SaskatchewanLiquor & Gaming Authority

HOST Saskatchewan Conference

March 14 - 15, 2010

About SLGA

• Liquor Operations – purchases, warehouses, distributes and retails beverage alcohol

• Gaming Operations – VLTs, SIGA slot machines, Breakopen Vending Machines

• Regulator – license and regulate liquor and gaming activities

Gaming in Saskatchewan– Electronic gaming machine market– Charitable gaming market– Bill S-226 update

Liquor in Saskatchewan– Litre sales by beverage alcohol category– Dollar sales by category and customer type– Market share by category and customer type– Regulatory changes– Retail initiatives– Top selling products

Saskatchewan Gaming MarketElectronic Gaming Machine Market

• Total number of VLTs is capped at 4,000• Casino slot machines totaled 2,865 in 2008-09

Saskatchewan Gaming Corporation• 995 slot machines

Saskatchewan Indian Gaming Authority• 1,870 slot machines

Gaming Market Trends• Declining charitable gaming activity (only growing segment is large

raffles)

• Live horse racing has declined significantly over the past two decades and over the last two years has been flat

• VLT market began to rebound in 2006-07 and 2007-08, however in 2008-09 gross revenue was down 2.5%

• Year to date (as of Jan. 2, 2010) indicates a decrease of 6.2% in gross VLT revenue and a similar decline in site commissions

• SIGA and SGC gaming activity is down YTD as well

VLT Activity VersusCharitable Gaming Net Income

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$10

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$50

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Figures are in millions of dollars

VLT Gross RevenueCG Net Income

Ch

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Gaming Market Activityby Operator ($ Millions)

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$10

$20

$30

$40

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VLT Site Commissions CP 37.5 33.9 33.9 36.9 36.6

Charitable Gaming 30.3 26.6 23.7 25.6 26.4

SGC 39.4 29.2 34.9 42.3 50.8

SIGA 34 40.2 48.8 58.1 59.9

2004-05 2005-06 2006-07 2007-08 2008-09

* VLT site commissions do not include commissions paid to Emerald Casino

Gaming Market Activityby Operator ($ Millions)

$0$50

$100$150

$200$250

$300$350

$400

2004-05 2005-06 2006-07 2007-08 2008-09

VLT Site Commissions CP Charitable Gaming SGC SIGA VLT SLGA

Bill S-226 Update• Seeks amendment to the Criminal Code to limit placement of

electronic gaming machines to casinos, race courses (racinos) or betting theatres

• The Bill received second reading in March 2009, but died on the Order Paper when Parliament was prorogued on Dec. 30, 2009

• Parliament opened on March 1, 2010 and reintroduction of a similar bill has not occurred to date.

Liquor Market in Saskatchewan

• Overall growth in both litre and dollar sales very strong in recent years

• Sales driven by a strong economy in 2008 and a relatively strong (compared to the rest of Canada) economy in 2009

• Litre and dollar sales expected to increase slightly for fiscal 2010

Sales by Category(YTD as of January 2, 2010)

2008-09 2009-10 $ Change % Change

Beer $195.8 M $212.3 M $16.5 M 8.4 %

Refresh. $18.2 M $19.5 M $1.3 M 7.1 %

Spirits $145.1 M $151.6 M $6.5 M 4.5 %

Wine $46.2 M $50.0 M $3.8 M 8.2 %

Total $405.3 M $433.4 M $28.1 M 6.9 %

Volume by Category(YTD as of January 2, 2010)

2008-09 2009-10 L Change % Change

Beer 54,150 56,228 2,078 3.8 %

Refresh. 3,434 3,699 265 7.7 %

Spirits 5,365 5,574 209 3.9 %

Wine 3,979 4,254 275 6.9 %

Total 66,928 69,755 2,827 4.2 %

Numbers are 000’s of litres

Total Value of Purchases/SalesAll Product Categories by Customer Type

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$50

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2004-05 2005-06 2006-07 2007-08 2008-09

Retail SOP Franchisees Comm. Perm.

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Market Share of Total Liquor MarketBy Customer Type (All Product Categories)

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Retail 48.19% 48.84% 49.35% 49.90% 51.00%

SOP 1.43% 1.48% 1.32% 1.32% 1.28%

Franchisees 8.69% 8.52% 8.39% 8.58% 8.64%

Comm. Perm. 41.69% 41.16% 40.95% 40.20% 39.08%

2004-05 2005-06 2006-07 2007-08 2008-09

Value of Beer PurchasesBy Customer Type

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2004-05 2005-06 2006-07 2007-08 2008-09

Retail SOP Franchisees Comm. Perm.

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Volume of Beer PurchasesBy Customer Type

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2005-06 2006-07 2007-08 2008-09

Retail SOP Franchises Comm. Perm.

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Beer Market ShareBy Customer Type

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60%

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Retail 32.06% 32.70% 33.15% 34.08% 36.01%

SOP 0.94% 0.98% 0.88% 0.93% 0.93%

Franchisees 3.22% 3.36% 3.52% 3.72% 4.18%

Comm. Perm. 63.77% 62.96% 62.45% 61.27% 58.87%

2004-05 2005-06 2006-07 2007-08 2008-09

Value of Spirits PurchasesBy Customer Type

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$30

$60

$90

$120

$150

2004-05 2005-06 2006-07 2007-08 2008-09

Retail SOP Franchisees Comm Permittees

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Spirits Market ShareBy Customer Type

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80%

Retail 64.54% 64.72% 64.22% 63.43% 63.36%

SOP 1.85% 1.90% 1.68% 1.61% 1.53%

Franchisees 16.55% 15.55% 14.90% 14.89% 14.51%

Comm Permittees 17.07% 17.83% 19.21% 20.07% 20.59%

2004-05 2005-06 2006-07 2007-08 2008-09

Refreshment PurchasesBy Customer Type

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$2

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$14

2004-05 2005-06 2006-07 2007-08 2008-09

Retail SOP Franchisees Comm Permittees

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Refreshment Market ShareBy Customer Type

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10%

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Retail 50.51% 51.38% 51.95% 51.76% 52.71%

SOP 1.50% 2.08% 1.77% 1.65% 1.61%

Franchisees 12.50% 14.35% 14.11% 14.39% 14.34%

Comm Permittees 35.48% 32.20% 32.17% 32.20% 31.35%

2004-05 2005-06 2006-07 2007-08 2008-09

Value of Wine Purchases By Customer Type

$0$5

$10

$15$20$25$30$35

$40$45$50

2004-05 2005-06 2006-07 2007-08 2008-09

Retail SOP Franchisees Comm Permittees

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Wine Market Shareby Customer Type

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Retail 71.03% 70.78% 71.58% 72.22% 73.98%

SOP 2.36% 2.24% 1.93% 1.88% 1.81%

Franchisees 7.37% 7.24% 7.05% 7.21% 6.93%

Comm Permittees 19.25% 19.74% 19.43% 18.69% 17.27%

2004-05 2005-06 2006-07 2007-08 2008-09

Top Selling Products

• Handout includes the top products and the market share represented by them in that category

• The list of top selling wines includes the price per 750 ml bottle as additional information

Regulatory Changes

In 2009, SLGA’s advertising policy was amended

For 2010-11 SLGA is working on regulatory changes in the following areas:

• Delivery of products from microbreweries and brew pubs to commercial permittees

• Development of a Micro Distillery policy to be consistent with the Cottage Winery and Microbrewery policies

Regulatory Changes (cont’d)

Other regulatory and related issues of interest:

• Moratorium on new brew pub licences and review of framework

• Revised Automated Banking Machine placement policy

Retail Initiatives

• Two specialty wine store franchises opened in 2009 (Saskatoon in June and Regina in November)

• Franchise Pilot Projects

Questions?