~ 1946 The Las Vegas Strip Begins

Humble Beginnings Strip only 3.8 miles long Consisted of only 2 resorts – El Rancho Hotel – Flamingo Hotel Now consists of 20 plus

~ 1960’s The Rat Pack Era

Unforgettable Times Las Vegas picks up momentum and growth Individual private owners – Fueled by a cast of characters like: Benny Binion Howard Hughes Meyer Lansky Entertainment started to Grow – Rat Pack – Elvis

~ Late 80’s Early 90’s~ Evolution of the Strip

Evolution of The Strip Beginning of the Mega Resort – Steve Wynn Era Financed by Wall Street – Through junk bonds and Michael Milken – At a cost of $630 million in 1989 – Had to generate $1 million daily to cover expenses

~ Consolidation~

Consolidation MGM purchases Mirage Resorts for $6.4b – At the time, largest merger in gaming history – Included Mirage, Bellagio, Treasure Island, and Golden Nugget – After acquisition, MGM controls 26% of Strip’s hotel rooms and 50% of Las Vegas High Roller market Throughout the past 15 years Harrah’s has aquired multiple properties including Caesars Entertainment for $9.4b in – After acquisitions Harrah’s became the worlds largest casino operator. Controlling 31% of strips hotel rooms

~ City Center ~

City Center Largest private construction project ever undertaken Original budget $4.5b Final price tag $8.5b Added an additional 5,895 rooms to the local market

~ ?

Current MGM Mirage sells assets while building City Center TI Purchased for $775M by Ruffin Acquisitions – $500M paid in cash which helped MGMM’s cash flow Icahn purchased Fountainebleau for $156M in cash – $1- $1.5b to finish project. This adds 4,000 rooms to the Las Vegas Strip Echlon Place construction on hold until 2012 Rate war for Occupancy (Industry) Visitors paying 50% less in rate than last year and spending less money

Las Vegas Gaming and Resort Industry Industry Overview Evolution and Reinvention Revenue Streams Q&A

Industry Overview Gaming Control Board (GCB) Regulation – Collects Gaming taxes – which funds 33% of state’s budget – Gaming tax rate 6.75% – Compliance All Nevada Casinos must comply with the “Minimum Internal Control Standards” (MICS) enforced by the GCB 2 years audits conducted by the GCB – Enforcement Resolves customer disputes Allows customers to disputes either W/L of $500 or more with a GCB agent

Industry Overview Uniqueness to Industry Complimentary Income (Phantom Revenue) – Revenue/Expense – % of cash to comps

Industry Overview Promotions and Special Events – Designed to drive Business in casino and hotel Players Club (Loyalty Program) – Earn Freeplay Table Games Tournaments – Win Promotional Chips Slot Tournaments and Giveaways Major Sporting and Holiday Event Parties – Customer incentives to high end players As high as 20% discount Gifts

Evolution and Reinvention Capital Investment – Consistently putting cash flow back into property Evolution creates synergies and competition Competition drives properties to continually evolve – Nightclubs – Tattoo shops – High end dinning – Retail – Entertainment attractions Competition in this industry is good for guests – Keeps Vegas fresh and unique – Constantly on the cutting edge

Evolution and Reinvention

Revenue Streams Gaming generates 44% of total revenue Non Gaming generates 56% of total revenue

Revenue Streams Casino Revenue – Table Games – Slots – Other (Race & Sports, Poker, and Keno)

Revenue Streams Non Gaming Revenue – Hotel – Food and Beverage – Retail – Other (Spa & Salon, Wedding Chapel, Etc.) – Entertainment

Q & A