GROWING IN-STORE SALES THROUGH THE INTERNET

Turning non-players into customers

Offering Online Scratch Sales Target Start date December 17, 2013
(subject to change)

When introduced, same games offered as available in stores Recognizable lottery products

Easily translatable to in-store offerings

Same prices as in-store

Benefits to Retailers
Increased product awareness Increased sales Increased Internet promotional opportunities Clean the slush off your car at Joes free of charge
Corner Store 205 Broadway Sleepy Eye, MN!!!
Free Car Wash with Gas Fill!! January 2, 2014 January 30, 2014

How Can an Internet Presence Have a Positive Impact on Retailers Sales?

A multi-channel strategy broadens the demographic base Increasing awareness of lottery products seen and played on the Internet, translates to purchases in-store for non-players Increased mobile accessibility reaches millions of users Retailer promotions will pull customers into the stores

Minnesota Player Demographic Changes

Minnesotas young adult player base has decreased in the last 10 years*
AGE YEAR % PURCHASING A TICKET

18-24 18-24 25-34 25-34

2003 2012 2003 2012

52% 29% 68% 45%

*St. Cloud State University Lottery Surveys

Results from Minnesota

Expanding the player base creates awareness of Lottery products: Play at the Pump average pilot retailer increased in-store Powerball & Mega Millions sales by 2% (as of 8/5/13) Sales at ATMs have had no impact on brick-and mortar stores Since the inception of Lotto games subscriptions, there has been no effect on brick-and-mortar stores and only represents .27% of total lotto sales

Results from Europe

Several countries in Europe have sold on the Internet now for quite a few years with success not only on the Internet but at retail*.
LOTTO GAMES
12% 10% 8% 6% 4% 2% 0%

SCRATCH GAMES
40% 35% 30% 25% 20% 15% 10% 5% 0%

11% 5%
RETAIL (countries selling on internet)

38%

28%
10%

6%

RETAIL DIFFERENCE (no internet)

RETAIL (countries selling on internet)

RETAIL DIFFERENCE (no internet)

130% INCREASE
(over Lotteries without Internet sales)
*Scientific Games European Snapshot (through 2011 comparison)

37% INCREASE
(over Lotteries without Internet sales)

Results from Europe cont.

Excerpts taken from the January, 2013 Spectrum Gaming Groups report compiled for the Massachusetts Treasurers Online Products Task Force shows similar results:
Finland introduced online sales in 1997 and has seen retail sales grow by 1 billion since then with 67% coming from traditional retailer channels In Britain, which introduced online sales in 2003, overall lottery sales increased by almost 2 billion and retail commissions increased by more than 8% Belgium introduced Internet sales in 2010 and since then overall lottery sales have increased 16% with 73% of the increase coming from retail channels

Why Now?
With the proliferation of Internet usage and the current young adult generation growing up using nothing but the Internet and mobile devices, traditional Lottery has become irrelevant and invisible we are not on their radar The percent of non-players in Minnesota is 34%.* And, in the 18-24 year age group, 67% have never played the lottery.* Retailers in Massachusetts reported 39% of customers were non-lottery purchasers based on the Spectrum Gaming Groups study Todays young adults are accustomed to easy accessibility and convenience. A 2012 survey found that one-third of the Minnesota young adults (18-34) who dont play lottery tickets say its because lottery games are not convenient to buy. Only 14 percent of non-players 35 and older mentioned this as a reason.** Retailers around the world are faced with the same shift in the marketplace and are embracing the same strategy
*2012 St. Cloud State University Study **Ipsos Reid Survey

Summary
Creating a multi-channel strategy will increase sales in all channels as the retail industry is realizing

In order to remain viable, all industries need to fish where the fish are in order to benefit all parties The changing marketplace requires us all to work together to remain solvent in the coming years

RETAILER PROMOTION/COUPON OFFERINGS ON MINNESOTA STATE LOTTERY WEBSITE(s)

Active Lottery retailers may use the Lotterys website (mnlottery.com) and the online website (mnlottery-ilottery.com) to advertise their in-store promotions, including coupon offers, store specials, etc.
Its an easy way to get the word out to customers that dont typically stop in your store but may see the offering on the internet, without needing in-house staff expertise to develop this access yourself. Its as easy as 1, 2, 3: 1) Develop your coupon, special, or promotion on an 8 x 11 page and save as a .jpg or .pdf file. Be sure to include the dates the offer is valid if applicable, i.e. offer valid January 1, 2014 through January 23, 2014. 2) Email the .pdf or .jpg to retailerpromo@mnlottery.com at least five (5) business days before the beginning of each month. 3) Be sure to include your store name, address, city, contact name and phone number in case there are questions. Thats it. We will post all offers at the beginning of each month as long as we have the file five (5) business days before the beginning of the month. If you do have your own website, we can also put in a link to your website to further expand the visibility of your message. If you have multiple locations, one offering will have to be used for all locations. All offerings will be listed on our website(s) alphabetically by retailer city. The first time you use this opportunity to expand your internet presence, we will ask that you complete and email the Retailer Promotion/Coupon Internet Agreement to amyj@mnlottery.com. This form is available at: http://www.mnlottery.com/_asset/bn1970/EIT_Retailer_Promotion_Agreement.pdf. The promotions will be available at: http://www.mnlottery.com/info_for_retailers/retailer_promotions/ If you have any questions on this, please call Amy Jaeger at 651-635-8233 or email amyj@mnlottery.com. All products, services and content must be appropriate for the Lotterys website.

RETAILER PROMOTION/COUPON INTERNET AGREEMENT

I, the undersigned, agree to: Allow the Minnesota State Lottery to post my submitted promotions, ads, coupons or any other specials and materials on the Lotterys website(s) mnlottery.com and mnlottery-ilottery.com;

Allow the Minnesota State Lottery to link to our website if requested by us from the Lotterys website(s) mnlottery.com and mnlottery-ilottery.com;
Hold the Minnesota State Lottery harmless for any errors on the Lotterys websites caused by the Retailers misprints in the submission documents, and that the Lottery will not be liable for any offerings; and Waive any liability for delays in postings or website downtimes.

Retailer # Retailer Name

Retailer Address, City, State, Zip Code

Owner or Authorized Signer Signature

Date The Minnesota State Lottery reserves the right to refuse postings of inappropriate submissions.