#M-11-1#BELENOVA

#LEONT’EV

OFBARRIERS

C A S I N OBARRIERS

OF

MARKETMARKET

THETHETHE ANALYSIS

FOR THEENTRY AND EXIT

THE TOP CASINOS IN LAS VEGASTHE TOP CASINOS IN LAS VEGAS

THE BELLAGIOMANDALAY BAY RESORT & CASINOTHE MGM GRANDCAESARS PALACETHE LUXOR HOTEL & CASINO

INTRODUCTIONINTRODUCTION

T

R

M

T

RANSPARENT (?)

EGULATED

ONITORED

AXED

INTRODUCTIONINTRODUCTION

> NYSE / NASDAQ > TAX: 6,75% - 55% > ITS OWN BUSINESS CYCLE > A VERSION OF IRRATIONAL EXUBERANCE

88NON-STRATEGIC!

!

BARRIERS

!

!

BARRIERS

> MARKET CAPACITY

CAPITAL REQUIREMENTS <

CRIMINALITY <

> ABSOLUTE COST ADVANTAGE

RELATIVE COST ADVANTAGE <

> ADMINISTRATIVE BARRIERS [GOVERNMENT REGULATIONS]

MARKET INFRASTRUCTURE <

> QUALITY OF GOODS & REPUTATION OF A FIRM

LICENSING PROCESSUPFRONT CAPITAL COSTS

DESIGN DEVELOPMENT CONSTRUCTION

HIGH LEVEL OF TAXATION

NON-STRATEGIC BARRIERSNON-STRATEGIC BARRIERS

CITYCENTER - $8,5 BILLION

CONSTRUCTION

CAPITAL REQUIREMENTSCAPITAL REQUIREMENTS

TECHNOLOGICAL INNOVATIONS

GAMING EQUIPMENT

WYNN ENCORE - $2,5 BILLIONRED ROCK- $1 BILLION

OR JUST LAND - $1,2 BILLION

ADMINISTRATIVE BARRIERSADMINISTRATIVE BARRIERS

> LICENSING PROCESS > NEVADA GAMING COMMISSION > STATE GAMING CONTROL BOARD > AGA: AMERICAN GAMING ASSOCIATION > NRS: NATIONAL REGULATORY SERVICES > TYPES: RESTRICTED & NON-RESTRICTED

> LICENSING PROCESS > NEVADA GAMING COMMISSION > STATE GAMING CONTROL BOARD > AGA: AMERICAN GAMING ASSOCIATION > NRS: NATIONAL REGULATORY SERVICES > TYPES: RESTRICTED & NON-RESTRICTED

55STRATEGIC!

!

BARRIERS

!

!

BARRIERS

> LIMIT PRICING

EXCESS CAPACITY <

> PRODUCT DIFFERENTIATION

LONG-TERM CONTRACTS: < SUPPLIERS & CUSTOMERS

> REPUTATION OF ‘TOUGH’ COMPETITOR

CULTURAL LANDMARK

STRATEGIC BARRIERS

PRODUCT DIFFERENTIATION

THE KILLING (OFF)

$100,000 ENTERTAINMENT EVENTS

$50,000

STRATEGIC BARRIERS

COMMENTS

WELCOME

AND

ARE

QUESTIONS