Global gaming responses to 12-7 meeting

Global Gaming Solutions, LLC, p. 1

Responsible Gaming Plan (updated September 2010)

Global Gaming Solutions, LLC & Global Gaming KS, LLC

Responsible Gaming Plan

• Global Gaming Solutions, LLC believes that informed and educated employees can be a very effective tool in identifying many of the most serious consequences of problem gaming.

• All employees will be trained on Responsible Gaming in Orientation. This will also continue to be an ongoing training throughout their employment.

• All employees will be trained on current Global Gaming Solutions, LLC. Responsible Gaming Training Curriculum along with any Responsible Gaming already in place by the Kansas Racing and Gaming Commission.

• All Employees will also be trained on form 580-01 (Application for Kansas Voluntary Exclusion Program for Problem Gamblers).

Responsible Gaming Objectives:

Our goal is to promote awareness, educate and train our employees on responsible gaming by focusing on the areas listed below.

- Provide employee education through problem gaming training by understanding what gaming is and isn’t

- Identify signs & symptoms of problem gamblers

- Understand management’s commitment to addressing problem gaming

- Understand the role of supervisors and employees in providing assistance to

a patron or a co-worker

- Awareness of Local and National Resources

- Problem Gambling in the Workplace

Global Gaming KS, LLC - Lottery Facility Manager Application Form 400-01 Submitted to Kansas Racing and Gaming Commission on 17 September 2010, p. 33



Empowerment:

- The management of Global Gaming Solutions, LLC. wants employees to feel empowered in offering assistance to patrons and co-workers in need.

- Employees should share their observations and concerns with a manager or supervisor.

Responsible Gaming Is:

- Meant to be fun, entertaining and recreation.

- Sticking to limits with regard to time and money. Not spending more than you can afford to lose.

- Gaming that DOES NOT cause problems at home, on the job, legally or financially.

- Gaming does not take the place of personal relationships.

- Gaming that does not become an obsession.

When gaming is not fun, entertaining or a recreation anymore, chances are something is wrong!




10 Questions about Gambling Behavior:

1. You have often gambled longer than you had planned. 2. You have often gambled until your last dollar was gone. 3. Thoughts of gambling have caused you to lose sleep. 4. You have used your income or savings to gamble while letting bills go unpaid. 5. You have made repeated, unsuccessful attempts to stop gambling. 6. You have broken the law or considered breaking the law to finance your

gambling. 7. You have felt depressed or suicidal because of your gambling losses 8. You have borrowed money to finance your gambling. 9. You have been remorseful after gambling. 10. You have gambled to get money to meet your financial obligations.

If you or someone you know answers “Yes” to any of these questions, consider assistance from a professional regarding this gambling behavior.


Section VI Attachment 3 Opening Marketing Plan by Global Gaming Solutions, LLC for Sumner County, Kansas

Purpose

The opening marketing campaign is designed to maximize exposure to the target market, i.e. greater Wichita, Kansas, and a radius of 100 miles around the new casino. While some programs can and will reach beyond that distance, one key goal will be to rapidly grow a strong local customer base. The location of the facility, adjacent to Interstate 35 (the Kansas Turnpike), means that significant marketing resources should and will be devoted to also building a robust stream of ongoing transient traffic.

Another key objective of the opening campaign and the early months in operation will be to establish the Casino complex as an exciting new destination in the region.

The gaming resort will offer a broad range of entertainment, relaxation, and recreation activities. These include but are not limited to the many varieties of gaming, lounges, restaurants, a hotel and live entertainment events. While most guest visits will be motivated by one primary activity, the guest’s entertainment experience will be ultimately be judged by the sum of the visit to the gaming resort. These visitors will determine their satisfaction with the trip and, in turn, their desire to return for a repeat visit, not by whether they win or lose, per se, but by the overall entertainment value created from the total experience.

We envisage a soft and grand opening with a marketing spend of $1 million for the activities outlined below.

Competitive Considerations

The primary gaming competition within the 100-mile radius of the casino will come from Tribal facilities south of the Oklahoma border on the I-35 corridor. The closest of these is approximately 25 miles from the Sumner County site. These facilities, all of which are smaller than the proposed Wellington complex, are operated by the Kaw Nation, the Otoe-Missouria Tribe, The Tonkawa Tribe and the Iowa Tribe of Oklahoma.

Global Gaming Solutions’ experience marketing to patrons along the I-35 corridor is that while many customers of existing nearby casinos will give the new facility a try, over time most patrons that are local to those existing facilities will remain part of their loyal customer base. That is why this marketing plan will direct most resources to the target greater Wichita market and attracting patrons travelling on I-35.

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The Product

The new casino will initially offer a full range of gaming options, with 1,300 slot machines, video poker, and table games, including blackjack, poker, craps and roulette. The slots will feature the latest and most successful games from all major manufacturers--IGT, WMS, Aristocrat, Konami and more. The facility is being planned to allow for growth, with available space for up to 2,000 slots and to nearly double the amount of gaming tables.

Global Gaming Solutions partners with some of the leading food service, hotel and travel facilities providers so that the complex will incorporate, on day one, branded food service options and a brand name hotel. The plan also includes the capability of opening a second contiguous hotel as the business grows and demand increases.

The first class showroom will offer a steady stream of entertainment, from contemporary, rock and country music stars, to competitive boxing cards, to seminars and other special events.

With the full support of an enthusiastic local community, it is anticipated that the area nearby the new casino will rapidly be developed with additional amenities—ideas for a travel plaza and a speedway are already being floated—that will further enhance the entertainment value of this new “destination.”

Grand Opening / Soft Opening

Management plans to open the new facility in a “soft” manner, where there is limited pre-opening media advertising. While there would be a coordinated newspapers/billboards branding campaign in front of the soft opening, the larger, full scale advertising media blitz would occur in support of a Grand Opening about 90 days later.

This allows for an adequate period of time to “get the kinks out” of the operation, where up to 80% of the workforce is new to their jobs and the multiple divisions of the facility can be stress tested. In our experience, this is the most effective way to open a new gaming venue. The early returns will still be outstanding with the limited advertising enhancing the publicity that the excitement of opening the new casino generates.

Patrons visiting the facility during the soft opening period will have a wonderful time as the staff becomes comfortable in their roles at the rapidly growing, multi-venue destination. Midway through the soft opening period, the full scale media campaign will get underway, leading to a spectacular Grand Opening. By that time, the facility and staff have the inevitable

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opening learning curve out of the way and larger numbers of patrons are sure to have a most positive experience when they visit.

Marketing Outline

Objectives:

• Generate Awareness and Brand Recognition in the market and region

Position the Casino as a partner to the community

Position the Complex as an entertainment destination throughout the region

Plan aggressive events schedule during first six months of operation

• Build Players’ Club Interest during Pre-Opening and Soft Opening periods

Distribute 10,000 Players’ Club Cards locally prior to Soft Opening

Use mail or other targeted media to distribute 20,000 additional during Soft Opening

• Identify and Utilize Business Partners to generate energy and awareness for opening

Partner with Chamber of Commerce and local travel related businesses

Utilize I-35 Corridor marketing opportunities

• Build local pool of prospective Casino employees and conduct employee recruitment campaign

Use local office and web-site to launch applicant database

Conduct multiple job fairs (local and elsewhere) four months prior to opening

Public Relations:

• Engage local media and community leaders to distribute news and other information

• Create & Maintain Publicity/Public Relations Office

• Create an Internet presence as a key Public Relations and Marketing Tool

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• Fully functional web site for distribution of information, Players’ Club recruiting, etc.

• Web site to include news media center for distribution of releases, photos, video, etc.

• Create and maintain social media presence—Facebook, Twitter, etc.

• Establish web-phone applications for information and entertainment

• Provide updates on progress through publicity releases, web site releases, etc.

• Distribute Press Kits for key events such as Groundbreaking, Soft Opening & Grand Opening

• Educate the local community as to the benefits the Casino Destination will bring to the area Jobs Roads and other infrastructure improvements Encouraging tourism Building customer traffic to local businesses

Events

• Groundbreaking Ceremony and Celebration

• Host Job Fairs in conjunction with community to fill 1,000+ Casino, Restaurant, Event Center & Hotel positions

• Sponsor Golf Outings and other events in conjunction with local community

• Host special pre-opening Early Member night as a preview for early signups

• Host an exclusive Invitation-Only VIP Night for key suppliers, supporters, local business leaders, etc.

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• Grand opening and on-going entertainment events. Please see attachments for a list of performing artists that we can contract on a regular basis, along with a list of actual performance concerts that were held at our Riverwind Casino in the last 12 months.

Community Partnership

Objective: To work with the city of Wellington and Sumner County to become a valued member of, and make positive contributions to, the community.

• Contribute to Sumner County economic growth

• Job training/solicitation partnership with applicable local education facilities

• Partnership with Wellington Chamber of Commerce to promote tourism

• Partnerships with existing local entertainment and retail businesses

Recruitment

• Generate awareness among residents of Wellington and Sumner County of the opportunities and benefits of working in the Casino, Restaurants, Hotel and Events Center at the new Complex

• Utilize advertising media, social media, online job boards and the website to support recruiting initiatives Casino Gaming positions – Pit Bosses, Slot Managers, Dealers, Croupiers, Slot Hosts, etc. Casino Support Positions – Security, Technicians, Valet Services, Human Resources, Finance, etc. Food & Beverage services – Hosts/Hostesses, Waiters/Waitresses, Cooks, etc. Marketing & Players’ Club positions

• Staff and train team members in advance of the Soft Opening Utilize extensive Tribal training resources to provide a robust education and training program Recruit and train staff to provide superior customer service in all areas of the operation

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Promotions

• Solicit Players’ Club signups during Pre-Opening and Soft Opening periods

• Utilize interactive contests via website and social media to promote brand awareness and excitement

• Use website, social media and local partners to build e-mail addresses database

• Enhance web search engine visibility via key advertising and placement vehicles

• Wherever possible partner with suppliers and local businesses for Opening and ongoing promotions

• Establish sponsorship and or improvement plan with local golf course

• Sponsor local events in Wellington & Sumner County

Direct Mail

• Create advertising and marketing campaigns to generate Opening awareness and excitement

• Feature the strongest amenities of the property:

The latest and most popular slot machine games A complete assortment of table games Multiple restaurant, sports bars and other food options World Class Event Center featuring scheduled entertainment Comfortable brand name hotel at the Casino

• Use market research to determine most effective messages and then direct mail and online resources to deliver

• Focus inner market promotional message on gaming product, restaurants and special events

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• Focus outer market message to promote gaming, special events and hotel

• Create a special database to target group sales opportunities, bus lines and tour operators

• Work with local businesses and Chamber to enhance target lists

Advertising

• Create brand awareness interest and excitement leading up to the Soft Opening through:

o Outdoor Advertising Packages – Billboards, including a “Coming Soon” flight near the Casino

o Newspaper Advertising – Teaser campaign directing readers to website and/or call center

o Light radio and or TV presence in support of Pre-Opening campaign

• Roll out large Grand Opening campaign 30-40 days prior to spectacular Grand Opening Weekend

o Replace pre-opening Billboards with “Now Open” message and Grand Opening promotion

o Ongoing Newspaper campaign driven by special events and promotion schedule, including a special insert in Wichita Eagle and Wellington Daily News on the weekend prior to Grand Opening

o Purchase large radio and TV packages to run in 10 days leading up to Grand Opening

o Hype website address/Players’ Club offers in all radio and television advertising

• Communicate concise, consistent messages focusing on:

o The exciting and convenient new entertainment destination

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o The largest Casino in the region with the latest, most popular games

o Great Food, Brand Name restaurants and sports bar

o Live entertainment in the Casino, and

o Celebrity concerts and special events in the World Class Showroom

Internet Presence

• Create easy-to-use website and purchase search engine and other online advertising to direct people to the site

• Feature the website address in all marketing materials and advertising venues

• The site would include six distinct main menu selections:

1. The Players Club Interface for signups and ongoing support 2. The Gaming Options – The latest and most popular slots, video poker, Blackjack,

Poker Room, Craps and Roulette 3. Showroom Special Events with link to ticket/reservations interface 4. Promotions Schedule 5. The Hotel – with link to online reservations mechanism 6. Hospitality options with separate sections featuring:

Restaurant/Buffet Sports Bar Casino Center Bar Food Court options

Summary

Global Gaming Solutions, LLC, its business partners, investors and management, are committed to creating a first class entertainment destination in the heart of Sumner County. In support of that commitment, we are dedicated to providing the substantial resources necessary to execute the Pre-Opening and Soft Opening marketing plans we have outlined here.

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We will build and nurture a strong partnership with the local community, supporting local endeavors and maintaining constant open channels of communication with the people of Sumner County.

We intend to be a true partner to the city of Wellington and will work in concert with local officials, local businesses and citizens of Sumner County to improve the community, provide job opportunities, contribute to improved infrastructure, promote tourism and attract future economic growth in the region.

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Examples of talent available for concert and performance booking at this current time.

Oldies...

The Temptations

Herman's Hermits

The Four Tops

Oldies Pop...

KC and The Sunshine Band

Kool and The Gang

The Commodores

Al Green

Classic Rock...

Three Dog Night

38 Special

REO Speedwagon

Styx

Forigner

Joan Jett

Blondie

Creedence Clearwater

Peter Frampton

Air Supply

America

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Heart

The Doobie Brothers

Classic country...

Kenny Rogers

Charlie Daniels Band

Clint Black

Oak Ridge Boys

Randy Travis

Wynonna

Country

Sara Evans

Josh Turner

Tracy Lawrence

Dierks Bentley

Gary Allan

Gretchen Wilson

Bill Engvall (comedy)

Billy Currington

Joe Nichols

Kellie Pickler

LeAnn Rimes

Montgomery Gentry

Dwight Yoakum

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Travis Tritt

Willie Nelson

Pop

Kenny Loggins

Mike McDonald

Chris Issak

Huey Lewis and The News

Current Pop

Train

Better Than Ezra

Gin Blossoms

Everclear

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Talent appearing at Riverwind in the last two years:

2009 Riverwind Casino Entertainer Acts

Tony Bennett Cheap Trick

Percy Sledge The B 52's

Foreigner Merle Haggard

Travis Ledoyt Lee Ann Womack

Hermans Hermits Tracy Lawrence

Willie Nelson Rodney Atkins

George Jones Ingrid Hoffman

Starship Gin Blossoms

Ricky Skaggs Johnny Rivers

Cross Canadian Dionne Warwick

Sinbad Heart

Glen Campbell Dierks Bentley

Asian Night Melissa Ethridge

Oak Ridge Boys Kevin Fowler

Billy Squire Brian McKnight

Tracy Lawrence 4 Tops

Michael Bolton Pat Green

BoyZ II Men Asian Night

Gene Watson Bonnie Raitt

Ron White Randy Travis

Patti Loveless Little Big Town

Jewel Gary Allan

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Creedance Chubby Checker

Neil Sedaka Kenny G

Rat Pack Tribute

2010 Riverwind Casino Entertainer Acts To-Date

BB King Roberta Flack

UFC Fight Merle/Kris

Travis LeDoyt One Night Of Queen

Larry The Cable Guy Mel Tillis

Asian Night Gary Allan Cancel

Eli Young Band Josh Turner

Joe Nichols Moe,Gene and TG

Jeff Foxworthy Gary Allan

Diamond Rio Reo

Gavin Degraw Darius Rucker

Temptations Ronnie Milsap

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Global Gaming Solutions, LLC and Emerging Brands Inc are dedicated in ensuring the

responsible use and sale of alcohol

Emerging Brands is a strategic business partner of Global Gaming Solutions, LLC.

Emerging Brands has 15 years of experience in the management and operation of

restaurants, pubs, and eateries where alcohol is served and consumed. In the process,

Emerging Brands have strictly adhered to the “TIPS” policy on alcohol sales.

We have repeatedly disclosed our intention to have Emerging Brands operate the day‐

one, six food and beverage outlets at WinSpirit Casino and Destination.

As such, we intend to apply Emerging Brands’ “TIPS” policy and adapt it to comply

with applicable local and state regulations in Kansas.

The “TIPS” program stands for “Training for Intervention ProcedureS.” This program is

run by a company called Health Communications, Inc. of Arlington, Virginia. “TIPS” has been a

global leader in education and training for the responsible service, sale and consumption of

alcohol. “TIPS” is a skill based training program designed to prevent intoxication, underage

drinking and drunk driving. The classroom training is based on building of each individual’s

fundamental skills. The “TIPS” trainers provide the knowledge and confidence the attendees

need to recognize potential alcohol‐related problems and how to effectively intervene.

Emerging Brands Inc has three TIPS trainers on our management team, one of whom is

fluent in Spanish. We have been teaching “TIPS” training for over 10 years throughout our

company. We feel so strongly about this program that we train all our managers, servers, host,

and bartenders with the “TIPS” program even though it is not required by the state.

Our goal is to instill confidence in our team members when dealing with alcohol related

situations. The training staff engages participants in a dynamic exchange of ideas and personal

experiences to help everyone learn in the classroom. Classes are taught in three different

stages, informational, skills training and practice/rehearsal. TIPS classroom training is designed

to give all the participants an opportunity to learn on all different levels. Each individual will be

given a closed book test and required to pass in order to be TIPS certified. The TIPS certification

is good for three years and is a nationally recognized program.

Additional Matters for Review Board’s Consideration Attachments and Supporting Information 08 December 2010 p. 1

December 8, 2010

Mr. Patrick Martin

Interim Director of Kansas Racing and Gaming Commission

700 S.W. Harrison, Suite 500

Topeka, KS 66603‐3754

Dear Patrick:

In the December 7th Lottery Facility Review Board’s conference call, Chairman All asked that applicants provide any additional market studies, data or other information we believed to be relevant to the revenue projections in the South Central Zone.

We have filed here additional market research including a case study from Worth County, Iowa; a second poll of Wichita residents; research from Lang Research of Canada; and KDOT/ KTA actual traffic data. We have also filed actual data from our Riverwind Casino below.

We would ask the Review Board to carefully review the case of Worth County, Iowa. In 2005, Cummings and Associates did a market study for the Iowa Racing and Gaming Commission evaluating the revenue potential at that location.

In that case, we have both the study and actual results to compare. Comparison results show that actual revenue generated was double that of the Cummings original projections. As you will see in the attached CBRE analysis, there are stark parallels between Worth County and Sumner County. The CBRE analysis is attached.

We have strenuously argued that the Cummings model is flawed in certain circumstances, and brings a result that is skewed.

We maintain our position that there is not a material revenue difference between Exit 33 and Exit 19. Not all information presented here has previously been provided to the Consultants or to the Review Board. We request that this information be forwarded to the individual members of the Review Board.

To begin with, Cummings has acknowledged the following three points:

1. Our analysis on deconstructing his Gravity Model and what drives the gravity model assumptions is accurate

2. If you believed CBRE’s analysis of factors in the model that drive revenue differentials, then you would conclude as CBRE did that material differences attributable to a competitor’s attractiveness do not exist.

3. NO changes have been made to the Cummings Gravity Model since its use in the Sumner County bids in 2007/ 2008.

These points are fundamental to the analysis that follows.


The Cummings Gravity Model attributes revenue differentials between Exit 33 and Exit 19 to two broad assumptions, these being: (1) incremental distance between the exits, and (2) relative competitive attractiveness of Northern Oklahoma tribal facilities. In 2008, the Cummings model projected a 23% revenue difference between a site at Exit 19 and Exit 33. This year the differential appears to be 27%, though no changes in the model have been disclosed. We do believe that Cumming has made a change in how he calculated traffic intercept, at Exit 19 from the

previous year which may account for some of the difference. As we previously discussed, approximately half of the percentage difference can be attributed to distance (the extra 12 minutes to Exit 19), and the other half is attributed to the relative attractiveness of competition. Sometimes the common sense approach should prevail. The Cummings model assumes that “revenue declines by 38% as distance from the population center doubles”. What if one casino was 1 mile from the population center and was projected to generate $100 million? Would a site one mile further away generate only $62 million? Distance matters, but common sense perspective on the distance differential would produce a much smaller percentage difference (perhaps reducing this gap to closer to 5%) having regard to real human behavior and the travel behavior of people in the Midwest. In other words, 12 minutes does not result in the rate of decline in revenue that is suggested. We believe the Worth County, Iowa results justify that position. Testing the distance relationship in the South Central Zone is complicated. There is no real world situation you can look at that provides actual data to prove the Cummings model is accurate (or not), except for possibly Worth County. The distance relationship used by Cummings was created by market research (a survey) in Mississippi. Additional analysis involved reviewing player’s club data. Both of those approaches require a lot of interpretation, and have some clear short comings. (See the original CBRE report.) Given that we know something is wrong in the Cummings Model’s application in Iowa, we think it is reasonable to ask Wichita residents whether distance really matters and how much. CBRE suggested that we get some direct market research through a poll of Wichita residents. While it isn’t perfect, any data provides information that is valuable. Polls are used to predict behavior all the time. In election polling there is immediate feedback with empirical data (called election results). Jayhawk Consulting has a strong track record of success in polling public attitudes in the Wichita Market. While not perfect, the local market research provides a reasonable measure of the public attitude on the issue of distance and its impact on gaming revenues, which gives us some alternative guidance as to the impact distance has on visitation. The original poll used registered voters who had voted in the last two elections. Jayhawk Consulting suggested using that sample basis because in they found that the results were more reliable than a sample using the general public. The complete polling data, and results are provided as an addendum.


Jayhawk Consulting found that there was little or no difference in attitudes regarding an additional 10 minute driving time to a local casino.

“We can say with complete certainty and professional confidence that … there would be no real difference in the number of gamblers, or amount of gambler participation, with a casino location difference of 10 minutes travel time.”

Questions have been raised about the decision to limit the sample to registered voters in the Wichita area and whether that sample would accurately reflect the general public attitude on the issue at hand. An additional suggestion was the sample size was inadequate although Jayhawk Consulting concluded that it is statistically valid. A final suggestion was that these consumers cannot predict their own behavior and that models are therefore more accurate. However, to test the assumption of any bias by registered voters, to address the question of sample size, and to see if material differences exists in consumers trying to predict their own behavior, a second poll was conducted on the weekend of December 4th. This poll focused on the general public (not just registered voters) with a further sample of 400 consumers, another sample regarded as statistically valid. The results are strikingly similar to the first poll and support the first poll’s conclusions. Both poll surveys by Jayhawk Consulting are appended to this document.

Registered Voters General Public

Gambled in the last year 21% 18%

Would Visit a casino 20 minutes south of Wichita

27% 34%

30 Minutes south of Wichita

26% 33%

Average Visits 20 minutes 8.18 4.87

Average Visits 30 Minutes 8.16 4.65

The comparison of these results brings some very interesting information.

There are some significant differences in the profile between frequent voters and the general public. But

both polls suggest that distance is not a major issue in the minds of both groups. There are hints in the

data that suggest that distance does matter, but not as much as the Cummings model assumes.

For example in the frequent voter poll, the percentage of people who would gamble at the facility 30

minutes away dropped by 1% point. That suggests a distance impact of 3.7%. In the general public

sample the same 1% drop occurred. That suggests a distance impact of 2.9%.

The average visits data also carries a suggestion of a distance factor in the general public polling data.

The decline of 0.22 in average number of visits (between 20‐minute and 30‐minute travel times) would

suggest a distance impact of 4.5%.


This is consistent with our belief that the distance factor, based on our market experience, is

approximately 5%.

The polling did not limit participation to those people who had gambled in the last 12 months, rather it included anyone who indicated that they would likely gamble at a casino. We have also provided data from our Riverwind Casino property located on I‐35 highlighting the

majority of customers travel in excess of 25 miles (or 30‐minute travel time) from the metropolitan area

of Oklahoma City to this facility. This is despite the customers having closer alternatives.

Oklahoma City Central Business District is located at the intersection of I‐35 and I‐40.

Within 100 miles of this central location there are 42 casinos in Oklahoma. As discussed we own

Remington Park, Newcastle Gaming, Goldsby Gaming and Riverwind Casino.

The following are distances to the closest casino properties to Oklahoma City (OKC) and the direction

from the above intersection:

1. OKC to Remington Park – North on I‐35, 10.3 miles (clean drive on I‐35) 2. OKC to Lucky Star – West ‐ Northwest, 32miles (clean drive) 3. OKC to Firelake Grand Casino – East on I‐40, 26.6 miles (clean drive on I‐40) 4. OKC to Riverwind – South on I‐35, 22.25 miles (congested drive on I‐35 through Norman) 5. OKC to Newcastle Gaming – Southwest ‐ 22.4miles (clean drive via freeway to west) 6. OKC to Goldsby Gaming – South on I‐35 next to Riverwind Casino, 23miles (congested drive on I‐

35 through Norman)

Seventy percent of customers in our player tracking data base come to Riverwind Casino from North of

I‐40 or farther away than 25 miles or a typical drive time of 30 minutes. If I‐35 is congested through

Norman, this drive time will be longer. This means they appear to choose to go to Riverwind Casino even

though getting to Remington Park would be the closest or Firelake (with some similar amenities to

Riverwind Casino) would take less time and the minimum distance is 22.25 miles. This result is despite

numerous competing facilities which is not the case in Sumner County.

This practical data supports our assertion that drive time and distance from Wichita on an easy I‐35 run

to Exit 19 does not diminish the propensity of gamblers to attend the facility in material ways as

suggested by Cummings.

We also supplied CBRE’s analysis demonstrating that the relative attractiveness of Northern Oklahoma’s

tribal gaming facilities was overestimated in the Gravity Model analysis, and if adjusted results in a

significant reduction in the revenue differential between Exit 33 and Exit 19. These adjustments were

attributable to overestimating the Power Rating of slots and several other factors.

Cummings has acknowledged that if you believe the adjustments by CBRE to Cummings’ assumptions

used to drive the revenue calculations in the Gravity Model, then this conclusion is correct. A copy of

this report was previously provided and is titled: “DISPROVING THE EXIT 33 MYTH: Exit 19 the Best Bet

for Kansas”.


Essentially, Mr. Cummings is saying in his assumptions on attractiveness that the Oklahoma tribal

casinos are better than ours.

In response, we draw your attention to a foot note in Cummings’ own study this year in the

South Central Zone:

Footnote 6, on page 15 (of 90) of the Cummings report:

“I will cite, as I did in 2008, casinos like the Eastern Shawnee Travel Center, Peoria Gaming Center and

Little Turtle Facilities in Oklahoma. These are ugly little “gasinos,” right next door (in two cases) to

physically much more attractive full‐scale casinos (and just down the road in the third case), but they

were all packed with customers when I visited. They clearly offer the gaming experience that many

players desire. I am therefore cautious in discounting the ability of less‐physically‐attractive casinos

to compete against those with more glitz.”

This footnote suggests that the “Gasinos,” or as we call them Travel Plazas, compete directly and

successfully against a much larger and nicer casino next door. As we have discussed in great detail, we

operate travel plazas as an amenity targeted to an entirely different market which greatly enhances our

total revenue picture.

This causes Cummings to make an attractiveness assumption that is inappropriately higher than justified

in the market.

This demonstrates a minimal understanding of the I‐35 corridor and the distinctive nature of that

market. Richard Wells notes in his revenue study that the customers of a travel plaza are not accounted

for in the gravity model. Those customers are travelling through the area and do not show up in

population estimates.

Cummings attempts to equate customers of a travel plaza to the general population within the area,

which is an inaccurate association. As a result, he applies a higher than appropriate attraction factor to

tribal casinos in Oklahoma, which skews his assumptions in his revenue projections.

Wells assigned an incremental revenue adjustment for the travel plaza of $5 million and 100,000

visitors.

Cummings appeared to assign a travel plaza revenue adjustment of $2.9 million and 20,000 visitors.

That adjustment, however, also included a deduction of $2.2 million because our project did not include

direct access. However, in reviewing the Cummings projections for Marvel Gaming, Penn Gaming and

the Generic Casino at exit 19 in 2008, both projects were given $5.9 million in a traffic intercept estimate

called “frontage traffic.” Neither the generic casino, Marvel Gaming or Penn gaming had direct access

proposed at the time those projections were made. None of the previous exit 19 applicants proposed a

travel plaza type development.

This was a change in the methodology used in the previous round. The methodology change means the

actual incremental value Cummings placed on the travel plaza was actually $700,000 in revenues.


The results of the Cummings Iowa study strongly suggest that the attraction factors used in the Kansas

study are flawed.

I‐35 is an important economic engine for development in Kansas and Oklahoma. Literally, millions of

dollars of economic opportunity drives up and down the corridor. Using traffic data from the southern

border of Kansas, approximately 14,000 vehicles a day enter or leave Kansas via I‐35.

This means approximately 8 million people in cars and trucks drive by Exit 19 every year. That

population base is larger than Dallas‐Fort Worth. It is also a population base that the gravity model

will never successfully predict.

Development of full service travel facilities that offer a wide range of food, competitive fuel prices, and

other comfort amenities is a tool that has generated millions of dollars in gaming revenues for the

Chickasaw Nation.

The strategy for our proposed Travel Plaza involves robust services for travelers. It also involves

deployment of gaming machines to match the market place, including truckers – who we like to call the

“high rollers” of the highway.

Our Travel Plaza development is planned for Year‐3 to allow time for the main facility to be fully up and

operational and traffic patterns established. We have an agreement with the Kansas Turnpike Authority

that we would not open the Travel Plaza until after our direct turnpike access is fully implemented and

operational.

In collaboration with CBRE, and use of data specific to our Travel Plaza operations, we project the total

traffic capture gaming revenues at the facility will exceed $10 million p.a. conservatively.

We advised the Review Board that we counted over 300 trucks parked nightly near our proposed

location, stopping under federally mandated rest requirements. The truck drivers will stop where they

have the capacity and the best amenities. This count represents roughly 7.5% of the total daily truck

traffic on I‐35 alone (total count is 4,060 trucks daily) and even excludes truck traffic on Highways 160

and 81. Again, we previously provided the traffic data from K‐DOT and KTA. This data is appended to this

document.

To put that in perspective, using our projected daily win per patron, the 300 trucks that are already

stopping in the immediate area would be the equivalent of $7 million in gaming revenues. In addition,

for each 100 cars representing 150 patrons (1.5 passengers per car) would account for an additional

$3.5m in gaming revenue in its own right.

As casual travelers stop at our facility, we also expect to add them to our players club data base and will

use that data to build a customer base that extends beyond traffic intercept.

Finally, the analyses by both Wells Gaming Research and Cummings’ credited us with more incremental

gaming revenue by the Travel Plaza than the Equestrian Center by Peninsula Gaming.


We have also included analysis by CBRE supported by research by Lang Research, Canada, highlighting a

34.3% premium in visitation spending by customers of our proposed auto sports facility v. Peninsula

Gaming’s proposed Equestrian Center. This analysis has also been provided to the Consultants.

The table below highlights the effect of the above adjustments to the suggested revenue differential

between Exit 33 and Exit 19:

In summary, if our adjustments are made as we our analysis clearly demonstrates,

the difference in revenue between Exit 33 and Exit 19 is a minimal 2% or $2.8m,

assuming that Peninsula Gaming selects Site A at Exit 33.

Finally, all of these differences are calculated assuming that Peninsula Gaming will build at Site A with I‐

35 access. It would appear to be a reasonable likelihood that given the current constraints with this site,

that Peninsula Gaming would have to utilize Site B which is located some two miles east of I‐35: in order

to maintain their proposed development timetable (having regard to planning needs, infrastructure

needs, zoning needs, and several outstanding legal challenges).

Basis of

Adjustments

2010 Bids In 2014 Dollars

($million)

Difference (as predicted

by Cummings’ Gravity

Model)

27%

(Reported as 22% in

2007/ 2008 analysis

with same

assumptions. Why?)

$50.9

Distance Exit 33 to Exit 19 14 miles.

In effect, the Gravity Model says that

gaming revenue declines by $3.6 million

for each mile, or $200,000 per 100 yards

(the length of a football field). This

prediction is not supported by market

research or by actual consumer behavior.

Adjustments:

‐ Attractiveness ‐ CBRE’s Analysis

‐ Riverwind data

8% $15.4

‐ Distance ‐ Two polls of Wichita

residents by

Jayhawk

Consulting

‐ Riverwind data

10% $19.2

‐ Travel Plaza ‐ Actual data 7% $13.5

‐ Net Difference after Adjustments

2% (negligible) $2.8m


Attachments and Other Supporting Information:

1. Jayhawk Consulting Services, Report of Public Opinion Survey, conducted August 27 and 28, 2010.

2. Jayhawk Consulting Services, Report of Public Opinion Survey, conducted December 3, 2010.

3. CBRE’s Analysis of: Cummings & Associates Track Record in Generating Gaming Revenue Projections in a Competitive Environment – Worth County (Iowa) Parallels with Sumner County (Kansas).

4. “DISPROVING THE EXIT 33 MYTH: Exit 19 the Best Bet for Kansas”, 33‐page report prepared with the assistance of CBRE.

5. Traffic Volume Map of major roadways in the vicinity of Exit 19 off I‐35, as provided by Traffic Engineers Wilson & Company.

6. CBRE Analysis of Auto Racing v. Equestrian Visits with Lang Research Supporting Information.

7. Information about CBRE’s Global Gaming Group and their casino industry qualifications



1) Jayhawk Consulting Services, Report of Public Opinion Survey, conducted August 27 and 28, 2010.

1

REPORT OF PUBLIC OPINION SURVEY August 27 and 28, 2010

PURPOSE Global Gaming Solutions (GGS) contacted Jayhawk Consulting Services (JCS) to conduct a public opinion survey to determine how voters in Wichita, Kansas feel about the distance they would have to travel to attend a casino in their area. Specifically, would they go to a casino located 30 minutes from South Wichita in the same numbers as they would one only 20 minutes away. The following is the report of the results of that survey. These results are confidential between JCS and GGS. With the submission of this report, these results become the property of GGS and any release of the information herein is their responsibility. PROCEDURES This survey was conducted by telephone on August 27 and 28, 2010. Calls were made from a list of voters, residing in Wichita, Kansas who voted in the last two general elections. Although this survey has no connection to an impending election, we have found through the years that interviewing frequent voters gives us a more reliable "feel" of the total population. Frequent voters, almost by definition, are more active citizens in their community and more accurately reflect that community's attitudes regarding the important issues of the day. We completed a total of 400 interviews. This number gives the survey results with a sampling error of approximately plus-or-minus 4%.

2

RESULTS First, have you, in the past year, gone to a casino to gamble? Yes - 21% No - 79% (IF "yes")How many times? (The following are the actual responses, not percentages, of the 83 persons who answered "yes" to the previous question. The number in basic text is the number of times one had gone to a casino, and the second (bold face) number is the number of persons who made that choice.) 1 - 20 4 - 3 10 - 2 24 - 4 2 - 27 6 - 2 12 - 4 30 - 2 3 - 12 8 - 3 18 - 1 52 - 3 If a destination casino were located on Interstate 35, about 20 minutes south of Wichita, would you visit it? Y - 27% N - 64% Not sure - 9% (IF "yes")How many times per year, would you go? (Again, the following are the actual responses of the 107 persons who answered "yes" to the previous question. The number in basic text is the number of times one would go to a local casino, and the second (bold face) number is the number of persons who made that choice.) 1 - 8 5 - 7 12 - 8 50 - 2 2 - 26 6 - 3 15 - 3 52 - 3 3 - 16 7 - 6 20 - 4 4 - 15 10 - 3 35 - 3

3

If the casino were 30 minutes south of Wichita, would you still be likely to visit it? Yes - 26% No - 64% Not sure - 10% (IF "yes")How many times per year, would you go? (Again, the following are the actual responses of the 105 persons who answered "yes" to the previous question. The number in basic text is the number of times one would go to the more-distant local casino, and the second (bold face) number is the number of persons who made that choice.) 1 - 10 5 - 10 12 - 7 50 - 2 2 - 25 6 - 5 15 - 3 52 - 3 3 - 12 7 - 5 20 - 4 4 - 14 10 - 2 35 - 3 SUMMARY First, we would note that about 1 in 5 (21%) residents of Wichita attended a casino to gamble within the past year. We have no frame of reference or recent past experience to know if that is low, high or about the average for a Kansas community. Secondly, the percentage of people who would go to a casino goes up, to 27%, if the casino is located about 20 minutes south of Wichita. This difference is significant, statistically speaking, for a sample of this size. However, we were a bit surprised that bringing the casino to within 20 minutes of Wichita only increased participation by 6 percent. In other words, reducing travel time from several hours down to 20 minutes did not have the major impact on participation that we had expected. Thirdly, on a related matter, adding another 10 minutes of travel time to get to the casino made no significant difference in the amount of participation by the public. Our results showed a drop from 27% to 26%, but that difference is not significant as a statistical measurement. There is one other comparison which we feel needs to be made regarding the results of this survey. We know that there is no difference between the number of participants as it relates to the "20 minute" casino and the "30 minute" casino. But what about the number of times they may attend?

4

Looking at the earlier question, would gamblers go less often if the casino were further away? To determine the answer to this question we developed what we will call the "gambler participation" scale. It works like this - for the "20 minute" casino, 8 people said they would go 1 time per year, that equals 8 points. Also, 26 people said they would go 2 times per year for 52 points, 16 said they would go 3 times for 48 points, and so on. Using the same procedure for the "30 minute" casino, 10 said they would go 1 time per year (10 points), 25 would go 2 times (50 points), 12 would go 3 times (36 points) and so on. Using this method for comparison, the "gambler participation" score for the "20 minute" casino is 875, or an average participation, per gambler, of 8.18, and the similar numbers for the "30 minute" casino are 857 points and an average, per gambler, of 8.16. We're not sure at what point this difference would be significant, but surely a difference of 0.02 on a factor total of about 8, must be of almost NO validity. ANALYSIS We can say with complete certainty and professional confidence that, based on our survey of 400 randomly-selected Wichita voters, there would be no real difference in the number of gamblers, or amount of gambler participation, with a casino location difference of 10 minutes travel time. In fact, given the comparison of participation currently, with as much as several hours travel time, and the level of participation with a casino practically in one's own "back yard", we could say with some confidence that travel distance is of very low priority when a gambler considers how much they will be involved. We hope this information will be of assistance to Global Gaming Solutions as you pursue your goals, whatever they might be. We appreciate this opportunity to be of assistance. Please contact us with any questions you have about the survey or this report.

Global Gaming KS, LLC Response to Review Board’s follow‐on questions 06 December 2010 p. 11


2) Jayhawk Consulting Services, Report of Public Opinion Survey, conducted December 3, 2010.

1

REPORT OF PUBLIC OPINION SURVEY December 3, 2010

PURPOSE Global Gaming Solutions (GGS) contacted Jayhawk Consulting Services (JCS) to conduct a second public opinion survey to determine how general public in Wichita, Kansas feel about the distance they would have to travel to attend a casino in their area. Specifically, would they go to a casino located 30 minutes from South Wichita in the same numbers as they would to a casino only 20 minutes away. A second major purpose of this survey is to compare the feelings of the general public with those of "frequent voters" who were polled in an earlier survey. This will be explained more fully in the "procedures" section, which follows. The following is the report of the results of this survey. These results are confidential between JCS and GGS. With the submission of this report, these results become the property of GGS and any release of the information herein is their responsibility. PROCEDURES This survey was conducted by telephone on December 3 and 4, 2010. Calls were made from a list of residents located in Wichita, Kansas. As mentioned, in an earlier survey, we interviewed only "frequent voters", those who had voted in the last two general elections. Most of the polling our company does is for candidates running for public office. To best serve their needs, it is most helpful to know how those who are likely to vote, feel about their race. Our experience has shown us that the best predictor of who will vote in the future, is those who have voted in the past. However, in this survey, we are not predicting the outcome of a possible future election. Further, we have no evidence of any correlation between the voting habits of a person and their gambling activities, or lack thereof. Therefore, our sample for this survey is the general population without any further identification. We completed a total of 400 interviews. This number gives the survey results with a sampling error of

2

approximately plus-or-minus 4%. RESULTS First, have you, in the past year, gone to a casino to gamble? Yes - 18% No - 82% (IF "yes")How many times? (The following are the actual responses, not percentages, of the 73 persons who answered "yes" to the previous question. The number in basic text is the number of times one had gone to a casino, and the second (bold face) number is the number of persons who gave that as their response.) 1 - 25 5 - 2 12 - 8 52 - 1 2 - 12 6 - 4 18 - 1 3 - 9 9 - 2 20 - 2 4 - 2 10 - 2 24 - 3 If a destination casino were located on Interstate 35, about 20 minutes south of Wichita, would you visit it? Y - 34% N - 52% Not sure - 14% (IF "yes")How many times per year, would you go? (Again, the following are the actual responses of the 136 persons who answered "yes" to the previous question. The number in basic text is the number of times one would go to a local casino, and the second (bold face) number is the number of persons who made that choice.) 1 - 25 5 - 10 12 - 8 52 - 1 2 - 29 6 - 4 15 - 3 NS - 2 (*) 3 - 22 7 - 6 20 - 2 4 - 19 10 - 3 24 - 2 (*) No specific number of times

3

If the casino were 30 minutes south of Wichita, would you still be likely to visit it? Yes - 33% No - 52% Not sure - 15% (IF "yes")How many times per year, would you go? (Again, the following are the actual responses of the 133 persons who answered "yes" to the previous question. The number in basic text is the number of times one would go to the more-distant local casino, and the second (bold face) number is the number of persons who made that choice.) 1 - 24 5 - 9 12 - 9 NS - 2 (*) 2 - 33 6 - 4 15 - 3 3 - 23 7 - 4 24 - 2 4 - 15 10 - 4 52 - 1 (*) No specific number of times SUMMARY First, we found that, among the general public, about 18% had been to a casino within the last year. In other casino polling we have done around the state of Kansas, we would note that a participation rate of about 20% is very typical of a Kansas community. Also, it compares closely with a participation rate of 21% by frequent voters, a number obtained in the earlier survey. The percentage of people who would go to a casino if one were located about 20 minutes south of Wichita is considerably higher, at 34%. Given these two responses, we can make the following generalizations: 1. members of the general population are slightly less likely to have gone to a casino within the last year than "frequent voters" by a 18% to 21% margin; 2. but, members of the general public are much more likely to attend a casino located in close proximity to Wichita than are frequent voters, by a margin of 34% to 27%. 3. Also, though only 18% of the general population currently go to a casino, on an annual basis, that number jumps to 34% when the casino is located close to Wichita.

4

A second major comparison within the survey is whether people would drive an extra 10 minutes if the casino was located 30 minutes from Wichita as compared to one only 20 minutes away. On the survey among frequent voters, they were just as willing to drive the extra 10 minutes with a participation response of 27% for the "closer" casino, and 26% for the one further away. Clearly this is not a statistically significant difference. On the current survey among the general public, we got higher, but equally similar results. In this group, 34% would go to the "20 minute" casino and 33% would still go to the casino located 30 minutes away. Again, the difference is clearly within the margin of sampling error. In our earlier report, we presented our "gambler participation" scale. It's a way of comparing not only the number of people who might go to a casino, but includes the number of times each of them might go. The scale is calculated as follows: If in a particular group, 8 people said they would go to a casino 1 time per year, that would equal 8 points. Then, if 26 people said they would go 2 times per year, that would be 52 points, and if 10 said they would go 3 times that would be 30 points, and so on. Considering this survey of the general public, and using this procedure for the "20 minute" casino, 25 said they would go 1 time per year (25 points), 29 would go 2 times (58 points), 22 would go 3 times (66 points) and so on. We arrived at a total of 652 points, or a per person factor of 4.87. For the "30 minute" casino, the total was 609 points, or a per person factor of 4.65. Again, a difference of 0.22 between the two factors is so close as to represent no statistically significant difference. There is, however, a significant difference between the "gambler participation" scale for the general public, averaging approximately 4.7 and the scale for the frequent voters, averaging about 8.17. This demonstrates that frequent voters would attend a casino more often than the general public. One caution however, there was a span of about 3 months between the time these two polls were done, and economic, and other factors could have changed.

5

ANALYSIS The results of this survey allow us to say with complete certainty and confidence that the attitudes of the general public, like those of frequent voters, show there is no real difference in the number of gamblers, or amount of gambler participation, with a casino location difference of 10 minutes travel time. There is evidence that frequent voters are a little less likely than the general public to go to a casino near Wichita, but among those who go, the voters are more likely to go more often. This is something we noticed based on a cursory review of the responses of this survey. However, any specific data of value would require further investigation. We hope this information will be of assistance to Global Gaming Solutions as you pursue your goals, whatever they might be. We appreciate this opportunity to be of assistance. Please contact us with any questions you have about the survey or this report.



3) CBRE’s Analysis of: Cummings & Associates Track Record in Generating Gaming Revenue Projections in a Competitive Environment – Worth County (Iowa) Parallels with Sumner County (Kansas).

CBRE’s Analysis of: Cummings & Associates Track Record in Generating Gaming Revenue Projections in a Competitive Environment – Worth County (Iowa) Parallels with Sumner County (Kansas)

Based on a brief look at his prognostication record, Cummings & Associates appears to be pretty accurate when it comes to projecting gaming revenue for casinos with limited competition (Boot Hill in Ford County and several monopolistic casinos in Iowa are good examples). However, Cummings’ projections have in some instances proved wildly inaccurate. In 2005, Cummings & Associates completed a report for the Iowa Racing & Gaming Commission called “Analysis of Current Markets for Casino Gaming in Iowa, with Projections for the Revenues and Impacts of Potential New Facilities.” In the report, Cummings projected gaming revenue from a Worth County casino of between $34 million and $39 million (in 2005$). In actuality, the Worth County casino has generated gaming revenue of between $74.0 million in 2007 to $79.2 million in 2009.

The similarities between Worth County, Iowa and Sumner County, Kansas are striking. First and foremost, both the casino in Worth County and Sumner County are located with excellent access off heavily traveled areas of I-35. In addition, the Worth County casino competes with 19 tribal casinos across the border in neighboring Minnesota. Across the border from Sumner County in Oklahoma are several tribal casinos. Both the Worth County and Sumner County casinos will try to attract many of their customers from a single metropolitan area. In the case of Worth, the metro area is Minneapolis-St. Paul (located 110 miles to the North), and in the case of Sumner, the metro area is Wichita.

After speaking with experts familiar with the situation in Iowa, it is likely that much of the revenue disparity between Cummings’ projections and the actual result is due to significantly greater amounts of gaming spend from residents of Minneapolis-St. Paul and neighboring cities in Minnesota and those driving by the facility on I-35. Spending from these customer groups were not fully accounted for in the Cummings’ projection.

In the white paper that we have previously presented, we have discussed in detail how the Cummings model is somewhat limited when factoring in surrounding competition – especially in a situation where there is so much in the way of competing casinos. It is very likely that the Exit 19/Exit 33 situation is one of those instances where the competition will not have as great an impact on the Sumner casino as the Cummings would indicate.

The Sumner casino market is unique in that it faces different levels of competition at varying distances and varying levels of quality. Although

Cummings claims that all his formulas and inputs are backed up by “real world” empirical evidence, the projections that were made in Worth County, Iowa certainly leave the door open for the possibility that some exogenous variables can impact the projections.

Inputs in Cummings Worth County projections that could have caused the discrepancy between projected and actual results:

• Understating the Impact of Having an Optimally Located Facility on Interstate 35 – Market intelligence indicates that the traffic going to/from Minneapolis along I-35 is helping generate “significant amounts” of incremental revenue for the facility.

o Relevance in KS – It provides some anecdotal evidence that a travel plaza would be a lot more powerful of a revenue generator for a facility off I-35 than Cummings is projecting.

• Rate of decline of spending as distance is increased – On page 5 of the Iowa report, Cummings says “This is a relatively “long-distance” attraction; if you double the distance, revenues decline by about 38%. For comparison, race tracks generally exhibit distance coefficients of about -1 to -1.2: if you double the distance, visitation declines by 50% or more.”

o Relevance in KS – If the rate of decline is not as severe as Cummings projected for Minneapolis residents going to Worth County, the same could be true as it relates to Wichita residents to Sumner County. Keep in mind, that a casino off Exit 33 or Exit 19 will devote a similar majority of marketing/advertising spend towards Wichita. A lower rate of decline in spend, for Wichita residents, would lower the gap between Exit 19 and Exit 33. This assertion has been justified by the market data collected by Jayhawk Consulting Services in August 2010 regarding Wichita residents’ attitudes towards visiting casinos in Sumner County.

• Relative appeal factors – Were the Cummings appeal factors too high for the Minnesota casinos relative to a Worth County casino? For example, the Minnesota tribal casinos do not offer craps, and the Iowa casinos do offer craps.

o Relevance to KS – If the same error were made in KS, more revenue would be pushed from KS residents to the OK casinos for either Exit 19 or Exit 33 even they are of a lower quality (at least the ones along the border and they do not offer craps). However, because of Exit 19’s closer proximity to OK,

significantly more revenue is allocated to the OK casinos than Exit 33. If lower appeal factors were used for the OK casinos, less revenue would be siphoned into OK thus narrowing the revenue gap between Exit 19 and Exit 33.

• Spending Elasticity with Size – Did Cummings give too much credit for the sheer size of the Minnesota casinos? The Minnesota casinos have more than 15,000 slot machines compared to the Worth County casino, which was only sized at with 520 slots and 18 table games in Cummings’ projections. Using the Cummings model, where the number of machines are weighted at close to a 1:1 basis, virtually no Minneapolis spending would be directed to a Worth County casino as collectively, the Minnesota casinos would be about 30 times more attractive than a Worth County casino.

o Relevance to KS – If the same error were made in KS, more revenue would be pushed from KS residents to the OK casinos for either Exit 19 or Exit 33. However, because of Exit 19’s closer proximity to OK, significantly more revenue is allocated to the OK casinos than Exit 33. If lower spending elasticity with size factors were used for the OK casinos, less revenue would be siphoned into OK thus narrowing the revenue gap between Exit 19 and Exit 33.

Figure 1 – Worth County, Iowa Competition Map

Note: There is a tremendous amount of competition to the north of Worth County casino (signified by the blue star).

Source: CasinoCity; GGS estimates



4) “DISPROVING THE EXIT 33 MYTH: Exit 19 the Best Bet for Kansas”, 33‐page report prepared with the assistance of CBRE.

Prepared by: Global Gaming Solutions, LLC in Collaboration with CBRE. October 2010

DISPROVING THE EXIT 33 MYTH: Exit 19 the Best Bet for Kansas

- 2 - October 2010

DISPROVING THE EXIT 33 MYTH

Table of Contents The Problem Statement ................................................................................................... 4

The Participants ............................................................................................................. 4

Proofing the Problem ....................................................................................................... 7

Distance Is the Overriding Factor In Determining Casino Spend .......................... 7

The Attractiveness, Proximity and the Amount of Competition ............................ 8

Defining Piece of New Evidence ................................................................................. 15

Solutions ........................................................................................................................... 16

Summary of the Four Solutions .................................................................................. 16

The Resolution ................................................................................................................. 19

Appendix ......................................................................................................................... 20

Appendix #1 – Technical Analysis of Solution 1 ..................................................... 20

Appendix #2 – Technical Analysis of Solution #4 .................................................. 20

Appendix #3 Recreation of State Consultant Gaming Revenue Model for Exit 19 and Exit 33 ............................................................................................................... 24

Appendix #4 – Jayhawk Consulting Services Report ............................................ 29

- 3 - October 2010

Index of Tables Table 1 – Sumner County Competition Grouped by Geographic Zones

(Estimated as Projected in 2008) .......................................................................... 14

Table 2 – Revenue Difference After the Four Solutions (2007$ Millions) ................. 18

Table 3 – Scoeff Calculation Using the State Consultant’s Estimate – “Population A” Example .............................................................................................................. 21

Table 4 – Adjusted Scoeff Calculation Using GGS Estimate - “Population A” Example .................................................................................................................... 23

Table 5 – Recreation of State Consultant Model (2008$ Unless Noted) ................ 24

Table 6 – Recreation of State Consultant Model (2008$ Unless Noted) – Exit 19 Slot Spend Detail ..................................................................................................... 25

Table 12 – Recreation of State Consultant Model (2008$ Unless Noted) – Exit 33 Slot Spend Detail ..................................................................................................... 27

- 4 - October 2010

The Problem Statement The problem this white paper explores is that in 2008 one of the State’s consultants implied there was a 23% revenue gap between essentially identical destination casinos off Exit 19 and Exit 33, respectively.

The Participants Global Gaming Solutions Global Gaming Solutions (GGS) is an experienced casino developer and operator. The entity is best for known for its two highly successful casinos located off Interstate 35 in Oklahoma. One of those casinos, WinStar, is the third largest casino in the world, proving that the entity has experience in developing and operating multi-million dollar destination casinos.

GGS’s expansive knowledge of running casinos on the I-35 Corridor has provided it with the knowledge to create the amenities and marketing philosophies that maximize both revenue and the customer experience.

GGS is seeking to construct and manage on behalf of the State the casino in the South Central Gaming Zone off Exit 19.

The State of Kansas In 2008, the KS legislature passed SB 66 – The Kansas Expanded Lottery Act. SB 66 authorized up to four state-owned casinos in four gaming zones: 1) the Northeast Zone, which consists of Wyandotte County; 2) the Southeast Zone, which consists of Cherokee or Crawford counties, 3) the South Central Zone, which consists of Sedgwick or Sumner counties, and 4) the Southwest Zone, which consists of Dodge County. Slots at the State’s racetracks were also permitted. This paper focuses solely on the state-owned casinos, and the South Central Zone specifically.

In each county within the gaming zones, a local referendum was held to allow voters a choice to allow casinos or not. All counties in the State voted to allow casinos except for Sedgwick County. That meant the South Central license could only go to Sumner County.

The Kansas Lottery Commission The Commission is charged with setting up the procedures for, and entering into, gaming facility management contracts with third party entities. In addition to managing the casinos on behalf of the State, the winning third party entities would also construct the facilities.

- 5 - October 2010

The Kansas Lottery Kansas Lottery Gaming Facility Review Board (KLGFRB) The independent KLGFRB was appointed by the Governor, Senate and House of Representatives to evaluate potential gaming facility managers. SB 66 says the Board may employ any experts, consultants or other professionals at the expense of a prospective gaming facility manager to provide assistance in evaluating a lottery gaming facility management contract submitted to it.

Past Gaming Facility Manager Applicants In 2008, Harrah’s Sumner Gaming, Penn Sumner LLC, and Marvel Gaming formally submitted applications to be the gaming facility manager in the South Central Gaming Zone. Both the Penn Sumner and Marvel Gaming proposals were off Exit 19, while the Harrah’s Sumner Gaming proposal was located off Exit 33.

State Consultants In 2008 and again in 2009, the KLGFRB retained Cummings & Associates, among other consultants, to explore the gaming revenue potential for the South Central and three other Gaming Zones. In this paper, Cummings & Associates is referred to as the “State’s consultant.”

State Consultant Reports Several times throughout this analysis, reference is made to reports that were previously conducted by Cummings Associates for the State of Kansas and other clients. The three main reports referenced are as follows:

• Cummings Associates, Casinos’ “Gravity” According to Reilly – Amended, May 25, 2006

• Cummings Associates, Projections for the Market Potential of the Four Gaming Zones in Kansas - DRAFT, May 26, 2008

• Cummings Associates, Projections for the Likely Gaming Revenues of Marvel Gaming, LLC - DRAFT, July 16, 2008

For the remainder of this writing, the above three reports are referenced as Cummings May 2006, Cummings May 2008, and Cummings July 2008, respectively.

- 6 - October 2010

State Consultant Revenue Projections for Exit 19 and Exit 33 In Exhibit C-4 of the Cummings July 2008 report, the analysis projects that identical casinos would generate slot/table revenue of $174.2 million off Exit 33 (Harrah’s) and $134.7 million off Exit 19 (Penn National). In other words, the analysis is projecting a casino off Exit 19 would generate about 23% less than a like casino off Exit 33 because of the approximately 11-minute further drive for Wichita-area customers. The Cummings July 2008 projections were very similar to the projections made in the Cummings May 2008 report.

Jayhawk Consulting Services Jayhawk Consulting Services (JCS) conducted a public opinion survey to the test the attitudes of how distance influences the casino visitation habits of Wichita residents.

Add JCS bio to clarify why they should be listened to. JCS is a respected polling company with X years of experience, etc.

- 7 - October 2010

Proofing the Problem Evidence will be brought forth, including real world data, examples and situations that will show that the perceived revenue gap should not be taken as a foregone conclusion.

The 23% revenue gap, as estimated by the State’s consultant, between two highly similar casinos off Exit 19 and Exit 33, has not factored in additional empirical data relevant to the analysis or come to a reasonable conclusion that can be drawn from that data.

There are two fundamental areas that form the basis of the 23% revenue gap as estimated by the State’s consultant. They are:

1. Distance is the overriding factor in determining a population’s spend at a particular casino.

2. The attractiveness, proximity and the amount of competition around a casino influences how much of the population’s spend that particular casino will capture.

Distance Is the Overriding Factor In Determining Casino Spend The State consultant presents data it has collected that the gaming spend of typical adult populations declines at a rate of 38% as the distance away from a casino is doubled. GGS’s research indicates that distance is not always the overriding factor in how often people will visit a casino, and that the applicability of the State consultant’s data to all casino markets and situations is not always relevant.

The evidence that the State consultant uses to justify why the 38% rate of decline is applicable is based on survey data it collected from Mississippi casinos and an analysis of players club data from two anonymous casinos. The consultant takes the visitation counts (from Mississippi) and the casino spend (from the players club data examples) and divides it by the adult population in those areas to determine the spend per adult. The State consultant then measures the rate of decline in spending as distance is increased from a particular casino.

However, the State consultant’s methodology undoubtedly overstates the rate of decline in spending for casinos generally and the South Central Zone casino specifically, as distance is increased for several reasons.

The first reason is every market in the U.S. has some form of casino competition, and no market is completely insulated. Both the Mississippi casinos and the two casino examples cited by the State consultant will have some of the gaming

- 8 - October 2010

spend from the more outlying populations siphoned off by surrounding casinos. For example, even within 50 miles of the Mississippi casinos are casinos in New Orleans. Therefore, distance is not the only reason New Orleans residents are not visiting the Mississippi casinos, but rather the fact that there are three casinos in the New Orleans area that are taking their play.

Kansas is conducting an open RFP process to get a top-notch casino built. The proposed facilities in Kansas are extremely different from multi-level casino riverboats built in the early and mid-1990s or even many of the riverboat casinos built more recently in Iowa (where the State consultant has experience), and are not likely to experience the same rate of decline. The Sumner casino will be of higher quality, be land-based, and have better access (right off I-35) than virtually any other regional casino in the U.S.

For these reasons alone it is more likely than not that the rate of decline in spending would be lower than the State consultant cites.

Other reasons the State’s consultant likely overstating the drop in gaming spend relate to the inherent self-selection bias of players club data and casino marketing philosophies. Players club data is not a perfect proxy for actual gaming revenue because not everyone signs up for a players card or uses their players card. In fact, more outlying populations are less likely to use a players card because they are less likely to be aware of the players club or may not visit the casino often enough to accumulate awards. However, the outlying residents are still visiting more than the players club data indicates.

Furthermore, casinos only have a finite amount of advertising dollars that can be spent to attract players. The advertising dollars typically are spent in areas closer to the casino. Whether a casino is built off Exit 19 or Exit 33, either one will spend a similar high dollar amount of their advertising budget in Wichita. In these other examples, part of the explanation for visitation dropping with distance is the fact that casinos target their advertising budgets on the close-in populations and spend less on more distant markets. This is especially true when there could be four different cities 25 miles away (one to the North, one to the South, one to the East and one to the West) that a casino would have to split its marketing budget four ways. In the case of either Exit 19 or Exit 33, virtually all of the marketing dollars will be plowed into Wichita.

The key question is how the spending decisions of Wichita residents will be influenced by distance, and not by examples that may or may not be relevant.

The Attractiveness, Proximity and the Amount of Competition Contrary evidence exists to the State consultant’s thesis specifically as it relates to the attractiveness, proximity and the amount of competition.

- 9 - October 2010

The first prong to the State consultant’s argument (discussed above) is that because Exit 19 is located eleven minutes further from Wichita than Exit 33, that the visitation rates of Wichita residents will be lower.

The second prong to the State consultant’s thesis is that by the Exit 19 casino being eleven minutes closer to the Oklahoma Border Casinos that those casinos will capture a greater amount of the Wichita (and surrounding county) population’s gaming spend than they would if the casino was located off Exit 33. Because of the large number of casinos and slot machines, the State consultant’s analysis predicts that significantly more Wichita resident gaming spend will go to the Oklahoma Border Casinos if the South Central Zone casino were located off Exit 19 rather than Exit 33.

The Attractiveness of Competition When the State consultant is determining how much of a population’s gaming spend will be spent at one casino versus another, the two key determining factors are the two casinos’ relative distance from the population and the relative attractiveness or appeal of the two casinos.

The State consultant’s assumption is that a facility of the kind proposed in Sumner County was next door to one of the Oklahoma Border Casinos (with the same number of slots) that the Sumner Casino would only generate 22.2% more revenue than the typical Oklahoma Border Casino.

((110 / 90)-1)=22.2%

(The typical Oklahoma Border Casino in this case does not include higher quality facilities such as Quapaw Downstream Casino, the Firelake Casino, the Hard Rock Casino in Tulsa, or the Riverwind Casino outside of Oklahoma City.)

While this assumption may not seem unreasonable, it greatly understates the quality disparity between casinos competing in location-neutral markets. Also, empirical evidence exists that is in conflict with this assumption. The Borgata dramatically outperforms most casinos in Atlantic City, for example, as does Wynn Las Vegas compared to Circus Circus just down the street on the Las Vegas Strip. The situation also exists in Lake Charles, Louisiana, for which more detail is provided.

Lake Charles Example Lake Charles is a regional gaming market located in southwestern Louisiana that consists of two riverboat complexes and one racino approximately 25 miles to the west in Vinton. Key to the understanding of this market is that two riverboat complexes have essentially no location advantage over one another. The only difference is in appeal and attractiveness. The newer, $370 million L’Auberge du

- 10 - October 2010

Lac generates nearly three times the win per slot machine than the older Isle of Capri riverboat complex.

Figure 1 – Lake Charles Casinos

Source: Google Earth

Fair Share Analysis - Total GamingL' Auberge du Lac

83.1%

140.5% 145.5% 151.0% 148.4%

0%30%60%90%

120%150%

2005 2006 2007 2008 2009

Fair Share Analysis - Total GamingDelta Downs

95.6% 103.3% 98.4% 95.0% 98.0%

0%

30%

60%

90%

120%

150%

2005 2006 2007 2008 2009

Delta Downs

- 11 - October 2010

Fair Share Analysis - Total GamingIsle of Capri Lake Charles

92.5%70.0% 65.5% 63.0% 60.3% 59.1%

0%

30%

60%

90%

120%

150%

2004 2005 2006 2007 2008 2009

Note: A fair share of 100% equals a market average win per slot machine and table game seat

Source: GGS; Louisiana Gaming Control Board

The State consultant himself has pointed out that his analysis is limited in this type of situation when at a presentation to the Kansas Lottery Gaming Facility Review Board on July 24, 2008, he said (quote taken from the official transcript):

Then I looked at everything else and I updated my reviews of what’s going on elsewhere around the Midwest, in large part, to try to come up with some quantification of these "everything else" factors which, again, are micro-access, slot mix, fit and finish, the hotel, structured parking, entertainment, retail, everything else, and I regret to report that I have found no systematic way to factor those into my projections [emphasis added].

Quite clearly, the estimated 22.1% difference in revenue (assuming no difference in location) between a new destination casino with excellent access in Sumner County and the typical Oklahoma border casino is at odds with numerous real world situations.

Proximity of Competition The State consultant’s analysis does not distinguish whether Wichita residents would have to bypass one facility to reach another. The inherent assumption in gravity models is that a given population lives between two facilities, as illustrated in the diagram below.

- 12 - October 2010

This assumption is not reflective of the real world case where the South Central Zone casino is between the population center (Wichita) and the inferior Oklahoma Border Casinos (illustrated in the diagram below).

Say that Person A lives 50 miles from a 100,000 square-foot Wal-Mart (the closest store to him) and about 100 to 120 miles from five or six 20,000 to 40,000 square-foot general stores. The Wal-Mart is nicer, newer, and offers every item the general stores offer plus a much greater selection (this last point is less important).

If someone told you that Person A and his neighbors would spend about 20% of their shopping dollars at the general stores, you would be scratching your head wondering who in their right mind would drive twice as far to go to a lower quality store with a poorer selection.

What if that same someone also said that this is what the gravity model dictates - a 20% market share of spend - especially once the increased distance, smaller size and lower relative quality of the general stores has been factored in? The likely response from a logical person would be, “There is no way that anyone will drive so far past the better facility to a poorer facility unless they happened to already be in the area of the poorer facility.”

Therefore, some adjustment to the gravity model needs to be made that will allow for some people not wanting to bypass a higher quality facility to go to a lower quality smaller facility further away.

Population Center Facility

A

Facility

B

Population Center Facility

A

Facility

B

- 13 - October 2010

Amount of Competition The map and table below illustrate the competition for the South Central Zone.

Figure 2 – South Central Zone Competition (July 2008)

Source: Wells Gaming Research; GGS

OK Border - Newkirk

Dodge

Wellington

Mulvane

Tulsa Oklahoma City

Cherokee-Quapaw

Kansas City / KS Tribal

- 14 - October 2010

Table 1 – Sumner County Competition Grouped by Geographic Zones (Estimated as Projected in 2008)

# of Slots Power RatingNumber of

CasinosCherokeeQuapaw 9,463 0.94 11Dodge 800 1.12 1Kansas City / KS Tribal 15,187 1.10 10Oklahoma City 9,332 0.95 9Tulsa 10,811 0.95 11OK Border - Newkirk 4,632 0.90 9/10 Notes: Figures based on data gleaned from Cummings July 2008 report and other sources. Power Ratings per State consultant. For Cherokee/Quapaw, GGS estimated based on a weighted average of Penn Cherokee (112), Quapaw (95) and Others (90). GGS estimated Power Ratings for Oklahoma City and Tulsa at 95 because facilities generally of a higher quality than OK Border Casinos.

Source: GGS estimates; Casino City; Cummings Associates

After looking at the above map and table, it quickly becomes apparent that each competitive zone, with the exception of Dodge, has several casinos grouped together. In addition, with the exception of two casinos in the Cherokee/Quapaw Zone (Penn Cherokee and the Downstream Casinos) and the one casino in Dodge, the rest of the facilities in the primary competition zones are of inferior quality and/or poorer micro-accessibility when compared with the Sumner casino.

This last point is important as it relates to the decision making process customers will make when deciding what casino to visit. Just because there are several casinos along the Oklahoma Border does not mean that the 20th casino will have the same incremental draw on where people are going to gamble as the first casino.

In the Cummings July 2006 report, the State consultant talked about the abstract concept of “the market elasticity with size” or Scoeff. While the theory behind it is complex, the Scoeff is an input in the Gravity Model that allows for the number of slot machines to be weighted greater or lower. A weighting closer to 1.0 (the State consultant advocates 0.9) means that a casino with double the number of slots will have double the market share of an otherwise identical casino.

However, in the situation where the competition is grouped together as shown on the map and table above, the total drawing power of each competitive area is not as strong as its total number of slots would indicate, and logic would dictate in the example of the Sumner Casino versus the Oklahoma border casinos, that the Scoeff should be much less than 1.0.

- 15 - October 2010

Defining Piece of New Evidence Comparing two casinos that are not yet in existence is an intellectual exercise. There has never been a real world situation where a casino was moved eleven minutes down the road, so theory can only get you so far.

Clearly, the best method to project how the difference in distance will impact Wichita residents’ casino visitation habits is to ask them. In other words, would Wichita residents really visit a casino 23% less if it was located ten or eleven minutes further away as the state consultant’s analysis suggests? That is exactly what Jayhawk Consulting Services (JCS) set out to discover on August 27 and 28th of 2010.

Testing the Attitudes of How Distance Influences the Casino Visitation Habits of Wichita Residents Simply put, JCS found that there was no material difference between how many times Wichita residents say they would visit a casino twenty minutes away and an identical one thirty minutes away.

Please see Appendix #4 for the full JCS report.

- 16 - October 2010

Solutions Contrary evidence to the state consultant’s analysis has been presented. Furthermore, the JCS survey also indicates that Wichita residents would not materially change their casino visitation habits because a casino is at Exit 19 instead of Exit 33.

Even though strong evidence has been presented that dispels the state consultant’s hypothesis about the impact of distance, the state consultant’s mathematical model would discount the impact of the poll data and suggest that Exit 19’s closer proximity to the Oklahoma Border Casinos would still justify a disparity. However, combining the Wichita polling data with solutions that more logically reflect the real impact of competition (attractiveness, proximity and the amount of casinos) in the consultant’s model yields a negligible 4% revenue difference between Exit 19 and Exit 33.

Summary of the Four Solutions For a more detailed technical analysis of Solution #1 and Solution #4, please see the Appendix.

The state consultant estimated a 23% difference between Exit 19 and Exit 33. Using the 23% gap as a starting point, the four solutions presented below show how each logical adjustment would impact the revenue difference in the consultant’s model.

Solution #1 – Wichita Residents’ Attitude that Distance Does Not Matter The first solution simply involved overlaying the assumption that Wichita residents would visit a casino off Exit 19 2.1% less than they would if the casino was located off Exit 33. Since the state consultant’s model would still have one believe that the Oklahoma Border Casinos would capture a materially higher portion of the gaming spend of Wichita residents (an assumption that has been discredited), a 13% revenue gap between Exit 19 and Exit 33 would still remain if one stuck strictly to his mathematical model.

Revenue Gap Remaining After Solution #1 – 13%

Solution #2 – The (Un)attractiveness of the Competition The second solution involved adjusting the state consultant’s admittedly conservative estimate of the relative appeal factors between the Oklahoma Border Casinos and the resort destination planned at Exit 19. Based on the revenue premium that superior facilities have when competing against lower

- 17 - October 2010

quality facilities in location-neutral situations, and adding on top of Solution #1, the revenue gap would be narrowed to 10% between Exit 19 and Exit 33.

Revenue Gap Remaining After Solution #1 and #2 – 10%

Solution #3 – Wichita Customers Won’t Ignore the Kansas Casino to get to Oklahoma Border Casinos The argument can be made that the spigot of customers streaming down to the Border Casinos from Wichita, Butler County, and other adjacent counties to the north will be virtually shut off once the South Central Zone casino opens. Therefore, the logical assumption is made that most of the Wichita gamblers and folks in adjacent counties will choose to visit a casino in Sumner County rather than sit in their cars for an extra hour for a lower quality experience at the Border Casinos. By assuming that 80% of the gaming spend the state consultant’s model is attributing to the Oklahoma Border Casinos from the above areas will be retained by the Sumner casino, this commonsense solution further narrows the revenue gap estimated by the state consultant to just 8% (after combining with Solutions #1 and #2).

Revenue Gap Remaining After Solution #1, #2 and #3 – 8%

Solution #4 – All Those Slots in Oklahoma Don’t Matter That Much The Solutions for the quality of the Oklahoma casinos have already been made, and it is logical that Kansans aren’t going to drive by a Sumner casino to get to lower quality facilities. The state consultant’s model, however, would suggest that the sheer number of slots near the Oklahoma border would draw Kansas customers past the Sumner casino. Since the Oklahoma Border Casinos don’t represent a destination casino market (such as Las Vegas or the Gulf Coast), each incremental slot in the area doesn’t have the same drawing power as the one before it. In other words, the pull of the 19th and 20th casino on Kansas gamblers likely has no additional impact on their decision to go visit the Sumner casino or one on the Oklahoma border.

After lowering the drawing power of every slot machine, the revenue gap estimated by the state consultant falls to just 4% (after Solutions #1, #2 and #3).

Revenue Gap Remaining After Solution #1, #2, #3, and #4 – 4%

- 18 - October 2010

Table 2 – Revenue Difference After the Four Solutions (2007$ Millions)

Wellington Mulvane % DifferenceState Consultant $134 $174 -23%After Solution #1 $152 $174 -13%After Solution #2 $157 $174 -10%After Solution #3 $159 $174 -8%After Solution #4 $167 $174 -4%

Notes: Assumes the Exit 19 and Exit 33 projects are identical in size and scope. Impact of each Solution is cumulative. The state consultant’s model is recalibrated after each solution to maintain Exit 33 slot/table revenue of $174 million.

Source: GGS estimates

- 19 - October 2010

The Resolution Numerous examples and persuasive evidence has been provided that eliminates the notion of a significant revenue gap between exit 33 and exit 19 put forth by the state’s consultant. The poll data, in particular, confirms the logical assumption that Wichita residents will not materially change their gaming behavior simply because a Sumner casino is at exit 19 instead of exit 33.

Despite the compelling poll evidence, the state consultant’s model would suggest that other factors aside from the distance between exit 33 and exit 19 from Wichita would still leave a revenue gap. Applying the poll evidence and real world examples, and making adjustments based on logical extrapolations to the state consultant’s model, quickly narrows the theoretical gap to negligible levels, however.

The state consultant’s approach is admittedly conservative and the gaming revenue in the consultant’s gravity model is predicated on “location, location, size and everything else.” Evidence has been presented that makes this approach less relevant when the “everything else” is dramatically different from one competitor to the other, and that the universal application of the consultant’s model inputs to the unique circumstances of this market is questionable.

GGS is a successful operator in the I-35 corridor, with superior operating, marketing and development knowledge over any other South Central zone bidder. In light of these facts, the poll data, and abundant corroborating empirical evidence, there is ample support to the conclusion that Exit 19 would not be disadvantaged in terms of gaming revenue potential.

- 20 - October 2010

Appendix Appendix #1 – Technical Analysis of Solution 1 On page 4 of the Cummings May 2008 report, the author suggests that as distance is doubled, gaming spend declines by about 38% (or the elasticity with respect to distance is -0.7).

Data gleaned from the JCS data overwhelmingly points to a rate of decline of less than 38% as the distance away from the Sumner Casino is doubled.

The JCS survey, which found that Wichita residents said they would visit a casino 30-minutes further away only 2.1% less than if a casino were 20-minutes away provides solid, “real world” evidence to a more appropriate rate of decline.

To mechanically make Adjustment #1, JCS survey results were overlaid onto a recreation of the State consultant’s model. The model is calibrated to reflect the number of distance-adjusted adults in the 54.5-minute drive-radius of Exit 19 that would yield a gaming revenue amount of 2.1% less than Exit 33. It turns out that the number of distance-adjusted adults in the Exit 19 54.5-minute drive-radius would have to increase from 167,841 in the recreated model to 197,551 after Solution 1. For reference, there is an estimated 213,416 distance-adjusted adults in the 50-minute drive-time radius of Exit 33 (different drive-time radii are used for Exit 33 and Exit 19 to ensure that there is apples-to-apples comparison of adults. The State consultant’s methodology is not clear how the switch is made between drive times, zip codes, counties, etc. so a reasonable assumption had to be made to ensure apples-to-apples comparisons).

After the appropriate number of distance-adjusted adults in the Exit 19-drive time radius was calculated, the surrounding competition was overlaid back onto the model as it was in the originally recreated model. No adjustments to the number of distance-adjusted adults in the area outside the 54.5/50 minute drive-time radii were made because it would have virtually no impact on the Exit 19-Exit 33 comparison. Again, virtually all of the revenue gap between Exit 19 and Exit 33 estimated by the State consultant is confined to only Wichita residents.

Appendix #2 – Technical Analysis of Solution #4 Solution 4 involves adjusting the Scoeff. The Scoeff measures the gravitational pull of every slot machine irrespective of other factors such location and attractiveness.

- 21 - October 2010

Customer Decision-Making Example Take the example of a population (“Population A”) living 50 minutes to the east of a 2,000 slot casino and 50 minutes west of a comparable quality 2,000-slot casino (call it “Casino B”). Gravity model theory dictates that Casino A and Casino B should each capture about 50% of Population A’s gaming spend (assuming there was no other competition in the area). Both Casino A and Casino can be considered high-quality destination casinos. Now say that scattered within the 10-20 mile radius of Casino B, there was another ten or so casinos of inferior quality with about 7,500 or so slots. Keep in mind that none of these casinos are within walking distance of one another and that there is very little in the way of cooperative marketing of the area as there would be at a casino destination.

Under such a scenario, it is estimated that the State consultant (assuming he would agree to a reduced 30 Power Rating for the 10-11 surrounding casinos) would allocate about 34.5% of Population A’s gaming spend to Casino A with the other 65.5% going to Casino B and the 10-11 other casinos around it.

Table 3 – Scoeff Calculation Using the State Consultant’s Estimate – “Population A” Example

Formula

# of Slots ^ ScoeffxAppeal Factorx(Distance/7) ^

(-2 - Market Elasticity of Distance) =Market Share

Casno A 2,000 ^ 0.9 x 1.1 x (50/7) ^ (-2-.7) = 5.09

Casino B 2,000 ^ 0.9 x 1.1 x (50/7) ^ (-2-.7) = 5.09

Casinos Surrounding 7,500 ^ 0.9 x 0.3 x (50/7) ^ (-2-.7) = 4.56

Market Share / Total Market Share = Capture

Casino A 5.09 / (5.09+5.09+4.56) = 34.5%

Casino B and Surrounding Casinos (5.09+4.56) / (5.09+5.09+4.56) = 65.5% Source: GGS

The “Population A Example” is a slightly simplified version of the situation that will face customers in south and southeastern Kansas as it relates to whether they

- 22 - October 2010

will go to the Cherokee/Quapaw Zone or the Sumner casino. It does not seem reasonable that the above formula (taken from the Cummings July 2006 report) will mimic actual customer patterns. For the theoretical Population A, these customers will likely visit either Casino A or Casino B, and very few will travel the distance to visit inferior casinos. Additionally, there is little evidence to support the theory that the inferior casinos will play a great role in the decision process for many of the people living in Population A. Remember, the casinos around Casino B are not cooperatively marketing like they do in Las Vegas, Atlantic City or Reno, and as such, they do not necessarily create synergies with one another.

There is simply a diminishing marginal return with every new casino and every slot that is added to a casino (unless there is an undersupply condition in place, which there is clearly not in Cherokee/Quapaw) to a customer’s decision-making process. The way the State consultant measures this diminishing marginal return is by using a measurement of the elasticity of the market with size that called Scoeff (or size coefficient). In the Cummings May 2006 report, the analysis suggests that a Scoeff of 0.9 is used to reflect that some of the members of the population will go to a certain casino because of its directional location (east, west, north, south) and not because of its number of slots. So basically, in the example where you have two equivalent quality casinos the same distance away from a population, with one having twice the number of slots as the other, the use of a 0.9 Scoeff will result in a market share of 65.1% for the larger casino and 34.9% for the smaller casino, representing an 87% market share premium for the larger casino.

Now, back to the “Population A Example.” This is one of those situations where the State consultant realizes there is a limitation with the model, but does not go far enough in tailoring the inputs of the model to the Population A situation or providing any sensitivity analysis. There is no hard empirical data to support what the exact market share should be for Casino A in the Population A Example. Casino A could not earn a 50% market share of Population A’s casino visits (because some people will naturally visit the inferior casinos surrounding Casino B for whatever reason), but a 34.5% market share for Sumner is too low from a logical standpoint. When one starts adding slots in those casinos by Casino B, they just have less and less of an impact for every one that is added – remember they are of inferior quality and don’t necessarily form any critical mass. The State consultant has probably not grouped the casinos together, but if this approach was taken, the problem with using a Scoeff as high as 0.9 would become apparent.

- 23 - October 2010

Table 4 – Adjusted Scoeff Calculation Using GGS Estimate - “Population A” Example

# of Slots ^ Scoeff xAppeal Factor x (Distance/7) ^

(-2 - Market Elasticity of Distance) = Market Share

Sumner Casino 2,000 ^ 0.4 x 1.1 x (50/7) ^ (-2-.7) = 0.11

Casino B 2,000 ^ 0.4 x 1.1 x (50/7) ^ (-2-.7) = 0.11

Casinos Surrounding B 7,500 ^ 0.4 x 0.3 x (50/7) ^ (-2-.7) = 0.05

Market Share / Total Market Share = Capture

Sumner Casino 0.11 / (0.11+ 0.11+ 0.05) = 40.6%

Casino B and Surrounding Casinos (0.11+ 0.05) / (0.11+ 0.11+ 0.05) = 59.4% Source: GGS

For the Sumner casino, if Scoeff of 0.4 is used, the Sumner casino’s market share in the “Population A Example” goes from 34.5% to 40.6% - a market share that makes more logical sense. That would leave Casino B with a similar market share (or maybe slightly less if people turned off to the surrounding casinos on their way to Casino B) and the remaining market share going to the casinos surrounding Casino B.

- 24 - October 2010

Appendix #3 Recreation of State Consultant Gaming Revenue Model for Exit 19 and Exit 33 Table 5 – Recreation of State Consultant Model (2008$ Unless Noted)

Assumptions

State Consultant Baseline unless

highlighted

38.0%

0.90 / 0.95

Yes

0.90

No

No

Exit 19 Exit 33 % Difference Comments

Power Rating 110.0 104.0 per State consultant

Revenue from Slots $Million

58 (Exit 19) / 50 (Exit 33) minute radius $95.7 $133.4 GGS recreation

Other Counties (100-Mile Radius) $17.4 $19.3 GGS recreation

Oklahoma City MSA $0.7 $0.5 GGS recreation

Tulsa MSA $0.4 $0.2 GGS recreation

Highway Intercept $5.3 $2.7 per CummingsRevenue from Slots $Million $119.5 $156.0

Table Games Revenue $18.0 $23.6 per State consultant inflated

Revenue from Slots/Tables $Million $137.5 $179.6

Revenue from Slots/Tables $Million 2007$ $134 $174 -23% approximates State consultant

Incremental slot spend from operating Wellington Travel Plaza?

Scoeff - Elasticity of market share with size

Incremental slot/table spend from marketing Wellington casino to GGS's OK customer base?

Distance Factor - How much does slot/table spend decrease when distance is doubled?

Power Rating / Appeal of OK Border Casinos

Assumes Wichita Customers will Bypass Mulvane / Wellington for Inferior OK Border Casinos


- 25 - October 2010

Table 6 – Recreation of State Consultant Model (2008$ Unless Noted) – Exit 19 Slot Spend Detail

Geogaphic Segment (Drive-Time Ring in

Mins) # of AdultsDistance Factor Income Factor

Distance-Adjusted Adults

Slot Spend (if no competition)

Slot Spend (w/ competition)

6.5 5,785 100.0% 83.4% 4,825 $3,715,103 $3,690,3688.5 145 100.0% 90.0% 130 $100,437 $99,13110.5 136 89.0% 95.7% 116 $89,181 $87,23812.5 439 78.7% 102.0% 353 $271,473 $262,50614.5 1,057 71.0% 93.7% 703 $541,057 $515,79916.5 879 64.8% 103.7% 591 $454,993 $426,49918.5 2,630 59.8% 102.1% 1,607 $1,237,066 $1,137,23020.5 6,259 55.7% 91.3% 3,184 $2,451,374 $2,204,46222.5 8,047 52.2% 95.0% 3,987 $3,070,036 $2,694,03924.5 15,495 49.2% 82.7% 6,298 $4,849,723 $4,142,97126.5 28,064 46.5% 79.6% 10,388 $7,998,955 $6,636,96328.5 45,778 44.2% 88.3% 17,869 $13,759,511 $11,064,37730.5 46,133 42.2% 88.9% 17,302 $13,322,522 $10,360,57532.5 51,006 40.3% 101.5% 20,876 $16,074,352 $12,065,00034.5 50,836 38.7% 107.7% 21,186 $16,313,243 $11,794,74936.5 42,973 37.2% 121.3% 19,378 $14,921,293 $10,372,89438.5 28,862 35.8% 129.2% 13,359 $10,286,435 $6,863,15340.5 22,517 34.6% 107.0% 8,328 $6,412,265 $4,099,04242.5 11,834 33.4% 106.2% 4,203 $3,236,495 $1,978,92044.5 5,874 32.4% 111.8% 2,126 $1,636,867 $955,74246.5 3,823 31.4% 105.1% 1,261 $970,682 $540,36548.5 6,185 30.5% 100.7% 1,898 $1,461,493 $774,48750.5 15,826 29.6% 90.3% 4,232 $3,258,578 $1,641,30952.5 10,741 28.8% 96.3% 2,983 $2,296,597 $1,097,84254.5 2,440 28.1% 96.3% 660 $507,994 $230,125

- 26 - October 2010

Geogaphic Segment (Other County/MSA) # of Adults

Distance Factor

Income Factor




Oklahoma City MSA 840,402 16.2% 100.7% 136,802 $105,337,164 $717,251Tulsa MSA 639,602 15.2% 100.7% 97,936 $75,411,005 $355,708Alfalfa 4,486 16.3% 79.7% 582 $447,869 $56,092Barber 3,754 17.0% 94.0% 599 $460,971 $102,980Barton 19,634 13.7% 91.0% 2,447 $1,884,300 $556,535Blaine 9,940 13.0% 64.1% 828 $637,239 $22,168Butler 45,349 27.9% 103.0% 13,035 $10,036,671 $5,760,449Chase 2,189 17.6% 95.4% 368 $283,492 $23,636Chautauqua 2,905 18.8% 84.4% 460 $354,113 $38,526Coffey 6,388 14.2% 100.9% 913 $703,060 $25,790Comanche 1,423 12.2% 92.1% 159 $122,768 $11,339Cowley 24,230 39.9% 87.0% 8,416 $6,480,180 $3,460,661Dickinson 14,396 15.0% 91.8% 1,987 $1,529,829 $76,713Elk 2,324 17.3% 81.8% 329 $253,132 $27,213Ellsworth 4,995 13.8% 90.5% 625 $481,054 $138,342Garfield 40,571 19.2% 93.7% 7,292 $5,614,807 $456,831Grant 3,450 14.0% 84.7% 410 $315,429 $6,049Greenwood 5,172 19.3% 84.8% 848 $652,617 $55,601Harper 4,404 25.1% 88.4% 977 $752,512 $341,859Harvey 24,201 25.7% 97.9% 6,081 $4,682,716 $2,698,817Kay 31,740 25.7% 88.8% 7,236 $5,571,929 $67,987Kingfisher 10,401 14.8% 102.2% 1,574 $1,211,631 $11,398Kingman 5,737 22.5% 98.0% 1,263 $972,616 $575,457Kiowa 2,147 14.2% 91.7% 279 $214,576 $29,232Lyon 24,173 18.6% 79.3% 3,572 $2,750,576 $335,989Major 5,485 14.3% 89.1% 699 $538,236 $24,108Marion 9,269 18.5% 82.9% 1,421 $1,094,516 $381,760Mcpherson 21,209 19.8% 99.4% 4,166 $3,208,049 $1,975,748Montgomery 24,784 14.7% 87.0% 3,160 $2,433,511 $96,085Morris 4,569 14.2% 92.8% 603 $464,449 $62,287Noble 8,051 13.7% 88.3% 974 $750,111 $16,765Nowata 7,837 12.8% 76.3% 764 $588,210 $4,049Payne 52,578 18.6% 87.8% 8,602 $6,623,668 $288,688Pratt 6,832 16.8% 94.8% 1,085 $835,667 $252,898Reno 46,395 20.4% 92.7% 8,778 $6,758,760 $3,583,661Rice 7,122 16.4% 82.1% 957 $736,508 $319,584Saline 38,804 16.6% 95.4% 6,125 $4,716,149 $1,122,924Stafford 3,226 15.0% 83.9% 405 $311,801 $92,191Washington 36,317 13.8% 100.6% 5,026 $3,870,008 $99,592Wilson 7,266 14.9% 82.8% 896 $689,721 $44,346Woods 6,091 15.0% 90.3% 827 $636,763 $114,014Woodson 2,693 15.5% 77.1% 321 $246,934 $11,627Less: Double Counting (1) ($6,010,071)

Traffic Intercept $5,329,000 (1) The State consultant has not been clear where he switches between drive times and zip codes/counties. Because of this, portions of the drive-time radius fall into neighboring counties. To avoid double counting, some of the slot spend that the model is allocating to the counties has been deducted.


- 27 - October 2010

Table 7 – Recreation of State Consultant Model (2008$ Unless Noted) – Exit 33 Slot Spend Detail

Geogaphic Segment (Drive-Time Ring in

Mins) # of AdultsDistance Factor

Income Factor




10 8,653 92.0% 98.8% 7,867 $5,727,342 $5,632,05412 8,375 81.0% 90.1% 6,113 $4,450,598 $4,334,26714 16,727 72.7% 83.7% 10,186 $7,415,555 $7,133,46616 27,288 66.2% 79.2% 14,313 $10,420,062 $9,874,74418 40,656 61.0% 87.9% 21,802 $15,871,642 $14,777,22920 50,281 56.7% 87.6% 24,949 $18,162,829 $16,568,27222 51,756 53.0% 104.0% 28,518 $20,761,297 $18,504,49724 43,720 49.9% 108.1% 23,566 $17,156,318 $14,900,11726 42,881 47.2% 125.6% 25,395 $18,487,470 $15,603,16128 16,971 44.8% 134.3% 10,207 $7,430,499 $6,078,08730 20,184 42.7% 122.5% 10,545 $7,677,101 $6,070,51332 9,674 40.8% 126.7% 4,999 $3,639,042 $2,774,48934 5,077 39.1% 111.4% 2,211 $1,609,587 $1,180,29836 3,702 37.5% 102.4% 1,423 $1,036,195 $729,02038 5,950 36.2% 104.1% 2,239 $1,629,893 $1,097,59840 16,531 34.9% 92.0% 5,305 $3,861,894 $2,483,48642 9,252 33.7% 94.0% 2,932 $2,134,624 $1,307,90744 12,881 32.6% 102.4% 4,303 $3,132,800 $1,824,83446 8,300 31.6% 95.5% 2,506 $1,824,637 $1,008,24948 6,059 30.7% 94.8% 1,763 $1,283,211 $671,24050 8,846 29.8% 86.1% 2,272 $1,653,993 $817,355

- 28 - October 2010

Geogaphic Segment (Other County/MSA) # of Adults

Distance Factor

Income Factor




Oklahoma City MSA 840,402 15.2% 100.7% 128,655 $93,661,097 $476,648Tulsa MSA 639,602 14.4% 100.7% 92,562 $67,385,033 $241,996Alfalfa 4,486 15.8% 79.7% 565 $411,415 $44,450Barber 3,754 15.8% 94.0% 557 $405,855 $69,498Barton 19,634 14.4% 91.0% 2,579 $1,877,707 $613,597Blaine 9,940 12.4% 64.1% 791 $575,715 $16,006Butler 45,349 32.6% 103.0% 15,238 $11,093,468 $7,758,542Chase 2,189 19.0% 95.4% 398 $289,394 $29,987Chautauqua 2,905 17.4% 84.4% 427 $310,546 $24,687Coffey 6,388 15.0% 100.9% 965 $702,453 $29,960Comanche 1,423 13.0% 92.1% 170 $123,887 $13,638Cowley 24,230 32.6% 87.0% 6,881 $5,009,226 $1,666,046Dickinson 14,396 16.0% 91.8% 2,111 $1,536,484 $91,081Elk 2,324 17.7% 81.8% 337 $245,671 $27,487Ellsworth 4,995 14.6% 90.5% 659 $479,720 $153,109Garfield 40,571 17.5% 93.7% 6,660 $4,848,376 $270,220Grant 3,450 13.3% 84.7% 389 $283,534 $4,249Greenwood 5,172 21.1% 84.8% 926 $673,857 $74,176Harper 4,404 22.5% 88.4% 875 $636,704 $215,854Harvey 24,201 29.4% 97.9% 6,972 $5,075,906 $3,479,346Kay 31,740 22.9% 88.8% 6,455 $4,698,880 $35,045Kingfisher 10,401 13.9% 102.2% 1,476 $1,074,627 $7,489Kingman 5,737 25.1% 98.0% 1,411 $1,027,541 $696,308Kiowa 2,147 15.0% 91.7% 294 $214,391 $33,396Lyon 24,173 18.6% 79.3% 3,572 $2,600,545 $302,349Major 5,485 13.6% 89.1% 664 $483,153 $16,921Marion 9,269 20.1% 82.9% 1,544 $1,123,749 $461,157Mcpherson 21,209 21.7% 99.4% 4,564 $3,322,863 $2,269,773Montgomery 24,784 13.9% 87.0% 2,995 $2,180,514 $66,785Morris 4,569 15.0% 92.8% 638 $464,233 $71,307Noble 8,051 13.0% 88.3% 928 $675,345 $11,874Nowata 7,837 12.2% 76.3% 731 $531,977 $2,921Payne 52,578 17.3% 87.8% 7,985 $5,812,981 $182,039Pratt 6,832 18.0% 94.8% 1,165 $848,244 $297,293Reno 46,395 22.5% 92.7% 9,660 $7,032,564 $4,268,359Rice 7,122 17.5% 82.1% 1,024 $745,704 $362,087Saline 38,804 17.7% 95.4% 6,567 $4,780,973 $1,333,145Stafford 3,226 15.9% 83.9% 430 $313,010 $104,360Washington 36,317 13.1% 100.6% 4,785 $3,483,179 $70,489Wilson 7,266 15.8% 82.8% 951 $692,074 $52,285Woods 6,091 14.2% 90.3% 782 $569,457 $81,235Woodson 2,693 16.5% 77.1% 342 $248,622 $13,972Less: Double Counting (1) ($6,038,644)

Traffic Intercept $2,664,500 (1) The State consultant has not been clear where the model switches between drive times and zip codes/counties. Because of this, portions of the drive-time radius fall into neighboring counties. To avoid double counting, some of the slot spend that the model is allocating to the counties has been deducted.


- 29 - October 2010

Appendix #4 – Jayhawk Consulting Services Report

REPORT OF PUBLIC OPINION SURVEY By Jayhawk Consulting Services

PURPOSE Global Gaming Solutions (GGS) contacted Jayhawk Consulting Services (JCS) to conduct a public opinion survey to determine how voters in Wichita, Kansas feel about the distance they would have to travel to attend a casino in their area. Specifically, would they go to a casino located 30 minutes from South Wichita in the same numbers as they would one only 20 minutes away. The following is the report of the results of that survey. These results are confidential between JCS and GGS. With the submission of this report, these results become the property of GGS and any release of the information herein is their responsibility. PROCEDURES This survey was conducted by telephone on August 27 and 28, 2010. Calls were made from a list of voters, residing in Wichita, Kansas who voted in the last two general elections. Although this survey has no connection to an impending election, we have found through the years that interviewing frequent voters gives us a more reliable "feel" of the total population. Frequent voters, almost by definition, are more active citizens in their community and more accurately reflect that community's attitudes regarding the important issues of the day. We completed a total of 400 interviews. This number gives the survey results with a sampling error of approximately plus-or-minus 4%.

- 30 - October 2010

RESULTS First, have you, in the past year, gone to a casino to gamble? Yes - 21% No - 79% (IF "yes")How many times? (The following are the actual responses, not percentages, of the 83 persons who answered "yes" to the previous question. The number in basic text is the number of times one had gone to a casino, and the second (bold face) number is the number of persons who made that choice.) 1 - 20 4 - 3 10 - 2 24 - 4 2 - 27 6 - 2 12 - 4 30 - 2 3 - 12 8 - 3 18 - 1 52 - 3 If a destination casino were located on Interstate 35, about 20 minutes south of Wichita, would you visit it? Y - 27% N - 64% Not sure - 9%

- 31 - October 2010

(IF "yes")How many times per year, would you go? (Again, the following are the actual responses of the 107 persons who answered "yes" to the previous question. The number in basic text is the number of times one would go to a local casino, and the second (bold face) number is the number of persons who made that choice.) 1 - 8 5 - 7 12 - 8 50 - 2 2 - 26 6 - 3 15 - 3 52 - 3 3 - 16 7 - 6 20 - 4 4 - 15 10 - 3 35 - 3 If the casino were 30 minutes south of Wichita, would you still be likely to visit it? Yes - 26% No - 64% Not sure - 10% (IF "yes")How many times per year, would you go? (Again, the following are the actual responses of the 105 persons who answered "yes" to the previous question. The number in basic text is the number of times one would go to the more-distant local casino, and the second (bold face) number is the number of persons who made that choice.) 1 - 10 5 - 10 12 - 7 50 - 2 2 - 25 6 - 5 15 - 3 52 - 3 3 - 12 7 - 5 20 - 4 4 - 14 10 - 2 35 - 3

- 32 - October 2010

SUMMARY First, we would note that about 1 in 5 (21%) residents of Wichita attended a casino to gamble within the past year. We have no frame of reference or recent past experience to know if that is low, high or about the average for a Kansas community. Secondly, the percentage of people who would go to a casino goes up, to 27%, if the casino is located about 20 minutes south of Wichita. This difference is significant, statistically speaking, for a sample of this size. However, we were a bit surprised that bringing the casino to within 20 minutes of Wichita only increased participation by 6 percent. In other words, reducing travel time from several hours down to 20 minutes did not have the major impact on participation that we had expected. Thirdly, on a related matter, adding another 10 minutes of travel time to get to the casino made no significant difference in the amount of participation by the public. Our results showed a drop from 27% to 26%, but that difference is not significant as a statistical measurement. There is one other comparison which we feel needs to be made regarding the results of this survey. We know that there is no difference between the number of participants as it relates to the "20 minute" casino and the "30 minute" casino. But what about the number of times they may attend? Looking at the earlier question, would gamblers go less often if the casino were further away? To determine the answer to this question we developed what we will call the "gambler participation" scale. It works like this - for the "20 minute" casino, 8 people said they would go 1 time per year, that equals 8 points. Also, 26 people said they would go 2 times per year for 52 points, 16 said they would go 3 times for 48 points, and so on. Using the same procedure for the "30 minute" casino, 10 said they would go 1 time per year (10 points), 25 would go 2 times (50 points), 12 would go 3 times (36 points) and so on. Using this method for comparison, the "gambler participation" score for the "20 minute" casino is 875, or an average participation, per gambler, of 8.18, and the similar numbers for the "30 minute" casino are 857 points and an

- 33 - October 2010

average, per gambler, of 8.16. We're not sure at what point this difference would be significant, but surely a difference of 0.02 on a factor total of about 8, must be of almost NO validity. ANALYSIS We can say with complete certainty and professional confidence that, based on our survey of 400 randomly-selected Wichita voters, there would be no real difference in the number of gamblers, or amount of gambler participation, with a casino location difference of 10 minutes travel time. In fact, given the comparison of participation currently, with as much as several hours travel time, and the level of participation with a casino practically in one's own "back yard", we could say with some confidence that travel distance is of very low priority when a gambler considers how much they will be involved. We hope this information will be of assistance to Global Gaming Solutions as you pursue your goals, whatever they might be. We appreciate this opportunity to be of assistance. Please contact us with any questions you have about the survey or this report.



5) Traffic Volume Map of major roadways in the vicinity of Exit 19 off I‐35, as provided by Traffic Engineers Wilson & Company.



6) CBRE Analysis of Auto Racing v. Equestrian Visits with Lang Research Supporting Information.

Gaming Spend Per Visitor - Auto Racing v. Equestrian visits (please see Lang Research: Interest in Casino Gambling Profile Report, attached)

If Both Had the Same # of Visitors, we'd conclude a 34.3% premium in visitation spending by Auto Racing visitor v. an Equestrian visitor

Approach #1 - TAMS Survey for Gaming Participation Rates, Adult Ratio per Historic Motor Sports Series

Auto Racing Equestrian CommentNumber of Visitors 100,000 100,000 we do not have the projections used by both groups

% Children 15.6% 28.5%% Adults 84.4% 71.5%# of Adults 84,420 71,454

Casino Participation While Vacationing

Enthusiasts 15.7% 15.7%

Moderate Interest 31.6% 31.6%

Relative Participation Factor (1.0 would equal the same the same ratio as the US/Canadian survey population)

Enthusiasts 1.23 1

Moderate Interest 1.02 1

Assumed Participation Rates of GroupsEnthusiasts 90.0% 90.0% GGS assumptionModerate Interest 50.0% 50.0% GGS assumption

Number of Gaming VisitsEnthusiasts 14,672 10,096Moderate Interest 13,605 11,290Total 28,277 21,386

Win / Visit

Enthusiasts $70 $70Moderate Interest $50 $50

Total WinEnthusiasts $1,027,053 $706,750Moderate Interest $680,260 $564,485Total Win $1,707,313 $1,271,235

Win / Visitor (all event visitors) $17.07 $12.71

Premium: Auto Racing Visitor vs. Equestrian Visitor 34.3%

GGS assumption that enthusiasts will game more; conservative spend/visit estimates as the length of the casino trip will be reduced by the main activity.

Tourism Ministry of Canada, Interest in Casino Gambling Profile Report, 2000 found people that sought out auto racing were 23% more likely to be Casino Enthusiasts. Harrah's Survey 2003 also points to casino gamblers more likely to being auto racing spectators than non-spectators (14% to 13%).

Tourism Ministry of Canada, Interest in Casino Gambling Profile Report, 2000 found people that sought out auto racing were 23% more likely to be Casino Enthusiasts. Harrah's Survey 2003 also points to casino gamblers more likely to being auto racing spectators than non-spectators (14% to 13%).

Auto racing attendance breakdown estimate based on Historic Motor Sports Series having 67% of spectators between 35-64; equestrian assumes children attendees are representative of the population as a whole.

Tourism Ministry of Canada, Interest in Casino Gambling Profile Report, 2000 represents the US adults surveyed. May be overstated for equestrian attendees since many will be grooms, shoesmiths and care-giversTourism Ministry of Canada, Interest in Casino Gambling Profile Report, 2000 represents the US adults surveyed. May be overstated for equestrian attendees since many will be grooms, shoesmiths and care-givers

michael.chang

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Gaming Spend Per Visitor - Auto Racing v. Equestrian visits (please see Lang Research: Interest in Casino Gambling Profile Report, attached) . If Both Had the Same # of Visitors, we'd conclude a 34.3% premium in visitation spending by Auto Racing visitor v. an Equestrian visitor

michael.chang

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michael.chang

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michael.chang

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TAMS: Interest in Casino Gambling Profile Report

Page 1

TAMSTAMSTAMSTAMSTravel Activities &Motivation Survey

BackgroundAn association of Canadian tourism ministries and organizations have collaborated to conduct two large scale surveys to assess the travel activities and motivators of pleasure travel among Canadians and Americans.

This survey, known as the Travel Activities and Motivation Survey (TAMS), represents the comprehensive assessment of travel behavior and motivators, and provides a rich and authoritative database by which to develop marketing strategies and travel products to attract visitors to Canada and Ontario.

A series of analyses are being conducted using the TAMS database to explore the travel patterns of the marketplace as well as the factors which motivate travel behavior. TAMS consisted of both a telephone survey and a self-completed mailback survey. The survey was conducted in Canada and the United States between September 27, 1999 and April 16, 2000. The telephone survey was completed by 28,397 individuals in the United States and by 18,385 individuals in Canada. Respondents were selected randomly within the household. People participating in the telephone survey who had travelled in the past two years or expressed interest in travel in the next two years were asked to complete a mailback questionnaire. Overall, 40,271 qualified for the mailback questionnaire. Of these 11,892 (29.4 %) returned usable questionnaires. The response rate was higher in Canada with 5,490 (35.2 %) returning the questionnaire while 6,405 (26.0 %) of the U.S. respondents returned the questionnaire.

This current study examines interest in casino gambling while respondents are not travelling and while they are travelling. The database was used to identify sectors of the market that exhibit a moderate or high interest in casino gambling. This report provides the demographic profile, Canadian travel activities, Canadian travel intentions, vacation experiences sought during the past two years, vacation activities participated in during the past two years, media consumption habits, information sources consulted to plan brief and longer vacations, and impressions of Canada and Ontario relative to the interest shown in casino gambling. This report also provides an Overall Market Potential, identifying those segments that offer the best potential for marketing, advertising and promotional activities related to casino gambling.


Page 2


Casino Gambling Interest IndexConstruction of the Index

The TAMS Mailback Survey contained three items specifically associated with casino gambling that were used to construct an overall Casino Gambling Interest Index. These were:

� How often the respondent had visited casinos during the past two years while not travelling: “frequently”, “occasionally”, “rarely” or “not at all”

� Whether a casino gambling vacation experience had been sought during the past two years� Whether the respondent had visited a casino and gambled while travelling in the past two years

The responses to the first of these items (i.e,. the extent to which casinos had been visited during the past two years while not travelling) was converted into a four point scale where “Not at all” was set to “0”, “Rarely” was set to “1”, “Occasionally” was set to “2” and “Frequently” was set to “3”. The two variables, which asked whether or not the individual visited a casino to gamble during the past two years while travelling, were converted into binary variables where “0” was “Did not visit a casino to gamble” and “1” was “Did visit a casino to gamble”. The three items were summed up to produce an overall score ranging from “0” to “5”. This score was reduced to three levels as follows: A score of “0” was set to “Low Interest”, a score between “1” and “3” was set to “Moderate Interest” and a score between “4” and “5” was set to “Enthusiast”.

This scoring scheme meant that in order to qualify as a Casino Gambling Enthusiast, it was necessary for those who “frequently visited a casino while not travelling” to have sought out a casino vacation experience or to have visited a casino and gambled while on a trip during the past two years, and those who “occasionally visit a casino while not travelling” to have both sought out a casino gambling vacation experience as well as visited a casino to gamble at least once while on a trip during the past two years. Those who never visited a casino were considered to have a Low Interest while all others were classified as having a Moderate Interest in casino gambling.


Page 3


Interest in Casino Gambling

Canada versus United StatesBased on Visiting a Gambling Casino While Travelling and Not Travelling

Base: Percent of Population(18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

61.8%52.7%

31.9%

31.6%

6.3%15.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CanadaUnited States

EnthusiastModerate InterestLow Interest

Americans were much more likely to have visited a gambling casino while travelling, and not travelling. Thus, Americans were

149 % more likely to be classified as Casino Gambling Enthusiasts than

Canadians. Clearly, casino gambling is a more prevalent activity in the United

States than in Canada.

Population: 1,238,000Unweighted Sample Size = 399

Population: 6,263,000Unweighted Sample Size = 1,807






Page 4



Canada: By ProvinceBased on Visiting a Gambling Casino While Travelling and Not Travelling

Base: Percent of Population (18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

5%

4%

9%

6%

6%

7%

6%

17%

11%

32%

21%

35%

36%

27%

37%

26%

24%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Newfoundland

Prince Edward Island

Nova Scotia

New Brunswick

Quebec

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

EnthusiastModerate Interest

Among Canadians, visiting a gambling casino (while travelling and not travelling) was more

prevalent in Ontario and Saskatchewan compared to other provinces. There was also above average interest in casino gambling in Quebec and Nova Scotia. Casino Gambling Enthusiasts were most frequently found in

Ontario. Interest in casino gambling tended to be lower in New Brunswick, Newfoundland

and P.E.I. ( based on a small sample).

Province of Residence

Small Sample Warning for P.E.I. n=11


Page 5



United States: By RegionBased on Visiting a Gambling Casino While Travelling and Not Travelling


12%

18%

16%

19%

19%

14%

17%

13%

11%

28%

23%

33%

33%

33%

42%

30%

33%

34%

0% 10% 20% 30% 40% 50% 60%

South Atlantic

East South Central

West South Central

Mountain

Pacific /Hawaii

West North Central

East North Central

Middle Atlantic

New England


Interest in casino gambling was somewhat higher the West North Central region of the United Sates. On the other hand, the level of interest in casino gambling was

somewhat lower in East South Central and South Atlantic regions of the country relative to other regions of the U.S.

Region of Residence

Maine, Connecticut, Massachusetts, Rhode Island, Vermont

Wisconsin, Illinois, Michigan, Ohio, Indiana

New Mexico, Arizona, Utah, Colorado, Nevada, Idaho, Wyoming, Montana

Alabama, Mississippi, Tennessee, Kentucky

California, Hawaii, Oregon, Washington, Alaska

Pennsylvania, New York, New Jersey

Florida, Georgia, North Carolina, South Carolina

Texas, Oklahoma,Arkansas, Louisiana

Kansas, Nebraska, South Dakota, Missouri, Iowa, Minnesota


Page 6



Canada: By DemographicsBased on Visiting a Gambling Casino While Travelling and Not Travelling


6%

7%

6%

6%

4%

7%

9%

7%

7%

7%

8%

5%

3%

6%

5%

7%

7%

32%32%35%

37%30%

27%34%

30%27%

33%32%

33%25%

33%29%

32%38%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Male

Female

Young Singles

Young Couples

Young Families

Mature Families

Mature Couples

Mature Singles

Senior Couples

Senior Singles

High School/Trade School

University/College

Advanced University Degree

Undefined

Less than $40K

$40K to $80K

$80K Plus


In Canada, young couples and mature couples were the most likely to exhibit an interest in casino gambling. This interest

wanes among families, and especially young families. The incidence of Casino

Gambling Enthusiasts declined as the level of education increased, but increased as the household income increased. This

indicates that vacation packages with a casino gambling theme should be targeted at couples with higher household incomes

but less formal education.

Technical NoteSee Appendix One for a description of each of

the life cycle stages.


Page 7



United States: By DemographicsBased on Visiting a Gambling Casino While Travelling and Not Travelling

Base: Percent of Population (18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years17%

14%

15%

17%

12%

14%

21%

17%

15%

14%

16%

16%

12%

14%

14%

16%

19%

33%

30%

34%

39%

32%

31%

31%

32%

27%

22%

28%

34%

34%

30%

26%

35%

38%

0% 10% 20% 30% 40% 50% 60%

Male

Female

Young Singles

Young Couples

Young Families

Mature Families

Mature Couples

Mature Singles

Senior Couples

Senior Singles

High School/Trade School

University/College

Advanced University Degree

Undefined

Less than $40K

$40K to $80K

$80K Plus


The demographic profile of those interested in casino gambling in the United

States was somewhat different than that observed in Canada. For example,

American males were more likely than females to exhibit an interest in casino

gambling. As well, those with advanced degrees exhibited a greater interest in

casino gambling in the United States than in Canada. However, similar to Canada, the level of interest in casino gambling

tended to increase as a function of household income and was highest among

young couples and mature couples. Overall, the primary U.S. target markets for casino gambling are affluent young

couples, mature singles & mature couples.

Technical NoteSee Appendix One for a description of each of

the life cycle stages.


Page 8



Canada: By Market SegmentBased on Visiting a Gambling Casino While Travelling and Not Travelling

Base: Percent of Population(18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

12%

5%

4%

3%

4%

6%

6%

11%

8%

5%

7%

7%

35%

43%

31%

32%

29%

29%

37%

35%

28%

36%

27%

33%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Affluent Young Singles

Affluent Young Couples

Young Mainstream Market

Affluent Families

Mainstream Young Families

Mainstream Mature Families

Affluent Mature Singles

Mainstream Mature Couples

Mainstream Mature Singles

Affluent Mature & Senior Couples

Mainstream Senior Couples

Affluent & Mainstream Senior Singles


In terms of the market segments (see technical notes) in Canada, interest in casino gambling was highest among Affluent Young Singles, Affluent Young Couples, Affluent Mature

Singles, Mainstream Mature Couples, Affluent Mature and Senior Couples and Senior Singles.

Affluent Young Singles and Mainstream Mature Couples were especially likely to be Casino Gambling Enthusiasts. In general, the

level of interest shown in casino gambling was lower within the family segments.

Technical NoteThe market segments used in this analysis

have been derived using the Ontario Tourism Marketing Partnership (OTMP)

tracking database. See Appendix Two for a description of each of these segments.


Page 9



United States: By Market SegmentBased on Visiting a Gambling Casino While Travelling and Not Travelling


17%

19%

16%

16%

11%

15%

17%

22%

17%

18%

15%

15%

35%

42%

35%

41%

29%

32%

40%

31%

26%

37%

26%

22%

0% 10% 20% 30% 40% 50% 60% 70%




Affluent Families










A different pattern was observed in the United States with all segments having a higher

incidence of Casino Gambling Enthusiasts. In general, the five affluent segments exhibit a greater interest in casino gambling than the mainstream segments. There is also a high

interest in casino gambling among Mainstream Mature Couples. These represent prime markets

for casino gambling promotional activity directed at the United States.

Technical NoteThe market segments used in this analysis

have been derived using the OTMP tracking database. See Appendix Two for a

description of each of these segments.


Page 10


Interest in Casino Gambling Based on Visits to Casinos While Travelling & Not Travelling

Canada vs. U.S.: By Trips In Canada Last Two YearsBase: Percent of Population (18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

7%

14%

24%

25%

35%

31%

35%

5%

0% 10% 20% 30% 40% 50% 60% 70%

No DomesticTrips

Took DomesticTrip

No Trips fromU.S. to Canada

Took Trip fromU.S. to Canada


In Canada, those who travelled domestically were slightly more likely to exhibit an interest in

casino gambling than those who did not travel domestically. However, Americans who took a trip to Canada within the last two years were

69 % more likely to be Casino Gambling Enthusiasts than those who did not take a trip to

Canada. This difference may partially be attributable to the higher level of affluence of

Casino Gambling Enthusiasts, as affluent households were more likely to have taken a trip

to Canada within the last two years.

Canada

UnitedStates


Page 11



Canada: Interest By Province Travelled ToBase: Percent of Population (18 Plus) Who Took a Trip to Each Province During the Last Two Years

7%

6%

5%

5%

6%

8%

7%

7%

7%

7%

30%

37%

34%

35%

37%

38%

34%

36%

32%

32%

36%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Newfoundland/ Labrador


Nova Scotia

New Brunswick

Quebec

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

Yukon


In Canada, there was a weak association between interest in

casino gambling and the provinces visited during the past two years.

However, those who exhibited interest in casino gambling were

somewhat more likely to have visited Ontario or Quebec than other

provinces during the past two years.

Destination Province


Page 12



United States: Interest By Province Travelled ToBase: Percent of Population (18 Plus) Who Took a Trip to Each Province During the Last Two Years

28%

24%

19%

13%

25%

27%

20%

21%

21%

21%

15%

41%

36%

42%

44%

39%

35%

38%

42%

41%

38%

40%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Newfoundland/ Labrador


Nova Scotia

New Brunswick

Quebec

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

Yukon


Destination Province

There was only a weak association between the level of interest exhibited in casino gambling by Americans, and the Canadian province visited during the past two years. However, those with an interest in casino gambling were slightly more likely to have

visited Newfoundland/Labrador during the past two years. This result reflects

the increased affluence of visitors from the U.S. to Newfoundland/Labrador

rather than indicating that this destination is of particular interest to

casino gamblers.


Page 13


Interest in Casino Gambling Based on Visits to a Casino While Travelling & Not Travelling

Intentions to Travel to Canada in Next Two YearsInterest in Casino Gambling By Intentions to Travel in Canada During Next Two Years


69%

71%

67%

21%

17%

16%

11%

10%

11%

23%

24%

20%

0% 20% 40% 60% 80% 100%

Enthusiast

ModerateInterest

Low Interest

Enthusiast

ModerateInterest

Low Interest

Very likelyFairly likely

Among Canadians, the likelihood of taking a trip within Canada during the next two years is unrelated to the level of interest in casino gambling. There

is, however, a modest association between interest in casino gambling

and travelling to Canada among Americans. This likely reflects the

fact that travellers to Canada from the United States are more affluent (and hence more likely to be interested in casino gambling) rather than the fact that Canada is an especially attractive

destination for people interested in casino gambling.

Canada

UnitedStates


Page 14


General Vacation Experiences SoughtDuring Pleasure Travel in the Past Two Years

By Interest in Casino Gambling Based on Visits to Casinos While Travelling & Not Travelling Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

-0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Exploration

PersonalIndulgence

Romance &Relaxation

Sports &Learning

Socializing


Casino Gambling Enthusiasts were more likely to have sought out vacation experiences associated with

personal indulgence (e.g., to experience the good life, visiting a casino, experiencing city life such as nightlife). They were somewhat more likely to have

pursued sports and learning vacation experiences (e.g., to participate in a hobby or sport). Advertising

and promotional materials designed to promote casino gambling-related tourism should emphasize

the opportunities for entertainment and personal indulgence offered by the destination.

Technical NoteThis analysis is based on a factor analysis of the vacation experiences sought

during the past two years. See Appendix Three for a description of the individual items associated with each of these factor scores. The factor scores

for each dimension are determined by the weighted sum of all items. The weight for each item is determined by how much the item is correlated with

the overall factor score. Factor scores are standardized with an average of “0” and a standard deviation of “1”. A value of “0” means that the travellers in

the group exhibited an average tendency to pursue a given vacation experience. Progressively more positive values indicate that the travellers in

the group were progressively more likely to have pursued the vacation experience. Progressively more negative values indicate that the travellers

within the group were progressively less likely to have pursued the vacation experience.


Page 15


Outdoor Activities SoughtDuring Pleasure Travel in the Past Two Years


-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Team Sports

Natural Sightseeing

Swimming & Sunbathing

Golfing

Hunting

Canoeing, Kayaking, Hiking

Fishing

Motorcycling

Extreme Sports

Fitness

Skiing

Snowmobiling

Biking

Skating

Extreme Winter Sports

Sailing, Windsurfing & Scuba

Natural Phenomena


Those with an interest in casino gambling tended to be more active in most outdoor activities than

those who were not interested. This was especially apparent among Casino Gambling

Enthusiasts, who tended to be more affluent and hence more likely to pursue outdoor activities

while travelling. Casino Gambling Enthusiasts were especially likely to be interested in fishing and golfing. Combining these activities in casino

gambling tourism packages may be especially effective, particularly for affluent travellers.

Technical NoteThis analysis is based on a factor analysis of the outdoor vacation activities sought during the past two years. See Appendix Four for a description of the individual items associated with each of these factor scores. The factor scores

for each dimension is determined by the weighted sum of all items determined by how much any given item is correlated with the overall factor score. Factor scores are standardized with an average of “0” and a standard

deviation of “1”. A value of “0” means that the travellers in the group exhibited an average tendency to pursue a given vacation experience.

Progressively more positive values indicate that the travellers in the group were progressively more likely to have pursued the vacation experience. Progressively more negative values indicate that the travellers within the

group were progressively less likely to have pursued the vacation experience.


Page 16


Cultural and Entertainment Activities SoughtDuring Pleasure Travel in the Past Two Years


-0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Shopping and dining

Museums, art, historical sites

High arts

Theme parks

Professional sports

Zoos, aquariums, planetariums

Agricultural and local fairs

Concerts, carnivals and festivals

Aboriginal cultural experiences

Gardens and natural attractions

Cultural festivals

International sporting events

Casino gambling and horse racing

Rodeos and auto racing

French Canadian cultural experiences


As would be expected, Casino Gambling Enthusiasts were much more likely to have visited a casino or a racetrack than those with a moderate or

low interest in casino gambling (Note: Some of these items were used in the construction of the scale). Enthusiasts were also more likely to have

attended an auto racing event or rodeo, a professional sports event, participated in

shopping/dining or visited a theme park. Combining opportunities to gamble together with sports events or a shopping/dining experience may be particularly

appealing to Casino Gambling Enthusiasts.

Technical NoteThis analysis is based on a factor analysis of the culture and entertainment

vacation activities sought during the past two years. See Appendix Five for a description of the individual items associated with each of these factor scores.

The factor scores for each dimension is determined by the weighted sum of all items determined by how much any given item is correlated with the

overall factor score. Factor scores are standardized with an average of “0” and a standard deviation of “1”. A value of “0” means that the travellers in





Page 17


Accommodation-Related Activities SoughtDuring Pleasure Travel in the Past Two Years


-0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Camping in publicgrounds orwilderness

Cooking or winetasting school

Lakeside orwilderness lodge

Remote fly-in lodgeor outpost

Ski resort

Seaside resort

B&B, spa or gourmetrestaurant


Casino Gambling Enthusiasts were more likely to have stayed in a seaside resort, a lakeside

wilderness lodge or a remote fly-in lodge than those with less interest in casino gambling.

This pattern likely reflects the relative affluence of the Casino Gambling Enthusiasts.

Technical NoteThis analysis is based on a factor analysis of the accommodation-related

activities sought during the past two years. See Appendix Six for a description of the individual items associated with each of these factor scores.

The factor scores for each dimension is determined by the weighted sum of all items determined by how much any given item is correlated with the

overall factor score. Factor scores are standardized with an average of “0” and a standard deviation of “1”. A value of “0” means that the travellers in





Page 18


Day and Overnight Touring Activities in the Past Two Years By Interest in Casino Gambling Based on Visits to Casinos While Travelling & Not Travelling Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

-0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Guided tours ofcountry or city

Winery tours

Touring by personalvehicle

Great Lakes boat andsubmarine cruise

Boat and train daytours

Scenic day tours byair

Ocean cruises


Technical NoteThis analysis is based on a factor analysis of the overnight tours

taken during the past two years. See Appendix Seven for a description of the individual items associated with each of these factor scores. The factor scores for each dimension is determined by the weighted sum of all items determined by how much any

given item is correlated with the overall factor score. Factor scores are standardized with an average of “0” and a standard deviation

of “1”. A value of “0” means that the travellers in the group exhibited an average tendency to pursue a given vacation

experience. Progressively more positive values indicate that thetravellers in the group were progressively more likely to have pursued the vacation experience. Progressively more negative

values indicate that the travellers within the group were progressively less likely to have pursued the vacation experience.

Casino Gambling Enthusiasts were slightly more likely to have taken all seven types of tours in the last two years compared to those

with a moderate or low interest in casino gambling. In particular, Casino Gambling

Enthusiasts are likely to have taken an ocean cruise, which usually offers opportunities for

casino gambling.


Page 19


Sources of Information Consulted to Plan Brief Vacations By Interest in Casino Gambling Based on Visits to Casinos While Travelling & Not Travelling Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

0% 10% 20% 30% 40% 50% 60% 70% 80%

Past experience/ Been there before

Advice of friends/ relatives

Internet/ World Wide Web

A travel agent

Articles in newspapers/ magazines

An airline's reservation system

An auto club such as CAA/AAA

Advertisements in newspapers/ magazines

Travel information offices including printed materials

Travel information you received in the mail

Travel guides such as Fodor's or Michelin

Programs on television

Other mentions

Advertisements on television

Visits to trade/ travel/ sportsmen's shows

None of these


Casino Gambling Enthusiasts were more likely to rely on their past travel experience or the advice of

family and friends than other sources of information when planning brief vacations. They

also consulted a larger variety of information sources when planning their brief vacations and especially travel agents, the Internet, newspaper

and magazine articles, airline reservation systems, newspaper and magazine advertising and information from auto clubs. Those with a

moderate interest in casino gambling generally consulted a larger variety of information sources

when planning brief vacations than those with low interest, but fewer information sources than the

Enthusiasts. Once again, this pattern was partially attributable to the relative affluence of the Casino

Gambling Enthusiasts.


Page 20


Sources of Information Consulted to Plan Longer Vacations By Interest in Casino Gambling Based on Visits to Casinos While Travelling & Not Travelling Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

0% 10% 20% 30% 40% 50% 60%

Past experience/ Been there before

Advice of friends/ relatives

A travel agent

Internet/ World Wide Web

An airline's reservation system

An auto club such as CAA/AAA

Articles in new spapers/ magazines

Travel information offices including printed materials

Advertisements in new spapers/ magazines

Travel information you received in the mail

Travel guides such as Fodor's or Michelin

Programs on television

Other mentions

Advertisements on television

Visits to trade/ travel/ sportsmen's shows

None of these


In the same manner as planning brief vacations, Casino Gambling Enthusiasts are more likely to rely on their past travel experience when planning longer

vacations. They also consult a larger variety of information sources when planning their longer vacations--especially travel agents, the Internet,

airline reservation systems, auto club information, and newspaper and magazine articles and

advertising. As with brief vacations, those with a moderate interest in casino gambling consult a larger variety of information sources when planning longer

vacations than those with low interest, but fewer information sources than the Enthusiasts.


Page 21


Interest in New Tourism Products By Interest in Casino Gambling (Part One of Two)

Percent Stating Attraction Would Make Them “A Lot More Interested” in Taking a Trip to OntarioBase: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

41%

36%

28%

21%

19%

18%

17%

21%

36%

32%

29%

22%

17%

18%

18%

18%

35%

28%

30%

21%

21%

19%

20%

18%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Overnight train tours through naturalterrain

Cruises on the Great Lakes (one or morenights)

Game parks or game preserves/ wildlifeviewing areas

A science and technology theme park suchas Epcot

An aboriginal attraction such as the IndianMuseum

A garden attraction such as CypressGardens or Tivoli Park

A heritage attraction with historicalreconstructions/ re-enactments

A movie theme park such as UniversalStudios or MGM


Respondents were asked whether each of 16 new tourism attractions would make them “a lot more interested” in taking a trip to Ontario. Among the

more popular tourism attractions, Casino Gambling Enthusiasts expressed increased interest in an

overnight train tour through natural terrain or a Great Lakes cruise. Those with a moderate interest in casino gambling also exhibited increased interest in Great Lakes cruises, but to a lesser degree than

the Casino Gambling Enthusiasts.


Page 22


Interest in New Tourism Products By Interest in Casino Gambling (Part Two of Two)

Percent Stating Attraction Would Make Them “A Lot More Interested” in Taking a Trip to OntarioBase: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

22%

17%

19%

16%

13%

11%

11%

10%

18%

17%

18%

15%

12%

10%

8%

8%

15%

16%

14%

13%

13%

9%

8%

8%

0% 10% 20% 30%

A cultural festival such as Mardi Gras

A children-oriented amusement park suchas Disneyland

A wine region such as Napa Valley or Coted'Or in France

A musical festival such as the Jazz Festivalin Montreal

A forestry or mining attraction such as minetours

A film festival such as the Cannes FilmFestival

A musical attraction such as the Rock'nRoll Museum, etc.

World-class trophy fishing tournaments


Among the new tourism attractions which were less popular, Casino Gambling Enthusiasts, and to a

certain extent those with a moderate interest in casino gambling, exhibited more interest than others in a cultural festival and wine tours. Combining these

activities with casino gambling may be an especially effective way to attract Casino Gambling Enthusiasts

to Ontario and Canada.


Page 23


Media Index for Print Media: Canada & United StatesBy Interest in Casino Gambling While Travelling & Not Travelling

Percent Reading Each Publication Type Among Those With an Interest in Casino Gambling By Percent Reading Each Type of Publication in General Market

Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

1.07

1.27

1.10

1.25

1.04

1.15

1.29

0.88

1.21

0.98

1.05

0.98

1.19

1.06

1.11

1.05

1.07

1.03

1.01

1.05

1.01

1.10

1.07

1.08

1.09

1.09

Daily newspaper

Travel section of daily newspaper

Weekend edition of newspaper

Travel section of weekend newspaper

Community newspaper

Other newspapers

Travel magazines such as Condé Nast Traveler

National Geographic

Sports magazines such as Sports Illustrated

Hobby magazines such as Gardening

News magazines such as Time or Newsweek

Fashion/ homemaking magazines such as Vogue

General interest magazines (The New Yorker)

Enthusiast

Moderate Interest

Media indexing for various types of print media (see Technical Note below)

suggests that the travel section of their daily or weekend newspapers and travel

magazines are the most efficient channels to reach Casino Gambling Enthusiasts. Enthusiasts are also more likely to read sports magazines and general interest

magazines. Those with a moderate interest in casino gambling are also more likely to read sports magazines and the travel section of their daily newspaper.

Technical NoteThe Media Index is computed by dividing the percent within

each segment routinely reading each publication by the percent in the total market who routinely reads each

publication. A score of 1.0 means that readership is the same as the total market. Index values above 1.0 indicate that the readership is above average while index values below 1.0 indicate that readership is below average. For example, an

index value of 1.2 means that people who were very interested in casino gambling were 20 % more likely to read

a particular publication than the general adult population.


Page 24


Media Index for Television Programs: Canada & United StatesBy Interest in Casino Gambling While Travelling & Not Travelling

Percent Reading Each Publication Type Among Those With an Interest in Casino Gambling By Percent Reading Each Type of Publication in General Market

Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

1.11

1.02

1.09

1.20

1.16

1.13

1.14

1.15

1.00

1.11

0.99

1.24

1.04

1.02

1.03

1.08

1.05

1.03

1.04

1.02

1.02

1.04

1.03

0.91

Movies shown on television

Nature shows

Early evening news shows

Professional sports events

Evening situation comedies

Evening drama

Late evening news shows

News magazine shows

Instructional or hobby shows

Morning news shows

Other television programs

Daytime television during weekdays

Enthusiast

Moderate Interest

Casino Gambling Enthusiasts were more likely to watch weekday daytime

television and television sports programming. This programming

represents the most efficient way to reach this target market. Enthusiasts were also more likely to watch late evening news, news magazines and

evening sitcoms and drama programming than those with a

moderate interest in casino gambling.

Technical NoteThe Media Index is computed by dividing the percent within

each segment routinely reading each publication by the percent in the total market who routinely reads each

publication. A score of 1.0 means that readership is the same as the total market. Index values above 1.0 indicate that the readership is above average while index values below 1.0 indicate that readership is below average. For example, an index value of 1.2 means that persons very interested in

casino gambling were 20 % more likely to read a particular publication than the general adult population.


Page 25


Percent Using Internet and Booking At Least One Trip Using the Internet

By Interest in Casino GamblingBase: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

57%

59%

48%

22%

20%

16%

Enthusiast

ModerateInterest

Low Interest

Enthusiast

ModerateInterest

Low Interest

Those with a moderate or high interest in casino gambling were slightly more likely

to use the Internet as an information source and to have booked a trip through the Internet than those with a low interest in casino gambling. The Internet appears

to be a moderately effective communication channel to reach both

Casino Gambling Enthusiasts and those with a moderate interest.

Uses InternetFor Research

(Any Topic)

Booked TripUsing Internet(Last Two Years)


Page 26


Destination Image Mapping- Technical Explanation -

Destination Offers Opportunities for Nature & Outdoor Activities ---->

Des

tinat

ion

Offe

rs O

ppor

tuni

ties

for C

ultu

re &

Ent

erta

inm

ent

----> Culture &

Entertainment Only

Neither Culture/ Entertainment nor

Nature/Outdoor Activities

Nature & Outdoor Activities Only

Culture/Entertainment &

Nature/Outdoor Activities

Respondents were asked to assess the image of Canada and Ontario on a 10-point rating scale for 25 image attributes. These ratings were factor analysed to identify general image dimensions upon which Canada and Ontario

were evaluated (See Appendix Eight for more details). The values of Canada and Ontario were plotted on a destination map to indicate the positioning of Canada for each type of respondent. If Canada or Ontario is found in

the upper left quadrant it is considered to offer excellent opportunities to experience culture and entertainment activities, but less likely to provide opportunities to experience nature or participate in outdoor activities. If Canada or Ontario is found in the lower right quadrant, it is considered to offer excellent opportunities to experience nature

and participate in outdoor activities, but fewer opportunities for cultural experiences or entertainment. When Canada or Ontario is found in the upper right quadrant, it is perceived as a hybrid destination offering opportunities for both

nature/outdoor experiences and culture/entertainment experiences. On the other hand, when Canada or Ontario is found in the lower left quadrant, it is either not well known or has weak imagery on both image dimensions.

HybridDestination

UndefinedDestination


Page 27


Canada and United States

Canadian Vacation ImageryBy Interest in Casino Gambling While Travelling & Not Travelling

Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years Able to Rate Canada On One Plus Attributes : Canada & U.S. (Mailback Survey): Circle Size Denotes Size of the Market


HybridDestination


Moderate InterestIn Casino Gambling

Canadians

Des

tinat

ion

Offe

rs C

ultu

re/E

nter

tain

men

t >

There was little variation in the impressions held of Canada by the level of interest exhibited in casino gambling.

Therefore, while Canadians have a more favourable impression of Canada

as a cultural and entertainment destination than Americans, the

impressions of Canada held by those with a low, moderate and high interest in casino gambling is more or less the

same within each country.

Casino Gambling EnthusiastsCanadiansLow Interest in

Casino Gambling Canadians

Moderate InterestIn Casinos Americans

Low InterestIn Casinos Americans

Casino Gambling

EnthusiastsAmericans


Page 28


Canada and United States

Ontario Vacation ImageryBy Interest in Casino Gambling While Travelling & Not Travelling

Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years Able to Rate Ontario On One Plus Attributes : Canada & U.S. (Mailback Survey): Circle Size Denotes Size of the Market


HybridDestination


Des

tinat

ion

Offe

rs C

ultu

re/E

nter

tain

men

t >

In Canada, Casino Gambling Enthusiasts had a more positive impression of Ontario on the nature and outdoor dimension than those with a moderate

or low interest in casino gambling. Among Americans, Casino Gambling Enthusiasts and

those with a moderate interest in casino gambling were slightly more likely to view Ontario as a

place offering greater opportunities to experience nature and the outdoors.

Low Interest in Casino Gambling

Canadians

Moderate InterestIn Casino Gambling

Canadians

Casino Gambling EnthusiastsCanadians

Moderate InterestIn CasinosAmericans

Low InterestIn Casinos Americans

Casino Gambling

EnthusiastsAmericans


Page 29


Overall Market Potential

Interest in Casino Gambling: CanadaInterest in Casino Gambling By Likelihood of Travel Within Canada (Indexed)

Percent of Population (18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

1.40

1.28

0.88

0.99

0.85

0.83

1.18

1.19

0.91

1.11

0.73

0.97




Affluent Families









The Overall Market Potential Index is constructed to identify those segments which are

most likely to be responsive to marketing, advertising and promotional initiatives designed

to promote casino gambling. This Index indicates that, in Canada, five affluent segments represent the primary target markets for such initiatives.

The Affluent Young Singles and Affluent Young Couples score especially well on this index and

should be considered prime markets for domestic casino-related tourism marketing.

Technical NoteThe Overall Market Potential Index is computed by multiplying the percent who exhibit an Interest in Casino Gambling related vacation

products and the percent likely to take a trip in Canada during the next two years. This index is standardized such that values above 1.0 reflect above average market potential and values below one

reflect below average market potential.


Page 30


Overall Market Potential

Interest in Casino Gambling: United StatesInterest in Casino Gambling By Likelihood of Travel To Canada (Indexed)

Percent of Population (18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

1.21

1.41

0.94

1.17

0.62

0.84

1.28

1.05

0.75

1.52

0.85

0.64




Affluent Families









The Overall Market Potential Index for the United States shows a similar pattern to the one in Canada. The five affluent segments

comprise the primary target market for casino-related tourism marketing and advertising. The Affluent Young Couples and Affluent Mature and Senior Couples score especially well on this index and should be the primary target

markets for U.S. campaigns and promotional activities. The other three affluent segments (Affluent Young Singles, Affluent Families, Affluent Mature Singles) also do well on this

dimension and should be considered secondary markets for such promotional activity.

Technical NoteThe Overall Market Potential Index is

computed by multiplying the percent who exhibit an Interest in Casino Gambling

related vacation products and the percent likely to take a trip in Canada during the

next two years. This index is standardized such that values above 1.0 reflect above

average market potential and values below one reflect below average market potential.

Travel Activities & Motivation Survey

Interest InCasino Gambling

Profile Report

May, 2001TAMSTAMSTAMSTAMSTravel Activities &Motivation Survey

Travel Activities & Motivation SurveyPrepared by:

Lang Research Inc.on behalf of

Atlantic Tourism PartnershipCanadian Tourism Commission

Department of Canadian HeritageGreater Toronto Hotel Association

Manitoba Ministry of Industry, Trade & TourismNorthern Ontario Heritage Fund

Ontario Casino CorporationOntario Ministry of Agriculture, Food & Rural Affairs

Ontario Ministry of Tourism, Culture & RecreationOntario Tourism Marketing Partnership

Parks CanadaSaskatchewan Tourism Authority

Tourism B.C.Tourism Toronto

Yukon Government Department of Tourism


Interest in Casino Gambling- Key Findings -

In general, Americans are much more interested in casino gambling than Canadians. Thus, 47.3 % of American travellershave at least a moderate interest in casino gambling, while 38.2 % of Canadians exhibit a moderate interest. Moreover, Americans were 149 % more likely than Canadians to be classified as Casino Gambling Enthusiasts. In part, this may reflect the fact that there are a greater number of casinos in the United States than in Canada.

There are important demographic similarities and differences between Americans and Canadians who share an interest in casino gambling. In both countries, the level of interest in casino gambling is highest among the affluent. However, American male travellers were more likely to be Casino Gambling Enthusiasts than American female travellers, while in Canada there was no difference between males and females.

In Canada, the likelihood that a trip will be taken domestically over the next two years is not associated with interest in casino gambling. Alternatively, in the United States, the likelihood that a trip will be taken to Canada over the next twoyears increases from 35 % among those with low interest in casino gambling to 44 % among those who are Casino Gambling Enthusiasts.

Casino Gambling Enthusiasts were more likely to have sought out vacation experiences associated with personal indulgence (e.g., to experience the good life, visiting a casino, experiencing city life such as nightlife). They were also more likely to have pursued sports and learning vacation experiences (e.g., to participate in a hobby or sport). Advertising and promotional materials designed to promote casino gambling-related tourism should emphasize the opportunities for entertainment and personal indulgence offered by the destination.

Individuals who have an interest in casino gambling were more likely to be active in outdoor activities while travelling. This is especially apparent among Casino Gambling Enthusiasts, who tend to be more affluent and hence more active in outdoor activities while travelling. Casino Gambling Enthusiasts were especially likely to be interested in fishing, golfing water sports and team sports. Providing opportunities to participate in these activities as part of casino gambling tourism packages may be especially effective, particularly for affluent travellers.


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Interest in Casino Gambling- Key Findings (Continued) -

As one would expect, Casino Gambling Enthusiasts were more likely to have visited a racetrack. As well, Casino Gambling Enthusiasts also attend sports events and enjoy shopping/dining. Combining casino gambling with opportunities to attend sports events, gamble in some other way, or to dine and shop may be particularly appealing to the Casino Gambling Enthusiasts.

Casino Gambling Enthusiasts were more likely to rely on their own experience when planning their vacations. If their previous experiences were positive, they might return or seek a similar destination. They also consulted a larger variety of information sources and especially friends and family, travel agents, the Internet, newspaper and magazine articles, airline reservation systems, newspaper and magazine advertising, and information provided by auto clubs.

In terms of new tourism products, Casino Gambling Enthusiasts were most interested in train trips through natural terrain, Great Lakes cruises, wine tours and cultural festivals. Casino Gambling Enthusiasts may be responsive to tourism packages that combine casino gambling with these types of events and tours.

Casino Gambling Enthusiasts, and to a certain extent those with a moderate interest in casino gambling, like to read the travel section of their daily newspaper and travel magazines. They are also relatively heavy viewers of professional sports on television, and daytime television. These may be the most efficient media channels to reach this audience.


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TAMSTAMSTAMSTAMSTravel Attitudes &Motivation Survey

Intérêt à l’égard des jeux de casino- Principales conclusions -

En général, les Américains se montrent beaucoup plus intéressés aux jeux de casino que les Canadiens. Ainsi, 47,3 % des voyageurs américains ont au moins un intérêt modéré à l’égard des jeux de casino, comparativement à 38,2 % chez les Canadiens. De plus, les Américains ont 149 % plus de chances que les Canadiens d’être classés comme des amateurs de jeux de casino. En partie, ces statistiques peuvent refléter le fait que les États-Unis comptent davantage de casinos que le Canada.

Il existe d’importantes similarités et différences démographiques entre les Américains et les Canadiens qui partagent un intérêt à l’égard des jeux de casino. Dans les deux pays, le niveau d’intérêt à l’égard des jeux de casino est plus élevé parmi les gens plus fortunés. Cependant, les voyageurs mâles américains sont davantage susceptibles de constituer des amateurs de jeux de casino que les femmes américaines, alors qu’au Canada, il n’y a pas de différence entre les hommes et les femmes.

Au Canada, la probabilité d’effectuer un voyage au pays au cours des deux prochaines années n’est pas liée à un intérêt quelconque à l’égard des casinos. Par contre, aux États-Unis, la probabilité d’effectuer un voyage au Canada au cours des deux prochaines années passe de 35 % parmi ceux ayant un faible intérêt pour les jeux de casino à 44 % parmi ceux qui sont considérés comme des amateurs de jeux de casino.

Les amateurs de jeux de casino sont davantage susceptibles de rechercher des expériences de vacances associées à des plaisirs personnels (comme goûter aux plaisirs de la belle vie, visiter un casino, faire l’expérience de la vie nocturne dans une grande ville, etc.). Ils sont également davantage susceptibles de rechercher des expériences de vacances liées aux sports ou à des occasions d’apprentissage (comme s’adonner à un passe-temps ou pratiquer un sport). Le matériel de promotion et de publicité conçu pour encourager le tourisme lié aux jeux de casino devrait mettre l’accent sur les possibilités de s’amuser et de profiter de plaisirs personnels qu’offrent le casino.

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TAMSTAMSTAMSTAMSTravel Attitudes &Motivation Survey

Intérêt à l’égard des jeux de casino- Principales conclusions (suite) -

Les personnes qui s’intéressent aux jeux de casino sont davantage susceptibles de participer à des activités extérieures durant leur séjour. Cela semble particulièrement vrai chez les amateurs de jeux de casino, qui sont souvent plus fortunés et qui, par conséquent, tendent à participer davantage à ce type d’activités durant leur séjour. Les amateurs de jeux de casino sont particulièrement susceptibles de s’intéresser à la pêche, au golf, aux sports nautiques et aux sports d’équipe. Inclure dans lesforfaits de voyage au casino des possibilités de participer à ces activités pourrait se révéler très efficace, surtout avec les voyageurs plus fortunés.

Comme on pouvait s’y attendre, les amateurs de jeux de casino sont davantage susceptibles d’avoir déjà visité une piste de course. De plus, ils assistent également à des événements sportifs, en plus de s’adonner au magasinage et de manger au restaurant. Combiner les jeux de casino avec des occasions d’assister à des événements sportifs, et de jouer d’une autre façon, de faire du magasine ou de s’offrir un repas au restaurant pourrait se révéler particulièrement attrayant pour les amateurs de jeux de casino.

Les amateurs de jeux de casino sont davantage susceptibles de se fier à leur propre expérience pour planifier leurs vacances. Sileurs vacances précédentes ont été réussies, ils auront tendance à retourner au même endroit ou à chercher une destination similaire. Ils consultent également un large éventail de sources d’information, dont les amis et la famille, les agents de voyage, l’Internet, les articles de journaux et de magazines, les systèmes de réservation des compagnies aériennes, les publicités dans les journaux et les magazines et les clubs automobiles.

Quant aux nouveaux produits touristiques, les amateurs de jeux de casino sont davantage intéressés par les voyages en train à travers des paysages naturels, les croisières sur les Grands Lacs, les tournées vinicoles et les festivals culturels. Ils pourraient être intéressés par des forfaits de voyage combinant les jeux de casino avec ce type d’événements et d’activités.

Les amateurs de jeux de casino, et dans une certaine mesure les personnes ayant un intérêt modéré dans les jeux de casino, aiment lire la section voyages des journaux quotidiens et des magazines de voyage. Ils écoutent également beaucoup d’émissions sportives à la télévision de même que d’autres émissions diffusées durant la journée. La télévision pourrait par conséquent être le média le plus efficace pour rejoindre cet auditoire.

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Table of Contents Executive Summary iiConclusions Principales ivBackground 1Casino Gambling Interest Index: Method 2Interest in Casino Gambling: Canada vs. U.S. 3Interest in Casino Gambling: Canada By Province 4Interest in Casino Gambling: U.S. By Region 5Interest in Casino Gambling: By Demographics 6Interest in Casino Gambling: By Market Segment 8Interest in Casino Gambling: Travel in Canada 10Intentions to Travel to Canada in Next Two Years 13General Vacation Experiences Sought 14Outdoor Activities Sought During Pleasure Travel 15Cultural and Entertainment Activities Sought 16Accommodation-Related Activities Sought 17Day and Overnight Touring Activities Sought 18Sources of Information Consulted to Plan Vacations 19Interest in New Tourism Products 21Media Index for Print Media 23Media Index for Television Programs 24Percent Using Internet to Research or Book Trips 25Destination Image Mapping 26Overall Market Potential Index By Segment 29Technical Appendices


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7) Information about CBRE’s Global Gaming Group and their casino industry qualifications.

CBRE Qualifications and CV for Jacob M. Oberman

CV for Jacob M. Oberman of CBRE Mr. Oberman has a wide array of experience in the gaming and hospitality industry, including finance, accounting, casino and hotel operations. Mr. Oberman has developed relationships and regularly converses with many of the casino industry’s and investment community’s brightest minds and most creative thinkers. Mr. Oberman believes providing clients with the most thoughtful and innovative ideas will ultimately help lead to optimal results when times are good or bad. Mr. Oberman has been Director of Gaming Research & Analysis with CB Richard Ellis’ Global Gaming Group based in Las Vegas, Nevada since 2004. In addition to providing analytical support for over $1 billion of casino transactions, Mr. Oberman has been the lead analyst or participated in approximately 40 casino and/or retail feasibility studies, property market assessments and economic assessments for commercial casinos, tribal casinos and racinos. Mr. Oberman has completed analyses for many markets that have recently introduced gaming or in are in various stages of legalizing/expanding gaming including Pennsylvania, Kansas, Maryland, Florida, Wisconsin, and Pennsylvania to name a few. Along with Brent Pirosch, the Global Gaming Group’s Director of Gaming Consulting Services, Mr. Oberman has completed assignments for major casino companies, investment banks, tribal nations, developers and governments. Most notably, the Global Gaming Group advised the Government of Singapore on the appropriate residual land valuation for two integrated resorts in 2005. These integrated resorts, at a cost of over $5 billion each, are the two largest casino developments, by cost, in the world. Also, of note, Mr. Oberman has co-authored an in-depth forecast for the Las Vegas Strip in both 2009 and 2010 for the subsequent years. In both of these reports, an analysis was conducted on the economic, operational and competitive drivers that have impacted the Las Vegas Strip through its history, and extrapolated those factors into a forecast for the following year. The accuracy of the 2009 report, which forecasted 2010 revenue correctly, was noted in an October 27, 2010 article in the Las Vegas Sun. Prior to joining CB Richard Ellis, Mr. Oberman was a Financial Analyst at The Bellagio in Las Vegas. In that role, he was responsible for property budgeting, performing ad hoc analyses, maintaining market share databases, and evaluating property financial performance. Mr. Oberman holds a Bachelor of Science Degree from the Cornell University’s School of Hotel Administration, where he graduated with honors.


CBRE’s Global Gaming Group (GGG) Consulting Client List (partial client list) Archon Capital Brookfield Real Estate Partners Crown Casinos Goldman Sachs Gordon Gaming Corporation Edge-Star Partners Fillmore Capital Focus Group Harrah’s Entertainment Isle of Capri MGM Resorts International Macquarie Bank Marriott International Marvel Gaming Mizuho Corporate Bank Morgan Stanley Pinnacle Entertainment Societe Generale Corporate & Investment Banking Government of Singapore St. Croix Chippewa Indians Station Casinos Whitehall Ltd. WAICCS Las Vegas York Capital


CBRE’s Global Gaming Group (GGG) Consulting Case Studies Singapore Market Assessment/Land Valuation (2005) – GGG analyzed the potential of Singapore’s gaming market and created financial models based on that market assessment to advise the Government on the appropriate residual land value of the proposed sites. To calculate the gaming market potential, GGG conducted a site visit and compared the opportunity to comparable gaming developments in the region, analyzed population and socio-demographic data for the target markets, and identified and analyzed existing tourist visitation trends. Upon completion of the market assessment, GGG generated detailed financial models for the project that factored in revenue and expenses for all revenue-generating departments, including hotel, food and beverage, casino, and retail. A discounted cash flow analysis was then used to discount future cash flows back to the present. The present value of the cash flows was then deducted by development costs/developer profit to arrive at an appropriate residual value for the land/gaming rights. It was the gaming revenue and development potential of the site that provided the basis for GGG’s valuation of the underlying land. GGG worked in conjunction with the Singapore Government and local Singapore real estate experts. Maryland Slot Parlor Feasibility Study (2008) – GGG conducted a feasibility study for a private client looking to operate a slots-only gaming facility in Maryland. In the study, GGG projected revenue based on the gaming spend habits of populations living around similar gaming facilities using the spend-per-distance and income adjusted adult methodology. GGG had to make adjustments to its projections to reflect the reality of a difficult housing market and economy. In addition to gaming revenue projections, GGG projected non-gaming revenue and total property EBITDA. GGG also provided an analysis of the Maryland’s gaming legislation, and how that would impact revenue and profitability. Las Vegas Locals Market Economic Analysis (2007) – In this study performed for a group of investment funds analyzing whether to make a debt investment in a portfolio of Las Vegas locals’ casinos, GGG undertook a detailed analysis of the local Las Vegas economy. In doing so, GGG identified the key economic factors that impact gaming spend – home prices, employment, population, personal income, gas prices, etc. While employment figures historically had the biggest impact on gaming spend, it was noted that declining home prices would have a much greater impact on gaming spend going forward. Morocco Market Assessment (2008) – GGG analyzed the gaming market and the financial feasibility of developing a massive multi-use project in Morocco. The market analysis required an extensive review of the Morocco market in terms of tourist,


development and economic activity. Part of this assessment included surveying existing hotel and gaming developments. The financial and feasibility work of the assignment required us to identify the most robust mix of hotel, casino, retail, food and beverage and other amenities for the client, given the client’s financial capacity and the direction of the market. GGG developed detailed departmental financial proformas and cash flow projections for the entire project and each of the development scenarios. Wisconsin Tribal Casino Resort Feasibility Study (2007) – GGG have conducted numerous feasibility studies, but this assignment not only involved projecting revenue and EBITDA for five years, it also involved sizing, planning the appropriate amenities, and phasing the facility. In the study, GGG calculated the appropriate square footage for the casino, the type of restaurants and number of seats, the size of the entertainment venue, and the number and quality of hotel rooms. Additionally, per the client’s request, GGG conducted a full-fledged analysis of an indoor water park hotel that identified the sizing of the facility, the amenity’s financial performance, and its potential impact on gaming spend. U.S. Virgin Islands Resort Project (2004) – GGG analyzed the Caribbean market and the financial feasibility of developing a condo-hotel resort project on St. Croix. The market analysis required an extensive review of the Caribbean market in terms of tourist, development and economic activity. Part of this assessment included surveying existing condominium and golf course developments. The financial and feasibility work of the assignment required us to identify the most robust mix of hotel-condo, hotel, timeshare, casino, retail, food and beverage and other amenities for the client, given the client’s financial capacity and the direction of the market. GGG developed detailed departmental financial proformas and cash flow projections for the entire project and each of the development scenarios. Las Vegas Strip Redevelopment (2004) – GGG analyzed the Las Vegas market and the financial feasibility of redeveloping an existing hotel casino. Plans called for the development of a resort project that had 3,000 hotel rooms, 200,000 square feet of meeting space, a casino, several food and beverage outlets, and over 500,000 square feet of retail space. GGG devised the financial models for this project based on the unique characteristics of the site (location, size, existing and future development, etc.), and included detailed projections for each area of the project.


Florida Retail Development Project (2007) – GGG analyzed the retail market for a development by a major gaming operator. The market analysis required a comprehensive review of the retail market in terms of tourist and local spending and visitation patterns to determine the ideal market space of the project. This analysis led to the development of a merchandising plan appropriate to the project and the marketplace. The financial and feasibility work of the assignment required us to identify the rental rates and rent structure best suited for the project, given the client’s financial capacity, construction costs and the direction of the market. GGG developed financial proformas and cash flow projections for the project.

Documents

Global gaming responses to 12-7 meeting