Adapting to Changing Environment Current Challenges and Measures

Adapting to Changing Environment Current Challenges and Measures in Other Industries General Assembly & 46 th International Conference, IFHA Afternoon session, October 8, 2012 Paris, France Moderator Winfried Engelbrecht-Bresges, Vice Chairman, IFHA Speakers Christopher Bell, Chairman, Business In Sport and Leisure Andrew Harding, Director of Racing Development, HKJC 4 Oct 2010 1

A step forward from the last Conference 45 th Conference “Future Challenges of Racing”. 4 Oct 2010 46 th Conference “Current Challenges of Racing”. 2

How soon can Racing address its challenges? 45 th Conference “Future Challenges of Racing”. 4 Oct 2010 46 th Conference “Current Challenges of Racing”. 47 th or ? ? th Conference “Past Challenges of Racing”. 3

Racing is facing significant competition, both as a sport / leisure entertainment option, and as a product in the Global Gambling marketing Global Gambling Market, 2010, % of total Horse Racing 20% Lotteries 22% Gaming Machines 17% Source: IFHA and GBGC 4 Oct 2010 US Indian Gaming 5% Total $513 bn Casinos 19% Sports Betting 15% 4

We cannot control our destiny ; our customers can This is especially true as the digital world has well-equipped our customers to select and subscribe only to offerings that best meet their needs. 4 Oct 2010 5

Hence, I remain a strong advocate that Racing has to understand our customers and to embrace customercentricity. 4 Oct 2010 6

Ability to look from outside-in will enhance Racing’s ability to stay competitive in our customer offerings Level 1 Organisation Inside Out “We make, you take. ” Company focuses on products and services and their specific features and offerings are based on company’s existing capabilities. Level 2 Organisation Customer Segmentation “We know you and where you are and can use that to encourage you to buy what we sell Swung to 60 degrees towards outside in view understands customers well enough to segment them and organize itself to tailor products and delivery strategies to specific groups. 4 Oct 2010 Source : Professor Ranjay Gulati, Harvard Business School Level 3 Organisation Customer Solutions “You’ve got a need, we can deliver a solution. ” Add another 60 degrees to the perspective swing. Company understands genuinely that the customer has complex, overlapping needs and organize itself to create customized solutions that deliver real values. Level 4 Organisation Outside-in “Your problems are our problems, today and tomorrow. ” A full 180 degrees to the perspective swing. Company recognises that it must work with outside entities to deliver optimal solution and it must be able to rapidly change its own architecture and processes to respond to customer’s shifting needs. 7

So our first speaker in this session, Mr Christopher Bell, will bring to us an outside perspective from a wagering operator; especially sportsbetting perspective. He will share with us how he sees trends in sports betting and how he sees Racing’s current and future state. 4 Oct 2010 8

It will be good to hear from a distribution perspective what Chris sees as major challenges for Racing in competition with the other offerings for customer spending. 4 Oct 2010 9

It is also interesting that Chris will touch upon the topic of exchange betting which wagering operators think are good, but not necessarily how we racing operators think. This naturally leads to our second speaker, Andrew’s topic on Intellectual Property (IP) Rights. . . 4 Oct 2010 10

How can we achieve a fair return to Racing in light of the free riders in the market ? Many industries are fighting piracy fiercely, as a matter of interest, in Germany, piracy costs the German Music industry € 524 million and German Film industry € 196 million in lost revenue in 2011 (source : Berlin-based House of Research study) 4 Oct 2010 11

Another study in the US reveals that their music industry is responding to the digital environment in 3 basic ways : a. Licensing repertoire in new ways that respond to what the consumer wants, b. Public education to explain copyright laws and highlight legal services, c. Copyright enforcement to protect copyrights. 4 Oct 2010 12

What Racing can do to get a fair share of the revenue it creates? What are the specific IP issues we have for our industry? 4 Oct 2010 13

Introducing the two speakers Speakers Christopher Bell Chairman, Business In Sport and Leisure 4 Oct 2010 14

Christopher Bell Christopher is Chairman of a strategic group the “Business in Leisure and Sport”, which is a broad leisure based group representing the interests of the sport, leisure, hospitality and gambling Industries. He is appointed Independent Non-Executive Director of Spirit PLC, and is also currently Senior Independent Director of Quintain Estates and Development and a Director of Bet Butler Limited in September 2012. He has also been a board member of the Responsible Gaming Strategy (RGSB) since 2009. 4 Oct 2010 15

Christopher Bell Between 2006 and 2010, Christopher was Chief Executive Officer of Ladbrokes plc. Prior to that, he spent twelve years at Allied-Lyons and held a number of senior positions, six years as Managing Director at Hilton Group and eight years as Managing Director at Ladbroke Group. 4 Oct 2010 16

Andrew Harding Andrew has worked as Chief Executive of the Australian Racing Board for the past 14 years. The ARB is the national body administering the Australian thoroughbred racing industry. He has also served as Secretary-General of the Asian Racing Federation (ARF) for the last 10 years. Andrew is currently Director of Racing Development of the Hong Kong Jockey Club. Andrew holds a Bachelor of Economics from the University of Queensland is an Australian qualified lawyer. 4 Oct 2010 17

Presentation by the speakers 4 Oct 2010 18