IAGR Conference 2014 Philadelphia October 2014

Horserace betting in France Legal framework  Pari mutuel is the only legal form of betting on horseracing in France.  Between 1881 and 2010, only horse racing associations (nonprofit) were allowed to organize betting on horseracing : –On racetracks only until 1931, –Off-track since 1931, through PMU.  In 2010, the law opened the French online gambling market (horserace betting, sports betting and poker) to competition : –Horseracing associations keep the monopoly for on-track betting and, though PMU, betting in retail networks, –8 operators (including PMU) offer online betting on horse racing.  Offline and online gambling markets are now regulated by different laws and monitored by supervision bodies, of which ARJEL regulates online gambling. 2

Horserace betting in France The market In 2013, horserace betting accounted for :  € 9.93 billion handle  23% of total gambling expenditures in France in

PMU, a company created to fund racing  Created in 1930 by French Horseracing Associations, PMU is a leisure company whose role is to conceive, market, totalize and promote bets on horse races for their account.  Since 1985, PMU has been an Economic Interest Group (EIG), now made up of 58 horseracing associations o Diversified into online sports betting and poker in 2010 o Returns its whole profit to its members → PMU’s activity is closely supervised by the State  PMU is run by a Board of Directors which gathers : o PMU’s Chairman & CEO and PMU’s Managing Director, o 4 representatives from State Departments (2 for Finance and 2 for Agriculture) o 4 representatives of the Horseracing Authorities (2 for France Galop and 2 for SECF). 4

614 PMU net income / return to the industry (M€) 5

N°1 Horserace betting operator in Europe N°2 Horserace betting operator worldwide 6 € 854 million paid to the horseracing sector in 2013 € 10.4 billion handle in 2013

PMU’s Offer Horserace betting o Retail network o Online on PMU.fr o Abroad in common pool Sports betting o Online on PMU.fr Poker o Online on PMU.fr €9,6 bn stakes (-1.8%) in ,371 races in 2013 Export : + 94% 85% market share €199 million stakes (+22.4%) 24% market share 30+ sports Live betting : 47% of stakes Cashgame et tournaments €569,9 million stakes (+ 10%) N°3 operator 9% market share 7

Cross selling is key to attract new customers 8

PMU’s retail network 12, 200 retail outlets in France and overseas territories 9  Mainly in cafés, bars, tobacco shops, restaurants  Diversification : Newsagent’s, gas stations, local shops… and fully owned Betting shops (« PMU City »)

PMU.fr PMU.fr is the N°1 betting site in France  44% market share, €1 billion turnover  N°1 for horserace betting with 83.6% market share (Gross Product)  35% of sports bets are registered through mobile  Cash game available 24/7 for poker players 10

International activity Foreign races offered to French punters to supplement national racing offer  2,585 foreign races from 27 countries in 2013  € 549 million handle (+12%)  31 contracts for betting on French races in PMU’s Pool : €638 million handle in 2013 (+94%)  Contracts for separate pool betting in 37 countries (>€ 1 Bn handle) French races offered to foreign punters 11

Separate pool CP & SP Common pool * * * * * * * * * * * * * * * * * * * * * * * * * * * Import * * * * PMU’s international contracts

Digital innovation is at the core of PMU’s activity PMU.FR website Enhanced user-friendly design PMU.FR app Adapted layout for smartphones, IOS and Android tablets INFO.PMU.FR website Horse racing information website for offline bettors MYPMU app Specially designed app for offline bettors with all horse racing information Touch screens Displaying live information in points of sale Touch tables To learn with the« Play for fun » option or to bet for real at PMU events 13

Powerful IT solutions  IT accounts for 40% of PMU’s operating costs  2500 transactions per second, among which 90% come from PMU’s 12,200 retail outlets  50% of turnover comes from bets registered in the last 10 minutes before the start of each race  EASY Project over 5 years, budget > € 50M −Reduce the Time to Market from 18 to 9 months to launch a new bet −Make it possible to operate 24/7 14

Corporate social responsibility Training of PMU’s employees and retailers Prevention among the general public and customers on internet and points of sales Funding of medical research Best practice sharing with other operators and dialogue with civil society stakeholders 15

PMU vision for 2020 PMU 2020 Retail & outlets CAGR : +1 % through new retail formats Digital 60% of the growth in France through digital channels International 10 % of net margin outside France Offer & products Competitive positioning on every authorized segment to become a reference actor of the gambling market Customers 15 % of the French people will be PMU customers People & culture Change into an agile and attractive organization, turned towards innovation 16

Is horse racing really a dying business?

Revenue sources of major sports 18

Competition trend : sports betting surpasses horse betting in 2014 CAGR 2009/2013 : 0.8% CAGR 2009/2013 : 4.3% CAGR 2009/2013 : 5.5% CAGR 2013/2017 : 1.2% CAGR 2013/2017 : 7.5% CAGR 2013/2017 : 3.3% 19

A broad range of issues to renew horse racing Customer Pattern racing Wagering Major events Social media Laboratory accreditation Popular culture Breeding Integrity Big Data Environmental sustainibility Jockey & horse safety Anti- doping Industry vocational training Media 20

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