Gaming RevenueProjections for

South-Central Kansas

Presentation to Lottery Gaming Facility Review Boardby Will Cummings / Cummings Associates

December 1, 2010

1

Will E. Cummings

Cummings Associates

2

Questions, Please!

- at any time -

3

Overview

Methodology (in brief)

. . . Distance Matters . . .

Projections:

Global Gaming / WinSpirit

Peninsula / Kansas Star

4

Methodology

“Gravity Models”

Residents

“Near” Neighbors

Traffic Intercept

14-15,000 vehicles / day

5

Gravity Models – Overview

Location

Location

Size

Everything Else

6

Gravity Models – Overview

Location

Location

Size

Everything Else

7

“Everything Else” 1

Micro-Access

Spaciousness

Slot Mix

Fit & Finish

Management

Marketing / Player Rewards

8

“Everything Else” 2

Hotel

Structured Parking

Variety of Dining Choices

Retail

Entertainment

“Brand”

9

“Everything Else”

=“Power Ratings”

10

11

Exhibit A-13: Gaming-Device Spending Ratios in Major US Markets(Total Annual Spending on Slots and/or VLTs Per "Distance-Adjusted" Adult in FY2010)

Northeastern Medium to Large Rural Markets

US Markets Midwest (+/-) Markets West & Midwest

Deadwood, SD $909 e

S Dakota Indian avg. (8) $873 e

Upstate Michigan avg. $840 e

Kansas Natives avg. $818 e

Mississippi / Louisiana $809 e(average of MANY facilities)

Diamond Jo N'wood, IA $793

Iowa Natives average $784 e

Terribles Lakeside. IA $773

Upstate Wisconsin avg. $770 e

Emmetsburg, IA $765

Colorado (2) $762

Horseshoe / Bluffs Run, IA $749 Dodge City, KS $747

Dubuque Mystique, IA $743

Dubuque Diamond Jo, IA $741

Riverside, IA $740

Harrahs NKCMO $734 IOC Boonville, MO $735 o

Niagara (NY) casino $729 e Albuquerque, NM avg. $729 e IOC Marquette, IA $730 o

Ameristar Council Bluffs, IA $727

Other New Mexico avg. $718 e

Atlantic City, NJ avg. $719 Mt. Pleasant, MI $718 e

IOC Waterloo, IA $715 Wisconsin Dells $715 e

Argosy Riverside, MO $707

Midwest Standard +10%

12

Iowa Natives average $784 e

Terribles Lakeside. IA $773

Upstate Wisconsin avg. $770 e

Emmetsburg, IA $765

Colorado (2) $762

Horseshoe / Bluffs Run, IA $749 Dodge City, KS $747

Dubuque Mystique, IA $743

Dubuque Diamond Jo, IA $741

Riverside, IA $740

Harrahs NKCMO $734 IOC Boonville, MO $735 o

Niagara (NY) casino $729 e Albuquerque, NM avg. $729 e IOC Marquette, IA $730 o

Ameristar Council Bluffs, IA $727

Other New Mexico avg. $718 e

Atlantic City, NJ avg. $719 Mt. Pleasant, MI $718 e

IOC Waterloo, IA $715 Wisconsin Dells $715 e

Argosy Riverside, MO $707

Ameristar KCMO $698

Michigan City, IN $694

Harrahs W St Louis $690

Harrahs Council Bluffs, IA $689

Prairie Meadows, IA $685

Mohegan Sun, CT $670 o Ameristar St Chas, MO $668

Jumers Rock Island, IL $668

Clinton, IA $668

Harrahs Joliet, IL $665 o

Belterra, Florence, IN $665

Argosy Sioux City, IA $664 o

St Jo MO $662 o Metropolis, IL/KY $663 o

Catfish Bend Burlington, IA $660

Salamanca, NY casino $656 e Mark Twain, MO $655 o

Foxwoods, CT $649 o East St Louis, IL (2 boats) $651 o

Dover Downs, DE $640 IOC Bettendorf, IA $640 o

Charles Town, WV $638

Tioga Downs, NY $636 Ameristar, E Chicago IN $631 o

Midwest Standard +10%

"Midwest Standard"

13

Exhibit A-14: Gaming-Device "Power Ratings"(Total Annual Spending versus benchmark of $700)

Northeastern Medium to Large Rural Markets

US Markets Midwest (+/-) Markets West & Midwest

Deadwood, SD 129.9

S Dakota Indian avg. (8) 124.7 e

Upstate Michigan avg. 120.0 e

Kansas Natives avg. 116.9 e

Mississippi / Louisiana 115.5(average of MANY facilities) Diamond Jo Northwood, IA 113.3

Iowa Natives average 112.0 e

Terribles Lakeside. IA 110.4

Upstate Wisconsin avg. 110.0 e

Emmetsburg, IA 109.3

Colorado (2) 108.9

Horseshoe / Bluffs Run, IA 107.0 Dodge City, KS 106.7

Dubuque Mystique, IA 106.1

Dubuque Diamond Jo, IA 105.9

Riverside, IA 105.7

Harrahs NKCMO 104.9 IOC Boonville, MO 105.0 o

Niagara (NY) casino 104.1 e Albuquerque, NM avg. 104.2 e IOC Marquette, IA 104.3 o

Ameristar Council Bluffs, IA 103.9

Mt. Pleasant, MI 102.6 e

Atlantic City, NJ avg. 102.7 Other New Mexico avg. 102.5 e

IOC Waterloo, IA 102.1 Wisconsin Dells 102.1 e

Argosy Riverside, MO 101.0

Ameristar KCMO 99.7

Michigan City, IN 99.1

Harrahs W St Louis 98.6

Harrahs Council Bluffs, IA 98.4

Prairie Meadows, IA 97.9

Mohegan Sun, CT 95.7 o Ameristar St Chas, MO 95.4

Jumers Rock Island, IL 95.4

Clinton, IA 95.4

Midwest Standard +10%

"Midwest Standard"

14

Exhibit 5: Projected Power Ratings, etc.

Peninsula / Kansas Star Global / WinSpirit

2012 2014 2016 Full Build 2012 2014 2016 Full Build

Slot Machines 1,310 1,500 2,000 2,000 1,300 1,550 1,800 2,000

Table Games (not inc. poker) 32 42 50 50 30 40 40 40

Total Gaming Positions ( " " ) 1,502 1,752 2,300 2,300 1,480 1,790 2,040 2,240

Baselines for Slots:

Midwest Standard 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Distance from Major Population Center 1.00 1.00 1.00 1.00 9.00 9.00 9.00 9.00

Temporary Facility (if applicable) (5.00)

Bricks & Mortar $ / Gaming Position (in $100ks) 0.94 1.15 1.13 1.13 0.93 0.83 0.92 1.00

Casino Square Footage / Gaming Position (x .02) 0.59 0.54 0.55 0.55 0.99 0.86 0.89 0.92

Hotel Rooms / Gaming Position (x 2) 0.17 0.26 0.26 0.11 0.09 0.08 0.18

---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------

Total Power Rating 97.52 102.86 102.94 102.94 111.02 110.78 110.89 111.10

"Reach" (miles before extra decline with distance) 120 200 200 200 200 200 200 200

Compare: Last year at this location 102.78 N/C

Note: 100 = "Midwest Standard" power rating. Latest major facilities in Iowa range from 102 to 107. Boot Hill today = 106.7.

Slot power ratings at the "Big Three" KCMO facilities currently range from 100 to 106; table ratings 100 to 105.

I have assumed 103 for tables at both facilities (the "3" reflects poker).

Gravity Models – Overview

Location

Location

Size

Everything Else

15

“Size” = Number of Slots

WinSpirit Kansas Star

2012 1,300 1,310

2014 1,550 1,500

2016 1,800 2,000

Full Build 2,000 2,000

16

Gravity Models – Overview

Location I

Location II

Size

Everything Else

17

Location II:

Competition

18

Location II:

Reilly’s Law

19

Reilly’s Law:

ms ~ S/d2

Where

ms : market share

S : outlet size (capacity)

d : distance

20

Newton’s Law:

F = m/d2

Where

F : gravitational force

m : mass (of each body)

d : distance

21

Reilly’s Law:

ms ~ S/d2

Where

ms : market share

S : casino size (capacity)

d : distance

22

23

Midwest Market Projections

Average Distances:

State County ZIP Spdway KStar WinSpir Park C DodgeCKC7thS Wh Cl Horton Mayetta Powhat Argosy IOC Harrahs

KS ALLEN 66732 99 128 138 117 266 106 155 142 122 147 110 109

KS ALLEN 66748 109 114 124 102 251 117 154 134 113 139 120 120

KS ALLEN 66749 100 121 131 106 255 108 146 127 106 132 112 111

KS ALLEN 66751 98 125 136 111 260 105 145 130 110 135 109 108

KS ALLEN 66755 90 135 145 120 269 97 146 134 114 139 101 100

KS ALLEN 66772 103 126 135 118 265 110 159 146 126 151 114 113

KS ANDERSON 66014 67 156 167 140 287 73 132 121 102 127 77 76

KS ANDERSON 66015 89 130 141 114 262 97 135 118 97 123 101 101

KS ANDERSON 66032 71 147 158 129 276 79 121 107 88 113 82 82

KS ANDERSON 66033 61 157 169 139 285 69 117 106 87 111 72 72

KS ANDERSON 66039 79 143 154 127 275 86 136 123 104 129 89 89

KS ANDERSON 66091 80 138 150 121 269 88 128 113 93 118 92 91

KS ANDERSON 66093 87 129 141 112 260 96 131 110 89 114 99 99

KS ATCHISON 66002 42 226 240 205 341 50 35 31 44 37 47 52

KS ATCHISON 66016 44 214 227 193 329 53 36 27 32 33 51 56

KS ATCHISON 66023 52 207 221 186 321 61 39 20 24 26 59 64

: : : : : : : : : : : : : :

: : : : : : : : : : : : : :

: : : : : : : : : : : : : :

KS WYANDOTTE 66106 9 216 228 196 337 7 84 79 65 85 10 11

KS WYANDOTTE 66109 7 216 229 196 337 10 76 70 57 76 10 13

KS WYANDOTTE 66111 7 216 228 196 337 7 82 76 63 82 10 11

KS WYANDOTTE 66112 7 216 229 196 337 7 79 73 60 79 10 11

KS WYANDOTTE 66118 13 223 235 203 344 7 86 81 69 87 7 7

Total KS

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Projected Market Shares

(Share of Sedgwick County Spending)

Kansas Star 2016 91%

Global Gaming 2016 80%

25

Gravity Models – Overview

Location I

Location II

Size

Everything Else

26

Location I:

The Closer, the Better

27

Location I:

The Closer, the Better

=“Friction”

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Las Vegas Visitation/Distance

0.0

5.0

10.0

15.0

20.0

25.0

0 500 1,000 1,500 2,000 2,500

La

sV

eg

as

Vis

itors

/0

00

ad

ults

Distance (miles)

Mississippi Visitors/Day/000

0.0

4.0

8.0

12.0

16.0

20.0

0 100 200 300 400 500 600 700

Mis

sis

sip

piV

isito

rs/D

ay/0

00

adults

Distance (miles)

Casino X / players’ club data

$0

$200

$400

$600

$800

$1,000

0 50 100 150 200 250 300 350 400

Ave

rag

eA

nn

ua

lS

pe

nd

ing

/Ad

ult

Distance from Casino X (miles)

Casino Y: players’ club data

$0

$100

$200

$300

$400

$500

0 20 40 60 80 100 120

Avera

ge

AnnualS

pendin

g/A

dult

Distance from Casino Y (miles)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5

ln(distance)

ln(L

as

Ve

gas

visito

rs/0

00

0)

33

Las Vegas Visitation [ log-log ]

Las Vegas: slope of the curve

y = -1.0082x + 10.75

R2 = 0.9631

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5

ln(distance)

ln(L

as

Ve

gas

visito

rs/0

00

0)

34

Mississippi: steeper slope

y = -1.4088x + 11.25

R2 = 0.9353

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0

ln(distance)

ln(M

issis

sip

piv

isito

rs/d

ay/0

00

0)

35

Laughlin: much steeper slope

y = -1.9121x + 16.299R² = 0.9552

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5

ln(L

au

gh

linvis

itors

/00

00

)

ln(distance)

36

Casino X: isolated market

y = -0.8982x + 7.8944R² = 0.6804

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5

ln(a

dju

ste

dannuals

pendin

g/a

dult)

ln(distance from Casino X)

37

Casino Y: competitors afar

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5

ln(a

nn

ua

lsp

en

din

g/a

du

lt)

ln(distance from Casino Y)

38

Casino Y: less competition close

y = -0.886x + 8.0919R² = 0.8505

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5

ln(a

nn

ua

lsp

en

din

g/a

du

lt)

ln(distance from Casino Y)

39

40

(1.00)

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50

ln(s

pen

din

gp

er

ad

ult

)

ln(distance)

Exhibit A-9: Slot Spending Declines With Distance at Casino Z

per model

per club

per W-2s

41

(1.00)

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50

ln(s

pen

din

gp

er

ad

ult

)

ln(drive time)

Exhibit A-10: Slot Spending Declines With Travel Time at Casino Z

per model

per club

per W-2s

42

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

0

5

10

15

20

25

30

0-10 miles 10-20miles

20-30miles

30-40miles

40-50miles

50-70miles

70-100miles

100-150miles

150-300(±)miles

> 300(±)miles

An

nu

alV

isit

s(a

nd

$W

in)

Per

Pla

yer

Exhibit A-11: Rates of Visitation (and Win) vs. Distance at Casino Z

Trips / Player

$ Win / Player

Model vs. Real World

43

44

Projection / Source Actual / Source

Facility / Market:

Zia Park / Hobbs, NM $53.7 (1) $68.9 (2)

Emmetsburg / Iowa $23.4 (3) $26.4 (4)

Northwood / Iowa $34.2 (3) $67.5 (4)

Riverside / Iowa $82.0 (3) $85.8 (4)

IOC Waterloo / Iowa $96.8 (3) $76.9 (4)

$30.2

$49.9

Hoosier Park / Indiana $275 (7) $201 (8)

Indiana Live / Shelbyville $261 (7) $228 (8)

Wild Rose Clinton / Iowa $48.2 (9) $39.2 (10)

DBQ Diamond Jo / Iowa $61.9 (9) $68.4 (10)

Jumers Rock Island / Illinois $89.7 (9) $75.2 (11)

Dodge City / Kansas $40.7 (12) $37.7 (13)

Tioga Downs / NY (5) (6)$42.2

Global Gaming /

WinSpirit Casino

45

46

47

Exhibit A: Summary of Projections(all in then-year $)

Global / WinSpirit

2012 2014 2016 Full Build

Slot Machines 1,300 1,550 1,800 2,000

Table Games (not inc. poker) 30 40 40 40

Total Gaming Positions ( " " ) 1,480 1,790 2,040 2,240

Slot Power Rating 111.0 110.8 110.9 111.1

Total Gaming Revenues ($million): (6 mos)

With no Local Competition $62.1 $141.2 $155.8 $160.5

With Competitor in Park City $46.8 $111.7 $127.3 $109.1

Total Annual Visitation (000): (6 mos)

With no Local Competition 716 1,583 1,684 1,760

With Competitor in Park City 578 1,316 1,434 1,278

Annual "Tourist" Visitation (000): (6 mos)

With no Local Competition 67 173 187 198

With Competitor in Park City * 68 175 189 197

48

$50

$100

$150

$200

$250

2011 2012 2013 2014 2015 2016 Full Build

To

talG

am

ing

Win

($m

n)

Note: Cummings projections are for "stabilized operations"

Exhibit B: Cummings Projections Compared to Global Gaming's

Global

Cummings

Peninsula Gaming /

Kansas Star Casino

49

50

51

Exhibit A: Summary of Projections(all in then-year $)

Peninsula / Kansas Star

2012 2014 2016 Full Build

Slot Machines 1,310 1,500 2,000 2,000

Table Games (not inc. poker) 32 42 50 50

Total Gaming Positions ( " " ) 1,502 1,752 2,300 2,300

Slot Power Rating 97.5 102.9 102.9 102.9

Total Gaming Revenues ($million):

With no Local Competition $159.1 $192.1 $213.4 $213.4

With Competitor in Park City $109.3 $143.7 $169.4 $141.0

Total Annual Visitation (000):

With no Local Competition 1,741 1,997 2,248 2,248

With Competitor in Park City 1,329 1,620 1,886 1,634

Annual "Tourist" Visitation (000):

With no Local Competition 70 121 144 144

With Competitor in Park City * 70 122 145 142

52

$50

$100

$150

$200

$250

2011 2012 2013 2014 2015 2016 = Full Build

To

talG

am

ing

Win

($m

n)

Note: Cummings projections are for "stabilized operations"

Exhibit C: Cummings Projections Compared to Peninsula's

Peninsula

Cummings

The DifferenceBetween the Two:

53

54

$50

$100

$150

$200

$250

2011 2012 2013 2014 2015 2016 Full Build

To

talG

am

ing

Win

($m

n)

Note: Cummings projections are for "stabilized operations"

Exhibit B: Cummings Projections Compared to Global Gaming's

Global

Cummings

55

$50

$100

$150

$200

$250

2011 2012 2013 2014 2015 2016 = Full Build

To

talG

am

ing

Win

($m

n)

Note: Cummings projections are for "stabilized operations"

Exhibit C: Cummings Projections Compared to Peninsula's

Peninsula

Cummings

56

57

58

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

0

5

10

15

20

25

30

0-10 miles 10-20miles

20-30miles

30-40miles

40-50miles

50-70miles

70-100miles

100-150miles

150-300(±)miles

> 300(±)miles

An

nu

alV

isit

s(a

nd

$W

in)

Per

Pla

yer

Distance Matters

Trips / Player

$ Win / Player

Will E. Cummings

Cummings Associates

135 Jason Street

Arlington, MA 02476

(781) 641-1215

cummingsw@aol.com

59

Gaming RevenueProjections for

South-Central Kansas

Presentation to Lottery Gaming Facility Review Boardby Will Cummings / Cummings Associates

December 1, 2010

60