Presentation to California State Lottery Commission November 08, 2018 Director’s Comments Presentation to California State Lottery Commission November 08, 2018 Director’s Report 6A

General Business Update Overview General Business Update YTD Sales Update Agenda Action Items 8(a) - Office Depot Contract Amendment 8(b) - Lottery Financial System Upgrade – Procurement of Epicor 10 Software and Implementation Services 8(c) - United Parcel Service (UPS) Contract Amendment Good morning Commissioners and welcome back to Sacramento. For today’s director’s report, I will provide our year to date sales picture As well as a few general information items of interest After going over the voting item agenda, Jim Hasegawa will provide research information about who plays the lottery

Sales Update: YTD Sales Ahead of Goal and Last Year

Fiscal Year-to-Date Estimated Profits are Solid and Well Above Goal With the recent big jackpots, our profit estimates are now well-above goal Although sales are 11% ahead of goal, profits are currently 20% ahead of goal YTD Profits from Draw Games account for 56% of total; Last Year it was 44% % of Goal Total Sales 111% Total Profits 120% Scratchers Profits 98% Draw Game Profits 148%

Big Jackpots in October Drove Sales MEGA Millions: 26 draws from $40 million to over $1.5 billion Sales for $1.537 billion jackpot were $116 million in CA $1 Billion Jackpot $667 Million Jackpot $548 Million Jackpot

$1.537 Billion Mega Millions Jackpot and $688 Million Powerball Jackpot CA:15.7% of U. S. Sales for Oct 23rd MM draw Peak sales during evening commute averaged over $164,000 per minute in CA About 32% of CA adults participated in that draw For the sequence, our sales totaled $358 million with total profit for education over $143 million For Powerball’s jackpot on Oct 27, CA sales were $20.8 million

CA Still in 2nd Place; But Closing the Gap with NY FY 2015: $1.73 B behind NY FY 2017: $1.45 B behind NY FY 2018: $962 million behind NY

Most Lotteries Grew Sales in FY 18 CA 6th Best Percentage

California’s 12% Growth is Tops Among Large Lotteries

FY 2017-28 U.S. Lottery Industry Review Other Rankings: CA Instant Ticket Sales: 1st Place ranking CA MEGA Millions Sales: 1st Place ranking CA Powerball Sales: 1st Place ranking CA In-State Lotto Sales (SLP): 2nd Place ranking CA Hot Spot Sales: 6th Place ranking CA Total Lottery Sales Per Capita: $175 (25th rank)