40 years after its creation Loto-Québec Needs to Adapt its Games Offering to
New Technological and Marketing Realities

MONTREAL , Nov. 17 /CNW Telbec/ - Just a few weeks before the fortieth anniversary of Loto-Québec's creation, Alain Cousineau, President and CEO, described the major challenges currently facing the public corporation to the members of the Montreal Board of Trade. According to Mr. Cousineau , one of the questions the lottery industry should resolve is how to literally reinvent itself and create a new family of games. Innovative concepts will be needed to better reach its young adult clientele who are today solicited by many digital and interactive proposals that often include some form of gambling.

"The lottery sector has changed greatly over the past 40 years," Alain Cousineau noted. "Loto-Québec's new products will, therefore, need to incorporate such factors as competition, decision-making and skill, in addition to the fun of playing. That is a major challenge," he acknowledged, "but meeting it successfully is critical if we are to maintain our products' competitiveness."

Consolidation of the Video Lottery Network

Loto-Québec's CEO also mentioned that the plan to reconfigure the video lottery terminal network (VLT) has met its objectives. They were even exceeded with the number of VLT locations being reduced by more than 36%. Mr. Cousineau explained that, in the bar and tavern network, achieving plan objectives resulted in about 11,500 VLTs being managed in some 2,380 sites. "It is a supply range that we consider optimal, i.e. it does not encourage problem gambling, while being large enough to discourage anyone from trying to establish an underground network."

Online Gambling

The growth in online gambling is a huge and probably irreversible worldwide trend, Mr. Cousineau explained. Quebecers are increasingly solicited to participate in online games, whether these are legal or not. In Canada , for example, that industry grew by an average 30% a year between 2003 and 2008, going from $184 million to $675 million . It is expected to pass the billion dollar mark in 2012. "Annual revenues drawn from Quebec ," Alain Cousineau reported, "are conservatively estimated at around $80 million , which is a sharp increase from the $50 million drawn in 2006."

Online gambling sites obviously do not offer an assistance program for vulnerable players, which leaves the State to pick up the costs of problem online gambling without reaping any benefits, the President and CEO said.

Given the growth of online gambling, Loto-Québec is planning to submit a proposal to the government to set out guidelines for this practice, Alain Cousineau announced. "For the time being," he said, "we are supporting a cooperation agreement with the other five provinces who have already begun offering online gambling - a partnership that could resemble the one we already enjoy with regard to Canada-wide draws such as Lotto Max. Come what may," Mr. Cousineau insisted, "our proposal will remain true to Loto-Québec's history of activities that seek to channel gambling and establish a consumption framework to minimize social costs."

Casinos

In such a competitive environment, Quebec casinos chose, for their part, to focus on both the quality of their service and their games offering. Mr. Cousineau said that Quebec's four casinos - Montréal, Charlevoix, Lac-Leamy and Mont-Tremblant - want to be recognized as providing superior hospitality, ambiance and customer satisfaction. "We have made significant investments in technology and personnel training as well as improved our operational efficiency. In short, we have made significant changes to gradually refocus our establishments on quality and customer service."

"Casino operations require a large workforce," Alain Cousineau reminded his audience. "We work in a saturated and almost mature market where operational costs rise more quickly than revenue. That is why we have improved our technology and changed our way of operating. Our biggest challenge will be to maintain profit margins without sacrificing service quality because we are in the field of entertainment where customers want extraordinary experiences."

Responsible Gaming

Finally, the President and CEO of Loto-Québec reminded his audience that over the past seven years, Loto-Québec has spent $160 million on assistance programs for problem gamblers, which are administered by the Ministère de la Santé et des Services Sociaux, as well as management of VLT access controls, which is the responsibility of the Régie des alcools, des courses et des jeux. Moreover, over the same period, Loto-Québec has given $20.6 million to the Fondation Mise sur toi to support programs that promote responsible gaming as well as the implementation and continuous improvement of prevention tools within the Company's operations.

"In total, this represents $180 million committed by Loto-Québec during that period to prevent problem gambling, making Quebec one of the areas of the word where the most money is expended on that issue," Mr. Cousineau stated. In this regard, he added, "we are very proud that Loto-Québec was the first lottery operator in the world to receive the World Lottery Association's highest international certification for responsible gaming."

Many times over, Loto-Québec has proven that it is both relevant and able to adapt to all kinds of changes, Loto-Québec's CEO continued. With the emergence of online gambling, we have no other choice than to adjust to this new wave. "The precise form of the adjustments still needs to be determined. One thing is sure, however, while Loto-Québec continues its efforts to channel gaming towards controlled sites and establish a consumption framework to the minimize social costs of gambling, the Corporation will always endeavour to maintain a balance between its economic mission and its social responsibility."

"We want Loto-Québec to be recognized as a model in Quebec with regard to overall performance and as a corporate citizen, but our ultimate goal is that the Corporation be recognized as a world leader in marketing responsible games of chance and money games," Alain Cousineau concluded.

For further information: Marie-Claude Rivet, Loto-Québec, [phone]