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Investor Presenta,on Global Gaming Expo September 26-29, 2016

EVRI Investor Presentation 09-16

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Page 1: EVRI Investor Presentation 09-16

InvestorPresenta,on

GlobalGamingExpoSeptember26-29,2016

Page 2: EVRI Investor Presentation 09-16

Disclaimer

2

Forward-LookingStatements;Non-GAAPFinancialMeasures

Throughoutthispresenta=onwemakeforward-lookingstatementswithinthemeaningoftheU.S.PrivateSecuri=esLi=ga=onReformActof1995.Theforward-lookingstatementsaregenerallyaccompaniedbywordssuchas‘‘plan,’’‘‘es=mate,’’‘‘expect,’’‘‘intend,’’‘‘believe,’’‘‘should,’’‘‘would,’’‘‘could,”“poten=al,”‘‘an=cipate,’’“project”orotherwordsthatconveyuncertaintyoffutureeventsoroutcomes.EveriHoldingsInc.’s(“Everi”or“our”)actualresultscoulddiffermateriallyfromthosestatedorimpliedbytheseforward-lookingstatementsduetorisksanduncertain=esassociatedwithEveri’sbusiness.FactorswhichcouldcauseEveri’sactualresultstodifferfromthoseprojectedorcontemplatedinanysuchforward-lookingstatementsinclude,butarenotlimitedto,thefollowingfactors:(1)ourabilitytomaintainabroadcustomerreach,crosssellingopportuni=esandacombinedsalesforceabletoaddresscustomers’needs;(2)ourgamedevelopmentstudios’abilitytoincreasetheproductlibraryanddevelopnewenhancementstoincludeinnewlydevelopedcontent;(3)ourabilitytoobtainapprovalofnewproductsinnewandexis=nggamingjurisdic=ons;(4)thefailureofanaly=csforgamingopera=onstoadequatelypredictormeasuregamingopera=ons;(5)ourabilitytoiden=fythecoststructureandcapitalspendrequiredtooperateatcurrentbusinesslevels;(6)ourabilitytosecurebrandlicensearrangementsandtocompletedevelopmentofgamesusingthesebrandsbyG2E2016;(7)ourabilitytointroducenewproductsandservices;(8)expecta=onsregardingcustomers’preferencesanddemandsforfuturegamingofferings;(9)expecta=onsregarding=mingforrecogni=onofrevenuefromnewmarkets;(10)the=mingofrecogni=onofcertainsalestoAlbertaGamingandLo^eryCommission;and(11)expecta=onsregardingproductapprovalsforourgamesandourabilitytointroducegamesintofieldtrials.Theforegoingreviewofimportantfactorsthatcouldcauseactualeventstodifferfromexpecta=onsshouldnotbeconstruedasexhaus=veandshouldbereadinconjunc=onwithstatementsthatareincludedhereinandelsewhere,includingtheriskfactorsincludedinEveri’smostrecentAnnualReportonForm10-KfiledwiththeU.S.Securi=esandExchangeCommission.Exceptasrequiredbyapplicablelaw,Everiundertakesnoobliga=ontopubliclyupdateanyforward-lookingstatement,ortomakeanyotherforward-lookingstatements,whetherwri^enororal,thatmaybemadefrom=meto=me,whetherasaresultofnewinforma=on,futuredevelopmentsorotherwise.Readersarecau=onednottoplaceunduerelianceonforward-lookingstatements,whicharebasedonlyoninforma=oncurrentlyavailabletoEveriandspeakonlyasofthedateofthiscommunica=on.

Addi,onalNotes

Thispresenta=oncontainsindustrymarketdata,industryforecastsandothersta=s=calinforma=on.Suchinforma=onhasbeenobtainedfrompubliclyavailableinforma=onandindustrypublica=ons.Everihasnotindependentlyverifiedsuchinforma=onandmakesnorepresenta=onsastotheaccuracyofsuchinforma=on.

Non-GAAPFinancialMeasures

Thispresenta=onincludesfinancialmeasuresthatwerenotpreparedinaccordancewithUnitedStatesgenerallyacceptedaccoun=ngprinciples(“GAAP”).AdjustedEBITDAisanon-GAAPmeasurementpresentedhereinasasupplementaldisclosure.EveridefinesAdjustedEBITDAasearningsbeforenetinterestexpense,incometaxes,deprecia=on,amor=za=on,lossonex=nguishmentofdebt,non-cashstockcompensa=on,assetimpairment,acquisi=onandothercostsrelatedtomergersandpurchaseaccoun=ngadjustments,accruedexecu=veseverance,accre=onofcontractrightslessabenefitfromone-=melegalse^lementproceeds.EveripresentsAdjustedEBITDAasitusesthismeasuretomanageitsbusinessandconsidersthismeasuretobesupplementaltoitsopera=ngperformance.Everialsomakescertaincompensa=ondecisionsbased,inpart,onitsopera=ngperformance,asmeasuredbyAdjustedEBITDA;anditscreditfacility,seniorsecurednotesandseniorunsecurednotesrequireEveritocomplywithaconsolidatedsecuredleveragera=othatincludesperformancemetricssubstan=allysimilartoAdjustedEBITDA..

Areconcilia=onofEveri’smostdirectlycomparableGAAPmeasuretoAdjustedEBITDAisincludedinEveri’searningreleaseslocatedonEveri’swebsiteatir.everi.com.Addi=onally,areconcilia=onofeachsegment’sopera=ngincome(loss)toAdjustedEBITDAisalsoincluded.Onasegmentlevel,opera=ngincome(loss)perGAAP,ratherthannetearnings(loss)perGAAP,isreconciledtoAdjustedEBITDAasEveridoesnotreportnetearnings(loss)bysegment.Managementbelievesthatthispresenta=onismeaningfultoinvestorsinevalua=ngtheperformanceofEveri’ssegments.

Page 3: EVRI Investor Presentation 09-16

BusinessOverview

Page 4: EVRI Investor Presentation 09-16

TheIndustry’sOnlyGames&PaymentsProvider

4

BroadCustomerReach/CrossSellingOpportuni,es/CombinedSalesforcetoAddressallCustomers

HighlyDifferen,ated,ComplementaryProductsfortheCasinoFloor

SignificantRecurringRevenue(Approximately90%ofTotalRevenue)

HistoricalStrengthinClassIIGaming/ProviderofGaming-FocusedPaymentsSolu,ons

Page 5: EVRI Investor Presentation 09-16

GamesSegmentOverviewGamingOpera,ons

•  19%of2Q16TTMconsolidatedrevenue

•  13,179gamingunitsinstalled(7,762ClassIIand5,417ClassIII)throughoutNorthAmericaatJune30,2016

•  Revenuederivedfromrevenue-sharingarrangementsorleasefeesontheinstalledbase

•  Suppliesthecentraldeterminantsystemforapproximately18,400videolo^eryterminals("VLTs")inNewYork

MachineSalesandOther

•  6%of2Q16TTMconsolidatedrevenue

•  Broadpornolioofgamingmachineproductssoldtocasinocustomers

•  Gamethemeshistoricallyfocusedonin-house,proprietarycontent

•  Introduced7newslotthemesbaseduponlicensed,brandedcontentatG2Ein2016toaddnewproductsegment

•  Sold2,483slotmachinesintwelvemonthsendedJune30,2016

$134.0$165.7

$204.2 $207.0 $214.4 $207.0

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

2011 2012 2013 2014 2015 2Q16TTM

Revenue

5 Note: $ in millions; fiscal year ended December 31

$62.4$79.9

$106.6 $110.9$122.8 $117.2

46.6% 48.2% 52.2% 53.6% 57.3% 56.6%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

$0.0

$25.0

$50.0

$75.0

$100.0

$125.0

$150.0

2011 2012 2013 2014 2015 2Q16TTM

AdjustedEBITDA

AdjustedEBITDA %Margin

Prominent Class II Manufacturer With Strong Recurring Revenue Base and Growing Class III Presence

Page 6: EVRI Investor Presentation 09-16

PaymentsSegmentOverview

ATM(38%ofTTM2Q16consolidatedrevenue)

•  EnablescashwithdrawalsusingATM,debit,orcreditcards

•  Processed74.6milliontransac=onstotaling$14.9billionindollarvolume(1)inthetwelvemonthsendedJune30,2016

CashAdvance(28%ofTTM2Q16consolidatedrevenue)

•  EnablescashadvancesthroughcreditcardcashaccessandPOSdebitcardtransac=ons

•  Processed8.8milliontransac=onstotaling$5.1billionindollarvolumeinthetwelvemonthsendedJune30,2016

CheckServices(3%ofTTM2Q16consolidatedrevenue)

•  Checkverifica=onandwarrantyservicesallowcasinostomanageandreducerisksonpatroncheckscashed

•  Processed3.5milliontransac=onstotaling$1.1billionindollarvolumeinthetwelvemonthsendedJune30,2016

Other(6%ofTTM2Q16consolidatedrevenue)

•  Includesintegratedkioskandjackpotkiosksalesandservices,CentralCreditrepor=ngservices,compliancesopwaresolu=ons,andcasinomarke=ngservices

•  Otherrevenueincreased~2.1%Y/YinthetwelvemonthsendedJune30,2016

$544.1 $584.5 $582.4 $585.6 $612.6 $626.0

-10.2%

7.4%

-0.3% 0.5%4.6% 5.4%

-15.0%

-5.0%

5.0%

15.0%

$0.0

$200.0

$400.0

$600.0

$800.0

2011 2012 2013 2014 2015 2Q16TTM

Revenue

Revenue %Growth

6 1)  Includes ATM processing acEvity for third-party ATM partner porJolios, which were

acquired by Everi in 3Q15 & 4Q15

$61.7

$79.3$71.2 $76.0 $77.6 $77.2

11.3%

13.6%

12.2%13.0% 12.7% 12.3%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

2011 2012 2013 2014 2015 2Q16TTM

AdjustedEBITDA

AdjustedEBITDA %Margin

Market Leading Provider of Cash Access and Compliance Products and Services

Note: $ in millions; fiscal year ending December 31

Page 7: EVRI Investor Presentation 09-16

2Q16Results&RecentDevelopments•  Consolidatedrevenuesof$214.0million

•  Gamesrevenueof$54.3million,down1.1%Y/Y•  Paymentsrevenueof$159.7million,up5.4%Y/Y

•  AdjustedEBITDAof$51.2million•  GamesAdjustedEBITDAof$30.0million,down10.4%Y/Y•  PaymentsAdjustedEBITDAof$21.2million,up12.2%Y/Y

•  KeyDevelopments•  NewCoreHDXgamingcabinetaccountedfor57%of2Q16unitsales•  Firstcompanyinthecasinoindustrytobefullyend-to-endEMVcompliantwithallits

financialtransac=ondevices,planormsandsystems•  Debu=ngsevenbrandedgamesatG2EthroughpartnershipswithPenn&Teller,

DreamWorks,HalvrickStudiosandWarnerBros.•  NewTournEventenhancementstodebutatG2E,includingthefirstskill-basedgame

baseduponpopularFruitNinjabrandwhichwillbeavailableineverymarket•  Enteredintoanagreementtolicensetechnologyandintegrategamingcontentto

expandsocialandrealmoneygamingcapabili=es

7

Page 8: EVRI Investor Presentation 09-16

Execu,ngonStrategicPriori,es:G2E

Page 9: EVRI Investor Presentation 09-16

FocusonFiveStrategicPriori,es1.  Increasetheproductlibrary

2.  Increasedistribu=oncapabili=esandenternewjurisdic=ons

3.  Driveopera=ngefficienciesandcostcontainment

4.  Developnewlicensedandbrandedgamesforpremiumpar=cipa=onsegment

5.  Drivesalesandplacementsthroughintegra=onofgamesandpaymentsproducts

9

Page 10: EVRI Investor Presentation 09-16

G2E2016Highlights

10

Page 11: EVRI Investor Presentation 09-16

EveriGamesDevelopmentIni,a,ves•  Industryvetsleadinggamedevelopment

•  Powerfulmixofhomegrownandnewtalentdesigningwithkeeneyeonslotplayer;provenleadershipaligningtechnologyandinnova=on

•  IncreasedR&Dbudgetfundingtechnologyinnova,on•  DrivingR&Dspendhigherasapercentageoftotalgamingbusinessrevenue

•  Robusthardwareroadmap•  Basegameplanorm,topboxintroduc=onsgivedeveloperslargercanvasforuniquegame

content

•  Largethemebandwidth•  Providediverseoutputofnewgamecontentcapableofopera=ngoncustomers’exis=ng

EverihardwareaswellasCompany’snewhardware•  Expandingstudiodevelopmentteamstosharpenfocusonqualitywithoutsacrificing

quan=ty

•  Introduc,onofgamesbasedonbrandedlicenses•  Strategicallytarge=ngthird-partycontentthatlendsitselftologicalplayerappealand

innova=vegameplaymechanics 11

Page 12: EVRI Investor Presentation 09-16

CoreHDX•  Premium-feelingcabinetforstandardcabinetprice

•  Keyfeaturesinclude:•  PremiumLCDbu^ondeck•  PowerfulMforce®planorm•  Immersivegamecontrolledligh=ng

•  Firstcabinettoofferaward-winningEveriBetsolu,on•  Proprietaryminimumbetconfigura=oncontrolledbyoperatorwithoutchangingvola=lity

12

Page 13: EVRI Investor Presentation 09-16

BrandedLicenses•  Sevennewbrandedlicensesdebu,ngatG2E

•  Penn&Teller®•  Casablanca®•  FruitNinja™

•  DreamWorksClassic®•  RichieRich®•  HotStuff®•  Underdog®•  Casper®

13

Page 14: EVRI Investor Presentation 09-16

PremiumLeasedCabinet:EmpireMPX•  ExclusivelyfortheCompany’sgamesbasedonlicensedbrands

•  LauncheswithPenn&Teller®andCasablanca®

•  Company’sfirst-everWAPgamesforClassIImarkets

•  DailyfeeexclusiveforClassIIImarkets

•  Keyfeatures•  Completelynewdesign•  Allowsfornes=ngofcabinetsinbank

sezngs•  Overheadspotlightfeature•  Gamecontrolledligh=ng•  Backligh=ng•  DualUSBcharger

14

Page 15: EVRI Investor Presentation 09-16

NewHardwareandBankedGames•  Hardware

•  Innova=onsenhanceCompany’sexis=ngpornolioofgamecabinets•  Tower370™,GameCrown®,Founda=on™Sign

•  BankedProduct•  JackpotJump™•  SuperJackpotSeries™•  ClassIIWideAreaProgressives•  LinkedLocalAreaProgressives

15

Page 16: EVRI Investor Presentation 09-16

EveriPaymentsDevelopmentIni,a,ves•  Dedica,ontonetworksecurity

•  StrategicinfrastructureandsecurityinvestmentsmakeEveriabest-in-classproviderofsecurepaymentssolu=ons

•  Innova,vesolu,ons•  ProprietaryEveriIDtechnologyaidsinpatroniden=fica=onandduediligencewhile

JackpotXpressallowsforefficientmobile-basejackpotprocessingandpayment

•  Industryleadingenhancements•  UniversalXchangewithUniversalIntegratedManagementprovidesanenhancedkiosk

sopwareplanorm•  Everiisonlycasinoindustrycompanytobefullyend-to-endEMVcompliant

•  Makingpaymentshappen•  Focusondrivingcashtofloorthrougheffec=veself-servicesolu=ons

•  Evolvingdigitalcapacity•  CashClubWalletdecentralizespaymentsthroughoutthegamingenterpriseandoffers

anenhanced,streamlinedplayerexperience16

Page 17: EVRI Investor Presentation 09-16

PaymentsProductsHighlights•  JackpotXChange®(JXC-L)

•  Fullservicejackpotpayoutdevice•  Singleterminal•  Newbacklitkeyboardwithtouchpad

•  UniversalXChange™(UXC)•  Fullyre-engineeredkiosksopwareplanorm

withupdated,simplifiedandcommonarchitectureforlineofEverikiosks

•  Modularapproachallowsforeasyandquickinstalla=onofinnova=vepaymentsproducts

•  Supportscommonkioskfunc=onality,suchasATM,billbreakand=cketredemp=on

•  Versa,leExchange™(VXC)•  Non-cashdispensingkioskintendedasQCA

replacement•  Featuresincludebillacceptor,PINpad,card

reader,TITOprinter,carddispenser

17

Page 18: EVRI Investor Presentation 09-16

PaymentsProductsHighlights•  JackpotXpress™

•  Mobileapplica=onthatallowsa^endanttoservicetheplayeratthepointofplay

•  Integra=onwithslotaccoun=ngsystemandEveri’sAMLsopware

•  RendersandcompletesIRSforms

•  CashClub®Wallet•  Facilitatesfundsflow,reducescashhandling

costsandkeepscashtransac=onsin-house•  Supportsalterna=veandmobilepayments•  IntegratedwithEvericashaccessservices

•  EveriID™•  Informa=ongatewayforPatrondata,

includingOFACSDNList,DMFandTIN•  IntegratedwithEveriCompliance

18

Page 19: EVRI Investor Presentation 09-16

FinancialOutlookandCreditUpdate

Page 20: EVRI Investor Presentation 09-16

SecuredLeverageRa,oAnalysis

20

($inthousands)Balance6/30/16 MaturityDate Rate

TermLoan 470,600$ 12/19/2020 6.25% LIBORplus5.25%witha1%floorRevolver -$ 12/19/2019 0.50% Commitmentrate-BorrowingatLIBORplus4.75%SeniorSecuredNotes 335,000$ 4/15/2021 7.25% FixedRateSeniorUnsecuredNotes 350,000$ 1/15/2022 10.00% FixedRate

1,155,600$

DebtCovenant:TheCompany'srequiredmaintenancecovenant,whichcoversSecuredDebtonly,asofDecember31stofeachperiodpresented($inthousands):

2016 2017 2018SecuredDebt(1) 800,600$ 790,600$ 780,600$CashReductiontoNetDebt(2) (50,000)$ (50,000)$ (50,000)$SecuredDebt,net $750,600 $740,600 $730,600

SecuredLeverageRatioRequirement 4.25x 4.00x 3.75x

RequiredAdjustedEBITDAperCreditAgreement(3)(6) 176,612$ 185,150$ 194,827$EstimatedCashUsageFeesexcludedfromCreditAgreementAdjEBITDA(4) 3,400$ 4,500$ 4,500$MinimumAdjustedEBITDA,asReported(5)(6) 180,012$ 189,650$ 199,327$

Assumptions:(1)AssumesnoadditionalFreeCashFlowPaydownorborrowingundertheRevolverandonlytherequired2%amortizationof$10Mperyear.(2)Forpurposeofthecovenantcomputation,theCreditAgreementprovidesforupto$50millionincashasareductiontothenetdebt.TableassumesCompanymaintainsinexcessof$50millioninfutureperiods.(3)RequiredAdjustedEBITDApertheCreditAgreementtoremainincompliancewithSecuredLeverageRatio.(4)CashUsagefeesareincludedaspartofInterestExpense,netforfinancialreportingpurposesandexcludedfromReportedAdjustedEBITDA.PertheCreditAgreementCashUsagefeesarenotincludedaspartofInterestExpenseforpurposesofSeniorLeverageRatioCovenant.Amountreportedreflectsapproximately50bpsincreaseinthecashusageratefor2017&2018ascomparedto2016.(5)MinimumAdjustedEBITDA,asReportedreflectsAdjustedEBITDAonacomparablebasistotheCompany'scurrentquarterlyreportingpracticesinquarterlyearningsreleases.(6)ToremainincompliancewiththeCompany'srequiredmaintenancecovenant,forevery$1millionincreaseinSecuredDebt,net(e.g.borrowingsontherevolver,amtofcashreductionlessthan$50million,etc.)theRequiredAdjustedEBITDAperCreditAgreementandMinimumAdjustedEBITDA,asReportedwouldbeincreasedbythefollowing:

2016 2017 2018ChangeinRequired/MinimumAdjEBITDAper$1MchangeinSecuredDebt,net 235$ 250$ 267$

Debt

Page 21: EVRI Investor Presentation 09-16

Current2016Outlook•  2016AdjustedEBITDAnotexpectedtogrowvs.2015AdjustedEBITDA

•  2H16AdjustedEBITDAexpectedtobehigherthan1H16

•  FactorsinCompany’s2016outlookinclude:•  GamesunitsalesexpectedtoincreaseY/Yineveryquarterbeginningin2Q16

•  CoreHDXintroduc=onaccelera=ngtrialunits•  Introduc=onofnewgamecontent•  Entranceintonewmarkets

•  TheCompanyexpectstorecognizethepreviouslyannouncedsaleof200unitstotheAlbertaGamingandLo^eryCommissioninthesecondhalfof2016

•  December31,2016installedbaseexpectedtoberela=velyflatcomparedtoinstalledbaseatDecember31,2015andexpectedtoincreasefrom2Q16levels

•  ReflectsnewplacementsofproprietaryClassIIandClassIIIunits•  Companyexpectstoreplaceapor=onofanythirdpartyClassIIIunitremovals

withproprietaryClassIIunits•  Paymentsexpectedtobenefitfromthecon=nuingimprovementincashtothefloorin

thegamingindustry•  Salesofkiosksandcomplianceproductsareexpectedtocontributehigherrevenuein

thesecondhalfoftheyearcomparedtothefirsthalfoftheyear21

Page 22: EVRI Investor Presentation 09-16

Q&A