 157 Drama 21% 107 American Idol (Fox) 17% 153 Family 23% 106 Law & Order: SVU(NBC) 21% 147 Animation 20% 104 CSI: Crime Scene Inv. (CBS) 24% 130 Source: USA NCS/NHCS 2009 doublebase MNQ: Media Neutral Quintiles split the consumers of each medium into 5 equal- Base: Illinois n=3,145; Instant Game Player n=731 sized groups based on their level of consumption of the medium. Quintile 1 refers 21 to the heaviest consumers and 5 the lightest consumers Media 2 Internet Print Activities (p30d) % Index Newspaper Titles (AIR) % Index USA Today 8% 111 Download movies 11% 197 New York Times 3% 100 Listen to satellite radio 6% 182 Wall Street Journal(sun/wknd) 3% 84 Send electronic greeting cards 10% 154 New York Times (sun/wknd) 3% 75 Real estate listings 14% 151 Wall Street Journal 2% 61 Play/download online games 19% 147 Download music files 25% 132 Auctions 15% 132 Newspaper Sections % Index Employment search 15% 128 Classifieds 23% 151 Auto shopping/comparing 11% 125 Home/Furnishings/Gardening 9% 118 Banking 41% 124 Movie Listings & Reviews 13% 117 Comics 17% 116 Sites (p30d) % Index TV or Radio listings 10% 111 Hotjobs.com 8% 223 Gamespot.com 8% 192 Magazine Titles (AIR) % Index Dell.com 11% 184 The National Enquirer 10% 228 Netflix.com 8% 172 Essence 8% 179 Careerbuilder.com 14% 162 Woman‘s World 7% 178 Myspace.com 22% 131 Ebony 10% 166 Abc.com 11% 130 JET 11% 153 Yellowpages.com 11% 127 Good Housekeeping 11% 144 Ebay.com 25% 124 Consumer Reports 9% 129 Paypal.com 9% 120 Family Circle 8% 122 Source: USA NCS/NHCS 2009 doublebase Base: Illinois n=3,145; Instant Game Player n=731 22 Retail Supermarkets (L4wks) Convenience stores (L4wks) Clothing & accessories (L3M) Schnucks Markets 17% 179 Circle K 10% 213 Kmart 22% 158 IGA Markets 7% 173 Quick Trip 11% 208 Sam's Club 13% 158 Speedway Cub Foods 6% 144 11% 186 Meijer 7% 153 SuperAmerica Save-A-Lot 17% 139 CITGO Quick Mart 9% 141 Wal-Mart 60% 148 Kroger 18% 131 Bp Connect 12% 140 JCPenney 27% 127 Meijer 15% 115 White Hen Pantry 8% 131 Target 30% 118 Wal-Mart Super Center 64% 111 7-Eleven 25% 125 Kohl's 29% 115 Jewel-Osco 48% 95 Sears 11% 112 Whole Foods 6% 93 Carson Pirie Scott 11% 104 Dominick's Finer Foods 20% 83 Macy's 11% 91 Source: USA NCS/NHCS 2009 doublebase Base: Illinois n=3,145; Instant Game Player n=731 23 Sports/ leisure activities Top leisure activities/hobbies (L12M) (by index) Paint,draw,sculpt Card games 17% 128 53% 125 Play bingo Board games 11% 169 40% 127 Top sports activities (participated L12M) (by index) Attended in L12M Comedy club 16% 123 Concerts 33% 108 Dance performances 11% 113 Target shooting Softball Live theatre 24% 95 8% 149 12% 143 Karate Fresh water fishing Theme parks 27% 131 7% 162 25% 146 Source: USA NCS/NHCS 2009 doublebase Base: Illinois n=3,145; Instant Game Player n=731 24 Eating out Restaurants (most often) (by index) Fast food (most often) (by index) Hometown Buffet 5% 161 Taco Bell 24% 141 Chuck E. Cheese‘s 6% 161 White Castle 10% 132 Red Lobster 16% 156 Little Caesar‘s 6% 131 IHOP (International House 13% 141 Arby‘s 11% 119 Of Pancakes) Denny‘s 13% 135 Hardee‘s 5% 118 TGI Friday‘s 12% 126 Dairy Queen 9% 113 Ruby Tuesday 5% 125 McDonald's 59% 111 Applebee‘s 20% 124 KFC 15% 109 Chili's Grill & Bar 12% 123 Steak 'N Shake 8% 102 Golden Corral 5% 119 Burger King 23% 95 Source: USA NCS/NHCS 2009 doublebase Base: Illinois n=3,145; Instant Game Player n=731 25 Weekly Online Game Lottery Players 26 Weekly Online Player Demographics & lottery participation More likely than average to be Married Males, Middle Income Key facts (Last 12M): Of the adult population: 27% or 2.6m have played the lottery Of those that have played weekly draw: ¾ 24% have also played daily online game ¾ 43% have also played instant game Demographics % Index Gender Male 60% 126 • Typically male, well educated, Age 35-54 46% 132 employed and in SEL 2 Marital status Married 66% 121 • Tend to be aged between 35 & 54 Education Attended college 26% 121 • Majority have children Employment Employed full time 67% 129 • More likely to also have played SEL* Level 2 26% 134 daily draw and instant games in Children in HH None 61% 105 L12M No of people in HH 2 36% 116 3 or more 49% 88 Source: USA NCS/NHCS 2009 doublebase *SEL (Socio Economic Level) consists of 4 levels based on education Base: Illinois n=3,145; Weekly Draw Players n=960 and ownership of durables where 1 is the highest and 4 lowest 27 Attitudes (Any agree: top 20 sorted by index) % Index I am good at fixing mechanical things 50% 130 TECHNICAL My friends often ask for my advice before buying electronic equipment 22% 119 I am good at fixing things 61% 118 Money is the best measure of success 26% 115 AMBITION I look at the work I do as a career rather than just as a job 47% 114 I keep up on the latest advances in automobile technology 26% 122 I like to drive faster than normal traffic 41% 121 A Sport Utility Vehicle (SUV) matches my active lifestyle 28% 121 AUTOMOBILES I often go on long car trips for vacations 41% 118 I often go for a drive by myself to gain a sense of freedom 30% 118 Friends and family always ask my advice on what car they should buy 15% 117 I am possessive about my car 44% 115 I read the financial pages of my newspaper 34% 124 The Internet has changed the way I shop for products/ services 41% 119 The Internet has changed the way I work 35% 118 MEDIA It is safe to make purchases online 49% 117 Often I can be swayed by coupons to try new food products 46% 116 I get more and more of my news from the Internet 42% 114 Because of my busy lifestyle, I don’t take care of myself as well as I should 51% 118 HEALTH & DIET Fast food fits my busy lifestyle 28% 116 Source: USA NCS/NHCS 2009 doublebase Base: Illinois n=3,145; Weekly Draw Players n=960 28 Media Media Quintiles Index above 120 TV Cable channels (Lwk) % Index Quintiles 1 2 3 4 5 Spike 17% 140 American Movie Classics 22% 139 TV 28% 22% 18% 14% 18% WGN America 19% 133 FX 17% 131 HLN 14% 130 Internet 18% 16% 12% 18% 14% Starz 12% 130 TCM 14% 128 Radio 31% 20% 24% 14% 11% History 32% 126 SCI-FI Channel 22% 124 Comedy Central 21% 121 Outdoor 22% 21% 26% 16% 16% Cable programmes(Lwk) % Index Hell‘s Kitchen (FOX) 10% 163 Films CBS Evening News – Sat 11% 160 Dateline (NBC) 12% 157 Genre saw in theatre % Index House (FOX) 23% 140 Drama 24% 119 Two and a half men 18% 138 Action/adventure 37% 115 Law & Order: SVU (NBC) 19% 137 Sci-Fi 20% 111 American Idol (FOX) 15% 134 Thriller 17% 108 CSI: Miami (CBS) 23% 133 Animation 20% 106 Law & Order: Criminal Intent 15% 132 Comedy 32% 103 Without a Trace (CBS) 16% 130 Family 20% 92 Source: USA NCS/NHCS 2009 doublebase MNQ: Media Neutral Quintiles split the consumers of each medium into 5 equal- Base: Illinois n=3,145; Weekly Draw Players n=960 sized groups based on their level of consumption of the medium. Quintile 1 refers 29 to the heaviest consumers and 5 the lightest consumers Media 2 Internet Print Activities (p30d) % Index Newspaper Titles (AIR) % Index Wall Street Journal 4% 131 Listen to radio online 11% 154 USA Today 8% 118 Real estate listings 14% 152 Wall Street Journal(sun/wknd) 4% 117 Send cards online 10% 151 New York Times (sun/wknd) 3% 94 Medical services & info 20% 143 New York Times 3% 92 Auto shopping/comparing 13% 143 Financial info/Stock trading 14% 140 Banking 44% 133 Newspaper sections % Index Employment search 16% 132 Classified 22% 144 Download/listen to podcasts 10% 131 Front page 41% 118 Air/Car/Hotel info/reservations 30% 130 General news 36% 117 Sports 22% 117 Sites (p30d) % Index Editorial 19% 117 Cnn.com 14% 177 Bestbuy.com 22% 156 Magazine Titles (AIR) % Index Hotmail.com 14% 150 Consumer Reports 9% 133 Itunes.com 19% 143 People 17% 124 Msn.com 16% 139 TV Guide 8% 123 Ebay.com 27% 136 O, The Oprah Magazine 6% 121 Weather.com 21% 135 National Geographic 8% 115 Craigslist.org 16% 131 Time 11% 109 Mapquest.com 32% 127 AARP, The Magazine 14% 106 Yahoo.com 45% 121 Reader's Digest 9% 104 Source: USA NCS/NHCS 2009 doublebase Base: Illinois n=3,145; Weekly Draw Players n=960 30 Retail Supermarkets (L4wks) Convenience stores (L4wks) Clothing & accessories (L3M) IGA Markets 6% 155 Quick trip 10% 205 Nordstrom 5% 150 Schnucks Markets 15% 153 BP Connect 11% 134 Target 33% 131 Trader Joe's 11% 128 White Hen Pantry 8% 131 Meijer 6% 127 Speedway Meijer 16% 124 8% 130 Kohl's 32% 125 SuperAmerica Dominick's Finer Foods 26% 111 7-Eleven 25% 126 Wal-Mart 50% 123 Wal-Mart Super Center 59% 103 Circle K 6% 120 JCPenney 26% 123 Whole Foods 6% 99 CITGO Quick Mart 7% 111 Sears 12% 121 Jewel-Osco 49% 98 Macy's 13% 115 Kroger 13% 96 Sam's Club 9% 113 Save-A-Lot 11% 85 Kmart 15% 108 Source: USA NCS/NHCS 2009 doublebase Base: Illinois n=3,145; Weekly Draw Players n=960 31 Sports/ leisure activities Top leisure activities/hobbies (L12M) (by index) Woodwork Visit a zoo 11% 148 34% 121 Tailgating Gardening 10% 179 33% 121 Top sports activities (participated L12M) (by index) Attended in L12M Comedy club 16% 129 Concerts 36% 117 Dance performances 12% 116 Billiards/pool Motorcycling Live theatre 29% 115 26% 129 8% 126 Fresh water fishing Golf Theme parks 22% 106 28% 160 20% 129 Source: USA NCS/NHCS 2009 doublebase Base: Illinois n=3,145; Weekly Draw Players n=960 32 Eating out Restaurants (most often) (by index) Fast food (most often) (by index) Red Lobster 15% 143 Taco Bell 23% 138 Lone Star Steakhouse & 5% 141 Dairy Queen 11% 136 Saloon Golden Corral 6% 139 Arby‘s 11% 122 IHOP (International House 12% 129 KFC 16% 119 Of Pancakes) Chili's Grill & Bar 12% 122 Wendy‘s 17% 116 Olive Garden 14% 116 Starbucks 11% 116 Outback Steakhouse 7% 116 Panera Bread 9% 116 Applebee‘s 19% 114 McDonald's 59% 111 Denny‘s 10% 99 Burger King 26% 106 Old Country Buffet 7% 94 Little Caesar‘s 5% 105 Source: USA NCS/NHCS 2009 doublebase Base: Illinois n=3,145; Weekly Draw Players n=960 33 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 REVENUES $ 2,658 $ 3,062 $ 3,392 $ 3,718 $ 3,891 Ticket Sales $ 2,619 $ 3,017 $ 3,342 $ 3,664 $ 3,835 Bricks & Mortar 2,612 2,986 3,285 3,581 3,736 Instant Games 1,430 1,699 1,897 2,031 2,115 On-line Games 1,182 1,288 1,388 1,550 1,621 State games 706 781 859 922 990 Multi-state games 476 506 528 628 631 Internet Pilot Program 7 31 57 83 99 Other Operating Revenues 39 45 50 54 56 Unclaimed prizes 33 37 41 45 47 Other revenues 6 8 9 9 9 EXPENSES $ 1,897 $ 2,180 $ 2,410 $ 2,628 $ 2,745 EXPENSE TYPE NOTES Direct Expenses $ 1,727 $ 2,001 $ 2,220 $ 2,427 $ 2,538 Prizes $ 1,595 $ 1,850 $ 2,054 $ 2,246 $ 2,349 VARIABLE % of ticket sales Bricks & Mortar 1,591 1,834 2,025 2,203 2,297 VARIABLE % of ticket sales Instant Games 984 1,172 1,311 1,406 1,464 VARIABLE % of ticket sales On-line Games 608 662 714 797 833 VARIABLE % of ticket sales State games 367 406 447 480 515 VARIABLE % of ticket sales Multi-state games 241 256 267 317 318 VARIABLE % of ticket sales Internet Pilot Program 3 16 29 43 52 VARIABLE % of ticket sales Retailer Commissions and Fees 132 151 166 181 189 VARIABLE % of ticket sales Operating Expenses 171 179 190 201 207 Management Fee 36 37 37 37 37 VARIABLE Incl headcount and capital support overhead charge Lottery Expenses $ 134 $ 142 $ 153 $ 164 $ 171 Marketing and Branding 31 36 40 43 45 VARIABLE % of ticket sales Customer Loyalty / Engagement Programs and Other Customer Insights 4 5 3 3 3 FIXED Operating leases with maintenance expenses grown at 2.5% Game Development / R&D 5 - - - - FIXED Grown at 2.5% from FY09 levels Gaming Platforms 35 29 33 36 38 VARIABLE % of gross margins Other IT and Infrastructure / Technology 11 17 18 19 20 MIXED Grown at 2.5% from FY09 levels/ % of internet ticket sales Telecommunications 7 8 9 9 9 VARIABLE Number of retailers and fee amounts, fees grown at 2.5% Logistics 6 8 9 9 9 VARIABLE % of ticket sales EUA Salaries and Other EUA Employment Costs 15 15 16 16 16 FIXED Grown at 2.5% from FY09 levels Other 20 25 27 29 29 Instants printing and disposal costs, commodities 12 14 16 17 18 VARIABLE % of instant ticket sales, $0.4m fixed cost Leased in-store equipment 1 3 4 4 4 VARIABLE Number of retailers and PPOS costs Corporate social responsibility 1 1 1 1 1 FIXED Grown at 2.5% Contractual services-other, professional services 2 2 2 2 2 FIXED Grown at 2.5% from FY09 levels Depreciation 1 2 2 2 2 FIXED Straight line depreciation expense of assets Other (SME Costs, Shared Services, Automotive Equipment) 2 2 2 2 2 FIXED Grown at 2.5% from FY09 levels Foundation expense 1 1 1 1 1 FIXED Grown at 2.5% NET OPERATING INCOME $ 761 $ 882 $ 982 $ 1,090 $ 1,146 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Net Income Target Net Income Targets will be submitted in a sealed envelope in accordance with the guidance letter of 25th August 2010
"Final Binding Offer List of Redacted items"