1. CoGHS CONFERENCE “Working from the Inside, Out Phillip Ryan Managing Director Responsible Gaming Networks Melbourne, Australia RESPONSIBLE GAMING NETWORKS

2. Focus Working on the Inside Learnings Issues lifecycle & implications Government regulatory phases The new solution Value chain exploitation Player Protection Key Victorian case study Internet & iTV gambling RESPONSIBLE GAMING NETWORKS

3. Working on the Inside Executive General Manager, Corporate Affairs, Tattersall’s, 2001& 2002 Operates half of the 27,500 Hotel and Clubs Poker machines across Victoria Operates other national and international gambling licences One of the ‘three demons’ of the Australian gaming industry – Tattersall’s, TABCORP, PBL. RESPONSIBLE GAMING NETWORKS

4. Working on the Inside Responsibilities Member of the Executive Management Team Government relations Media management Pressure group management Community relations Issues management Employee communications Corporate image Monthly Board presentations RESPONSIBLE GAMING NETWORKS

5. Learnings Hold your ground Create decoys Slow down the opposition Exploit the market Nothing happens by accident RESPONSIBLE GAMING NETWORKS

7. Learnings Hold your ground Create decoys Slow down the opposition Exploit the market Nothing happens by accident 20-year licences generate arrogance Let the Government take the heat RESPONSIBLE GAMING NETWORKS

8. Learnings Hold your ground Create decoys Slow down the opposition Exploit the market Nothing happens by accident 20-year licenses generate arrogance - safe Let the Government take the heat Business Model not sustainable RESPONSIBLE GAMING NETWORKS

9. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME INTENSITYINTENSITY

10. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY INTENSITYINTENSITY

11. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE INTENSITYINTENSITY

12. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES INTENSITYINTENSITY

13. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES INTENSITYINTENSITY GOVERNMENT UNDER PRESSURE

14. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES GOVERNMENT UNDER PRESSURE INTENSITYINTENSITY GOVERNMENT PRIORITY

15. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES GOVERNMENT UNDER PRESSURE INTENSITYINTENSITY GOVERNMENT PRIORITY

16. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES GOVERNMENT UNDER PRESSURE INTENSITYINTENSITY GOVERNMENT PRIORITY TIPPING POINT

17. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES GOVERNMENT UNDER PRESSURE INTENSITYINTENSITY GOVERNMENT PRIORITY TIPPING POINT GOVERNMENT YIELDS

18. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES GOVERNMENT UNDER PRESSURE INTENSITYINTENSITY GOVERNMENT PRIORITY TIPPING POINT GOVERNMENT YIELDS

19. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES GOVERNMENT UNDER PRESSURE INTENSITYINTENSITY GOVERNMENT PRIORITY TIPPING POINT WA GOVERNMENT YIELDS

20. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES GOVERNMENT UNDER PRESSURE INTENSITYINTENSITY GOVERNMENT PRIORITY TIPPING POINT WA TAS GOVERNMENT YIELDS

21. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES GOVERNMENT UNDER PRESSURE INTENSITYINTENSITY GOVERNMENT PRIORITY TIPPING POINT WA TAS QLD NSW GOVERNMENT YIELDS

22. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES GOVERNMENT UNDER PRESSURE INTENSITYINTENSITY GOVERNMENT PRIORITY TIPPING POINT WA TAS QLD NSW VIC, SA GOVERNMENT YIELDS

23. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES GOVERNMENT UNDER PRESSURE INTENSITYINTENSITY GOVERNMENT PRIORITY TIPPING POINT WA USA TAS NZ QLD NSW VIC, SA GOVERNMENT YIELDS

24. Issue Lifecycle & Responses RESPONSIBLE GAMING NETWORKS TIME VOCAL MINORITY MEDIA COVERAGE PUBLIC DEBATES GOVERNMENT UNDER PRESSURE INTENSITYINTENSITY GOVERNMENT PRIORITY TIPPING POINT WA USA TAS NZ QLD NSW VIC, SA NOVA SCOTIA GOVERNMENT YIELDS

25. Implications for Lobbying Strategic Focus to Achieve Change Sustained pressure required Success is within reach in three major jurisdictions NOW! Concentrate lobbying resources into these susceptible regions Other jurisdictions will roll-over and follow very quickly Leverage national and international opportunities Share knowledge from the three jurisdictions with your local networks Spread the news on the progress of global change with key local stakeholders (media, MPs etc) Local education programs Build lobbying programs around your own local lifecycle stage RESPONSIBLE GAMING NETWORKS

26. Government Regulatory Phases First Phase - Venues Operating hours Lights, clocks Advertising ATM access No major impact Second Phase - Machines Bet limits, spin rates, number of machines, bank note acceptor limits etc No major impact RESPONSIBLE GAMING NETWORKS

27. The New Agenda Third Wave of Reform – Pre-Commitment Focus on player Pre-commitment limits Player loss limits – daily, weekly, monthly, annual etc Duration of play limits – hours per day, week etc. Machines must stop when limits reached Players initially set their own limits voluntarily Players set limits away from the machines Players carry an ID device connected to their limits in order to play (e.g. plastic card, smart card or some other smart technology) Machines only operate using an ID device. Machines still use coins and notes as usual

28. Australian Context Australian Ministerial Council on Gambling Research Program on Pre-commitment Analysis of Gambler Pre-Commitment Behaviour, June 2006 Player Support for Pre-Commitment 77% of Victorians support compulsory pre-commitment limits 88% support voluntary pre-commitment limits Stage 2 Tender just released last few weeks Gaming machine designs which support/undermine pre- commitment Venue activities/features which support/undermine pre- commitment RESPONSIBLE GAMING NETWORKS

29. Australian Context South Australia Concerned about lack of national progress Ministerial Working Party established November 2006 Reporting this year on how to implement pre-commitment Victoria Current Gaming Industry Structure Review Kirby Report October 2006 “Support for exploiting the monitoring system to develop harm minimization measures” “a universal system of pre-commitment will possibly be more effective than a range of other proposals for enhancing responsible gaming”

30. Global Context Global Leadership - Nova Scotia, Canada Responsible Gaming Device (RGD) trial 2006 Plastic Card with ‘voluntary’ capability to set limits Trialled across two towns - Windsor & Mount Uniacke Players required to use a card to play machines News Report of trial Recent tender for entire province issued April 2007 Short listed companies in May 2007 Final decision later this year RESPONSIBLE GAMING NETWORKS

31. Nova Scotia Trial Findings Significant database of player activities Analysis now possible by independent researchers Unfortunately some players ‘beat’ the system Plastic cards shared amongst players One third of players shared their card with someone else Sharing of cards extended for up to a week Card sharing increased with increased PG score International Gaming Institute, University of Nevada, Las Vegas Report, February 2007 Biometric ID solution required (fingerprint, facial etc) RESPONSIBLE GAMING NETWORKS

32. Biometric Gaming Standards Nevada Gaming Commission Biometric technical standards established Mobile Gaming System Policies May 2006 Two Factor authentication for player ID Cryptographic protocols Encryption algorithms

33. Benefits of Pre-Commitment Individual solutions for individual players Set dollar loss limits Set playing time limits Ideal self exclusion Integrate with problem gambling counsellors A dynamic public policy solution Players protected from value chain exploitation

34. EGM PLAYER Player Exploitation Risks

35. EGM PLAYER Player Exploitation Risks EXAMPLE CBC TV NEWS Report March 2007 Konami – 2 minutes - Update

36. EGM PLAYER Pre-Commitment Protection

37. VENUE PLAYER OPERATOR Player Exploitation Risks

38. VENUE PLAYER OPERATOR Player Exploitation Risks EXAMPLE CBC TV NEWS Report April 2007 Atlantic Lottery Corporation Agents 2 Mins - Update

39. VENUE PLAYER OPERATOR Pre-Commitment Protection

40. BANK PLAYER Player Exploitation Risks

41. BANK PLAYER Pre-Commitment Protection

42. Value Chain Exploitation Risks RESPONSIBLE GAMING NETWORKS OPERATOR

43. Dynamic Public Policy Solution RESPONSIBLE GAMING NETWORKS OPERATOR

44. Learnings The focus is moving to a third wave of reform Pre-Commitment Individual solutions for individual players The vast majority of players support pre-commitment Pre-commitment offers a dynamic public policy solution to avoid value chain exploitation from industry participants.

45. Responsible Gaming Networks Safety Net Solution Pre-Commitment Player Protection Key Next Generation technology solution Solution for all types of gambling Solution for all channels of distribution Integrated with problem gambling counselling

46. Player Protection Key RESPONSIBLE GAMING NETWORKS

47. Player Protection Key Electronic Key – unique for each player Plug-and-Play Device – no batteries Connects directly into USB outlets Eliminates need for a card reader Massive storage capacity (8 Gigabytes) One Key for all channels of distribution Physical gaming machines, PCs, PDAs, interactive TVs. One Key for all multiple forms of gambling Slots/Poker machines, Wagering, Lotteries RESPONSIBLE GAMING NETWORKS

48. Player Protection Key Biometric identification of owner Eliminates sharing of ID amongst players On-board fingerprint scanner On-board storage of biometrics On-board storage of pre-commitment limits On-board storage of all gambling activity On-board microprocessor & data encryption On-board multiple digital certificates No charge to Player or the Government RESPONSIBLE GAMING NETWORKS

49. Card Systems Disadvantages of Cards Cards can be easily copied/skimmed Cards & PINs can be swapped between gamblers Cards require an additional card reader Cards have very limited storage capacity Cards operate on proprietary standards Cards limited to a single gambling provider’s network Disadvantages of Smartcards Smartcards use dangerous digital cash Like using a credit card KPMG Study for Australian Government 2002 RESPONSIBLE GAMING NETWORKS

50. Learnings “Smart technologies” provide a player tracking solution, not just “smartcards” There is a new and improved product now available: Player Protection Key

51. Case Study Victorian Gaming Licence 2007 Review of 20 year licences Incumbents want status quo Government under pressure Close to the tipping point Call for Public Submissions Nexus between problem gamblers and taxation revenue

52. Public Submissions Minimal Industry submissions No machine manufacturers Only one technology supplier Our Submission to Industry Review Focused on a reduction in player loss Player pre-commitment Structural efficiency Protection of government revenue Creation of a single operator model RESPONSIBLE GAMING NETWORKS

53. Problem Gambling & Revenue

54. Creative Solutions

55. Justifications Department of Treasury and Finance Report (2000) $300 - $500 million ‘super profits’ of the current two operators Briefings to Financial Analysts “The Real Truth” Continuous Disclosure to the Market Examples  Labor efficiency increases  Revenue efficiency increases

57. New Channels of Distribution Internet Gambling Interactive TV Gambling

58. Internet Gambling Nielsen//Net Ratings Major global study – November 2006 6.9% of adults gamble in a casino 8.1% of adults gamble online Online gambling most popular among households with lower incomes Nielsen//Net Ratings Earlier December 2005 results (18 months ago) Household survey

59. It’s big… Source: Nielsen//NetRatings NetView Home & Work data (ES, CH, JAP & BR home data only), September 2004-2005

60. However, it’s most popular in France… E.g. 1 in 4 French surfers visit gambling sites compared to 1 in 13 online Brazilians Source: Nielsen//NetRatings NetView Home & Work data (ES, CH, JAP & BR home data only), September 2005

61. …and its growing fast Source: Nielsen//NetRatings NetView Home & Work data (ES, CH, JAP & BR home data only), September 2004-2005 Spain’s online gambling audience has tripled over the last year

62. …and driven by high speed access

63. …and its not limited to the home Age April 2007 “Gaming, Porn Rife at Work” More than 1 in 7 Australian workers accessed online gambling sites at work Websense study of 52,000 workers

64. …and Federal Government is ignorant Current Government policy Minister’s recent remarks on the issue The political race for broadband Massive explosion in usage by 2009 Economic and social consequences Problem Gambling Counsellors Need to be on the look out right now

65. Current Regulatory Response Australia: Bans Australians gambling on internet casinos operated by Australian companies Allows Australians to gamble on all overseas internet casinos No Australian regulatory oversight on overseas internet casinos No player protection for Australian players using overseas sites Allows all wagering, lottery & sports gambling operated by anyone

66. A Better Model? A local regulated industry model is far safer for Australian players e.g. United Kingdom Operator licensing, regulation and supervision ISP blocking of all non licensed and unregulated operators e.g. Italy, China, South Korea, Israel, Singapore Player Pre-Commitment limits mandatory

67. Interactive TV Gambling Foxtel introducing early 2008 Supplier – Two Way TV 5 year agreement with Foxtel and TABCORP Multi million dollar deal 2,000,000 households Already available in USA and Europe

68. Questions Contact Phillip Ryan Managing Director Responsible Gaming Networks Melbourne, Victoria p_ryan@responsible.com.au Mobile 0417 313 726