COMPARING THE SUMNER COUNTY SUBMISSIONS

William R. EadingtonDecember 1, 2010

SIMILARITIES BETWEEN THE APPLICANT SUBMISSIONS

• Applicant companies have similar histories, similar scope of casino operations

• Similar regional presence in their respective markets– Oklahoma for Global Gaming Solutions– Iowa and Louisiana for Peninsula

• Similar target audiences, with respect to existing casino operations– Roughly three star hotel operations, similar in food

offerings• Both applicants have some experience with racinos

(Remington Park and Evangeline Downs)• Both have developed greenfield casino sites into

successful casino operations• Did they use the same architects?

– Similar visualization of what a Kansas Prairie-inspired casino should look like

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BOTH APPLICANTS OPERATE ATTRACTIVE FACILITIES

ELSEWHERE

http://www.flickr.com/photos/palmsrick/3748795064/�

ICE HARBOR DEVELOPMENT, DUBUQUE (2009)

BOTH APPLICANTS OFFER INTERESTING “SWEETENERS”

FOR SUMNER COUNTY

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GLOBAL GAMING SOLUTIONS• All data taken from www.casinocity.com• WinStar World Casino (Thackerville, OK)

– Proximity to Dallas market; about a one hour drive– 5,800 slots, 114 table games, 395 hotel rooms, 380,000 sq. ft. of

gaming space; 395 hotel rooms & suites• Includes all restaurant, lounge, back-of-house in sq. footage

computation– Claim of being 3rd largest casino in the world (probably based on

slot count or casino square footage, not revenues or visitation or CAPEX)

– Gaming revenues: perhaps $300 m to $400 m (consultant’s estimate)

• Riverwind Casino (Norman, OK)– 2,498 slots and 55 tables, 219,000 sq.ft. of gaming space; 100 hotel

rooms => gaming revenues of perhaps $125 m to $175 m• Remington Park (Oklahoma City, OK)

– 750 slot machines, 55,000 sq.ft. of gaming space; no hotel rooms => gaming revenues of $74.5 m (12 months ending 8-10)

• Treasure Valley Casino (Davis, OK)– 402 slot machines, 4 table games, 9,440 sq.ft. of gaming space; 59

hotel rooms => gaming revenues of perhaps $10 m to $15 m

PENINSULA GAMING• All data taken from www.casinocity.com• Diamond Jo Dubuque

– 975 slot machines, 17 table games; 35,000 sq. ft. of gaming space; no hotel => gaming revenues $68.4 m (FY 2010)

• Diamond Jo Worth – 965 slot machines, 33 table games; 38,500 sq. ft. of gaming

space; 102 hotel rooms => gaming revenues of $80.2 m (FY 2010)

• Amelia Belle– 822 slot machines, 17 table games; 30,000 sq. ft. of gaming

space; no hotel => gaming revenues of $44.4 m for 12 months ending 9/30/10

• Evangeline Downs– 1,627 gaming machines, no table games; 80,000 sq. ft. of

gaming space; no hotel => gaming revenues of $113.5 M for 12 months ending 9/30/10

OTHER OBSERVATIONS ON GLOBAL GAMING SOLUTIONS

• Tribal casinos are self-regulated– They have not been subject to state regulation

• No direct experience to date in running an Auto Racing Facility– They will have to hire the needed expertise

• Race Track is more than 60 months (5 years) out on submitted plans; funded by outside partners

• Tax differentials between Kansas and Oklahoma create incentives to redirect customers from Kansas to Oklahoma casinos– However, given regional nature of markets, customers are

going to stay within 100 mile radius of their residences => it may be hard to persuade them to migrate to a lower tax environment

• I-35 Corridor argument is a bit contrived– The Interstate itself is not a tourist attraction– The company does understand the local TX, OK market

• I-35 destination market experience.

• Proven development and operational expertise in destination properties.

• Substantial financial capability.

• Proven record in economic development in local communities.

• Proven record in expanding facilities to extract market potential.

3. Key Advantages of Global Gaming as the State’s Operator

Wellington, Sumner County, Kansas.October 28, 2010

INTERESTING COINCIDENCE, BUT I-35 IS NOT A DESTINATION IN ITS OWN RIGHT

IS THE I-35 CORRIDOR A STRATEGIC ADVANTAGE?

OTHER OBSERVATIONS ON PENINSULA GAMING

• Experience with regulatory bodies in Iowa and Louisiana

• No direct experience to date in running an Equestrian Events Center– They will have to hire the needed expertise

• Distance from their other casinos will limit their ability to cross-market

• The indictment issue in Iowa should be taken into consideration by the Review Board

AN UNORTHODOX SOURCE OF INFORMATION:

WWW.TRIPADVISOR.COM

TRIPADVISOR COMMENTS ON WINSTAR WORLD CASINO

QUALIFIER: POSSIBLE LOADING OF RESULTS FROM THE MARKETING DEPARTMENTS OF CASINOS REFERENCED. ALSO, CASINO PATRONS CAN BE A CRITICAL BUNCH OF PEOPLE.

• Trip Advisor rating at about 2.5 (out of 5); 35 reviews• Lots of complaints on tight slots, 50 cents to $1 ante per hand at

Blackjack– Some note that this is the norm in Oklahoma– Characteristics of a monopoly situation, i.e. used in Morongo Casino in

Palm Springs, CA (closest to LA market) before competition became more heated in that area

• Very large casino but cheap construction (industrial style building, poor AC)

– World Cities theming is not very effective• Numerous complaints on the food; some compliments on free coffee

& soft drinks on casino floor– Complaints about unfriendly employees

• Numerous customers compared Winstar against Shreveport (3 hours drive from Dallas, compared to 1 hour)

– On balance, Shreveport comes out better in comparison

TRIPADVISOR COMMENTS ON RIVERWIND CASINO

• TripAdvisor rating at about 2.0 (out of 5); 18 reviews

• Lots of complaints on tight slots, 50 cents ante per hand at Blackjack, expensive mixed drinks (though free soft drinks and coffee)– Limited service from casino employees

• Some compliments on the facility and the hotel rooms; none on the gambling conditions (too expensive, cannot win, etc.)

• Cigarette smoke, poor ventilation mentioned in some references

TRIPADVISOR COMMENTS ON REMINGTON PARK

• TripAdvisor rating at 5 (out of 5); 1 review• Patron liked the Silk’s Restaurant,

ambience; surprisingly pleased

TRIPADVISOR COMMENTS ON PENINSULA CASINOS

• No reviews on the Dubuque or Worth casinos– 4 reviews on the Woodfire Grill Restaurant

at Diamond Jo Dubuque (average score 4.5 out of 5)

• No reviews on Evangeline Downs or on Amelia Belle

TRIPADVISOR COMMENTS ON OTHER REGIONAL CASINOS

• Ameristar Casino, Kansas City, MO – Rating of about 4.0, 27 reviews– Comments mainly on the hotel

• Argosy Casino, Kansas City, MO – Rating of about 4.0, 31 ratings– Comments mainly on the hotel

• Eldorado Casino, Shreveport, LA– Rating of about 4.0, 84 ratings– Comments mainly on the hotel

• Sam’s Town, Shreveport, LA– Rating of about 3.5, 86 ratings– Complaints over smoke in casino, unfriendly staff, charging for internet,

etc.• Mohegan Sun, Uncasville, CT

– Rating of about 4.0, 624 ratings– Some reviewers mixed up Foxwoods and Mohegan Sun

• Foxwoods, Ledyard, CT– Rating of about 3.0, 37 ratings– Complaints over tight machines, dirty bathrooms, poor service

MAJOR AREAS FOR COMPARISON OF THE APPLICANTS

• Does an Auto Racing Facility have a stronger or weaker attractiveness to a Sumner County casino resort than an Equestrian Center?– Is the difference in planned development and opening of these

facilities an important consideration?• Is the revenue generating capability of the Mulvane location

over Wellington an important consideration?– There is going to be some difference, ceteris paribus, but one can

dispute the magnitudes• Are there marked differences between the two applicants in

terms of the physical facilities offered?– Does either one have the capability to outdraw the other if all other

influences were the same• Are there marked differences between the two applicants in

terms of management styles and philosophies?– Can the marketing or HR strategy of one company lead to better

performance than the other?

THE TRAVEL TIME ISSUE• 14 miles in difference between Exit 19 and Exit 33 translates into about an

additional 12 minutes of travel time in each direction (11 minutes at 76 miles per hour; 10 minutes at 84 mph)

• Survey results (such as those provided to Global Gaming by Jayhawk Consulting Services) are not good indicators of how people are actually going to act

– Far better to observe behavior than to ask people how they would behave in a hypothetical situation

• Assume increased travel time is 25 minutes per trip (round-trip) for Mulvane v. Wellington casino

– If the alternative Site B in Mulvane is selected, then assume all the numbers below should be cut by 40% to 50%

• For someone who would travel 4 times per month (48 times per year) to a Mulvane casino from Wichita is going to have to travel a total of 20 hours more per year, and will have to travel about 1,350 more miles per year to get to a Wellington casino site

– At a cost of $0.50 per mile for transport, this would amount to an additional $675 per year on gasoline, maintenance, wear-and-tear, etc.

– If travel time is valued at $18.81/hour (average wage rate in Wichita), then the additional travel time cost to the individual would amount to an additional $375 per year. (Note: the assumption is that the opportunity cost of driving time is the wage rate, i.e. the person could be working instead, or values his free time at that rate.)

• Because it is more expensive to go to a casino in Wellington relative to Mulvane (at the rate of about $22 per trip, based on the above assumptions), it is reasonable that Wichita consumers would make fewer trips to Wellington, all other considerations held constant

Wells Gaming Research

Wells Gaming Research