Revenue Estimating Conference Executive Summary for Lottery Ticket Sales and the EETF December 4, 2018

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1 Revenue Estimating Conference Executive Summary for Lottery Ticket Sales and the EETF December 4, 2018 The Revenue Estimating Conference reviewed Lottery revenues on December 4, Total ticket sales were an estimated $153.2 million over expectation for this point of the current year, mostly attributable to strong Mega Millions sales which were influenced by the largest jackpot ever produced by the game. The Conference increased the overall sales forecast by $158.1 million in Fiscal Year and increased the forecast by $57.3 to $61.1 million in subsequent fiscal years. As a result, the final transfers to the Educational Enhancement Trust Fund (EETF) were increased by $66.1 million in Fiscal Year , and by $23.7 to $25.2 million in the remaining fiscal years. In regard to the specific games: Scratch-Off sales were running approximately $7.6 million below estimate for the current year. The Conference decreased Scratch-Off ticket sales by $20.1 to $22.3 million each year. Powerball sales were about $14.8 million over estimate for the current year. The Conference increased the estimate by that amount for this year and retained the prior forecast for each year thereafter. Mega Millions ticket sales were running higher than projected, coming in $142.5 million over estimate for the current year. The Conference increased the forecast by $163.9 million for Fiscal Year , banking the overage and assuming stronger weekly sales for the remainder of the year. For each year thereafter, sales were increased by $79.0 to $83.7 million. Lotto sales came in $4.2 million higher than anticipated for this point of the current year. Given this small difference, the Conference kept the prior forecast. Similarly, since Fantasy 5 was virtually on estimate for the current year, the Conference retained that forecast as well. Lucky Money ticket sales were running $0.7 below estimate for the current year; however, this game will be replaced by Jackpot Triple Play in January To recognize the likely boost to sales caused by the introduction of a new game, the Conference increased Fiscal Year sales by $3.2 million and adjusted the forecast for the remaining years by $0.8 to $6.1 million. Ticket sales for Pick Games Pick 2, Pick 3 (formerly Cash 3), Pick 4 (formerly Play 4), and Pick 5 were running below estimate for the current year. In response, the Conference decreased the forecast between $4.0 and $9.3 million each year. Cash 4 Life sales were running above estimate by $0.5 million for the current year. Given this small difference, the Conference retained the prior forecast. Fast Play ticket sales for the current year were running about $2.3 million above the estimate. The Conference increased the forecast by $2.3 to $2.9 million each year. The details of the forecast and other changes are shown in the following table.

2 Summary of All Games Aug 2018 Dec 2018 Difference Scratch-off Powerball Mega Millions Lotto Lucky Money Fantasy Pick Games Cash 4 Life Fast Play TOTAL EETF Receipts from Ticket Sales Other Income % unclaimed prizes Distribution to EETF from Lottery Receipts

3 LOTTERY ESTIMATING CONFERENCE, December 2018 LOTTERY SALES PROJECTIONS SUMMARY Ticket Sales Aug 2018 Dec 2018 Diff Other Income Aug 2018 Dec 2018 Diff Unclaimed Prizes Aug 2018 Dec 2018 Diff Distribution to EETF from Lottery Receipts Aug 2018 Dec 2018 Diff /4/2018

4 SCRATCH-OFF Total Sales Due to EETF from Ticket Sales Per Capita Sales Average Weekly Sales Aug 2018 Dec Average Weekly Sales % -12.9% Aug 2018 Dec % 0.7% % 7.1% % 15.3% % 18.0% % 12.8% % 9.0% % 6.2% % 7.3% % 9.6% % 4.2% % 3.9% % 1.9% % 1.6% % 1.4% % 1.4% /4/2018

5 POWERBALL (INCLUDING POWER PLAY) Ticket Sales Per Capita Sales Average Weekly Sales * * % 86.0% % -9.5% % 28.2% % 29.9% % -28.3% % -20.1% % 60.5% % -27.9% % 9.2% % -3.7% % -1.8% % 1.5% % 1.5% % 1.4% % 1.4% *Annualized figures 3 12/4/2018

6 Ticket Sales Per Capita Sales Average Weekly Sales n/a % -12.1% % 1.8% % -1.7% % 49.7% % 73.3% % -21.3% % 1.5% % 1.5% % 1.4% % 1.3% Mega Millions 4 12/4/2018

7 Ticket Sales Per Capita Sales Average Weekly Sales % -16.5% % -31.5% % -7.7% % 1.9% % -15.9% % -0.9% % -13.8% % -3.2% % -13.2% % -5.1% % -9.0% % -5.0% % -3.0% % -1.0% % -0.5% % 0.0% LOTTO WITH XTRA 5 12/4/2018

8 Ticket Sales Per Capita Sales Average Weekly Sales % -16.7% % -9.9% % -3.4% % 3.8% % -3.1% % -11.2% % 29.8% % -17.0% % 4.9% % -17.2% % 7.1% % -4.8% % 0.0% % 0.0% % 0.0% % 0.0% *Formerly Mega Money. Name Change effective July *EZ Match added at same time as name change. LUCKY MONEY* (Including EZ Match)* 6 12/4/2018

9 Ticket Sales Per Capita Sales Average Weekly Sales % -7.2% % -1.9% % 0.3% % 2.8% % -3.2% % 2.4% % -0.2% % 3.0% % -7.0% % -4.1% % 0.8% % 0.3% % 0.3% % 0.3% % 0.3% % 0.3% FANTASY 5 (Including EZ Match) 7 12/4/2018

10 % -0.9% % -3.6% % 1.8% % 1.9% % 1.6% % 5.0% % 7.0% % 5.0% % 0.2% % 3.8% % 2.6% % 2.2% % 1.5% % 1.4% % 1.4% % 1.3% Pick Games* Pick Games Ticket Sales Per Capita Sales Average Weekly Sales * Beginning August 1, 2016, the Lottery is launching a new family of Pick Games that includes Cash 3 and Play 4 which will be renamed Pick 3 and Pick 4 and introduces two similar new games called Pick 2 and Pick 5. The historical data through Fiscal Year is the combined sales data for Cash 3 and Play 4. Beginning in Fiscal Year , the conference will forecast all four pick games together. 8 12/4/2018

11 Ticket Sales Per Capita Sales Average Weekly Sales % 105.8% % -12.2% % 0.0% % 0.0% % 0.0% % 0.0% % 0.0% Cash 4 Life 9 12/4/2018

12 Ticket Sales Per Capita Sales Average Weekly Sales % -2.7% % 0.7% % 0.7% % 0.7% % 0.7% % 0.7% Fast Play 10 12/4/2018

13 Raffle Ticket Sales Per Capita Sales Average Weekly Sales /4/2018

14 Lucky Lines Ticket Sales Per Capita Sales Average Weekly Sales Monopoly Millionaire Ticket Per Capita Average Weekly Sales Sales Sales /4/2018

15 Ticket Sales Due to EETF from Ticket Sales Per Capita Sales Average Weekly Sales Aug 2018 Dec Average Weekly Sales Aug 2018 Dec 2018 Aug 2018 Dec % -2.8% % -2.2% % 5.6% % 5.4% % -1.7% % -4.7% % 13.4% % -9.3% % 7.1% % 6.0% % -4.0% % 0.8% % 1.0% % 1.0% % 1.0% TERMINAL (ONLINE) GAME SALES 13 12/4/2018

16 Ticket Sales Per Capita Sales Average Weekly Sales % -5.7% % -1.0% % 2.8% % 11.0% % 12.7% % 7.1% % 4.0% % 8.6% % 1.5% % 8.8% % 5.0% % 1.4% % 1.6% % 1.4% % 1.3% % 1.3% TOTAL TICKET SALES 14 12/4/2018

17 Instant (Scratch-off + Fast Play) versus Online (Terminal) Instant Ticket Sales Online Games Ticket Sales Total Ticket Sales Instant - percent of total Terminal Games - percent of total Aug 2018 Dec 2018 Aug 2018 Dec % 29.8% % 70.2% % 28.5% % 71.5% % 28.3% % 71.7% % 25.3% % 74.7% % 28.1% % 71.9% % 28.1% % 71.9% % 37.4% % 62.6% % 44.2% % 55.8% % 53.1% % 46.9% % 53.5% % 46.5% % 55.4% % 44.6% % 56.7% % 43.3% % 52.4% % 47.6% % 53.3% % 46.7% % 55.5% % 44.5% % 57.7% % 42.3% % 60.4% % 39.6% % 63.7% % 36.3% % 66.7% % 33.3% % 65.2% % 34.8% % 68.9% % 31.1% % 69.4% % 30.6% % 69.1% % 30.9% % 70.8% % 29.2% % 71.0% % 29.0% % 71.2% % 28.8% % 71.3% % 28.7% % 71.3% % 28.7% 15 12/4/2018

18 Factors Affecting EETF Transfers Aug 2018 Dec 2018 Prize Percentage Scratch-off 73.30% 73.30% 73.27% 73.33% 73.27% 73.33% 73.27% 73.33% 73.27% 73.33% 73.27% 73.33% 73.27% 73.33% Prize Percentage Terminal Games 51.34% 51.34% 51.20% 51.25% 51.20% 51.25% 51.20% 51.25% 51.20% 51.25% 51.20% 51.25% 51.20% 51.25% Retailer Commission Rate 5.50% 5.50% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% Administrative Appropriation $82.40 $82.40 $81.60 $81.80 $80.90 $80.90 $80.90 $80.90 $80.90 $80.90 $80.90 $80.90 $80.90 $80.90 Vendor Rate Scratch-off 1.37% 1.37% 1.36% 1.34% 1.28% 1.28% 1.28% 1.28% 1.28% 1.28% 1.28% 1.28% 1.28% 1.28% Vendor Rate Terminal Games 1.56% 1.56% 1.84% 1.84% 2.63% 2.63% 2.65% 2.65% 2.67% 2.67% 2.68% 2.68% 2.68% 2.68% Unclaimed Prize Rate 1.24% 1.24% 1.24% 1.24% 1.24% 1.24% 1.24% 1.24% 1.24% 1.24% 1.24% 1.24% 1.24% 1.24% Note: After transfers for prizes, fees, administrative expenses, and unclaimed prizes, net transfers to the EETF equal approximately 41.3% of terminal game ticket sales and 18.6% of scratch-off ticket sales /4/2018

19 Other Income (Interest Earnings, Retailer Fees, On-Line Communication Fees, Prize Money Held in Reserve) 80% Unclaimed Prizes for Transfer Aug 2018 Dec 2018 Aug 2018 Dec /4/2018

20 Calculation of Fiscal Year Distributions to EETF from Lottery Receipts Aug 2018 Dec 2018 % Week 51 scratch-off * % % % % % % % % % % % % % % % Week 51 terminal games * % % % % % % % % % % % % % % % Week 52 scratch-off * % % % % % % % % % % % % % % % Week 52 terminal games * % % % % % % % % % % % % % % % of Week 51 to subsequent year ** % % 0.00% 0.00% % % % % % % % % 0.00% 0.00% % of Week 52 to subsequent year ** 85.43% 85.43% % % 29.20% 29.20% 44.72% 44.72% 61.40% 61.40% 71.43% 71.43% % % % of scratch-off rec'd subsequent year % % % % % % % % % % % % % % % of terminal games rec'd subsequent year % % % % % % % % % % % % % % EETF Transfer rate scratch-off 18.60% 18.60% 18.58% 18.57% 18.71% 18.66% 18.73% 18.67% 18.74% 18.69% 18.76% 18.70% 18.77% 18.72% EETF Transfer rate terminal games 40.37% 40.37% 40.17% 40.15% 39.43% 39.39% 39.43% 39.38% 39.42% 39.38% 39.43% 39.38% 39.44% 39.40% * based on weekly sales figures for ** based on daily sales figures for August 2018 Forecast Instant Game Sales (Scratch + Fast Play) Terminal Game Sales EETF transfer due from current year ticket sales and other income less collection lag loss (52.2) (27.0) (38.3) (43.2) (48.5) (52.0) (29.0) plus collection lag gain from prior year Due to EETF from Lottery Receipts adjustment for estimated true-up payment in next fiscal year (1.6) (1.6) (1.6) (1.6) (1.6) (1.6) (1.6) adjustment for delayed June transfer* Distribution to EETF from Lottery Receipts NOTE: Since the Lottery s inception, the conference has estimated transfers to EETF by examining the Lottery s weekly sales during the fiscal year. However, in practice there is a delay in the transfer of weekly sales receipts from the retailers to the Lottery. Depending on what day the fiscal year ends, this delay ranges from one to two weeks. Beginning with the November 2012 estimate, the conference based the expected transfers to EETF on the cash actually received by the Lottery during the fiscal year. While the conference will continue to develop the estimate based on weekly retailer sales, the results will be adjusted to take into account the delay in the transfers from the retailers to the Lottery. This page describes the calculation of the adjustment. December 2018 Forecast Instant Game Sales (Scratch + Fast Play) Terminal Game Sales EETF transfer due from current year ticket sales and other income less collection lag loss (52.2) (28.0) (38.8) (43.7) (49.1) (52.7) (29.4) plus collection lag gain from prior year Due to EETF from Lottery Receipts adjustment for estimated true-up payment in next fiscal year (1.6) (1.6) (1.6) (1.6) (1.6) (1.6) (1.6) adjustment for delayed June transfer* Distribution to EETF from Lottery Receipts /4/2018