Onshore  Interac-ve  Gambling  in  the  Netherlands  

Simon  Holliday  H2  Gambling  Capital    Gaming  in  Holland  Amsterdam  23  June  2014      www.h2gc.com  

AGENDA  

•  Interac-ve  Gambling  Market  Update  •  EU28  Market  Trends  •  Dot  Country  Markets  -­‐  Recent  Performance  •  Current  NL  Gambling  Market  •  Dot  NL  Expecta-ons  /  Changes  

Interac-ve  Gambling  Market  Update  •  Con-nued  Overall  Strong  Growth  

•  Dot  Com  Markets  

•  Developing  Regions  •  Product  Innova-on  • Mobile  Channel  

• Weaker  Performance  

•  Onshore  Regulated  Markets  

•  Poker  

•  2013  Globally  Interac-ve  Gambling  Up  7.8%  to  €26.5bn  

•  Current  Year  a  Further  13%  of  Growth  to  €30.0bn  

•  Globally  8.3%  of  Gross  Gambling  Revenues  are  Now  Interac-ve  (8.9%  14  /10.2%  18)  

•  Highest  in  the  Nordics  where  mid-­‐30%'s  

•  UK  mid-­‐to  High  20%'s  

•  Southern  Europe  s-ll  Low  to  Mid-­‐Single  Digit  

•  Dutch  Market  Currently  11%  -­‐  Onshore  Regula-on  by  2018  14%  (20%  Gross  Win  Tax)  to  18%  (10%  Gross  Win  Tax)  

•  Onshore  Ac-vity  Accounted  for  40%  of  Global  Interac-ve  Revenues  2013  /  Expected  to  be  52%  by  2018  •  Low  Point  Just  Under  30%  in  2006  

EU28  Market  Trends  

• All  Gambling  €11.6bn  Gross  Win  2013  -­‐  14%  of  Total  with  41%  Onshore  

•  14.2%  Growth  Expected  in  Current  Year  

• Bebng  and  Gaming  Only  €10.1bn  -­‐  20%  of  Total  with  33%  Onshore  

•  12.5%  Growth  Expected  in  the  Current  Year  

• UK   -­‐   Largest   European  Market   €2.96bn   (bebng   and   gaming   only)   29%   of   the   Total  European  Market  

•  Just  18%  Onshore  (Going  Forward  PoC  to  Capture  Taxa-on  for  the  Treasury)    

•  6   Fully   Compe--ve   Markets   Up   and   Running   with   Bebng   and   Gaming   Gross   Wins  Totalling  €2bn  in  2013  

•  Another  €1.3bn  in  Monopoly  Markets  or  Those  Restricted  to  Land  Licensees  

•  A  Number  of  Other  Markets  Expected  2014-­‐15      

EU  Dot  Country  Markets  -­‐  Recent  Performance  •  Current  Year  Expec-ng  7.9%  Dot  Country  Mkt  a  Growth  vs  EU28  Average  14.9%  

•  Lower  GDP  Growth  •  Total  Value  Onshore  Bebng  and  Gaming  Ac-vity  Approaching  €2.1bn  •  Offshore  Ac-vity  Sta-c  c€900m  

•  Overall  Ini-al  Market  Upside  Expected  Upon  Onshore  Regula-on  •  Combined   On   and   Offshore   Will   Grow   the   Market   –   Amount   will   Depend   on   Tax   Rate   /   Any   Other  Restric-ons  •  New  Onshore  Market  Will  Not  Surpass  the  Size  of  Previous  Offshore  Market  at  20%  Gross  Win  Tax  (Closer  to  15%  to  Achieve  this)  

•  Channelling  –  Average  c70%  •  Can  Vary  From  Less  than  50%  (Highest  Tax  /  Lack  of  Product  Ver-cals  /  No  Interna-onal  Pooling)  •  To  85%  •  Op-mal  Likely  to  be  95-­‐97%  

•  Structural  Restric-ons  on  Growth  Beyond  Market  Launch  • Where  Applicable  Domes-c  Liquidity  Bigger  Factor  /  Cri-cal  Mass  to  Develop  Momentum  •  Predominantly  the  Same  Operators  Moving  Onshore  /  Development  of  Local  Monopolies'  Offer  •  Ini-al  Land-­‐grabs  -­‐  Market  Sehles  Operators  Cau-ous  as  Paying  Tax  on  Bonuses  which  can  be  as  High  as  20%  in  Dot  Com  Gaming  

•  Affiliates  Opera-ons    

Current  NL  Gambling  Market  • Netherlands  15th  Largest  Gambling  Market  in  the  World  (7th  Largest  in  the  World  

•  Average  Gross  Win  per  Adult  €164  (25th    World/  14th  EU28)  –  EU28  Average  €193  

•  %  of  GDP  Accounted  for  by  Gambling  c0.40%  (EU28  Average  c0.65%)  

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Land# Interac6ve#

Be#ng&4%&

Gaming&52%&

Lo1eries&44%&

NL Total Gambling Gross Win (€bn)"NL Gross Win by Product"

Be#ng&14%&

Gaming&48%&

Lo1eries&38%&

EU Gross Win by Product"EU Total Gambling Gross Win (€bn)"

0"10"20"30"40"50"60"70"80"90"

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Land" Interac5ve"

Dot  NL  Expecta-ons  –  On  Going  Changes  

• Changes  to  Our  Approach  /  Key  Drivers  •  IMF  GDP  Forecasts  

•  Evolu-on  of  Benchmark  Markets  

•  Adjustments  in  the  Mix  of  Benchmark  Markets  

•  Allowance  for  any  Change  of  Pace  in  Current  Marke-ng  

•  Changes   in   Regula-on   /   More   Detailed   Assessment   of   the   Exact   Similari-es   /  Differences  with  the  Dot  DK  Regula-on  

Dot  NL  Expecta-ons  

• Currently  An-cipated  that  the  Offshore  Dutch  Market  will  be  Worth  c€225m  in  the  Current  Year  

•  With  a  20%  Gross  Win  Tax  

•  Onshore  Bebng  and  Gaming  Ac-vity  First  Full  Year  Could  Range  From  c€150m  (29%  GWT)  to  c€300m  (10%  GWT)  

•  Ini-al  Bebng  and  Gaming  Channelling  Could  Vary  from  60%  to  90%  

•  Latest  Update  of  Model  /  Start  Date  

•  Execu-ve  Market  Report  

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Onshore" Offshore"

Be#ng&47%&

Casino&32%&

Poker&11%&

Bingo/Other&10%&

NL Interactive Gambling Gross Win (€m)" NL Interactive Gambling Gross Win by Product"

Further  Details:    Simon  Holliday  H2  Gambling  Capital  simon.holliday@h2gc.com    www.h2gc.com  

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