1. Annual Business Plan FY 2017-18
Presentation to California State Lottery Commission
May 17, 2017

2. Process to Develop the Plan
Starts with the 3-Year Strategic Plan
Review of product and business performance
Form the key areas of focus for the year
Develop tactical proposals in these areas
Determine resources needed
Evaluate and review the proposals
Prioritize and select tactics for next year

3. Recap of Strategic Plan

4. Vision and Desired Outcomes
Vision: Become the largest lottery in the U. S.
Outcomes:
Increase Profits for CA public schools
Grow Sales in a Responsible Manner
Increase purchase occasions by Casual Players
Expand Playership: more adults buy Lottery tickets

5. Five Key Strategies To achieve these desired outcomes:
Build Sales in Jackpot Games and Hot Spot
Clear-up myths about the Lottery and elevate the Brand Perception
Be a Responsible Corporate Citizen
Put more Fun & Entertainment into the Brand
Become customer-focused and Improve the Customer Experience

6. FY Business Plan

7. Key Pillars for the FY 2017-18 Plan
Mix of elements providing immediate sales gains with long-term strategies delivering sales growth in the future
Growth in Jackpot Games and Hot Spot
Moderate gains in Scratchers sales
Elevate perceptions about the Lottery
Improve the customer experience

8. Create Significant Sales Growth in Jackpot Games and Hot Spot
Jackpot Games have highest profitability among our products
Examples from Product Review to highlight rationale behind the Plan

9. Mega Millions Sales Declining (Particularly after Big Powerball Jackpot)

10. Future Purchase Intent for SLP
SLP Efforts in FY
Source: Communications Effectiveness Tracking Study
Oct 16
Nov 16
Dec 16
Jan 17
Feb 17
Mar 17
Future Purchase Intent for SLP
63%
57%
59%
67%
56%
68%
When advertising was running (Jan & Mar), significantly higher purchase intent scores seen
The SLP Promotion in March produced over $1.5 million in incremental sales by boosting transaction size

11. Plan for Jackpot Games Continue Super Lotto Plus Brand Advertising
Utilize periodic SLP Promotions
Implement Consortium’s Game modifications for Mega Millions
Evolve Jackpot Alert advertising for Mega Millions and Powerball

12. Hot Spot Background
Although sales have increased more than 60% in the past 4 years, product review shows Hot Spot still having much potential
Many states have higher sales for this type of product – on Total Dollars and Per Capita basis
Number of retailers in social environments dramatically lower in CA than in other states
Hot Spot has responded very well to increased prize payout

13. Hot Spot Tactics Dedicated effort to recruit new Hot Spot retailers
Net gain of at least 200 Social Trade Channel locations during the fiscal year
Add Hot Spot monitors to many existing retailers in the convenience, liquor and grocery trade channels
Additional support for Hot Spot retailers

14. Produce Moderate Sales Gains for Scratchers
Scratchers sales have increased well over $1 billion over past 3 fiscal years
Primary driver has been growth of higher price point games
Although $10, $20 and $30 games have higher prize payouts, dollar profits have also risen

15. New Products at Higher Price Points Have Driven Sales

16. Profits Also Rising with the Product Innovations

17. Scratchers Plan Continue Product Innovation to drive sales growth
Introduce $10 Crosswords Game
Maintain presence of $30 product
Apply innovation to $1 and $2 product enhancements
Retailer Support continues to be important
Reduce Out-of-Stock situations
Provide training, support and service via DSR’s

18. Elevate Perceptions about the Lottery
Improved perceptions about the Lottery is critical for expanding playership
A number of areas where perceptions need to be upgraded
Need to develop integrated plan for delivering these messages

19. Improve the Customer Experience
Consumer-focused Initiatives:
Redesign Public Website
Streamline process to claim winning tickets >$599
Improve direct communications to players
Retailer Initiatives:
New Retailer Website
Alternate Payment Terms for Scratchers
Internal Initiatives:
Upgrade Financial System