Board Meeting Minutes- Jan 2021

WYOMING LOTTERY CORPORATION Board Meeting Minutes January 26, 2021 Zoom Video Conference Board Members via Zoom: Gerry Marburger-Chairman, Jim Willox- Vice Chairman, Ed Liebzeit- Secretary, Dave Bonner-Treasurer, Gina Monk, Sandra Wallop, Todd Peterson, and Mary Throne. Staff Members Present: Jon Clontz-CEO, Robin Medina-COO, Loy Jackson-CFO, Dave Stevens-Chief of Security and Enforcement, Sarah Shoden- Executive Assistant and Social Media/ Events Coordinator, Ashley Pexton- Marketing Manager and Arin Schlensker- Player Services Specialist. Guests Present: Matt Kaufman-Legal Counsel Guests Present via Zoom: Vlad Simonenko - Intralot ____________________________________________________________________________ Establish Quorum: Chairman Gerry Marburger called the meeting to order at 8:30 a.m. with a roll call of board members and staff members. It was noted that Vice Chairman Jim Willox and Board Member Mary Throne would be approximately fifteen minutes late due to other obligations but would join when they were available. All guests were welcomed. Agenda Approval: Chairman Marburger asked for any additions or edits to the presented agenda. With none presented, an approval was motioned by Board Secretary Ed Liebzeit and seconded by Board Treasurer Dave Bonner and passed with a unanimous vote. Approval of Meeting Minutes: The motion was made by Board Member Todd Peterson to approve the minutes from October 29 with amendments. The motion was seconded by Board Member Liebzeit and the motion passed by a unanimous vote. 1 Amendments made by Board Treasurer Dave Bonner for the October 29 minutes: ● Page 2 change the word “draw” to “daily” CEO Report: Wyolotto CEO Jon Clontz presented the Quarter Two (Q2) overview report. Mr. Clontz began with an update in regards to the upcoming game “2by2” set to launch in March of 2021. He noted that everything including game testing, marketing planning and development were on schedule and on budget. He noted that Wyoming Lottery Corporation (WLC) had been accepted into the consortium for 2by2 several months ago, and so Mr. Clontz had sent out an update to the other state lotteries to inform them of the Wyoming launch date of March 14. He also noted that the week prior he had been a part of the video shoot which would be used for the upcoming launch of the game. Board Secretary Liebzeit then asked if the WLC had a draft of the video to share with the board during the meeting. Mr. Clontz responded that at this time the video crew was still working on editing and that the WLC team would share a copy of that soon. Wyolotto COO Robin Medina then shared that she would be sharing a storyboard for the video during the marketing section of the report. Mr. Clontz then shared updates in regards to Keno development. He shared that the goal was that after the launch of 2by2 the WLC team would then begin the development of Keno with an estimated launch date eleven to twelve months after planning had begun. He then shared that this will be the most complicated game launch that the WLC has done thus far with an extensive education plan and the addition of up to 200 new retailer locations. Mr. Clontz also noted that the WLC has already done a large portion of this planning already but that it was now time to implement it. Mr. Clontz then noted that within the upcoming fiscal year, the WLC has multiple large expenses to plan for and execute on. He noted these will include the launch of 2by2, a game change for Lucky for Life to a daily draw game in July and a likely draw day addition to Powerball in August. He shared that both of these game changes will incur game testing costs, as well as marketing and implementation. He noted that at this time the Powerball change was not official but it was highly likely that the change was going to move forward. Mr. Clontz noted that all of these factors may have an impact on the launch of Keno with both financial and personnel resources being used. He shared that he and the WLC leadership team were working closely to define the 2 plan and felt confident that the WLC would likely not have to borrow funds to achieve all of the objectives, which is largely due to the recent large jackpots which grew sales. He concluded that while this will be a busy upcoming year, he and the WLC team felt confident that they could continue to transfer their quarterly 75% of net proceeds and continue to be flexible on the launch of Keno dependent on jackpot run ups and timing. Chairman Marburger asked in regards to the finances if there was a planned budget amendment that would be presented next quarter in reference to the changes. Mr. Clontz responded that it was highly likely that one would be presented and also noted that with the addition of more draw dates and the needs of Keno location management that there would be the request to add more staff positions. Secretary Liebzeit then asked if the WLC had set up a cash reserve to cover the anticipated expenses. Mr. Clontz responded that the WLC does have those accounts in place currently and have been actively adding to them when funds allow in accordance with the WLC statute and the requirement of 75% of net proceeds being transferred. He further explained that they did have $400,000 set up in that account that was planned to be for Keno, but after deciding to move forward with 2by2 first, those funds were reallocated to be used for those costs. He then shared that based on the decisions around kiosks and several other factors they still wanted to go forward with growing the game portfolio for Wyoming and therefore went ahead with the development of 2by2. Board Treasurer Bonner then asked in regards to the costs for the new game equipment needed for Keno and if Intralot was going to help support that budget. Mr. Clontz responded that was the case and that early in the original development planning for Keno, he had made an agreement with the Intralot CEO that Intralot would contribute up to $1 million to Keno development and that Intralot would purchase the kiosks should they be approved by legislature. He explained that the estimated total for costs associated for Keno is $1.8 million and so with Intralot covering the million, WLC will need to set aside the $800,000 to support the rest. Mr. Clontz then noted that in the prior few weeks ticket sales had been doing very well. He made mention of when the initial Powerball game change had taken place and that the plan was that every four or so years jackpots of this large amount would be seen. He further noted that this is the first time that both jackpots were so close to hitting the $1 billion jackpot amount at the same time. He concluded that while this was an exciting time, he did look forward to the time when games like Keno could be implemented since the other games sales are so dependent on jackpot amounts. 3 Mr. Clontz then made mention of the plan for retailer forums, noting that this had been a topic he and his team had been working on for a while, but had paused due to the pandemic. He explained that his team had created virtual forums and that those would be finalized and launched soon. He concluded that going forward he would prefer to conduct these in person, but would gauge the comfortability of each region prior to doing so. Mr. Clontz also made mention of their upcoming MUSL game audit which occurs every two years. He noted that while this audit reviews various details, it primarily focuses on security, which is why the Wyolotto Security Officer Mr. David Stevens would be the main lead on that. Mr. Clontz also noted that they are keeping a close eye on upcoming legislation and that during the Executive Session there would be some additional updates from their legal counsel. Board Secretary Liebzeit then asked if there was an update in regards to the app user growth and engagement. Mrs. Medina responded that they were able to get a user total update as of the night prior of over 14,800. She further noted that they would be reviewing the data to see the growth due to the large jackpots and that they were also currently running a Second Chance promotion where players could double their chances by scanning their tickets. Vice Chairman Jim Willox, who had joined a few minutes late to the meeting due to a prior commitment, then asked if the topic of additional staff had been discussed yet. Mr. Clontz responded that they would be covering the topic in detail during the Executive Session but he did note that the WLC would need an additional full time Draw Coordinator as well as a possibly an additional part time Draw Coordinator when Keno goes live. He also noted that they would need to look into the addition of a Keno Coordinator who would travel around the state to continually check on retailers and how well Keno was going. He also noted that when Keno goes live there was an expectation that Intralot would add additional staffing to support the game. Vice Chairman Willox then asked if there had been a consideration about whether the Keno Coordinator would have to be based in Cheyenne or not. Mr. Clontz responded that they had discussed that possibility and that as part of the recommendation for the role they would be considering equipment to support the role as well as including the possibility of a vehicle.

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