for Colorado Lottery by Simon Jaworski Colorado Lottery Tracking Study The Hispanic & Non-Hispanic Market Differentials October 2011 (W3)

2 2 Key Findings

3 3 Hispanic Report: Key Findings (1)   Hispanic respondents have greater past month playership numbers than non-Hispanics across all games, significantly greater in Powerball and Mega Millions.   $2 Powerball is more likely to cause Hispanics to alter their Powerball spend both positively and negatively, more than Non-Hispanics.   Clarity of the changes is going to be critical in communications.   Hispanic respondents also express their plans to purchase CO Lottery games in the future more strongly than non-Hispanics.   Hispanics appear to be more aware of/familiar with Mega Millions than Non- Hispanic respondents   However, Hispanics are more likely to not think of playing Mega Millions.

4 4 Hispanic Report: Key Findings (2)   Hispanics were more likely to be driven to purchase Scratch Games tickets by a ‘lucky’ feeling, than any other factor, significantly higher than non-Hispanics.   Hispanic respondents are significantly more likely to purchase CO Lottery tickets at convenience stores than non-Hispanics.   Over ¼ of Hispanics rated the website as a 10 on a scale of 1 to 10, significantly greater than Non-Hispanics   Non-Hispanic reported awareness of and participation in loyalty programs is significantly greater than Hispanics. However, Hispanics participation in department store loyalty programs was significantly higher than Non- Hispanics.   Hispanics are more likely to access social media using their mobile phone, while Non-Hispanics are more likely to use PC   Hispanics are more likely to be influenced to play by hearing about local winners and are also more likely to believe their chances of winning the lottery are good than Non-Hispanics

5 5 Games Played In … Total Market   Hispanic respondents are significantly more likely to have played a multi- state online game (Powerball or Mega Millions) in the past month Q15.IN THE PAST YEAR, which of these Colorado Lottery games have you played? Q16.AND IN THE PAST MONTH, which of these Colorado Lottery games have you played? Total Lottery Playership Scratch Games Powerball Lotto Mega Millions Cash 5 MatchPlay Raffle tickets None … Past Year… Past Month Hispanic (B) (n = 130) Non-Hispanic (C) (n = 474) Lower case letters indicate a significant difference across player groups at the 90% confidence level Capital letters indicate a significant difference across player groups at the 95% confidence level C c

6 6 Hispanic/Non-Hispanic Outlets Where CO Lottery Tickets Purchased Regularly   Hispanic respondents are significantly more likely to purchase CO Lottery tickets at convenience stores   While Non-Hispanics are more likely to purchase at grocery stores Lower case letters indicate a significant difference across player groups at the 90% confidence level Capital letters indicate a significant difference across player groups at the 95% confidence level Q18.From which of the following outlets do you regularly purchase your Colorado Lottery tickets? Convenience Stores Grocery Liquor Stores Restaurant/Bar Other Outlets C

7 7 Mean Rating: Hispanic/Non-Hispanic Likelihood to Purchase CO Games in the Future   Hispanic respondents also express their plans to purchase CO Lottery games in the future more strongly than Non-Hispanics. Lower case letters indicate a significant difference across player groups at the 90% confidence level Capital letters indicate a significant difference across player groups at the 95% confidence level 5-point scale where ‘5’ means Definitely Purchase and ‘1’ means Definitely Not Purchase Q23.How likely are you to purchase Colorado Lottery games in the future? Top 2 Box: 70% c 61% C

8 8 Hispanic/Non-Hispanic Importance When Deciding to Buy Scratch Games   Hispanics are more likely to be driven to purchase Scratch Games tickets by a lucky feeling Note: Capital letters indicate a significant difference across player groups at the 95% confidence level *Base=Respondents who have played Scratch games in the past year Q30.Please think about the last time you bought Scratch games. Below is a list of reasons that may or may not have been important to you in deciding to buy these Scratch games. Please check whether each reason was important or not important in deciding to buy the Scratch games. I had spare money I felt lucky I saw the scratch tickets I remembered the advertising I saw a lottery sign The sales clerk mentioned it Reasons for Deciding to Buy Scratch Games

9 9 Hispanic/Non-Hispanic At What Jackpot Amount Do You Begin Playing Powerball   Jackpot denominations see little difference between Hispanics and Non- Hispanics as to when they start playing. Note: Capital letters indicate a significant difference across player groups at the 95% confidence level *Base=Respondents who have played Powerball in the past year Q37.At what jackpot amount do you begin playing Powerball? Size of Jackpot doesn’t matter Mean Amount: $76M $75M

10 Impact of $2 Powerball on Total CO Lottery Spend   $2 Powerball is more likely to cause Hispanics to alter their Powerball spend both positively and negatively, more than Non-Hispanics.   Clarity of the changes is going to be critical in communications. *Base=Respondents who have played Powerball in the past year Q39f.How do you think a $2 Powerball game would affect your spending on the range of Lottery games you currently play, including Powerball? Hispanic (B) (n = 60) Non-Hispanic (C) (n =211) W3 Spend Same on PB and Other Spend more on PB, keep other same Spend more on PB, lower other Spend less on PB, keep other same Spend more on PB, more on other Spend less on PB, more on other Spend less on PB, lower other Don't Know C b C Lower case letters indicate a significant difference across player groups at the 90% confidence level Capital letters indicate a significant difference across player groups at the 95% confidence level

11 Reason for Not Buying Mega Millions Ticket   Hispanics appear to be more aware of/familiar with Mega Millions than Non- Hispanic respondents   However, Hispanics are more likely to not think of playing Mega Millions. *Base=Respondents who have played Powerball and not played Mega Millions in the past year Q51.In the PAST YEAR, you said you have played Colorado Lottery’s Powerball game, but not the Mega Millions game. Both games are very similar, being National Jackpot drawing games, so what is the main reason you have not bought a Mega Millions ticket? Hispanic (B)Non-Hispanic (C) (n = 37*)(n = 122*) Not aware of/Familiar with the game8%23% B Poor odds/hard to win0%3% Prefer Powerball/Used to playing Powerball11%10% Have not thought/Don't think about playing it24% C7% I don’t have the money11%13% I don’t think I’ll ever win0%2% Powerball has a higher payout0%2% Just haven’t tried Mega Millions yet8% C2% Familiar with Powerball0%3% I play/Prefer to play other Colorado lottery games (game unspecified) 3%2% Don't like Mega Millions0%1% Other8%5% No reason11%8% Don’t Know8%9% Lower case letters indicate a significant difference across player groups at the 90% confidence level Capital letters indicate a significant difference across player groups at the 95% confidence level

12 Hispanic/Non-Hispanic Days of the Week Typically Buy Lottery Tickets   Opportunity exists with the Hispanic market for mid-week play. Lower case letters indicate a significant difference across player groups at the 90% confidence level Capital letters indicate a significant difference across player groups at the 95% confidence level *Base=Respondents who have played games in the past year Q61.On which days of the week do you typically buy Lottery tickets? Monday Tuesday Wednesday Thursday Friday Saturday Sunday B

13 Loyalty Programs/Clubs   Hispanics are significantly less likely to be aware of and participate in loyalty programs in general.   However, Hispanics are significantly more likely to participate in department store loyalty programs Lower case letters indicate a significant difference across player groups at the 90% confidence level Capital letters indicate a significant difference across player groups at the 95% confidence level *Base=Respondents who participate in loyalty programs Q5aw3Do you know what a Loyalty, VIP, Affinity or Rewards Club is? Q5bw3Loyalty, VIP, Affinity or Rewards Club programs are partnerships in which one company offers special rates or services to their members when their services are used on a repeated basis. Allowing members to earn points, credits or in some cases miles. Do you actively participate in any such club or program? Q5cw3Which of the following loyalty programs do you participate in? Aware of Loyalty Programs/Clubs Hispanic (B) (n = 130) W3 Participate in Loyalty Programs/Clubs Hispanic (B) (n = 130) Non-Hispanic (C) (n = 474) Non-Hispanic (C) (n = 474) Supermarket (Safeway, Albertson, King Soopers) Credit card programs (like American Express, Discover Card) Frequent Flyer Programs (Delta, US Air) Hotel Programs (Marriott, Hilton) Restaurants (Subway, Panera Bread) Department Stores (Macy's, Dillard, Kohls) Casinos (Foxwoods, Cherokee) Specialty Store (DSW, Toys R Us) Food/Beverage (Coke) Drug Stores (CVS, Walgreens) Video Game Stores (Game Shop) Online survey panels Other Loyalty Programs Participate In B C B C c

14 Social Media Access   Hispanics are significantly more likely to access social media using their mobile phones, while Non-Hispanics are more likely to use PC Lower case letters indicate a significant difference across player groups at the 90% confidence level Capital letters indicate a significant difference across player groups at the 95% confidence level *Base=Respondents who use social media Q7c. How do you access social media? W3 PC (Desktop or Laptop) Mobile Phone Tablets (such as IPads) Other Hispanic (B) (n = 91*) Non-Hispanic (C) (n = 336*) B c

15 Rating of Colorado Lottery Website Design   Hispanic respondents are significantly more likely to rate the website a 9 or 10 on a scale of 1 to 10 than Non-Hispanics   Over ¼ of Hispanic respondents rated the website at 10 *Base=Respondents who have visited the CO website Q10.On a scale of 1 to 10, where 10 is an excellent website that offers you everything you need to know about the Colorado Lottery and its games, and is easy to use, and 1 is a poorly designed website that is difficult to use, how would you rate the Colorado Lottery website? Mean Rating: Top 2 Box: 43% C 30% (n = 65*) Lower case letters indicate a significant difference across player groups at the 90% confidence level Capital letters indicate a significant difference across player groups at the 95% confidence level (n = 250*) C b Top 3 Box: 63% 61%

16 Lottery Statements – Agree – Top 2 Box %   Hispanics are significantly more likely to believe that their chances of winning the lottery are good and are more likely to play when they’ve heard of local winners Q63.On a 1 to 5 scale, where 5 is Strongly Agree and 1 is Strongly Disagree, please rate how much you agree or disagree with each of the following Lottery statements… It is unlikely that I will increase my spend on the Lottery in the future. The Lottery has been an overall benefit to the state of Colorado. The Colorado Lottery has been run honestly. The price of gas has directly lowered my spend on the Colorado Lottery. The state of the economy has had a direct effect on my Lottery spending habits. The lottery is an inexpensive form of entertainment. I am more likely to play lottery games when I've heard about a local winner. The chances of winning a prize in the Colorado Lottery are good. Top 2 Box Scores 5 = Strongly Agree, 4 = Somewhat Agree 1-5 scale Lower case letters indicate a significant difference across player groups at the 90% confidence level Capital letters indicate a significant difference across player groups at the 95% confidence level C C B

17 Hispanic Market: Recommendations 1. 1.Hispanic players love the Colorado Lottery. They play at convenience stores but are their needs being met? Are there specific Scratch Games and Ad campaigns directed at this market? Is there enough point-of-sale materials in Spanish language in convenience stores ‘Feeling lucky’ is a large component of Hispanic’s Scratch game purchase ideals, and should be used as a theme in either advertising or point of purchase material, in Spanish Hispanics appear not to have fully embraced Mega Millions, many respondents stated they did not even think of playing the game. Can these perceptions or lack of interest be altered?