Together we can CHANGE the World INTRO: Kurt Freedlund General Counsel, SVP

The Power WE possess… Together the category generates more than $6.2B! U.S Population of Mega Millions only + Cross-sell States: 268M Average Weekly Sales: $59M Annual Sales: $3B U.S Population of Powerball only + Cross-sell States: 254M Average Weekly Sales: $63M Annual Sales: $3.2B Our jackpot brands are incredibly valuable assets both in terms of the populations they reach and the sales they generate. Let’s take a closer look at the statistics: In 2010, the population of those states selling Mega Millions amounted to a staggering 268 million with total annual sales of 3 billion. Powerball’s population exposure was similarly impressive at 254 million with annual sales of $3.2bn. Together the category generates more than $6.2B! Source: GTECH

National Brand Landscape… These sales levels prompt two important questions. First: How do we compare with nationals brands? Second: Are we investing in our brands at appropriate levels? Let’s take a look at the national brand landscape to get some insight.

We have two national brands in our portfolio… US Sales: $15.4B Advertising Spend: $1B US Sales: $23B Advertising Spend: $1B US Sales: $8B Advertising Spend: $234M US Sales: $6.5B Advertising Spend: $592M The data make for an interesting read. Anheuser Busch has annual sales of $36bn and spends $1bn on advertising. Coca-Cola has annual sales of $8bn with an advertising spend of $234million dollars. The Home Depot earns $59bn in the USA with an ad spend of $472million. Macy’s earned $23billion dollars with an ad spend of $1bn. Nike earned $4bn with an ad spend of $592 and Apple earned $22bn with an ad spend of $377m. US Sales: $59B Advertising Spend: $472M US Sales: $22B Advertising Spend $377M Advertising Age: 2009 Figures

We have two national brands in our portfolio… US Sales: $65B Advertising Spend: $1.1B US Sales: $30.8B Advertising Spend: $2B US Sales: $37B Advertising Spend: $555M US Sales: $4B Advertising Spend: $532M Here are more great examples. J&J – US sales of $31billion and an ad spend of $2bn Best Buy – US sales of $37bn and an ad spend of $555m The GAP – US sales of $11bn and an ad spend of $419m Target – US sales of $65bn and an ad spend of $1.1bn Visa – US sales of $4bn and an ad spend of $532m Kelloggs – US sales of $7.9bn and an ad spend of $857m US Sales: $11B Advertising Spend: $419M US Sales: $7.9B Advertising Spend: $857M Advertising Age: 2009 Figures

National Brand Landscape… The reality is that these brands stand tall on the national brand landscape and deserve our attention and collaboration. Advertising Age: 2009 Figures

Our business is driven by jackpot games…. Let’s not forget the relative importance of these brands. I am sure that all of our jurisdictions have similar sales charts demonstrating the high correlation between jackpot games and total sales. Spikes in jackpot games drive spikes in our total sales. In other words, these brands have incredible value within our overall portfolios. GLC Econometrics Study 2009

Jackpot games affect our sales in two different ways…. 1. 65% of our jackpot game business is incremental Interestingly, jackpot games affect our business in two distinct ways. First, 65% of our jackpot game sales is incremental. That’s a significant level of business from occasional players. GLC Econometrics Study 2009

Jackpot games affect our sales in two different ways…. 2. High jackpots lift total sales in a separate effect The second way in which jackpot games affect our sales is specifically through high jackpots which lift sales of all games. Simply put – jackpots drive our business GLC Econometrics Study 2009

Together, these brands have power … Represent the “People” Create alliances Develop creative & promotional content Build Brand Awareness & Domination And together these brands have power. The power to Represent the “People” Create alliances Develop creative & promotional content Build Brand Awareness & Domination

With this national power… We have the strength to create programs that not only reach national audiences, but affect each audience. Let’s look at an example…

Here are two VERY successful concepts that are changing the world for some folks. One, a weekly TV show and the other is one of the most talked about, most entered promotion of the year. What do they have in common…they both address our basic need for shelter.

ABC’s Extreme Home Makeover find deserving people who are living in sub-standard conditions, and who are unable to afford better. They find local builders and construction workers, and partner with Sears and other national brands to totally demolish, then reconstruct the family’s home. Check out these before after pictures.

OK, so who’s not entering this annual giveaway OK, so who’s not entering this annual giveaway? This year’s HGTV Dream Home contest which is one of the most-anticipated sweepstakes ended on February, 5. The 2011 contest  gives  participants a chance to win a $2 million prize which includes the dream home itself, the land lot the house sits on, professional interior decor and landscaping design, several artworks, a “Doggie Dream Home,” $500,000 in cash, and finally a GMC crossover Denali Acadia SUV! So… why aren’t we as a family of lotteries doing this?

Let’s talk about changing our world… With foreclosures and the housing slump still a major concern for families and the economy as a whole, a Powerball or Mega Millions branded promotion would be perfectly positioned to bring excitement and the dream of owning a home back to the forefront.

In partnership with a few strategic partners, subsidizing the construction cost of the first nationwide home giveaway would be an attractive marketing program. Networks like ABC or HGTV could literally build a season long TV show around…

New Hampshire New Jersey New Mexico New York North Carolina Arizona Arkansas California Colorado Connecticut Delaware D.C. Florida Georgia Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Missouri Montana Nebraska New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Vermont Virginia Washington West Virginia Wisconsin …the construction of 44 dream homes in 44 different states. Yes, one winner in each state! Let’s say that Good Morning America is our broadcast partner. We would have them to stage the drawings of the winners. Each state would have it’s own drawing pool. This promotion would require online entry. In states that would permit consideration, entrants would enter their Mega Millions or Powerball ticket number. Winners would have the option to select one dream house from the 12 options. Only 1 selection per entry/serial number.

In conclusion…..