The Market Potential of the Four Gaming Zones of Kansas Presentation to Kansas Lottery Gaming Facility Review Board by Will Cummings / Cummings Associates June 3,

Overview l Cummings background l Gravity model methodology l Comparisons / “Power Ratings” l What is “Potential”? l Northeast... Southeast... South-Central... Southwest l Summary / Statewide 2

Will E. Cummings Cummings Associates 3

Will Cummings u Graduate of MIT’s Sloan School of Management u Has directed studies of leisure and entertainment businesses in more than forty states, provinces and foreign countries, with particular focus on gaming and wagering u Extensive experience with casinos in Iowa, rest of Midwest, Northeast, and Canada 4

Gravity Model / Casino Analyses u Iowa u New York u New England u Pennsylvania u Michigan u Indiana u South Dakota u New Mexico u The Caribbean u... and many more 5

Gov’t Agencies / Regulatory Bodies u Iowa Racing and Gaming Commission u South Dakota Commission on Gaming u Horse Racing Alberta u New Jersey Casino Control Commission u Connecticut Division of Special Revenue u many State Racing Commissions u Massachusetts State Lottery u Virginia State Lottery u Connecticut Lottery Corporation u Atlantic Lottery Corporation 6

Why “Gravity Model?” 7

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“Gravity Models” – Overview l Location l Size l Everything Else 11

Location I: The Closer, the Better 12

13 Las Vegas Visitation/Distance

Las Vegas: slope of the curve 14

Mississippi: steeper slope 15

Laughlin: much steeper slope 16

Casino X: isolated market 17

Casino Y: competition afar 18

Casino Y: less competition close 19

Location I: The Closer, the Better =“Friction” 20

Location II: Reilly’s Law 21

Reilly’s Law: ms ~ S/d 2 Where ms : market share S :“size” of each trade center d : distance 22

Newton’s Law: F = m/d 2 Where F : gravitational force m : mass (of each body) d : distance 23

Reilly’s Law: ms ~ S/d 2 Where ms : market share S : casino size (capacity) d : distance 24

Newton’s Law: F = m/d 2 Where F : gravitational force m : mass (of each body) d : distance 25

Reilly’s Law: ms ~ S/d 2 Where ms : market share S : casino size (capacity) d : distance / travel time 26

Size Matters 27

Reilly’s Law: ms ~ S /d 2 Where ms : market share S :“size” of each trade center d : distance 28

More Slots, More Spending 29

Calculations 30

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Other Things Matter, Too 33

“Other Things” that REALLY Matter l Micro-Access l Spaciousness l Slot Mix l Fit & Finish l Management l Marketing / Player Rewards 34

Useful Assets l Hotel l Structured Parking l Variety of Dining Choices l Retail l Entertainment l Players’ Club 35

Comparisons / “Power Ratings” 36

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How Do They Do? 38

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What is “Potential?” 40

“Potential” involves... l Examining more than just one “representative” location l Assume “average” performance? l Or something better? l My “Upside” reasonable, not sky-high 41

Northeast Zone 42

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Summaries 52

Kansas Speedway Site: $150/s/d 4,000 slots Downside $158.1 x Baseline $245.5$246.0 Upside $341.3 x (all in 2007 $ million) 53

KCK Stateline Site: $150/s/d 4,000 slots Downside $273.2 x Baseline $396.6$311.8 Upside $518.4 x (all “as was,” in 2007 $ million) 54

KCK “Middle” Site: $150/s/d 4,000 slots Downside $320.1 $282.1 Baseline $424.2$331.3 Upside $530.4 $380.2 (all in 2007 $ million) 55

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Southeast Zone 61

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Cherokee “Corner” Site: 600± slots* 1,200 slots Downside $20.5 x Baseline $29.3 $46.1 Upside $35.9 x (all in 2007 $ million) * win/slot/day less than $150, but ~ minimum critical mass 63

Cherokee “Galena” Site: 600± slots* 1,200 slots Downside $22.8 $32.7 Baseline $32.9 $51.3 Upside $49.3 $60.9 (all in 2007 $ million) * win/slot/day less than $150, but ~ minimum critical mass 64

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South-Central Zone 66

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Sumner Mulvane Site: $150/s/d 3,000 slots Downside $165.4 $162.7 Baseline $188.9 $187.5 Upside $205.4 $202.4 (all in 2007 $ million) 68

Sumner Wellington Site: $150/s/d 3,000 slots Downside $103.2 x Baseline $133.1$142.4 Upside $151.1 x (all in 2007 $ million) 69

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Southwest Zone 71

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Dodge City Site: $150/s/d 800 slots Downside $30.5 $32.5 Baseline $34.7 $36.5 Upside $38.6 $39.8 (all in 2007 $ million) 73

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Conclusions 75

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All Four(?) Zones: l Downside: $536 mn l Baseline: $669 mn l Upside: $797 mn (all excluding facilities whose viability is in doubt) 77

Will E. Cummings Cummings Associates 135 Jason Street Arlington, MA (781)

The Market Potential of the Four Gaming Zones of Kansas Presentation to Kansas Lottery Gaming Facility Review Board by Will Cummings / Cummings Associates June 3,