Saskatchewan Liquor & Gaming Authority HOST Saskatchewan Conference March , 2010

About SLGA Liquor Operations – purchases, warehouses, distributes and retails beverage alcohol Gaming Operations – VLTs, SIGA slot machines, Breakopen Vending Machines Regulator – license and regulate liquor and gaming activities

Gaming in Saskatchewan –Electronic gaming machine market –Charitable gaming market –Bill S-226 update Liquor in Saskatchewan –Litre sales by beverage alcohol category –Dollar sales by category and customer type –Market share by category and customer type –Regulatory changes –Retail initiatives –Top selling products

Saskatchewan Gaming Market Electronic Gaming Machine Market Total number of VLTs is capped at 4,000 Casino slot machines totaled 2,865 in Saskatchewan Gaming Corporation 995 slot machines Saskatchewan Indian Gaming Authority 1,870 slot machines

Gaming Market Trends Declining charitable gaming activity (only growing segment is large raffles) Live horse racing has declined significantly over the past two decades and over the last two years has been flat VLT market began to rebound in and , however in gross revenue was down 2.5% Year to date (as of Jan. 2, 2010) indicates a decrease of 6.2% in gross VLT revenue and a similar decline in site commissions SIGA and SGC gaming activity is down YTD as well

VLT Activity Versus Charitable Gaming Net Income Figures are in millions of dollars VLT Gross RevenueCG Net Income Charitable Gaming VLT

Gaming Market Activity by Operator ($ Millions) * VLT site commissions do not include commissions paid to Emerald Casino

Gaming Market Activity by Operator ($ Millions)

Bill S-226 Update Seeks amendment to the Criminal Code to limit placement of electronic gaming machines to casinos, race courses (racinos) or betting theatres The Bill received second reading in March 2009, but died on the Order Paper when Parliament was prorogued on Dec. 30, 2009 Parliament opened on March 1, 2010 and reintroduction of a similar bill has not occurred to date.

Liquor Market in Saskatchewan Overall growth in both litre and dollar sales very strong in recent years Sales driven by a strong economy in 2008 and a relatively strong (compared to the rest of Canada) economy in 2009 Litre and dollar sales expected to increase slightly for fiscal 2010

Sales by Category (YTD as of January 2, 2010) $ Change% Change Beer$195.8 M$212.3 M$16.5 M8.4 % Refresh.$18.2 M$19.5 M$1.3 M7.1 % Spirits$145.1 M$151.6 M$6.5 M4.5 % Wine$46.2 M$50.0 M$3.8 M8.2 % Total$405.3 M$433.4 M$28.1 M6.9 %

Volume by Category (YTD as of January 2, 2010) L Change% Change Beer54,15056,2282, % Refresh.3,4343, % Spirits5,3655, % Wine3,9794, % Total66,92869,7552, % Numbers are 000’s of litres

Total Value of Purchases/Sales All Product Categories by Customer Type Millions

Market Share of Total Liquor Market By Customer Type (All Product Categories)

Value of Beer Purchases By Customer Type Millions

Volume of Beer Purchases By Customer Type Millions of Litres

Beer Market Share By Customer Type

Value of Spirits Purchases By Customer Type Millions

Spirits Market Share By Customer Type

Refreshment Purchases By Customer Type Millions

Refreshment Market Share By Customer Type

Value of Wine Purchases By Customer Type Millions

Wine Market Share by Customer Type

Top Selling Products Handout includes the top products and the market share represented by them in that category The list of top selling wines includes the price per 750 ml bottle as additional information

Regulatory Changes In 2009, SLGA’s advertising policy was amended For SLGA is working on regulatory changes in the following areas: Delivery of products from microbreweries and brew pubs to commercial permittees Development of a Micro Distillery policy to be consistent with the Cottage Winery and Microbrewery policies

Regulatory Changes (cont’d) Other regulatory and related issues of interest: Moratorium on new brew pub licences and review of framework Revised Automated Banking Machine placement policy

Retail Initiatives Two specialty wine store franchises opened in 2009 (Saskatoon in June and Regina in November) Franchise Pilot Projects

Questions?