Spectrum SIGHT White Paper Spectrum SIGHT White Paper June 2017 final | Page 14

The core of our original theorem is that brick-and-mortar casinos will embrace the Internet in the same way that, say, professional sports embraced broadcasting: as a new source of revenue and as a principal means of generating new customers. This follow-up has a different core: Different forms of gaming, with different constituencies and differing levels of political support will identify new ways of using the Internet in an effort to become major players in this emerging virtual world. If the current set of nascent trends continues to evolve, state lotteries and pari-mutuel interests may find themselves competing against brick-and-mortar casinos for places in this new competitive dynamic. Consider that many slot suppliers already license many of their best-known slot brands to lotteries, and there is a massive crossover between slots and lotteries on third-party brands. Where will the line ultimately be drawn? We cannot answer that question, in part because the issue is evolving differently in different states. We can state, however, that the concerns will prove particularly acute in states that offer – or intend to offer – both lottery and casino gaming. There are no assurances that such states understand the potential convergence, and competition between these forms of wagering. But we feel confident that the casino industry will continue to move along the SIGHT continuum. Whether all other stakeholders will accommodate that inevitable evolution remains an open question that we will address in future analyses that commemorate the anniversary of SIGHT. th Observing 15 Anniversary of SIGHT 14