iGaming Landbased Operators Survey

2013

The Survey

• Goals:• Where are landbased operators in process of implementing

iGaming• What are the expectations on revenue impacts:

• Landbased revenues• iGaming revenues

• What resources are they assigning to iGaming• What are issues with provider solutions

• Was conducted in January and February of 2013• Sent to all US landbased operators• Received 61 completed responses (108 overall)

Respondents Level of Involvement

67.8% of respondents either lead the process or were very involved

Type of Respondent Company

73% of respondents were Native American operators

Number of Properties OperatedOn average respondents operated 1.9 properties

Type of Respondent Company

74% operated between 1,000 and 7,499 gaming positions

Status of IGaming67.9% either formally or informally investigating iGaming,

10.7% initiated provider selection process, 10.7% already selected provider,

and 7.1% have already implemented, only 1.8% have decided not to pursue

Status of IGaming

Other Observations:

Greater proportion of Commercial casinos have already implemented iGaming compared to Native American casinos

Native American casino catching up as greater proportion have initiated formal research, initiated provider selection process, or have already selected provider

Motivation for Implementing iGaming63% cite need to stay competitive, 59.3% to support landbased rev. and marketing,

53.7% motivated by new online revenue, 35.2% as extension of online presence

Form of iGaming85.4% preparing for real money gaming, 75% focusing on social gaming,

66.7% focusing on free play

iGaming Staffing and Salary Expectations71.4% planning to add new staff dedicated to iGaming

ranging from 2 to 30, with total salaries from $60,000 to $750,000 plus.Average 5.9 FTE’s with total salary of $306,429

Native American casinos more likely to add staff compared to Commercial casinos

Cost ExpectationAverage start up costs=$2,4 million

Average annual operating costs = $567,586

In House Functions

• Bonus and Loyalty programs•VIP account management•Customer Service

Also looking to have control inthat they are retaining functionssuch as:

•Hosting•Selection of Games•Analytics

Landbased operators are keeping in house functions that touch thecustomer such as:

Out Source Functions

• Payment and Fraud Protection• Geo-Location & Age

Verification• SEO/Site Optimization• Web site maintenance• Affiliate management• Hosting • Network chat maintenance

Landbased operators are outsourcing:

Out Source / In House

Integration with Landbased Rewards/Loyalty Program48.9% reported no or minimal integration with landbased rewards/loyalty program

42.8% are integrated or highly integrated with rewards/loyalty program17.6% of future marketing budgets to be aimed at iGaming

Integration with Landbased Rewards/Loyalty Program

Other observations:

Commercial casino more focused than Native American on integration with landbased rewards/loyalty program

Native American casino likely to devote more of their marketing budget to iGaming

Larger casino expect to devote greater proportion of their marketing budget to iGaming than smaller ones

Current Social Media Participation

Current Level of Commitment to Social Media

Perceived Threat from State Lottery46.1% see State Lottery as a significant or severe threat in online gaming

Legislative Expectations63.6% expect State by State legislation, 34.5% expect mixture of State and National

Only 1.8% expect Federal legislation alone,Everyone expects some legislative action

Desired Legislative Framework41.5% want Federal legislation, 26.4% want State by State legislation,

30.2% want a mixture of Federal and state legislation56.6% want State legislation with or without Federal legislation

Surprising given predominance of Native American casinos in sample who would benefit more from State legislation

Impact on Landbased Revenues39.6% see no or minor impacts on landbased revenues, 21.6% see a significant or

very significant impact while 37.7% see a moderate impact

iGaming Revenues 73.6% of respondents see iGaming revenues as minor to moderate

in comparison to landbased revenues

iGaming and Landbased Revenues

Other Observations:

Commercial operators foresee a smaller impact on landbased revenues from iGaming than do Native American operators

Both Commercial and Native American operators foresee minor to moderate iGaming revenues with respect to landbased revenues.

Partnering with other casino for online point redemption

Moderate level of interest

Partnering with nontraditional companies such as Expedia, American Express or airlines for the redemption of points won online?

Moderate level of interest but higher than for other casino companies

Top Three Reasons you decided to pursue iGaming?

40% Future Competitive Positioning30% Marketing/Branding/Younger Audience27% Revenue Enhancement

Major Concerns voiced internally within your organization as it relates to online gaming?

24% Regulation/Compact/Legality Concerns

19% Cannibalization / Profitability / ROI

13% Cost of System and Developing Capabilities

10% Integration with Landbased

Main Concerns with the software solutions that have been presented to you?

30% Data Protection/Reliability/Stability/Security14% Cost11% Integration7% Regulation/Compact/Legality Concerns5% Flexibility/Open Architecture

In terms of factors, processes, and/or software functions, what are the three most important technology advances that you would like to see providers integrate into their offerings?

19% Integration/Compatibility/Mobile Functionality

13% Flexibility/Variety/More Games/Mobile apps

13% Player Identification/Verification/Security

10% Data and payment processing4% Cost

Major problems/concerns you have encountered in developing iGaming

37% Regulation/Compact/Legality Concerns

10% Lack of Clear Information/Confusion/Road to monetization/Lack of knowledge

10% Finding a trustworthy and credible Partner

7% Cost6% Integration/Compatibility