global response to board 1201 questions

Response to Review Board’s follow-on questions Attachments and Supporting Information 07 December 2010 p. 1

December 7, 2010

Mr. Patrick Martin

Interim Director of Kansas Racing and Gaming Commission

700 S.W. Harrison, Suite 500

Topeka, KS 66603-3754

Dear Patrick:

This response addresses answers to questions (a) to (j) outlined in your email dated December 2, 2010.

We will provide by separate correspondence other comments on matters we advised the Lottery Facility Review Board that we would provide in writing, as we did not have time to address these during our Presentation on December 1, 2010 in Topeka, KS.

a. Question: WinStar data regarding hold percentage on EGMs

As you can see from the above table of WinStar World Casino’s major gaming vendors hold percentages at WinStar World Casino are 3% to 5% lower (i.e.: in favor of the gaming customer) than competitive states. We highlighted this during our Presentation on December 1 to the Review Board. In contrast to the Consultants’ view that Oklahoma is a monopolistic pricing market, this underscores the highly competitive nature of the market, which has some 47,000 slots in it.

Comparison to other marketsLouisiana Hold % 7.5%**

Vendor 1 4.50% Missouri (statewide) Hold % 9.1%*Vendor 2 5.30% Missouri (KS City) Hold % 9.4%*Vendor 3 6.00%Vendor 4 5.00%Vendor 5 3.50%

4.86%

* source: Missouri Gaming Commission website

**http://www.insidervlv.com/slotspayouts.html

Winstar Hold Percentage


b. Question: Winstar data regarding 95% loyalty The Consultants presented TripAdvisor.com data with some 30 comments from over 3 million customer visits. We dispute the integrity and the validity of this data. Summarized below are our customer satisfaction results for WinStar World Casino and also for Riverwind Casino. These are from 2010 results based on feedback provided by 1,000 customers at each facility.

Customer satisfaction survey results 2010

Survey Results WinStar Riverwind Customer Satisfaction 91.4% 94% Customer Loyalty 94.6% 96% Percent of customers somewhat to very satisfied 91.4% 92% Percent of customers likely to very likely to recommend to friends and family 93.6% 93% Percent of customers satisfied with the staff friendliness 93.4% 97%

In addition, both WinStar World Casino and Riverwind Casino have been the recipients of various recognition awards.

WinStar World Casino 2010 Awards (non-populated area with fewer media outlet awards):

Nominated by the 45th Academy of Country Music – Top Country Music Casino Venue in the United States in 2010.

WinStar RV Park named Gold Award winner of The Oklahoma and Arkansas Chapter of The American Concrete Paving Association in 2010.

Riverwind Readership Awards:

2007 Oklahoma Readers’ Choice Award 2008 the Oklahoma Gazette Best of Oklahoma City, category for Friendliest Casino. 2008 the Oklahoma Gazette Best of Oklahoma City, category for Best Casino. 2009 the Oklahoma Gazette Best of Oklahoma City, category for Best Casino. 2009 and 2010 the Oklahoma Gazette of Oklahoma City, preferred venue, placed in the top five. 2010 the Oklahoma Gazette Best of Oklahoma City, category for Best Concert Venue, placed in

top five.

We have also included an attachment with October – November (approximately 30 days) Facebook comments from WinStar and Riverwind customers.


c. Question: Travel data to Norman, Oklahoma facility (Riverwind Casino)

Oklahoma City Central Business District is located at the intersection of I-35 and I-40.

Within 100 miles of this central location there are 42 casinos in Oklahoma. As discussed we own Remington Park, Newcastle Gaming, Goldsby Gaming and Riverwind Casino.

The following are distances to the closest casino properties to Oklahoma City (OKC) and direction from the above intersection.

1. OKC to Remington Park- North on I-35, 10.3 miles (clean drive on I-35) 2. OKC to Lucky Star- North, 32miles (clean drive north) 3. OKC to Firelake Grand Casino- East on I-40, 26.6 miles (clean drive on I-40) 4. OKC to Riverwind- South on I-35, 22.25 miles (congested drive on I-35 through Norman) 5. OKC to Newcastle Gaming- South- 22.4miles (clean drive via freeway to west) 6. OKC to Goldsby Gaming- South on I-35, 23miles (congested drive on-I-35 through Norman)

Seventy percent of customers in our player tracking data base come to Riverwind Casino from North of I-40 or farther away than 25 miles or a typical drive time of 30 minutes. If I-35 is congested through Norman, this drive time will be longer. This means they appear to choose to go to Riverwind Casino even though getting to Remington Park would be the closest or Firelake (with some similar amenities to Riverwind Casino) would take less time and the minimum distance is 22.25 miles.

d. Question: Support other instances of building out ancillary facilities according to market forces

The Review Board requested additional information to assist in their evaluation of the proposed racetrack amenity. Three pieces of information are provided with this response.

(i) The racetrack plan (ii) Illustrative information on propensity of auto sports customers to game (iii) Estimates of potential incremental gaming revenue, not included in our conservative

projections


(i) Racetrack Plan (shown below)

(ii) Illustrative information on propensity of auto sports customers to game

As noted previously customer preference surveys and market research clearly support that racetrack customers are also gaming customers.

Some examples follow:

• The demographics of attendees that attend NASCAR races closely mirror the general population

in terms of income. • According to Harrah’s Survey 2003: Profile of an American Gambler, 14% of casino-goers are

auto racing spectators. o 13% of the U.S. population are auto-racing spectators according to the same Harrah’s

survey meaning auto racing visitors will be slightly more likely to visit a casino than the average person. Interestingly, the survey did not even ask about equestrian events.

• Synergy between auto racing and casino is evidenced by numerous auto races that have been or are currently title-sponsored by casinos:

o Harrah’s 500 (NASCAR event held at Texas Motor Speedway) o Belterra Resort Indy 300 (IRL event held at Kentucky Speedway) o Sam’s Town 300 (NASCAR Nationwide event held at Las Vegas Motor Speedway) o Casino Arizona 150 (NASCAR Nationwide event held at Phoenix International Raceway) o Ameristar Casino has sponsored Indy Racing Northern Light Series at Kansas Motor

Speedway


o WinStar World 350 (NASCAR Nationwide event held at Texas Motor Speedway) o Tioga Downs Casino 125 (NASCAR Camping World Series East event at Watkins Glen).

Tioga Downs and Vernon Downs also became joint sponsors of Watkins Glen International for three years.

o Thunder Valley Casino Resort 200 (NASCAR K&N Pro Series West event at Infineon Speedway)

• Harrah’s Entertainment sponsored a car in NASCAR for several years: o From Sports Business Daily - Las Vegas-based Harrah's Entertainment "is gambling" that

its title sponsorship of this Sunday's Winston Cup Harrah's 500 at Texas Motor Speedway "will rev up business at its casinos in" LA and NV, according to Richard Alm of the DALLAS MORNING NEWS. Courtesy of Harrah's, 300 top customers will spend Saturday night at Harrah's new luxury hotel in Shreveport, LA, then board a DC-9 on Sunday morning for a flight to the race. Harrah's VP/Strategic Alliances John Dluzak said, "The demographics for NASCAR are moving upward in terms of income. It's a very attractive customer base because of the brand loyalty of NASCAR fans."

• Synergy between auto racing and casino supported by Kansas Entertainment building a casino adjacent to the Kansas Speedway in the Northeast Gaming Zone:

o 2009 Kansas Entertainment bid cited survey data that said 57.5% of Kansas Speedway visitors had visited a casino in the past 12 months. This meant that Kansas Speedway visitors were 27% more likely to have visited a casino than the average person in Kansas City.

o Kansas Entertainment said that fans of the Indy Racing League are 85% more likely to visit a casino than the average person. WinSpirit currently has an expression of interests from the Indy Racing League.

• Sahara Hotel & Casino in Las Vegas has a NASCAR Café. • Over 13 million attended NASCAR events in 2005 (per NASCAR) and over 306 million viewers

watched a NASCAR race in 2005 (Source: Nielsen Media). • According to the Goodyear Tire & Rubber Company, the top 12 American auto racing series

where the company competes had 16.9 million attendees in 1997. • Bobby Rahal helped begin the Legends of Motorsports Racing Series in 2010 (owned by Historic

Motor Sports): o Four events in Alabama, Watkins Glen NY, Montreal and Florida o So far, Legends of Motorsports has attracted Rolex, Lotus and Road & Track magazine as

chief sponsors. Rahal said he's also had talks with the Discovery Channel about broadcasting races. "It's a major overlooked area. Ad agencies don't really get it," Rahal said. "The demographics of these guys are higher than if you sponsored a golf tournament.

• Historic Motor Sports demographics (vintage car racing) o Participant demographics

90% of participants over 45 88% with income above $100,000 95% are homeowners 49% own two or more homes

o Spectator demographics 67% of spectators between 35-64 (implies very few children compared to what

would be expected based on population as a whole) 88% are homeowners


74% are business owners

• Sports Vintage Racing Association has 11 events on its 2010 calendar • American Le Mans Demographics (* Source: Nielsen Media Research - July 2006):

o 51% are between the ages of 25 to 49 o 48% earn more than $90,000 per year o 13% have a net worth of over $1 million o 22% have a net worth of over $500K

• Monaco hosts a vintage race every other year before its Formula One race • Goodwood Festival of Speed in Great Britain hosted 130,000 people in 2009. • Biggest vintage race in the U.S. is The Monterey Historic Automobile Races. The 2009 event in

California hosted 400 historic cars and 40,000 people.

(iii) Estimates of potential incremental gaming revenue, not included in our conservative projections

Included in the Appendix is an analysis by CBRE which concludes that if our proposed auto racing facility and Peninsula Gaming’s proposed equestrian facility had the same number of visitors (nominally 100,000 visits p.a.), a 34.3% premium in visitation gaming spending by auto racing visitors would result over equestrian visitors. This 34.3% premium does not quantify other economic activities such as hotel stays, retail, and food & beverage. Part of this premium reflects greater adult participation in auto racing v. equestrian events.

Casino customer spending and demographic research is also included from Lang Research, Canada, in support of the CBRE analysis.

Peninsula Gaming estimated 95,000 visitors (attendee days) for their equestrian center.

Global Gaming has indicated 300 to 500 attendees per week and several major events per year from IRL (Letter of Intent in existence) or GrandAm. These major events typically have up to 50,000 attendees. Accordingly, the analysis shown above was performed assuming a similar number of attendees of approximately 100,000 a year.

Wells Gaming Research concluded that incremental gaming revenue attributable to Peninsula Gaming’s equestrian center was $2.45m p.a. (in 2014) and 33,000 gaming visitors. At the same time, Wells Gaming Research concluded the WinSpirit Casino travel plaza alone would drive $5m (in 2014) incremental gaming revenue or 100,000 gaming visitors.

The Review Board has expressed some concern over how to evaluate the auto racing facility given our Management Contract does not require its opening before Year-5. In contrast, the Peninsula equestrian center is proposed to be open in probably Year-2. We would point out the following two key points:

1) Our travel plaza would open in a timeframe closely following that of the equestrian center; it drives more incremental gaming revenue, and


2) We can accelerate the development of the auto racing facility: our ability and history to

accelerate development is answered in Question (e) immediately below.

Again, we wish to point out that we did not include any incremental gaming revenue or other amenity revenues for the auto racing facility in our conservative projections, because of our belief and focus on the quality of the core destination facility (260,000 square feet permanent, entertainment, full restaurants, etc.) and the 80/ 20 rule of where revenue is derived from.

We also note that our initial investment is placed firmly in the quality of the destination as our infrastructure and land investment is approximately $5m v. Peninsula Gaming’s infrastructure and land costs estimated at $45m.

e. Question: Support other instances of building out ancillary facilities according to market forces

In support of our statement to the Review Board that we have a proven track record in accelerating development plans, we summarize below the history of expansion of WinStar World Casino, Riverwind Casino, and Remington Park. As you can see, the timeline for expansion have been aggressive and continuous in responding to the market.

WinStar World Casino

WinStar opened in late 2002 with 243 electronic games and a 400-seat capacity Bingo Hall.

In October 2003, two distinct gaming areas, themed Circus and Carnival, were opened with an additional 1,000 electronic gaming machines bringing the total to 1,250, a buffet restaurant, a steak house and a casual dining snack bar.

In 2004, an additional 250 games were added bringing the total to 1,500 machines.

In early 2004, ground was broken to expand WinStar Casino with the addition of "The Palace" gaming plaza. The Palace expansion opened to the public in May 2005, adding an Italian restaurant and 740 more gaming units (making capacity 2,240 machines).

In late 2004, in response to the expanding infrastructure and community needs, a dedicated waste water treatment plant was built and opened by the Nation.

While that that expansion was underway, the Nation built and opened an adjacent 100-room hotel and a 1,500-seat entertainment center.

An 18-hole, championship golf course featuring a world class clubhouse facility was officially opened in March 2007. Construction of nine additional holes was completed this Fall and will open to the public in March 2011.


In late 2007, construction commenced on the current WinStar World Casino complex themed on great cities of the world, to increase the gaming capacity to 280,000 square feet, including 6,026 total slots, 70 table games (Blackjack, Pai-Gow, Ultimate Texas Hold ‘em), 46 Poker tables, and an off-track betting center.

The expansion featured a new, 3,000-seat, state of the art entertainment and event center. This aggressive development, which resulted in WinStar World Casino becoming the third largest casino in the world in gaming units and square footage, was phased in, opening sections to the public between October 2008 and December 2009, including six additional restaurants and a four-star, 11-story, 395-room and suites hotel.

• A one million gallon water tower to provide for the ever expanding complex went online in October 2009.

• A dedicated Emergency Services building opened in 2009. • A 150-space RV Park, with capacity for an additional 150 spaces, opened in March 2010. • Ground was broken in November 2010 for a 1,400 car parking garage that is expected to open in

September 2011. • Future plans call for two additional restaurants, a night club, and a 6,000 sq. ft. VIP, high-limit

gaming center, and a dedicated child care facilities for employees. • The Nation has completed negotiations with the federal government for an additional exit (at

mile marker three on I-35) north of the WinStar complex that is expected to open in 2013.

Riverwind Casino

The award-winning Riverwind Casino opened at Exit 108 on I-35 in Norman, Oklahoma, in July 2006. Riverwind Casino is consistently voted the best casino and entertainment venue in the competitive Oklahoma City market.

Riverwind opened featuring 2,025 electronic games, blackjack, a poker room, a 1,500-seat "Showplace Theater" and event center, an off track betting parlor, a buffet restaurant, a steakhouse, and a food court. That facility was constructed from a bare piece of land, with no infrastructure, in just 11 months.

In 2007, games were expanded 2,130, an increase of 105 games.

In 2008, games were expanded to 2,250, an increase of 120 games.


In April 2009, a new 100-room three-plus stars Riverwind Hotel opened.


In June 2010, a Sky Bridge between the Casino and Hotel was completed.


Remington Park

As the Review Board knows, we acquired Remington Park located just north of Oklahoma City center on January 1, 2010. This facility is regulated by the state and has 750 slots as well as race track, convention and food and beverage amenities. When we acquired Remington Park, we had set a plan to improve games and amenities of 36 months. These improvements were achieved in the first six months of operations.

The performance of this facility under our management has been highly publicized and it is one of the only tracks in the country showing growth and adding races.

This facility has an effective tax rate of 50% after state tax, payments to the breeds and other payments to the State.

We acquired this facility for $80.25m through the bankruptcy process. The Review Board is also aware that we have within 25 -30 minutes of this facility, Riverwind Casino, Goldsby Gaming and New Castle Gaming tribal facilities that are subject to a 6% tax rate, with some 4700 games collectively.

Remington had 700 slots when we acquired it and under the law was entitled to 750 games on January 1, 2010. We added the additional 50 games and worked with the Oklahoma Horse Racing Commission to have these up and running by 1 minute after we took ownership, or one minute past midnight on December 31, 2009/ January 1, 2010.

In the first four months of ownership we replaced or upgraded 300 of the original 700 slot machines. The effect of this along with marketing and improvements to physical facilities has been to drive up win per unit or per machine by 15% and coin in volume in excess of 30%. Attendance has increased and export of our signal has increased more than 40%.

We have added a Henry Hudson’s Pub and Grill, restored the executive suites, completely restored the exterior of the 20-year old building, created a new outside plaza area with paving, landscaping, etc. in the first 6 months of ownership. These investments total some $15m.

We highlight this as it clearly demonstrates that if our intention was to focus on the lower taxed tribal facilities then clearly we would not have made these investments at all and we would certainly have not made and completed them in a time frame of 4 months for all games and 6 months for all physical improvements.

Below is a table showing a summary of machine increases at four properties, continually being expanded in response to market forces:


As you can see, our approach to business is to maximize the performance of each business operation.

f. Question: KDOT/ ODOT traffic numbers for I-35

We have provided as an attachment the Traffic Volume Map for the major roadways in the vicinity of Exit 19, including I-35, Highway 160, and Highway 81.

We would note that we propose using a traffic volume count near the state line to give us an estimate that would include traffic leaving and entering the state rather than immediately adjacent to Exit 19 to eliminate local traffic (including commuters) that would inflate the total traffic but not add to the capture rate of traffic passing through the area.

Riverwind

Year No. of Slots Slot increase

2006 2,025

2007 2,130 105

2008 2,250 120

2009 2,325 75

2010 2,488 163

463

Goldsby

2006 160

2007 200 40

2008 225 25

2010 299 74

139

Newcastle

2006 700

2007 1,200 500

2009 1,275 75

2010 1,892 617

1,192

WinStar

2002 243

2003 1,250 1,007

2004 1,500 250

2006 2,240 740

2010 6,026 3,786

5,783

Total 5 year slot increase





We also note that Exit 19 has the benefit of traffic from two other US-highways which intersect in the city of Wellington. We believe placement of the travel plaza at a location that includes three major highways is a significant benefit to the State in regards to traffic capture versus Exit 33. If Peninsula Gaming were forced to use Site B this will eliminate any potential for a travel plaza at Site B.

Cummings notes in footnote 7, on page 16 of 90 in his report, that a portion of his calculated gaming revenue differential between Peninsula Gaming’s Site A and Site B is the loss of traffic capture.

It is helpful to understand that truck drivers are required to take federally mandated breaks. This mandate is one of the reason you see trucks parked at the KTA rest areas every night. To get a sense of the number of trucks that are currently stopping in the area for these breaks, we did a head count of trucks in rest areas within 50 miles of Exit 19 in the early morning hours (approximately 3:00 am). That net count exceeded 300 trucks, which stopped overnight in the area, roughly 7.5% of the total daily truck traffic on I-35 at the Kansas border. Trucks can only stop where they have the capacity and the amenities to do so.

It is important that there are many more trucks parked in the vicinity of Exit 19 that we have not counted such as those parked in non-KTA rest areas, e.g. Exit 4 on I-35. It is also important to note that current capacity is limited and the travel plaza is a value-added strategy to the State of Kansas.

To put that in perspective, using our projected daily win per patron, the 300 trucks that are already stopping in the immediate area would be the equivalent of $7 million in gaming revenues.


g. Question: Schematics for Travel Plaza The schematic below shows the Travel Plaza site relative to the casino site. The plan actually includes truck parking for up to 180 trucks. We indicated in our Review Board presentation that the Travel Plaza would include at least 100-truck parking capacity.

I-35 is an important economic engine for development in Kansas and Oklahoma. Literally, millions of dollars of economic opportunity drives up and down the corridor.

Using traffic data from the southern border of Kansas, approximately 14,000 vehicles a day enter or leave Kansas via I-35. That means approximately 8 million people in cars and trucks drive by Exit 19 every year. That population base is larger than Dallas-Fort Worth. It is also a population base that the gravity model will never successfully predict.

Development of full service travel facilities that offer a wide range of food, competitive fuel prices, and other comfort amenities is a tool that has generated millions of dollars in gaming revenues for the Chickasaw Nation.

The strategy does involve robust services for travelers. It also involves deployment of gaming machines the match the market place, including truckers – who we like to call the “high rollers” of the highway.


Our Travel Plaza development is planned for Year-3 to allow time for the main facility to be fully up and operational and traffic patterns established. We have an agreement with the Kansas Turnpike Authority that we would not open the travel plaza until after our direct turnpike access is fully implemented and operational.

The key criteria for success of the associated gaming amenity are that it provides a sense of exclusivity and a sense of easy access.

In collaboration with CBRE, and use of data specific to our travel plaza operations, we project the total traffic capture gaming revenues at the facility will exceed $10 million.

We advised the Review Board that we counted over 300 trucks parked nightly near our proposed location, stopping under federally mandated rest requirements. The truck drivers will stop where they have the capacity and the best amenities. This count represents roughly 7.5% of the total daily truck traffic on I-35 alone (total count is 4,060 trucks daily, per our response to question (f)) and even excludes truck traffic on Highways 160 and 81. Again, we provided the traffic data from K-DOT and KTA in our response to question (f).

To put that in perspective, using our projected daily win per patron, the 300 trucks that are already stopping in the immediate area would be the equivalent of $7 million in gaming revenues. In addition, for each 100 cars representing 150 patrons (1.5 passengers per car) would account for an additional $3.5m in gaming revenue in its own right.

As casual travelers stop at our facility, we also expect to add them to our players club data base and will used that data to build a customer base that extends beyond traffic intercept.

Cummings appeared to assign a travel plaza adjustment for incremental gaming revenue of $2.9m and 20,000 visitors. In contrast, Wells Gaming Research assigned $5m in incremental gaming revenue and 100,000 visitors. In 2008, Cummings assigned $5.9m in a traffic intercept estimate called “Frontage Traffic” to Marvel Gaming, Penn Gaming, and the generic casino at Exit 19. Neither of these developments had direct access proposed to I-35 at the time these projections were made.

This appears to be a change in Cummings’ methodology since 2008 which undervalues gaming revenues for our travel plaza.


h. Ownership Organization Chart and Structure

Global Gaming KS, LLC (GG-KS or the Company) included in its original application a disclosure that the company was contemplating the involvement of an investor which could be incorporated in the project as a preferred lender with the right of converting the debt to an equity position (subject to the approval of the Lottery and appropriate background approvals) or a direct equity position in the Company. In the past several weeks, the Company, and the equity investor, came to the conclusion that the best approach was to take the common equity route rather than through a preferred loan arrangement. After research by legal counsel, it was determined that under the Kansas Expanded Lottery Act (KELA), the Company had an obligation to notify the Lottery and Kansas Racing and Gaming Commission (KRGC) of this intent. As such, GG-KS provided the KRCG with background materials on that investor and discussed procedures for amending the application to make those changes. We have submitted an amended operating agreement for GG-KS for review of the Lottery’s Counsel. We are told Lottery’s Counsel does not object to the contract provisions as provided. Mr. Fulton is a passive investor in the development and does not have any day to day management role in the Casino. As shown in the Revised Ownership Structure, Mr. Fulton will own a 50% equity interest in GG-KS.


As one can see from Mr. Fulton’s background, included below and as published by the International Gaming Institute in Las Vegas, NV, Mr. Fulton has considerable experience and expertise in the gaming industry. Stan Fulton was a pioneer in the video slot machine industry. Products that he was responsible for include: the construction of the first multi-line video slot machine, the first video full color poker machines, and the use of the first credit meters in the State of Nevada While at Anchor Gaming, Fulton helped build the first slot machines using a wheel as a bonus feature, which led to a joint venture with IGT on the Wheel of Fortune machine. Wheel of Fortune was the most successful slot machine to hit the floor. When he left Anchor Gaming, Mr. Fulton acquired Sunland Park Racetrack and Casino from Anchor Gaming and over the years has tripled that racino's (race track with slot machines) business. His philanthropy includes major gifts to the University of Nevada at Las Vegas, New Mexico State University, Hope International University in Fullerton, California, Randolph-Macon Academy in Front Royal, Virginia; and the City of Sunland Park, New Mexico.

"If you want to be successful, and I think you probably want to be successful, there are many things that are necessary to achieve success. One is dedication - you have to put forth the extra effort. Number two is common sense; there is a difference between brilliance and common sense. A good example of this took place in 1976 when we had a heat problem in the first multi-line video slot machine. I was dedicated to solving the problem and worked through a Labor Day weekend. I used common sense - hot air rises - so I put a fan at the top of the slot machine and created an air flow channel so that the air being expelled flowed across the top of the PC boards.

I'm not brilliant, but I did use common sense. Then again, when the general manager, who was an engineer, saw that I had solved the problem, he said that I was a master of hot air." – By Stan Fulton (as quoted from by the International Gaming Institute).


Attachments and Other Supporting Information:

1) Facebook comments, October – November 2010 (approximately 30 days), from WinStar and Riverwind customers

2) CBRE Analysis of Auto Racing v. Equestrian Visits with Lang Research Supporting Information.

3) Traffic Volume Map of major roadways in the vicinity of Exit 19 off I-35, as provided by Traffic Engineers Wilson & Company.

4) “DISPROVING THE EXIT 33 MYTH: Exit 19 the Best Bet for Kansas”, 33-page report prepared with the assistance of CBRE.


Attachments and Other Supporting Information: (b) Facebook comments, October – November 2010 (approximately 30 days), from WinStar and Riverwind customers

Gaming Spend Per Visitor - Auto Racing v. Equestrian visits (please see Lang Research: Interest in Casino Gambling Profile Report, attached)

If Both Had the Same # of Visitors, we'd conclude a 34.3% premium in visitation spending by Auto Racing visitor v. an Equestrian visitor

Approach #1 - TAMS Survey for Gaming Participation Rates, Adult Ratio per Historic Motor Sports Series

Auto Racing Equestrian CommentNumber of Visitors 100,000 100,000 we do not have the projections used by both groups

% Children 15.6% 28.5%% Adults 84.4% 71.5%# of Adults 84,420 71,454

Casino Participation While Vacationing

Enthusiasts 15.7% 15.7%

Moderate Interest 31.6% 31.6%

Relative Participation Factor (1.0 would equal the same the same ratio as the US/Canadian survey population)

Enthusiasts 1.23 1

Moderate Interest 1.02 1

Assumed Participation Rates of GroupsEnthusiasts 90.0% 90.0% GGS assumptionModerate Interest 50.0% 50.0% GGS assumption

Number of Gaming VisitsEnthusiasts 14,672 10,096Moderate Interest 13,605 11,290Total 28,277 21,386

Win / Visit

Enthusiasts $70 $70Moderate Interest $50 $50

Total WinEnthusiasts $1,027,053 $706,750Moderate Interest $680,260 $564,485Total Win $1,707,313 $1,271,235

Win / Visitor (all event visitors) $17.07 $12.71

Premium: Auto Racing Visitor vs. Equestrian Visitor 34.3%

GGS assumption that enthusiasts will game more; conservative spend/visit estimates as the length of the casino trip will be reduced by the main activity.

Tourism Ministry of Canada, Interest in Casino Gambling Profile Report, 2000 found people that sought out auto racing were 23% more likely to be Casino Enthusiasts. Harrah's Survey 2003 also points to casino gamblers more likely to being auto racing spectators than non-spectators (14% to 13%).

Tourism Ministry of Canada, Interest in Casino Gambling Profile Report, 2000 found people that sought out auto racing were 23% more likely to be Casino Enthusiasts. Harrah's Survey 2003 also points to casino gamblers more likely to being auto racing spectators than non-spectators (14% to 13%).

Auto racing attendance breakdown estimate based on Historic Motor Sports Series having 67% of spectators between 35-64; equestrian assumes children attendees are representative of the population as a whole.

Tourism Ministry of Canada, Interest in Casino Gambling Profile Report, 2000 represents the US adults surveyed. May be overstated for equestrian attendees since many will be grooms, shoesmiths and care-giversTourism Ministry of Canada, Interest in Casino Gambling Profile Report, 2000 represents the US adults surveyed. May be overstated for equestrian attendees since many will be grooms, shoesmiths and care-givers

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Gaming Spend Per Visitor - Auto Racing v. Equestrian visits (please see Lang Research: Interest in Casino Gambling Profile Report, attached) . If Both Had the Same # of Visitors, we'd conclude a 34.3% premium in visitation spending by Auto Racing visitor v. an Equestrian visitor

michael.chang

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TAMS: Interest in Casino Gambling Profile Report

Page 1

TAMSTAMSTAMSTAMSTravel Activities &Motivation Survey

BackgroundAn association of Canadian tourism ministries and organizations have collaborated to conduct two large scale surveys to assess the travel activities and motivators of pleasure travel among Canadians and Americans. This survey, known as the Travel Activities and Motivation Survey (TAMS), represents the comprehensive assessment of travel behavior and motivators, and provides a rich and authoritative database by which to develop marketing strategies and travel products to attract visitors to Canada and Ontario. A series of analyses are being conducted using the TAMS database to explore the travel patterns of the marketplace as well as the factors which motivate travel behavior. TAMS consisted of both a telephone survey and a self-completed mailback survey. The survey was conducted in Canada and the United States between September 27, 1999 and April 16, 2000. The telephone survey was completed by 28,397 individuals in the United States and by 18,385 individuals in Canada. Respondents were selected randomly within the household. People participating in the telephone survey who had travelled in the past two years or expressed interest in travel in the next two years were asked to complete a mailback questionnaire. Overall, 40,271 qualified for the mailback questionnaire. Of these 11,892 (29.4 %) returned usable questionnaires. The response rate was higher in Canada with 5,490 (35.2 %) returning the questionnaire while 6,405 (26.0 %) of the U.S. respondents returned the questionnaire. This current study examines interest in casino gambling while respondents are not travelling and while they are travelling. The database was used to identify sectors of the market that exhibit a moderate or high interest in casino gambling. This report provides the demographic profile, Canadian travel activities, Canadian travel intentions, vacation experiences sought during the past two years, vacation activities participated in during the past two years, media consumption habits, information sources consulted to plan brief and longer vacations, and impressions of Canada and Ontario relative to the interest shown in casino gambling. This report also provides an Overall Market Potential, identifying those segments that offer the best potential for marketing, advertising and promotional activities related to casino gambling.


Page 2


Casino Gambling Interest IndexConstruction of the Index

The TAMS Mailback Survey contained three items specifically associated with casino gambling that were used to construct an overall Casino Gambling Interest Index. These were:

� How often the respondent had visited casinos during the past two years while not travelling: “frequently”, “occasionally”, “rarely” or “not at all”

� Whether a casino gambling vacation experience had been sought during the past two years� Whether the respondent had visited a casino and gambled while travelling in the past two years

The responses to the first of these items (i.e,. the extent to which casinos had been visited during the past two years while not travelling) was converted into a four point scale where “Not at all” was set to “0”, “Rarely” was set to “1”, “Occasionally” was set to “2” and “Frequently” was set to “3”. The two variables, which asked whether or not the individual visited a casino to gamble during the past two years while travelling, were converted into binary variables where “0” was “Did not visit a casino to gamble” and “1” was “Did visit a casino to gamble”. The three items were summed up to produce an overall score ranging from “0” to “5”. This score was reduced to three levels as follows: A score of “0” was set to “Low Interest”, a score between “1” and “3” was set to “Moderate Interest” and a score between “4” and “5” was set to “Enthusiast”. This scoring scheme meant that in order to qualify as a Casino Gambling Enthusiast, it was necessary for those who “frequently visited a casino while not travelling” to have sought out a casino vacation experience or to have visited a casino and gambled while on a trip during the past two years, and those who “occasionally visit a casino while not travelling” to have both sought out a casino gambling vacation experience as well as visited a casino to gamble at least once while on a trip during the past two years. Those who never visited a casino were considered to have a Low Interest while all others were classified as having a Moderate Interest in casino gambling.


Page 3


Interest in Casino Gambling

Canada versus United StatesBased on Visiting a Gambling Casino While Travelling and Not Travelling

Base: Percent of Population(18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

61.8%52.7%

31.9%

31.6%

6.3%15.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CanadaUnited States

EnthusiastModerate InterestLow Interest

Americans were much more likely to have visited a gambling casino while travelling, and not travelling. Thus, Americans were

149 % more likely to be classified as Casino Gambling Enthusiasts than

Canadians. Clearly, casino gambling is a more prevalent activity in the United

States than in Canada.

Population: 1,238,000Unweighted Sample Size = 399

Population: 6,263,000Unweighted Sample Size = 1,807






Page 4



Canada: By ProvinceBased on Visiting a Gambling Casino While Travelling and Not Travelling

Base: Percent of Population (18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

5%

4%

9%

6%

6%

7%

6%

17%

11%

32%

21%

35%

36%

27%

37%

26%

24%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Newfoundland

Prince Edward Island

Nova Scotia

New Brunswick

Quebec

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

EnthusiastModerate Interest

Among Canadians, visiting a gambling casino (while travelling and not travelling) was more

prevalent in Ontario and Saskatchewan compared to other provinces. There was also above average interest in casino gambling in Quebec and Nova Scotia. Casino Gambling Enthusiasts were most frequently found in

Ontario. Interest in casino gambling tended to be lower in New Brunswick, Newfoundland

and P.E.I. ( based on a small sample).

Province of Residence

Small Sample Warning for P.E.I. n=11


Page 5



United States: By RegionBased on Visiting a Gambling Casino While Travelling and Not Travelling


12%

18%

16%

19%

19%

14%

17%

13%

11%

28%

23%

33%

33%

33%

42%

30%

33%

34%

0% 10% 20% 30% 40% 50% 60%

South Atlantic

East South Central

West South Central

Mountain

Pacific /Hawaii

West North Central

East North Central

Middle Atlantic

New England


Interest in casino gambling was somewhat higher the West North Central region of the United Sates. On the other hand, the level of interest in casino gambling was

somewhat lower in East South Central and South Atlantic regions of the country relative to other regions of the U.S.

Region of Residence

Maine, Connecticut, Massachusetts, Rhode Island, Vermont

Wisconsin, Illinois, Michigan, Ohio, Indiana

New Mexico, Arizona, Utah, Colorado, Nevada, Idaho, Wyoming, Montana

Alabama, Mississippi, Tennessee, Kentucky

California, Hawaii, Oregon, Washington, Alaska

Pennsylvania, New York, New Jersey

Florida, Georgia, North Carolina, South Carolina

Texas, Oklahoma,Arkansas, Louisiana

Kansas, Nebraska, South Dakota, Missouri, Iowa, Minnesota


Page 6



Canada: By DemographicsBased on Visiting a Gambling Casino While Travelling and Not Travelling

Base: Percent of Population (18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years6%

7%

6%

6%

4%

7%

9%

7%

7%

7%

8%

5%

3%

6%

5%

7%

7%

32%32%35%

37%30%

27%34%

30%27%

33%32%

33%25%

33%29%

32%38%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Male

Female

Young Singles

Young Couples

Young Families

Mature Families

Mature Couples

Mature Singles

Senior Couples

Senior Singles

High School/Trade School

University/College

Advanced University Degree

Undefined

Less than $40K

$40K to $80K

$80K Plus


In Canada, young couples and mature couples were the most likely to exhibit an interest in casino gambling. This interest

wanes among families, and especially young families. The incidence of Casino

Gambling Enthusiasts declined as the level of education increased, but increased as the household income increased. This

indicates that vacation packages with a casino gambling theme should be targeted at couples with higher household incomes

but less formal education.

Technical NoteSee Appendix One for a description of each of

the life cycle stages.


Page 7



United States: By DemographicsBased on Visiting a Gambling Casino While Travelling and Not Travelling

Base: Percent of Population (18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years17%

14%

15%

17%

12%

14%

21%

17%

15%

14%

16%

16%

12%

14%

14%

16%

19%

33%

30%

34%

39%

32%

31%

31%

32%

27%

22%

28%

34%

34%

30%

26%

35%

38%

0% 10% 20% 30% 40% 50% 60%

Male

Female

Young Singles

Young Couples

Young Families

Mature Families

Mature Couples

Mature Singles

Senior Couples

Senior Singles

High School/Trade School

University/College

Advanced University Degree

Undefined

Less than $40K

$40K to $80K

$80K Plus


The demographic profile of those interested in casino gambling in the United

States was somewhat different than that observed in Canada. For example,

American males were more likely than females to exhibit an interest in casino

gambling. As well, those with advanced degrees exhibited a greater interest in

casino gambling in the United States than in Canada. However, similar to Canada, the level of interest in casino gambling

tended to increase as a function of household income and was highest among

young couples and mature couples. Overall, the primary U.S. target markets for casino gambling are affluent young

couples, mature singles & mature couples.

Technical NoteSee Appendix One for a description of each of

the life cycle stages.


Page 8



Canada: By Market SegmentBased on Visiting a Gambling Casino While Travelling and Not Travelling

Base: Percent of Population(18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

12%

5%

4%

3%

4%

6%

6%

11%

8%

5%

7%

7%

35%

43%

31%

32%

29%

29%

37%

35%

28%

36%

27%

33%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Affluent Young Singles

Affluent Young Couples

Young Mainstream Market

Affluent Families

Mainstream Young Families

Mainstream Mature Families

Affluent Mature Singles

Mainstream Mature Couples

Mainstream Mature Singles

Affluent Mature & Senior Couples

Mainstream Senior Couples

Affluent & Mainstream Senior Singles


In terms of the market segments (see technical notes) in Canada, interest in casino gambling was highest among Affluent Young Singles, Affluent Young Couples, Affluent Mature

Singles, Mainstream Mature Couples, Affluent Mature and Senior Couples and Senior Singles.

Affluent Young Singles and Mainstream Mature Couples were especially likely to be Casino Gambling Enthusiasts. In general, the

level of interest shown in casino gambling was lower within the family segments.

Technical NoteThe market segments used in this analysis

have been derived using the Ontario Tourism Marketing Partnership (OTMP)

tracking database. See Appendix Two for a description of each of these segments.


Page 9



United States: By Market SegmentBased on Visiting a Gambling Casino While Travelling and Not Travelling


17%

19%

16%

16%

11%

15%

17%

22%

17%

18%

15%

15%

35%

42%

35%

41%

29%

32%

40%

31%

26%

37%

26%

22%

0% 10% 20% 30% 40% 50% 60% 70%




Affluent Families










A different pattern was observed in the United States with all segments having a higher

incidence of Casino Gambling Enthusiasts. In general, the five affluent segments exhibit a greater interest in casino gambling than the mainstream segments. There is also a high

interest in casino gambling among Mainstream Mature Couples. These represent prime markets

for casino gambling promotional activity directed at the United States.

Technical NoteThe market segments used in this analysis

have been derived using the OTMP tracking database. See Appendix Two for a

description of each of these segments.


Page 10


Interest in Casino Gambling Based on Visits to Casinos While Travelling & Not Travelling

Canada vs. U.S.: By Trips In Canada Last Two YearsBase: Percent of Population (18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

7%

14%

24%

25%

35%

31%

35%

5%

0% 10% 20% 30% 40% 50% 60% 70%

No DomesticTrips

Took DomesticTrip

No Trips fromU.S. to Canada

Took Trip fromU.S. to Canada


In Canada, those who travelled domestically were slightly more likely to exhibit an interest in

casino gambling than those who did not travel domestically. However, Americans who took a trip to Canada within the last two years were

69 % more likely to be Casino Gambling Enthusiasts than those who did not take a trip to

Canada. This difference may partially be attributable to the higher level of affluence of

Casino Gambling Enthusiasts, as affluent households were more likely to have taken a trip

to Canada within the last two years.

Canada

UnitedStates


Page 11



Canada: Interest By Province Travelled ToBase: Percent of Population (18 Plus) Who Took a Trip to Each Province During the Last Two Years

7%

6%

5%

5%

6%

8%

7%

7%

7%

7%

30%

37%

34%

35%

37%

38%

34%

36%

32%

32%

36%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Newfoundland/ Labrador


Nova Scotia

New Brunswick

Quebec

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

Yukon


In Canada, there was a weak association between interest in

casino gambling and the provinces visited during the past two years.

However, those who exhibited interest in casino gambling were

somewhat more likely to have visited Ontario or Quebec than other

provinces during the past two years.

Destination Province


Page 12



United States: Interest By Province Travelled ToBase: Percent of Population (18 Plus) Who Took a Trip to Each Province During the Last Two Years

28%

24%

19%

13%

25%

27%

20%

21%

21%

21%

15%

41%

36%

42%

44%

39%

35%

38%

42%

41%

38%

40%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Newfoundland/ Labrador


Nova Scotia

New Brunswick

Quebec

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

Yukon


Destination Province

There was only a weak association between the level of interest exhibited in casino gambling by Americans, and the Canadian province visited during the past two years. However, those with an interest in casino gambling were slightly more likely to have

visited Newfoundland/Labrador during the past two years. This result reflects

the increased affluence of visitors from the U.S. to Newfoundland/Labrador

rather than indicating that this destination is of particular interest to

casino gamblers.


Page 13


Interest in Casino Gambling Based on Visits to a Casino While Travelling & Not Travelling

Intentions to Travel to Canada in Next Two YearsInterest in Casino Gambling By Intentions to Travel in Canada During Next Two Years


69%

71%

67%

21%

17%

16%

11%

10%

11%

23%

24%

20%

0% 20% 40% 60% 80% 100%

Enthusiast

ModerateInterest

Low Interest

Enthusiast

ModerateInterest

Low Interest

Very likelyFairly likely

Among Canadians, the likelihood of taking a trip within Canada during the next two years is unrelated to the level of interest in casino gambling. There

is, however, a modest association between interest in casino gambling

and travelling to Canada among Americans. This likely reflects the

fact that travellers to Canada from the United States are more affluent (and hence more likely to be interested in casino gambling) rather than the fact that Canada is an especially attractive

destination for people interested in casino gambling.

Canada

UnitedStates


Page 14


General Vacation Experiences SoughtDuring Pleasure Travel in the Past Two Years

By Interest in Casino Gambling Based on Visits to Casinos While Travelling & Not Travelling Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

-0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Exploration

PersonalIndulgence

Romance &Relaxation

Sports &Learning

Socializing


Casino Gambling Enthusiasts were more likely to have sought out vacation experiences associated with

personal indulgence (e.g., to experience the good life, visiting a casino, experiencing city life such as nightlife). They were somewhat more likely to have

pursued sports and learning vacation experiences (e.g., to participate in a hobby or sport). Advertising

and promotional materials designed to promote casino gambling-related tourism should emphasize

the opportunities for entertainment and personal indulgence offered by the destination.

Technical NoteThis analysis is based on a factor analysis of the vacation experiences sought

during the past two years. See Appendix Three for a description of the individual items associated with each of these factor scores. The factor scores

for each dimension are determined by the weighted sum of all items. The weight for each item is determined by how much the item is correlated with

the overall factor score. Factor scores are standardized with an average of “0” and a standard deviation of “1”. A value of “0” means that the travellers in

the group exhibited an average tendency to pursue a given vacation experience. Progressively more positive values indicate that the travellers in

the group were progressively more likely to have pursued the vacation experience. Progressively more negative values indicate that the travellers

within the group were progressively less likely to have pursued the vacation experience.


Page 15


Outdoor Activities SoughtDuring Pleasure Travel in the Past Two Years


-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Team Sports

Natural Sightseeing

Swimming & Sunbathing

Golfing

Hunting

Canoeing, Kayaking, Hiking

Fishing

Motorcycling

Extreme Sports

Fitness

Skiing

Snowmobiling

Biking

Skating

Extreme Winter Sports

Sailing, Windsurfing & Scuba

Natural Phenomena


Those with an interest in casino gambling tended to be more active in most outdoor activities than

those who were not interested. This was especially apparent among Casino Gambling

Enthusiasts, who tended to be more affluent and hence more likely to pursue outdoor activities

while travelling. Casino Gambling Enthusiasts were especially likely to be interested in fishing and golfing. Combining these activities in casino

gambling tourism packages may be especially effective, particularly for affluent travellers.

Technical NoteThis analysis is based on a factor analysis of the outdoor vacation activities sought during the past two years. See Appendix Four for a description of the individual items associated with each of these factor scores. The factor scores

for each dimension is determined by the weighted sum of all items determined by how much any given item is correlated with the overall factor score. Factor scores are standardized with an average of “0” and a standard

deviation of “1”. A value of “0” means that the travellers in the group exhibited an average tendency to pursue a given vacation experience.

Progressively more positive values indicate that the travellers in the group were progressively more likely to have pursued the vacation experience. Progressively more negative values indicate that the travellers within the

group were progressively less likely to have pursued the vacation experience.


Page 16


Cultural and Entertainment Activities SoughtDuring Pleasure Travel in the Past Two Years


-0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Shopping and dining

Museums, art, historical sites

High arts

Theme parks

Professional sports

Zoos, aquariums, planetariums

Agricultural and local fairs

Concerts, carnivals and festivals

Aboriginal cultural experiences

Gardens and natural attractions

Cultural festivals

International sporting events

Casino gambling and horse racing

Rodeos and auto racing

French Canadian cultural experiences


As would be expected, Casino Gambling Enthusiasts were much more likely to have visited a casino or a racetrack than those with a moderate or

low interest in casino gambling (Note: Some of these items were used in the construction of the scale). Enthusiasts were also more likely to have

attended an auto racing event or rodeo, a professional sports event, participated in

shopping/dining or visited a theme park. Combining opportunities to gamble together with sports events or a shopping/dining experience may be particularly

appealing to Casino Gambling Enthusiasts.

Technical NoteThis analysis is based on a factor analysis of the culture and entertainment

vacation activities sought during the past two years. See Appendix Five for a description of the individual items associated with each of these factor scores.

The factor scores for each dimension is determined by the weighted sum of all items determined by how much any given item is correlated with the

overall factor score. Factor scores are standardized with an average of “0” and a standard deviation of “1”. A value of “0” means that the travellers in





Page 17


Accommodation-Related Activities SoughtDuring Pleasure Travel in the Past Two Years


-0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Camping in publicgrounds orwilderness

Cooking or winetasting school

Lakeside orwilderness lodge

Remote fly-in lodgeor outpost

Ski resort

Seaside resort

B&B, spa or gourmetrestaurant


Casino Gambling Enthusiasts were more likely to have stayed in a seaside resort, a lakeside

wilderness lodge or a remote fly-in lodge than those with less interest in casino gambling.

This pattern likely reflects the relative affluence of the Casino Gambling Enthusiasts.

Technical NoteThis analysis is based on a factor analysis of the accommodation-related

activities sought during the past two years. See Appendix Six for a description of the individual items associated with each of these factor scores.

The factor scores for each dimension is determined by the weighted sum of all items determined by how much any given item is correlated with the

overall factor score. Factor scores are standardized with an average of “0” and a standard deviation of “1”. A value of “0” means that the travellers in





Page 18


Day and Overnight Touring Activities in the Past Two Years By Interest in Casino Gambling Based on Visits to Casinos While Travelling & Not Travelling Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

-0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00

Guided tours ofcountry or city

Winery tours

Touring by personalvehicle

Great Lakes boat andsubmarine cruise

Boat and train daytours

Scenic day tours byair

Ocean cruises


Technical NoteThis analysis is based on a factor analysis of the overnight tours

taken during the past two years. See Appendix Seven for a description of the individual items associated with each of these factor scores. The factor scores for each dimension is determined by the weighted sum of all items determined by how much any

given item is correlated with the overall factor score. Factor scores are standardized with an average of “0” and a standard deviation

of “1”. A value of “0” means that the travellers in the group exhibited an average tendency to pursue a given vacation

experience. Progressively more positive values indicate that thetravellers in the group were progressively more likely to have pursued the vacation experience. Progressively more negative

values indicate that the travellers within the group were progressively less likely to have pursued the vacation experience.

Casino Gambling Enthusiasts were slightly more likely to have taken all seven types of tours in the last two years compared to those

with a moderate or low interest in casino gambling. In particular, Casino Gambling

Enthusiasts are likely to have taken an ocean cruise, which usually offers opportunities for

casino gambling.


Page 19


Sources of Information Consulted to Plan Brief Vacations By Interest in Casino Gambling Based on Visits to Casinos While Travelling & Not Travelling Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

0% 10% 20% 30% 40% 50% 60% 70% 80%

Past experience/ Been there before

Advice of friends/ relatives

Internet/ World Wide Web

A travel agent

Articles in newspapers/ magazines

An airline's reservation system

An auto club such as CAA/AAA

Advertisements in newspapers/ magazines

Travel information offices including printed materials

Travel information you received in the mail

Travel guides such as Fodor's or Michelin

Programs on television

Other mentions

Advertisements on television

Visits to trade/ travel/ sportsmen's shows

None of these


Casino Gambling Enthusiasts were more likely to rely on their past travel experience or the advice of

family and friends than other sources of information when planning brief vacations. They

also consulted a larger variety of information sources when planning their brief vacations and especially travel agents, the Internet, newspaper

and magazine articles, airline reservation systems, newspaper and magazine advertising and information from auto clubs. Those with a

moderate interest in casino gambling generally consulted a larger variety of information sources

when planning brief vacations than those with low interest, but fewer information sources than the

Enthusiasts. Once again, this pattern was partially attributable to the relative affluence of the Casino

Gambling Enthusiasts.


Page 20


Sources of Information Consulted to Plan Longer Vacations By Interest in Casino Gambling Based on Visits to Casinos While Travelling & Not Travelling Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

0% 10% 20% 30% 40% 50% 60%

Past experience/ Been there before

Advice of friends/ relatives

A travel agent

Internet/ World Wide Web

An airline's reservation system

An auto club such as CAA/AAA

Articles in new spapers/ magazines

Travel information offices including printed materials

Advertisements in new spapers/ magazines

Travel information you received in the mail

Travel guides such as Fodor's or Michelin

Programs on television

Other mentions

Advertisements on television

Visits to trade/ travel/ sportsmen's shows

None of these


In the same manner as planning brief vacations, Casino Gambling Enthusiasts are more likely to rely on their past travel experience when planning longer

vacations. They also consult a larger variety of information sources when planning their longer vacations--especially travel agents, the Internet,

airline reservation systems, auto club information, and newspaper and magazine articles and

advertising. As with brief vacations, those with a moderate interest in casino gambling consult a larger variety of information sources when planning longer

vacations than those with low interest, but fewer information sources than the Enthusiasts.


Page 21


Interest in New Tourism Products By Interest in Casino Gambling (Part One of Two)

Percent Stating Attraction Would Make Them “A Lot More Interested” in Taking a Trip to OntarioBase: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

41%

36%

28%

21%

19%

18%

17%

21%

36%

32%

29%

22%

17%

18%

18%

18%

35%

28%

30%

21%

21%

19%

20%

18%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Overnight train tours through naturalterrain

Cruises on the Great Lakes (one or morenights)

Game parks or game preserves/ wildlifeviewing areas

A science and technology theme park suchas Epcot

An aboriginal attraction such as the IndianMuseum

A garden attraction such as CypressGardens or Tivoli Park

A heritage attraction with historicalreconstructions/ re-enactments

A movie theme park such as UniversalStudios or MGM


Respondents were asked whether each of 16 new tourism attractions would make them “a lot more interested” in taking a trip to Ontario. Among the

more popular tourism attractions, Casino Gambling Enthusiasts expressed increased interest in an

overnight train tour through natural terrain or a Great Lakes cruise. Those with a moderate interest in casino gambling also exhibited increased interest in Great Lakes cruises, but to a lesser degree than

the Casino Gambling Enthusiasts.


Page 22


Interest in New Tourism Products By Interest in Casino Gambling (Part Two of Two)

Percent Stating Attraction Would Make Them “A Lot More Interested” in Taking a Trip to OntarioBase: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

22%

17%

19%

16%

13%

11%

11%

10%

18%

17%

18%

15%

12%

10%

8%

8%

15%

16%

14%

13%

13%

9%

8%

8%

0% 10% 20% 30%

A cultural festival such as Mardi Gras

A children-oriented amusement park suchas Disneyland

A wine region such as Napa Valley or Coted'Or in France

A musical festival such as the Jazz Festivalin Montreal

A forestry or mining attraction such as minetours

A film festival such as the Cannes FilmFestival

A musical attraction such as the Rock'nRoll Museum, etc.

World-class trophy fishing tournaments


Among the new tourism attractions which were less popular, Casino Gambling Enthusiasts, and to a

certain extent those with a moderate interest in casino gambling, exhibited more interest than others in a cultural festival and wine tours. Combining these

activities with casino gambling may be an especially effective way to attract Casino Gambling Enthusiasts

to Ontario and Canada.


Page 23


Media Index for Print Media: Canada & United StatesBy Interest in Casino Gambling While Travelling & Not Travelling

Percent Reading Each Publication Type Among Those With an Interest in Casino Gambling By Percent Reading Each Type of Publication in General Market

Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey) 1.07

1.27

1.10

1.25

1.04

1.15

1.29

0.88

1.21

0.98

1.05

0.98

1.19

1.06

1.11

1.05

1.07

1.03

1.01

1.05

1.01

1.10

1.07

1.08

1.09

1.09

Daily newspaper

Travel section of daily newspaper

Weekend edition of newspaper

Travel section of weekend newspaper

Community newspaper

Other newspapers

Travel magazines such as Condé Nast Traveler

National Geographic

Sports magazines such as Sports Illustrated

Hobby magazines such as Gardening

News magazines such as Time or Newsweek

Fashion/ homemaking magazines such as Vogue

General interest magazines (The New Yorker)

Enthusiast

Moderate Interest

Media indexing for various types of print media (see Technical Note below)

suggests that the travel section of their daily or weekend newspapers and travel

magazines are the most efficient channels to reach Casino Gambling Enthusiasts. Enthusiasts are also more likely to read sports magazines and general interest

magazines. Those with a moderate interest in casino gambling are also more likely to read sports magazines and the travel section of their daily newspaper.

Technical NoteThe Media Index is computed by dividing the percent within

each segment routinely reading each publication by the percent in the total market who routinely reads each

publication. A score of 1.0 means that readership is the same as the total market. Index values above 1.0 indicate that the readership is above average while index values below 1.0 indicate that readership is below average. For example, an

index value of 1.2 means that people who were very interested in casino gambling were 20 % more likely to read

a particular publication than the general adult population.


Page 24


Media Index for Television Programs: Canada & United StatesBy Interest in Casino Gambling While Travelling & Not Travelling

Percent Reading Each Publication Type Among Those With an Interest in Casino Gambling By Percent Reading Each Type of Publication in General Market

Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

1.11

1.02

1.09

1.20

1.16

1.13

1.14

1.15

1.00

1.11

0.99

1.24

1.04

1.02

1.03

1.08

1.05

1.03

1.04

1.02

1.02

1.04

1.03

0.91

Movies shown on television

Nature shows

Early evening news shows

Professional sports events

Evening situation comedies

Evening drama

Late evening news shows

News magazine shows

Instructional or hobby shows

Morning news shows

Other television programs

Daytime television during weekdays

Enthusiast

Moderate Interest

Casino Gambling Enthusiasts were more likely to watch weekday daytime

television and television sports programming. This programming

represents the most efficient way to reach this target market. Enthusiasts were also more likely to watch late evening news, news magazines and

evening sitcoms and drama programming than those with a

moderate interest in casino gambling.

Technical NoteThe Media Index is computed by dividing the percent within

each segment routinely reading each publication by the percent in the total market who routinely reads each

publication. A score of 1.0 means that readership is the same as the total market. Index values above 1.0 indicate that the readership is above average while index values below 1.0 indicate that readership is below average. For example, an index value of 1.2 means that persons very interested in

casino gambling were 20 % more likely to read a particular publication than the general adult population.


Page 25


Percent Using Internet and Booking At Least One Trip Using the InternetBy Interest in Casino Gambling

Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years: Canada & U.S. (Mailback Survey)

57%

59%

48%

22%

20%

16%

Enthusiast

ModerateInterest

Low Interest

Enthusiast

ModerateInterest

Low Interest

Those with a moderate or high interest in casino gambling were slightly more likely

to use the Internet as an information source and to have booked a trip through the Internet than those with a low interest in casino gambling. The Internet appears

to be a moderately effective communication channel to reach both

Casino Gambling Enthusiasts and those with a moderate interest.

Uses InternetFor Research

(Any Topic)

Booked TripUsing Internet(Last Two Years)


Page 26


Destination Image Mapping- Technical Explanation -

Destination Offers Opportunities for Nature & Outdoor Activities ---->

Des

tinat

ion

Offe

rs O

ppor

tuni

ties

for C

ultu

re &

Ent

erta

inm

ent

----> Culture &

Entertainment Only

Neither Culture/ Entertainment nor

Nature/Outdoor Activities

Nature & Outdoor Activities Only

Culture/Entertainment &

Nature/Outdoor Activities

Respondents were asked to assess the image of Canada and Ontario on a 10-point rating scale for 25 image attributes. These ratings were factor analysed to identify general image dimensions upon which Canada and Ontario

were evaluated (See Appendix Eight for more details). The values of Canada and Ontario were plotted on a destination map to indicate the positioning of Canada for each type of respondent. If Canada or Ontario is found in

the upper left quadrant it is considered to offer excellent opportunities to experience culture and entertainment activities, but less likely to provide opportunities to experience nature or participate in outdoor activities. If Canada or Ontario is found in the lower right quadrant, it is considered to offer excellent opportunities to experience nature

and participate in outdoor activities, but fewer opportunities for cultural experiences or entertainment. When Canada or Ontario is found in the upper right quadrant, it is perceived as a hybrid destination offering opportunities for both

nature/outdoor experiences and culture/entertainment experiences. On the other hand, when Canada or Ontario is found in the lower left quadrant, it is either not well known or has weak imagery on both image dimensions.

HybridDestination

UndefinedDestination


Page 27


Canada and United States

Canadian Vacation ImageryBy Interest in Casino Gambling While Travelling & Not Travelling

Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years Able to Rate Canada On One Plus Attributes : Canada & U.S. (Mailback Survey): Circle Size Denotes Size of the Market


HybridDestination


Moderate InterestIn Casino Gambling

Canadians

Des

tinat

ion

Offe

rs C

ultu

re/E

nter

tain

men

t >

There was little variation in the impressions held of Canada by the level of interest exhibited in casino gambling.

Therefore, while Canadians have a more favourable impression of Canada

as a cultural and entertainment destination than Americans, the

impressions of Canada held by those with a low, moderate and high interest in casino gambling is more or less the

same within each country.

Casino Gambling EnthusiastsCanadiansLow Interest in

Casino Gambling Canadians

Moderate InterestIn Casinos Americans

Low InterestIn Casinos Americans

Casino Gambling

EnthusiastsAmericans


Page 28


Canada and United States

Ontario Vacation ImageryBy Interest in Casino Gambling While Travelling & Not Travelling

Base: Total Population (18 Plus) Who Took a Trip in the Last Two Years Able to Rate Ontario On One Plus Attributes : Canada & U.S. (Mailback Survey): Circle Size Denotes Size of the Market


HybridDestination


Des

tinat

ion

Offe

rs C

ultu

re/E

nter

tain

men

t >

In Canada, Casino Gambling Enthusiasts had a more positive impression of Ontario on the nature and outdoor dimension than those with a moderate

or low interest in casino gambling. Among Americans, Casino Gambling Enthusiasts and

those with a moderate interest in casino gambling were slightly more likely to view Ontario as a

place offering greater opportunities to experience nature and the outdoors.

Low Interest in Casino Gambling

Canadians

Moderate InterestIn Casino Gambling

Canadians

Casino Gambling EnthusiastsCanadians

Moderate InterestIn CasinosAmericans

Low InterestIn Casinos Americans

Casino Gambling

EnthusiastsAmericans


Page 29


Overall Market Potential

Interest in Casino Gambling: CanadaInterest in Casino Gambling By Likelihood of Travel Within Canada (Indexed)

Percent of Population (18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

1.40

1.28

0.88

0.99

0.85

0.83

1.18

1.19

0.91

1.11

0.73

0.97




Affluent Families









The Overall Market Potential Index is constructed to identify those segments which are

most likely to be responsive to marketing, advertising and promotional initiatives designed

to promote casino gambling. This Index indicates that, in Canada, five affluent segments represent the primary target markets for such initiatives.

The Affluent Young Singles and Affluent Young Couples score especially well on this index and

should be considered prime markets for domestic casino-related tourism marketing.

Technical NoteThe Overall Market Potential Index is computed by multiplying the percent who exhibit an Interest in Casino Gambling related vacation

products and the percent likely to take a trip in Canada during the next two years. This index is standardized such that values above 1.0 reflect above average market potential and values below one

reflect below average market potential.


Page 30


Overall Market Potential

Interest in Casino Gambling: United StatesInterest in Casino Gambling By Likelihood of Travel To Canada (Indexed)

Percent of Population (18 Plus) Who Either Travelled in Last Two Years or Intends to Travel in Next Two Years

1.21

1.41

0.94

1.17

0.62

0.84

1.28

1.05

0.75

1.52

0.85

0.64




Affluent Families









The Overall Market Potential Index for the United States shows a similar pattern to the one in Canada. The five affluent segments

comprise the primary target market for casino-related tourism marketing and advertising. The Affluent Young Couples and Affluent Mature and Senior Couples score especially well on this index and should be the primary target

markets for U.S. campaigns and promotional activities. The other three affluent segments (Affluent Young Singles, Affluent Families, Affluent Mature Singles) also do well on this

dimension and should be considered secondary markets for such promotional activity.

Technical NoteThe Overall Market Potential Index is

computed by multiplying the percent who exhibit an Interest in Casino Gambling

related vacation products and the percent likely to take a trip in Canada during the

next two years. This index is standardized such that values above 1.0 reflect above

average market potential and values below one reflect below average market potential.

Travel Activities & Motivation Survey

Interest InCasino Gambling

Profile Report

May, 2001TAMSTAMSTAMSTAMSTravel Activities &Motivation Survey

Travel Activities & Motivation SurveyPrepared by:

Lang Research Inc.on behalf of

Atlantic Tourism PartnershipCanadian Tourism Commission

Department of Canadian HeritageGreater Toronto Hotel Association

Manitoba Ministry of Industry, Trade & TourismNorthern Ontario Heritage Fund

Ontario Casino CorporationOntario Ministry of Agriculture, Food & Rural Affairs

Ontario Ministry of Tourism, Culture & RecreationOntario Tourism Marketing Partnership

Parks CanadaSaskatchewan Tourism Authority

Tourism B.C.Tourism Toronto

Yukon Government Department of Tourism


Interest in Casino Gambling- Key Findings -

In general, Americans are much more interested in casino gambling than Canadians. Thus, 47.3 % of American travellershave at least a moderate interest in casino gambling, while 38.2 % of Canadians exhibit a moderate interest. Moreover, Americans were 149 % more likely than Canadians to be classified as Casino Gambling Enthusiasts. In part, this may reflect the fact that there are a greater number of casinos in the United States than in Canada.

There are important demographic similarities and differences between Americans and Canadians who share an interest in casino gambling. In both countries, the level of interest in casino gambling is highest among the affluent. However, American male travellers were more likely to be Casino Gambling Enthusiasts than American female travellers, while in Canada there was no difference between males and females.

In Canada, the likelihood that a trip will be taken domestically over the next two years is not associated with interest in casino gambling. Alternatively, in the United States, the likelihood that a trip will be taken to Canada over the next twoyears increases from 35 % among those with low interest in casino gambling to 44 % among those who are Casino Gambling Enthusiasts.

Casino Gambling Enthusiasts were more likely to have sought out vacation experiences associated with personal indulgence (e.g., to experience the good life, visiting a casino, experiencing city life such as nightlife). They were also more likely to have pursued sports and learning vacation experiences (e.g., to participate in a hobby or sport). Advertising and promotional materials designed to promote casino gambling-related tourism should emphasize the opportunities for entertainment and personal indulgence offered by the destination.

Individuals who have an interest in casino gambling were more likely to be active in outdoor activities while travelling. This is especially apparent among Casino Gambling Enthusiasts, who tend to be more affluent and hence more active in outdoor activities while travelling. Casino Gambling Enthusiasts were especially likely to be interested in fishing, golfing water sports and team sports. Providing opportunities to participate in these activities as part of casino gambling tourism packages may be especially effective, particularly for affluent travellers.


Page ii

Interest in Casino Gambling- Key Findings (Continued) -

As one would expect, Casino Gambling Enthusiasts were more likely to have visited a racetrack. As well, Casino Gambling Enthusiasts also attend sports events and enjoy shopping/dining. Combining casino gambling with opportunities to attend sports events, gamble in some other way, or to dine and shop may be particularly appealing to the Casino Gambling Enthusiasts.

Casino Gambling Enthusiasts were more likely to rely on their own experience when planning their vacations. If their previous experiences were positive, they might return or seek a similar destination. They also consulted a larger variety of information sources and especially friends and family, travel agents, the Internet, newspaper and magazine articles, airline reservation systems, newspaper and magazine advertising, and information provided by auto clubs.

In terms of new tourism products, Casino Gambling Enthusiasts were most interested in train trips through natural terrain, Great Lakes cruises, wine tours and cultural festivals. Casino Gambling Enthusiasts may be responsive to tourism packages that combine casino gambling with these types of events and tours.

Casino Gambling Enthusiasts, and to a certain extent those with a moderate interest in casino gambling, like to read the travel section of their daily newspaper and travel magazines. They are also relatively heavy viewers of professional sports on television, and daytime television. These may be the most efficient media channels to reach this audience.


Page iii

TAMSTAMSTAMSTAMSTravel Attitudes &Motivation Survey

Intérêt à l’égard des jeux de casino- Principales conclusions -

En général, les Américains se montrent beaucoup plus intéressés aux jeux de casino que les Canadiens. Ainsi, 47,3 % des voyageurs américains ont au moins un intérêt modéré à l’égard des jeux de casino, comparativement à 38,2 % chez les Canadiens. De plus, les Américains ont 149 % plus de chances que les Canadiens d’être classés comme des amateurs de jeux de casino. En partie, ces statistiques peuvent refléter le fait que les États-Unis comptent davantage de casinos que le Canada.

Il existe d’importantes similarités et différences démographiques entre les Américains et les Canadiens qui partagent un intérêt à l’égard des jeux de casino. Dans les deux pays, le niveau d’intérêt à l’égard des jeux de casino est plus élevé parmi les gens plus fortunés. Cependant, les voyageurs mâles américains sont davantage susceptibles de constituer des amateurs de jeux de casino que les femmes américaines, alors qu’au Canada, il n’y a pas de différence entre les hommes et les femmes.

Au Canada, la probabilité d’effectuer un voyage au pays au cours des deux prochaines années n’est pas liée à un intérêt quelconque à l’égard des casinos. Par contre, aux États-Unis, la probabilité d’effectuer un voyage au Canada au cours des deux prochaines années passe de 35 % parmi ceux ayant un faible intérêt pour les jeux de casino à 44 % parmi ceux qui sont considérés comme des amateurs de jeux de casino.

Les amateurs de jeux de casino sont davantage susceptibles de rechercher des expériences de vacances associées à des plaisirs personnels (comme goûter aux plaisirs de la belle vie, visiter un casino, faire l’expérience de la vie nocturne dans une grande ville, etc.). Ils sont également davantage susceptibles de rechercher des expériences de vacances liées aux sports ou à des occasions d’apprentissage (comme s’adonner à un passe-temps ou pratiquer un sport). Le matériel de promotion et de publicité conçu pour encourager le tourisme lié aux jeux de casino devrait mettre l’accent sur les possibilités de s’amuser et de profiter de plaisirs personnels qu’offrent le casino.

Page iv

TAMSTAMSTAMSTAMSTravel Attitudes &Motivation Survey

Intérêt à l’égard des jeux de casino- Principales conclusions (suite) -

Les personnes qui s’intéressent aux jeux de casino sont davantage susceptibles de participer à des activités extérieures durant leur séjour. Cela semble particulièrement vrai chez les amateurs de jeux de casino, qui sont souvent plus fortunés et qui, par conséquent, tendent à participer davantage à ce type d’activités durant leur séjour. Les amateurs de jeux de casino sont particulièrement susceptibles de s’intéresser à la pêche, au golf, aux sports nautiques et aux sports d’équipe. Inclure dans lesforfaits de voyage au casino des possibilités de participer à ces activités pourrait se révéler très efficace, surtout avec les voyageurs plus fortunés.

Comme on pouvait s’y attendre, les amateurs de jeux de casino sont davantage susceptibles d’avoir déjà visité une piste de course. De plus, ils assistent également à des événements sportifs, en plus de s’adonner au magasinage et de manger au restaurant. Combiner les jeux de casino avec des occasions d’assister à des événements sportifs, et de jouer d’une autre façon, de faire du magasine ou de s’offrir un repas au restaurant pourrait se révéler particulièrement attrayant pour les amateurs de jeux de casino.

Les amateurs de jeux de casino sont davantage susceptibles de se fier à leur propre expérience pour planifier leurs vacances. Sileurs vacances précédentes ont été réussies, ils auront tendance à retourner au même endroit ou à chercher une destination similaire. Ils consultent également un large éventail de sources d’information, dont les amis et la famille, les agents de voyage, l’Internet, les articles de journaux et de magazines, les systèmes de réservation des compagnies aériennes, les publicités dans les journaux et les magazines et les clubs automobiles.

Quant aux nouveaux produits touristiques, les amateurs de jeux de casino sont davantage intéressés par les voyages en train à travers des paysages naturels, les croisières sur les Grands Lacs, les tournées vinicoles et les festivals culturels. Ils pourraient être intéressés par des forfaits de voyage combinant les jeux de casino avec ce type d’événements et d’activités.

Les amateurs de jeux de casino, et dans une certaine mesure les personnes ayant un intérêt modéré dans les jeux de casino, aiment lire la section voyages des journaux quotidiens et des magazines de voyage. Ils écoutent également beaucoup d’émissions sportives à la télévision de même que d’autres émissions diffusées durant la journée. La télévision pourrait par conséquent être le média le plus efficace pour rejoindre cet auditoire.

Page v

Table of Contents Executive Summary iiConclusions Principales ivBackground 1Casino Gambling Interest Index: Method 2Interest in Casino Gambling: Canada vs. U.S. 3Interest in Casino Gambling: Canada By Province 4Interest in Casino Gambling: U.S. By Region 5Interest in Casino Gambling: By Demographics 6Interest in Casino Gambling: By Market Segment 8Interest in Casino Gambling: Travel in Canada 10Intentions to Travel to Canada in Next Two Years 13General Vacation Experiences Sought 14Outdoor Activities Sought During Pleasure Travel 15Cultural and Entertainment Activities Sought 16Accommodation-Related Activities Sought 17Day and Overnight Touring Activities Sought 18Sources of Information Consulted to Plan Vacations 19Interest in New Tourism Products 21Media Index for Print Media 23Media Index for Television Programs 24Percent Using Internet to Research or Book Trips 25Destination Image Mapping 26Overall Market Potential Index By Segment 29Technical Appendices


Page vi

Global Gaming KS, LLC Response to Review Board’s follow-on questions 06 December 2010 p. 19 Attachments and Other Supporting Information:

(d) CBRE Analysis of Auto Racing v. Equestrian Visits with Lang Research Supporting Information


(f) Traffic Volume Map of major roadways in the vicinity of Exit 19 off I-35, as provided by Traffic Engineers Wilson & Company


(j) “DISPROVING THE EXIT 33 MYTH: Exit 19 the Best Bet for Kansas”, 33-page report prepared with the assistance of CBRE

Prepared by: Global Gaming Solutions, LLC in Collaboration with CBRE. October 2010

DISPROVING THE EXIT 33 MYTH: Exit 19 the Best Bet for Kansas

- 2 - October 2010

DISPROVING THE EXIT 33 MYTH

Table of Contents The Problem Statement ................................................................................................... 4

The Participants ............................................................................................................. 4

Proofing the Problem ....................................................................................................... 7

Distance Is the Overriding Factor In Determining Casino Spend .......................... 7

The Attractiveness, Proximity and the Amount of Competition ............................ 8

Defining Piece of New Evidence ................................................................................. 15

Solutions ........................................................................................................................... 16

Summary of the Four Solutions .................................................................................. 16

The Resolution ................................................................................................................. 19

Appendix ......................................................................................................................... 20

Appendix #1 – Technical Analysis of Solution 1 ..................................................... 20

Appendix #2 – Technical Analysis of Solution #4 .................................................. 20

Appendix #3 Recreation of State Consultant Gaming Revenue Model for Exit 19 and Exit 33 ............................................................................................................... 24

Appendix #4 – Jayhawk Consulting Services Report ............................................ 29

- 3 - October 2010

Index of Tables Table 1 – Sumner County Competition Grouped by Geographic Zones

(Estimated as Projected in 2008) .......................................................................... 14

Table 2 – Revenue Difference After the Four Solutions (2007$ Millions) ................. 18

Table 3 – Scoeff Calculation Using the State Consultant’s Estimate – “Population A” Example .............................................................................................................. 21

Table 4 – Adjusted Scoeff Calculation Using GGS Estimate - “Population A” Example .................................................................................................................... 23

Table 5 – Recreation of State Consultant Model (2008$ Unless Noted) ................ 24

Table 6 – Recreation of State Consultant Model (2008$ Unless Noted) – Exit 19 Slot Spend Detail ..................................................................................................... 25

Table 12 – Recreation of State Consultant Model (2008$ Unless Noted) – Exit 33 Slot Spend Detail ..................................................................................................... 27

- 4 - October 2010

The Problem Statement The problem this white paper explores is that in 2008 one of the State’s consultants implied there was a 23% revenue gap between essentially identical destination casinos off Exit 19 and Exit 33, respectively.

The Participants Global Gaming Solutions Global Gaming Solutions (GGS) is an experienced casino developer and operator. The entity is best for known for its two highly successful casinos located off Interstate 35 in Oklahoma. One of those casinos, WinStar, is the third largest casino in the world, proving that the entity has experience in developing and operating multi-million dollar destination casinos.

GGS’s expansive knowledge of running casinos on the I-35 Corridor has provided it with the knowledge to create the amenities and marketing philosophies that maximize both revenue and the customer experience.

GGS is seeking to construct and manage on behalf of the State the casino in the South Central Gaming Zone off Exit 19.

The State of Kansas In 2008, the KS legislature passed SB 66 – The Kansas Expanded Lottery Act. SB 66 authorized up to four state-owned casinos in four gaming zones: 1) the Northeast Zone, which consists of Wyandotte County; 2) the Southeast Zone, which consists of Cherokee or Crawford counties, 3) the South Central Zone, which consists of Sedgwick or Sumner counties, and 4) the Southwest Zone, which consists of Dodge County. Slots at the State’s racetracks were also permitted. This paper focuses solely on the state-owned casinos, and the South Central Zone specifically.

In each county within the gaming zones, a local referendum was held to allow voters a choice to allow casinos or not. All counties in the State voted to allow casinos except for Sedgwick County. That meant the South Central license could only go to Sumner County.

The Kansas Lottery Commission The Commission is charged with setting up the procedures for, and entering into, gaming facility management contracts with third party entities. In addition to managing the casinos on behalf of the State, the winning third party entities would also construct the facilities.

- 5 - October 2010

The Kansas Lottery Kansas Lottery Gaming Facility Review Board (KLGFRB) The independent KLGFRB was appointed by the Governor, Senate and House of Representatives to evaluate potential gaming facility managers. SB 66 says the Board may employ any experts, consultants or other professionals at the expense of a prospective gaming facility manager to provide assistance in evaluating a lottery gaming facility management contract submitted to it.

Past Gaming Facility Manager Applicants In 2008, Harrah’s Sumner Gaming, Penn Sumner LLC, and Marvel Gaming formally submitted applications to be the gaming facility manager in the South Central Gaming Zone. Both the Penn Sumner and Marvel Gaming proposals were off Exit 19, while the Harrah’s Sumner Gaming proposal was located off Exit 33.

State Consultants In 2008 and again in 2009, the KLGFRB retained Cummings & Associates, among other consultants, to explore the gaming revenue potential for the South Central and three other Gaming Zones. In this paper, Cummings & Associates is referred to as the “State’s consultant.”

State Consultant Reports Several times throughout this analysis, reference is made to reports that were previously conducted by Cummings Associates for the State of Kansas and other clients. The three main reports referenced are as follows:

• Cummings Associates, Casinos’ “Gravity” According to Reilly – Amended, May 25, 2006

• Cummings Associates, Projections for the Market Potential of the Four Gaming Zones in Kansas - DRAFT, May 26, 2008

• Cummings Associates, Projections for the Likely Gaming Revenues of Marvel Gaming, LLC - DRAFT, July 16, 2008

For the remainder of this writing, the above three reports are referenced as Cummings May 2006, Cummings May 2008, and Cummings July 2008, respectively.

- 6 - October 2010

State Consultant Revenue Projections for Exit 19 and Exit 33 In Exhibit C-4 of the Cummings July 2008 report, the analysis projects that identical casinos would generate slot/table revenue of $174.2 million off Exit 33 (Harrah’s) and $134.7 million off Exit 19 (Penn National). In other words, the analysis is projecting a casino off Exit 19 would generate about 23% less than a like casino off Exit 33 because of the approximately 11-minute further drive for Wichita-area customers. The Cummings July 2008 projections were very similar to the projections made in the Cummings May 2008 report.

Jayhawk Consulting Services Jayhawk Consulting Services (JCS) conducted a public opinion survey to the test the attitudes of how distance influences the casino visitation habits of Wichita residents.

Add JCS bio to clarify why they should be listened to. JCS is a respected polling company with X years of experience, etc.

- 7 - October 2010

Proofing the Problem Evidence will be brought forth, including real world data, examples and situations that will show that the perceived revenue gap should not be taken as a foregone conclusion.

The 23% revenue gap, as estimated by the State’s consultant, between two highly similar casinos off Exit 19 and Exit 33, has not factored in additional empirical data relevant to the analysis or come to a reasonable conclusion that can be drawn from that data.

There are two fundamental areas that form the basis of the 23% revenue gap as estimated by the State’s consultant. They are:

1. Distance is the overriding factor in determining a population’s spend at a particular casino.

2. The attractiveness, proximity and the amount of competition around a casino influences how much of the population’s spend that particular casino will capture.

Distance Is the Overriding Factor In Determining Casino Spend The State consultant presents data it has collected that the gaming spend of typical adult populations declines at a rate of 38% as the distance away from a casino is doubled. GGS’s research indicates that distance is not always the overriding factor in how often people will visit a casino, and that the applicability of the State consultant’s data to all casino markets and situations is not always relevant.

The evidence that the State consultant uses to justify why the 38% rate of decline is applicable is based on survey data it collected from Mississippi casinos and an analysis of players club data from two anonymous casinos. The consultant takes the visitation counts (from Mississippi) and the casino spend (from the players club data examples) and divides it by the adult population in those areas to determine the spend per adult. The State consultant then measures the rate of decline in spending as distance is increased from a particular casino.

However, the State consultant’s methodology undoubtedly overstates the rate of decline in spending for casinos generally and the South Central Zone casino specifically, as distance is increased for several reasons.

The first reason is every market in the U.S. has some form of casino competition, and no market is completely insulated. Both the Mississippi casinos and the two casino examples cited by the State consultant will have some of the gaming

- 8 - October 2010

spend from the more outlying populations siphoned off by surrounding casinos. For example, even within 50 miles of the Mississippi casinos are casinos in New Orleans. Therefore, distance is not the only reason New Orleans residents are not visiting the Mississippi casinos, but rather the fact that there are three casinos in the New Orleans area that are taking their play.

Kansas is conducting an open RFP process to get a top-notch casino built. The proposed facilities in Kansas are extremely different from multi-level casino riverboats built in the early and mid-1990s or even many of the riverboat casinos built more recently in Iowa (where the State consultant has experience), and are not likely to experience the same rate of decline. The Sumner casino will be of higher quality, be land-based, and have better access (right off I-35) than virtually any other regional casino in the U.S.

For these reasons alone it is more likely than not that the rate of decline in spending would be lower than the State consultant cites.

Other reasons the State’s consultant likely overstating the drop in gaming spend relate to the inherent self-selection bias of players club data and casino marketing philosophies. Players club data is not a perfect proxy for actual gaming revenue because not everyone signs up for a players card or uses their players card. In fact, more outlying populations are less likely to use a players card because they are less likely to be aware of the players club or may not visit the casino often enough to accumulate awards. However, the outlying residents are still visiting more than the players club data indicates.

Furthermore, casinos only have a finite amount of advertising dollars that can be spent to attract players. The advertising dollars typically are spent in areas closer to the casino. Whether a casino is built off Exit 19 or Exit 33, either one will spend a similar high dollar amount of their advertising budget in Wichita. In these other examples, part of the explanation for visitation dropping with distance is the fact that casinos target their advertising budgets on the close-in populations and spend less on more distant markets. This is especially true when there could be four different cities 25 miles away (one to the North, one to the South, one to the East and one to the West) that a casino would have to split its marketing budget four ways. In the case of either Exit 19 or Exit 33, virtually all of the marketing dollars will be plowed into Wichita.

The key question is how the spending decisions of Wichita residents will be influenced by distance, and not by examples that may or may not be relevant.

The Attractiveness, Proximity and the Amount of Competition Contrary evidence exists to the State consultant’s thesis specifically as it relates to the attractiveness, proximity and the amount of competition.

- 9 - October 2010

The first prong to the State consultant’s argument (discussed above) is that because Exit 19 is located eleven minutes further from Wichita than Exit 33, that the visitation rates of Wichita residents will be lower.

The second prong to the State consultant’s thesis is that by the Exit 19 casino being eleven minutes closer to the Oklahoma Border Casinos that those casinos will capture a greater amount of the Wichita (and surrounding county) population’s gaming spend than they would if the casino was located off Exit 33. Because of the large number of casinos and slot machines, the State consultant’s analysis predicts that significantly more Wichita resident gaming spend will go to the Oklahoma Border Casinos if the South Central Zone casino were located off Exit 19 rather than Exit 33.

The Attractiveness of Competition When the State consultant is determining how much of a population’s gaming spend will be spent at one casino versus another, the two key determining factors are the two casinos’ relative distance from the population and the relative attractiveness or appeal of the two casinos.

The State consultant’s assumption is that a facility of the kind proposed in Sumner County was next door to one of the Oklahoma Border Casinos (with the same number of slots) that the Sumner Casino would only generate 22.2% more revenue than the typical Oklahoma Border Casino.

((110 / 90)-1)=22.2%

(The typical Oklahoma Border Casino in this case does not include higher quality facilities such as Quapaw Downstream Casino, the Firelake Casino, the Hard Rock Casino in Tulsa, or the Riverwind Casino outside of Oklahoma City.)

While this assumption may not seem unreasonable, it greatly understates the quality disparity between casinos competing in location-neutral markets. Also, empirical evidence exists that is in conflict with this assumption. The Borgata dramatically outperforms most casinos in Atlantic City, for example, as does Wynn Las Vegas compared to Circus Circus just down the street on the Las Vegas Strip. The situation also exists in Lake Charles, Louisiana, for which more detail is provided.

Lake Charles Example Lake Charles is a regional gaming market located in southwestern Louisiana that consists of two riverboat complexes and one racino approximately 25 miles to the west in Vinton. Key to the understanding of this market is that two riverboat complexes have essentially no location advantage over one another. The only difference is in appeal and attractiveness. The newer, $370 million L’Auberge du

- 10 - October 2010

Lac generates nearly three times the win per slot machine than the older Isle of Capri riverboat complex.

Figure 1 – Lake Charles Casinos

Source: Google Earth

Fair Share Analysis - Total GamingL' Auberge du Lac

83.1%

140.5% 145.5% 151.0% 148.4%

0%30%60%90%

120%150%

2005 2006 2007 2008 2009

Fair Share Analysis - Total GamingDelta Downs

95.6% 103.3% 98.4% 95.0% 98.0%

0%

30%

60%

90%

120%

150%

2005 2006 2007 2008 2009

Delta Downs

- 11 - October 2010

Fair Share Analysis - Total GamingIsle of Capri Lake Charles

92.5%70.0% 65.5% 63.0% 60.3% 59.1%

0%

30%

60%

90%

120%

150%

2004 2005 2006 2007 2008 2009

Note: A fair share of 100% equals a market average win per slot machine and table game seat

Source: GGS; Louisiana Gaming Control Board

The State consultant himself has pointed out that his analysis is limited in this type of situation when at a presentation to the Kansas Lottery Gaming Facility Review Board on July 24, 2008, he said (quote taken from the official transcript):

Then I looked at everything else and I updated my reviews of what’s going on elsewhere around the Midwest, in large part, to try to come up with some quantification of these "everything else" factors which, again, are micro-access, slot mix, fit and finish, the hotel, structured parking, entertainment, retail, everything else, and I regret to report that I have found no systematic way to factor those into my projections [emphasis added].

Quite clearly, the estimated 22.1% difference in revenue (assuming no difference in location) between a new destination casino with excellent access in Sumner County and the typical Oklahoma border casino is at odds with numerous real world situations.

Proximity of Competition The State consultant’s analysis does not distinguish whether Wichita residents would have to bypass one facility to reach another. The inherent assumption in gravity models is that a given population lives between two facilities, as illustrated in the diagram below.

- 12 - October 2010

This assumption is not reflective of the real world case where the South Central Zone casino is between the population center (Wichita) and the inferior Oklahoma Border Casinos (illustrated in the diagram below).

Say that Person A lives 50 miles from a 100,000 square-foot Wal-Mart (the closest store to him) and about 100 to 120 miles from five or six 20,000 to 40,000 square-foot general stores. The Wal-Mart is nicer, newer, and offers every item the general stores offer plus a much greater selection (this last point is less important).

If someone told you that Person A and his neighbors would spend about 20% of their shopping dollars at the general stores, you would be scratching your head wondering who in their right mind would drive twice as far to go to a lower quality store with a poorer selection.

What if that same someone also said that this is what the gravity model dictates - a 20% market share of spend - especially once the increased distance, smaller size and lower relative quality of the general stores has been factored in? The likely response from a logical person would be, “There is no way that anyone will drive so far past the better facility to a poorer facility unless they happened to already be in the area of the poorer facility.”

Therefore, some adjustment to the gravity model needs to be made that will allow for some people not wanting to bypass a higher quality facility to go to a lower quality smaller facility further away.

Population Center Facility

A

Facility

B

Population Center Facility

A

Facility

B

- 13 - October 2010

Amount of Competition The map and table below illustrate the competition for the South Central Zone.

Figure 2 – South Central Zone Competition (July 2008)

Source: Wells Gaming Research; GGS

OK Border - Newkirk

Dodge

Wellington

Mulvane

Tulsa Oklahoma City

Cherokee-Quapaw

Kansas City / KS Tribal

- 14 - October 2010

Table 1 – Sumner County Competition Grouped by Geographic Zones (Estimated as Projected in 2008)

# of Slots Power RatingNumber of

CasinosCherokeeQuapaw 9,463 0.94 11Dodge 800 1.12 1Kansas City / KS Tribal 15,187 1.10 10Oklahoma City 9,332 0.95 9Tulsa 10,811 0.95 11OK Border - Newkirk 4,632 0.90 9/10 Notes: Figures based on data gleaned from Cummings July 2008 report and other sources. Power Ratings per State consultant. For Cherokee/Quapaw, GGS estimated based on a weighted average of Penn Cherokee (112), Quapaw (95) and Others (90). GGS estimated Power Ratings for Oklahoma City and Tulsa at 95 because facilities generally of a higher quality than OK Border Casinos.

Source: GGS estimates; Casino City; Cummings Associates

After looking at the above map and table, it quickly becomes apparent that each competitive zone, with the exception of Dodge, has several casinos grouped together. In addition, with the exception of two casinos in the Cherokee/Quapaw Zone (Penn Cherokee and the Downstream Casinos) and the one casino in Dodge, the rest of the facilities in the primary competition zones are of inferior quality and/or poorer micro-accessibility when compared with the Sumner casino.

This last point is important as it relates to the decision making process customers will make when deciding what casino to visit. Just because there are several casinos along the Oklahoma Border does not mean that the 20th casino will have the same incremental draw on where people are going to gamble as the first casino.

In the Cummings July 2006 report, the State consultant talked about the abstract concept of “the market elasticity with size” or Scoeff. While the theory behind it is complex, the Scoeff is an input in the Gravity Model that allows for the number of slot machines to be weighted greater or lower. A weighting closer to 1.0 (the State consultant advocates 0.9) means that a casino with double the number of slots will have double the market share of an otherwise identical casino.

However, in the situation where the competition is grouped together as shown on the map and table above, the total drawing power of each competitive area is not as strong as its total number of slots would indicate, and logic would dictate in the example of the Sumner Casino versus the Oklahoma border casinos, that the Scoeff should be much less than 1.0.

- 15 - October 2010

Defining Piece of New Evidence Comparing two casinos that are not yet in existence is an intellectual exercise. There has never been a real world situation where a casino was moved eleven minutes down the road, so theory can only get you so far.

Clearly, the best method to project how the difference in distance will impact Wichita residents’ casino visitation habits is to ask them. In other words, would Wichita residents really visit a casino 23% less if it was located ten or eleven minutes further away as the state consultant’s analysis suggests? That is exactly what Jayhawk Consulting Services (JCS) set out to discover on August 27 and 28th of 2010.

Testing the Attitudes of How Distance Influences the Casino Visitation Habits of Wichita Residents Simply put, JCS found that there was no material difference between how many times Wichita residents say they would visit a casino twenty minutes away and an identical one thirty minutes away.

Please see Appendix #4 for the full JCS report.

- 16 - October 2010

Solutions Contrary evidence to the state consultant’s analysis has been presented. Furthermore, the JCS survey also indicates that Wichita residents would not materially change their casino visitation habits because a casino is at Exit 19 instead of Exit 33.

Even though strong evidence has been presented that dispels the state consultant’s hypothesis about the impact of distance, the state consultant’s mathematical model would discount the impact of the poll data and suggest that Exit 19’s closer proximity to the Oklahoma Border Casinos would still justify a disparity. However, combining the Wichita polling data with solutions that more logically reflect the real impact of competition (attractiveness, proximity and the amount of casinos) in the consultant’s model yields a negligible 4% revenue difference between Exit 19 and Exit 33.

Summary of the Four Solutions For a more detailed technical analysis of Solution #1 and Solution #4, please see the Appendix.

The state consultant estimated a 23% difference between Exit 19 and Exit 33. Using the 23% gap as a starting point, the four solutions presented below show how each logical adjustment would impact the revenue difference in the consultant’s model.

Solution #1 – Wichita Residents’ Attitude that Distance Does Not Matter The first solution simply involved overlaying the assumption that Wichita residents would visit a casino off Exit 19 2.1% less than they would if the casino was located off Exit 33. Since the state consultant’s model would still have one believe that the Oklahoma Border Casinos would capture a materially higher portion of the gaming spend of Wichita residents (an assumption that has been discredited), a 13% revenue gap between Exit 19 and Exit 33 would still remain if one stuck strictly to his mathematical model.

Revenue Gap Remaining After Solution #1 – 13%

Solution #2 – The (Un)attractiveness of the Competition The second solution involved adjusting the state consultant’s admittedly conservative estimate of the relative appeal factors between the Oklahoma Border Casinos and the resort destination planned at Exit 19. Based on the revenue premium that superior facilities have when competing against lower

- 17 - October 2010

quality facilities in location-neutral situations, and adding on top of Solution #1, the revenue gap would be narrowed to 10% between Exit 19 and Exit 33.

Revenue Gap Remaining After Solution #1 and #2 – 10%

Solution #3 – Wichita Customers Won’t Ignore the Kansas Casino to get to Oklahoma Border Casinos The argument can be made that the spigot of customers streaming down to the Border Casinos from Wichita, Butler County, and other adjacent counties to the north will be virtually shut off once the South Central Zone casino opens. Therefore, the logical assumption is made that most of the Wichita gamblers and folks in adjacent counties will choose to visit a casino in Sumner County rather than sit in their cars for an extra hour for a lower quality experience at the Border Casinos. By assuming that 80% of the gaming spend the state consultant’s model is attributing to the Oklahoma Border Casinos from the above areas will be retained by the Sumner casino, this commonsense solution further narrows the revenue gap estimated by the state consultant to just 8% (after combining with Solutions #1 and #2).

Revenue Gap Remaining After Solution #1, #2 and #3 – 8%

Solution #4 – All Those Slots in Oklahoma Don’t Matter That Much The Solutions for the quality of the Oklahoma casinos have already been made, and it is logical that Kansans aren’t going to drive by a Sumner casino to get to lower quality facilities. The state consultant’s model, however, would suggest that the sheer number of slots near the Oklahoma border would draw Kansas customers past the Sumner casino. Since the Oklahoma Border Casinos don’t represent a destination casino market (such as Las Vegas or the Gulf Coast), each incremental slot in the area doesn’t have the same drawing power as the one before it. In other words, the pull of the 19th and 20th casino on Kansas gamblers likely has no additional impact on their decision to go visit the Sumner casino or one on the Oklahoma border.

After lowering the drawing power of every slot machine, the revenue gap estimated by the state consultant falls to just 4% (after Solutions #1, #2 and #3).

Revenue Gap Remaining After Solution #1, #2, #3, and #4 – 4%

- 18 - October 2010

Table 2 – Revenue Difference After the Four Solutions (2007$ Millions)

Wellington Mulvane % DifferenceState Consultant $134 $174 -23%After Solution #1 $152 $174 -13%After Solution #2 $157 $174 -10%After Solution #3 $159 $174 -8%After Solution #4 $167 $174 -4%

Notes: Assumes the Exit 19 and Exit 33 projects are identical in size and scope. Impact of each Solution is cumulative. The state consultant’s model is recalibrated after each solution to maintain Exit 33 slot/table revenue of $174 million.

Source: GGS estimates

- 19 - October 2010

The Resolution Numerous examples and persuasive evidence has been provided that eliminates the notion of a significant revenue gap between exit 33 and exit 19 put forth by the state’s consultant. The poll data, in particular, confirms the logical assumption that Wichita residents will not materially change their gaming behavior simply because a Sumner casino is at exit 19 instead of exit 33.

Despite the compelling poll evidence, the state consultant’s model would suggest that other factors aside from the distance between exit 33 and exit 19 from Wichita would still leave a revenue gap. Applying the poll evidence and real world examples, and making adjustments based on logical extrapolations to the state consultant’s model, quickly narrows the theoretical gap to negligible levels, however.

The state consultant’s approach is admittedly conservative and the gaming revenue in the consultant’s gravity model is predicated on “location, location, size and everything else.” Evidence has been presented that makes this approach less relevant when the “everything else” is dramatically different from one competitor to the other, and that the universal application of the consultant’s model inputs to the unique circumstances of this market is questionable.

GGS is a successful operator in the I-35 corridor, with superior operating, marketing and development knowledge over any other South Central zone bidder. In light of these facts, the poll data, and abundant corroborating empirical evidence, there is ample support to the conclusion that Exit 19 would not be disadvantaged in terms of gaming revenue potential.

- 20 - October 2010

Appendix Appendix #1 – Technical Analysis of Solution 1 On page 4 of the Cummings May 2008 report, the author suggests that as distance is doubled, gaming spend declines by about 38% (or the elasticity with respect to distance is -0.7).

Data gleaned from the JCS data overwhelmingly points to a rate of decline of less than 38% as the distance away from the Sumner Casino is doubled.

The JCS survey, which found that Wichita residents said they would visit a casino 30-minutes further away only 2.1% less than if a casino were 20-minutes away provides solid, “real world” evidence to a more appropriate rate of decline.

To mechanically make Adjustment #1, JCS survey results were overlaid onto a recreation of the State consultant’s model. The model is calibrated to reflect the number of distance-adjusted adults in the 54.5-minute drive-radius of Exit 19 that would yield a gaming revenue amount of 2.1% less than Exit 33. It turns out that the number of distance-adjusted adults in the Exit 19 54.5-minute drive-radius would have to increase from 167,841 in the recreated model to 197,551 after Solution 1. For reference, there is an estimated 213,416 distance-adjusted adults in the 50-minute drive-time radius of Exit 33 (different drive-time radii are used for Exit 33 and Exit 19 to ensure that there is apples-to-apples comparison of adults. The State consultant’s methodology is not clear how the switch is made between drive times, zip codes, counties, etc. so a reasonable assumption had to be made to ensure apples-to-apples comparisons).

After the appropriate number of distance-adjusted adults in the Exit 19-drive time radius was calculated, the surrounding competition was overlaid back onto the model as it was in the originally recreated model. No adjustments to the number of distance-adjusted adults in the area outside the 54.5/50 minute drive-time radii were made because it would have virtually no impact on the Exit 19-Exit 33 comparison. Again, virtually all of the revenue gap between Exit 19 and Exit 33 estimated by the State consultant is confined to only Wichita residents.

Appendix #2 – Technical Analysis of Solution #4 Solution 4 involves adjusting the Scoeff. The Scoeff measures the gravitational pull of every slot machine irrespective of other factors such location and attractiveness.

- 21 - October 2010

Customer Decision-Making Example Take the example of a population (“Population A”) living 50 minutes to the east of a 2,000 slot casino and 50 minutes west of a comparable quality 2,000-slot casino (call it “Casino B”). Gravity model theory dictates that Casino A and Casino B should each capture about 50% of Population A’s gaming spend (assuming there was no other competition in the area). Both Casino A and Casino can be considered high-quality destination casinos. Now say that scattered within the 10-20 mile radius of Casino B, there was another ten or so casinos of inferior quality with about 7,500 or so slots. Keep in mind that none of these casinos are within walking distance of one another and that there is very little in the way of cooperative marketing of the area as there would be at a casino destination.

Under such a scenario, it is estimated that the State consultant (assuming he would agree to a reduced 30 Power Rating for the 10-11 surrounding casinos) would allocate about 34.5% of Population A’s gaming spend to Casino A with the other 65.5% going to Casino B and the 10-11 other casinos around it.

Table 3 – Scoeff Calculation Using the State Consultant’s Estimate – “Population A” Example

Formula

# of Slots ^ ScoeffxAppeal Factorx(Distance/7) ^

(-2 - Market Elasticity of Distance) =Market Share

Casno A 2,000 ^ 0.9 x 1.1 x (50/7) ^ (-2-.7) = 5.09

Casino B 2,000 ^ 0.9 x 1.1 x (50/7) ^ (-2-.7) = 5.09

Casinos Surrounding 7,500 ^ 0.9 x 0.3 x (50/7) ^ (-2-.7) = 4.56

Market Share / Total Market Share = Capture

Casino A 5.09 / (5.09+5.09+4.56) = 34.5%

Casino B and Surrounding Casinos (5.09+4.56) / (5.09+5.09+4.56) = 65.5% Source: GGS

The “Population A Example” is a slightly simplified version of the situation that will face customers in south and southeastern Kansas as it relates to whether they

- 22 - October 2010

will go to the Cherokee/Quapaw Zone or the Sumner casino. It does not seem reasonable that the above formula (taken from the Cummings July 2006 report) will mimic actual customer patterns. For the theoretical Population A, these customers will likely visit either Casino A or Casino B, and very few will travel the distance to visit inferior casinos. Additionally, there is little evidence to support the theory that the inferior casinos will play a great role in the decision process for many of the people living in Population A. Remember, the casinos around Casino B are not cooperatively marketing like they do in Las Vegas, Atlantic City or Reno, and as such, they do not necessarily create synergies with one another.

There is simply a diminishing marginal return with every new casino and every slot that is added to a casino (unless there is an undersupply condition in place, which there is clearly not in Cherokee/Quapaw) to a customer’s decision-making process. The way the State consultant measures this diminishing marginal return is by using a measurement of the elasticity of the market with size that called Scoeff (or size coefficient). In the Cummings May 2006 report, the analysis suggests that a Scoeff of 0.9 is used to reflect that some of the members of the population will go to a certain casino because of its directional location (east, west, north, south) and not because of its number of slots. So basically, in the example where you have two equivalent quality casinos the same distance away from a population, with one having twice the number of slots as the other, the use of a 0.9 Scoeff will result in a market share of 65.1% for the larger casino and 34.9% for the smaller casino, representing an 87% market share premium for the larger casino.

Now, back to the “Population A Example.” This is one of those situations where the State consultant realizes there is a limitation with the model, but does not go far enough in tailoring the inputs of the model to the Population A situation or providing any sensitivity analysis. There is no hard empirical data to support what the exact market share should be for Casino A in the Population A Example. Casino A could not earn a 50% market share of Population A’s casino visits (because some people will naturally visit the inferior casinos surrounding Casino B for whatever reason), but a 34.5% market share for Sumner is too low from a logical standpoint. When one starts adding slots in those casinos by Casino B, they just have less and less of an impact for every one that is added – remember they are of inferior quality and don’t necessarily form any critical mass. The State consultant has probably not grouped the casinos together, but if this approach was taken, the problem with using a Scoeff as high as 0.9 would become apparent.

- 23 - October 2010

Table 4 – Adjusted Scoeff Calculation Using GGS Estimate - “Population A” Example

# of Slots ^ Scoeff xAppeal Factor x (Distance/7) ^

(-2 - Market Elasticity of Distance) = Market Share

Sumner Casino 2,000 ^ 0.4 x 1.1 x (50/7) ^ (-2-.7) = 0.11

Casino B 2,000 ^ 0.4 x 1.1 x (50/7) ^ (-2-.7) = 0.11

Casinos Surrounding B 7,500 ^ 0.4 x 0.3 x (50/7) ^ (-2-.7) = 0.05

Market Share / Total Market Share = Capture

Sumner Casino 0.11 / (0.11+ 0.11+ 0.05) = 40.6%

Casino B and Surrounding Casinos (0.11+ 0.05) / (0.11+ 0.11+ 0.05) = 59.4% Source: GGS

For the Sumner casino, if Scoeff of 0.4 is used, the Sumner casino’s market share in the “Population A Example” goes from 34.5% to 40.6% - a market share that makes more logical sense. That would leave Casino B with a similar market share (or maybe slightly less if people turned off to the surrounding casinos on their way to Casino B) and the remaining market share going to the casinos surrounding Casino B.

- 24 - October 2010

Appendix #3 Recreation of State Consultant Gaming Revenue Model for Exit 19 and Exit 33 Table 5 – Recreation of State Consultant Model (2008$ Unless Noted)

Assumptions

State Consultant Baseline unless

highlighted

38.0%

0.90 / 0.95

Yes

0.90

No

No

Exit 19 Exit 33 % Difference Comments

Power Rating 110.0 104.0 per State consultant

Revenue from Slots $Million

58 (Exit 19) / 50 (Exit 33) minute radius $95.7 $133.4 GGS recreation

Other Counties (100-Mile Radius) $17.4 $19.3 GGS recreation

Oklahoma City MSA $0.7 $0.5 GGS recreation

Tulsa MSA $0.4 $0.2 GGS recreation

Highway Intercept $5.3 $2.7 per CummingsRevenue from Slots $Million $119.5 $156.0

Table Games Revenue $18.0 $23.6 per State consultant inflated

Revenue from Slots/Tables $Million $137.5 $179.6

Revenue from Slots/Tables $Million 2007$ $134 $174 -23% approximates State consultant

Incremental slot spend from operating Wellington Travel Plaza?

Scoeff - Elasticity of market share with size

Incremental slot/table spend from marketing Wellington casino to GGS's OK customer base?

Distance Factor - How much does slot/table spend decrease when distance is doubled?

Power Rating / Appeal of OK Border Casinos

Assumes Wichita Customers will Bypass Mulvane / Wellington for Inferior OK Border Casinos


- 25 - October 2010

Table 6 – Recreation of State Consultant Model (2008$ Unless Noted) – Exit 19 Slot Spend Detail

Geogaphic Segment (Drive-Time Ring in

Mins) # of AdultsDistance Factor Income Factor

Distance-Adjusted Adults

Slot Spend (if no competition)

Slot Spend (w/ competition)

6.5 5,785 100.0% 83.4% 4,825 $3,715,103 $3,690,3688.5 145 100.0% 90.0% 130 $100,437 $99,13110.5 136 89.0% 95.7% 116 $89,181 $87,23812.5 439 78.7% 102.0% 353 $271,473 $262,50614.5 1,057 71.0% 93.7% 703 $541,057 $515,79916.5 879 64.8% 103.7% 591 $454,993 $426,49918.5 2,630 59.8% 102.1% 1,607 $1,237,066 $1,137,23020.5 6,259 55.7% 91.3% 3,184 $2,451,374 $2,204,46222.5 8,047 52.2% 95.0% 3,987 $3,070,036 $2,694,03924.5 15,495 49.2% 82.7% 6,298 $4,849,723 $4,142,97126.5 28,064 46.5% 79.6% 10,388 $7,998,955 $6,636,96328.5 45,778 44.2% 88.3% 17,869 $13,759,511 $11,064,37730.5 46,133 42.2% 88.9% 17,302 $13,322,522 $10,360,57532.5 51,006 40.3% 101.5% 20,876 $16,074,352 $12,065,00034.5 50,836 38.7% 107.7% 21,186 $16,313,243 $11,794,74936.5 42,973 37.2% 121.3% 19,378 $14,921,293 $10,372,89438.5 28,862 35.8% 129.2% 13,359 $10,286,435 $6,863,15340.5 22,517 34.6% 107.0% 8,328 $6,412,265 $4,099,04242.5 11,834 33.4% 106.2% 4,203 $3,236,495 $1,978,92044.5 5,874 32.4% 111.8% 2,126 $1,636,867 $955,74246.5 3,823 31.4% 105.1% 1,261 $970,682 $540,36548.5 6,185 30.5% 100.7% 1,898 $1,461,493 $774,48750.5 15,826 29.6% 90.3% 4,232 $3,258,578 $1,641,30952.5 10,741 28.8% 96.3% 2,983 $2,296,597 $1,097,84254.5 2,440 28.1% 96.3% 660 $507,994 $230,125

- 26 - October 2010

Geogaphic Segment (Other County/MSA) # of Adults

Distance Factor

Income Factor




Oklahoma City MSA 840,402 16.2% 100.7% 136,802 $105,337,164 $717,251Tulsa MSA 639,602 15.2% 100.7% 97,936 $75,411,005 $355,708Alfalfa 4,486 16.3% 79.7% 582 $447,869 $56,092Barber 3,754 17.0% 94.0% 599 $460,971 $102,980Barton 19,634 13.7% 91.0% 2,447 $1,884,300 $556,535Blaine 9,940 13.0% 64.1% 828 $637,239 $22,168Butler 45,349 27.9% 103.0% 13,035 $10,036,671 $5,760,449Chase 2,189 17.6% 95.4% 368 $283,492 $23,636Chautauqua 2,905 18.8% 84.4% 460 $354,113 $38,526Coffey 6,388 14.2% 100.9% 913 $703,060 $25,790Comanche 1,423 12.2% 92.1% 159 $122,768 $11,339Cowley 24,230 39.9% 87.0% 8,416 $6,480,180 $3,460,661Dickinson 14,396 15.0% 91.8% 1,987 $1,529,829 $76,713Elk 2,324 17.3% 81.8% 329 $253,132 $27,213Ellsworth 4,995 13.8% 90.5% 625 $481,054 $138,342Garfield 40,571 19.2% 93.7% 7,292 $5,614,807 $456,831Grant 3,450 14.0% 84.7% 410 $315,429 $6,049Greenwood 5,172 19.3% 84.8% 848 $652,617 $55,601Harper 4,404 25.1% 88.4% 977 $752,512 $341,859Harvey 24,201 25.7% 97.9% 6,081 $4,682,716 $2,698,817Kay 31,740 25.7% 88.8% 7,236 $5,571,929 $67,987Kingfisher 10,401 14.8% 102.2% 1,574 $1,211,631 $11,398Kingman 5,737 22.5% 98.0% 1,263 $972,616 $575,457Kiowa 2,147 14.2% 91.7% 279 $214,576 $29,232Lyon 24,173 18.6% 79.3% 3,572 $2,750,576 $335,989Major 5,485 14.3% 89.1% 699 $538,236 $24,108Marion 9,269 18.5% 82.9% 1,421 $1,094,516 $381,760Mcpherson 21,209 19.8% 99.4% 4,166 $3,208,049 $1,975,748Montgomery 24,784 14.7% 87.0% 3,160 $2,433,511 $96,085Morris 4,569 14.2% 92.8% 603 $464,449 $62,287Noble 8,051 13.7% 88.3% 974 $750,111 $16,765Nowata 7,837 12.8% 76.3% 764 $588,210 $4,049Payne 52,578 18.6% 87.8% 8,602 $6,623,668 $288,688Pratt 6,832 16.8% 94.8% 1,085 $835,667 $252,898Reno 46,395 20.4% 92.7% 8,778 $6,758,760 $3,583,661Rice 7,122 16.4% 82.1% 957 $736,508 $319,584Saline 38,804 16.6% 95.4% 6,125 $4,716,149 $1,122,924Stafford 3,226 15.0% 83.9% 405 $311,801 $92,191Washington 36,317 13.8% 100.6% 5,026 $3,870,008 $99,592Wilson 7,266 14.9% 82.8% 896 $689,721 $44,346Woods 6,091 15.0% 90.3% 827 $636,763 $114,014Woodson 2,693 15.5% 77.1% 321 $246,934 $11,627Less: Double Counting (1) ($6,010,071)

Traffic Intercept $5,329,000 (1) The State consultant has not been clear where he switches between drive times and zip codes/counties. Because of this, portions of the drive-time radius fall into neighboring counties. To avoid double counting, some of the slot spend that the model is allocating to the counties has been deducted.


- 27 - October 2010

Table 7 – Recreation of State Consultant Model (2008$ Unless Noted) – Exit 33 Slot Spend Detail

Geogaphic Segment (Drive-Time Ring in

Mins) # of AdultsDistance Factor

Income Factor




10 8,653 92.0% 98.8% 7,867 $5,727,342 $5,632,05412 8,375 81.0% 90.1% 6,113 $4,450,598 $4,334,26714 16,727 72.7% 83.7% 10,186 $7,415,555 $7,133,46616 27,288 66.2% 79.2% 14,313 $10,420,062 $9,874,74418 40,656 61.0% 87.9% 21,802 $15,871,642 $14,777,22920 50,281 56.7% 87.6% 24,949 $18,162,829 $16,568,27222 51,756 53.0% 104.0% 28,518 $20,761,297 $18,504,49724 43,720 49.9% 108.1% 23,566 $17,156,318 $14,900,11726 42,881 47.2% 125.6% 25,395 $18,487,470 $15,603,16128 16,971 44.8% 134.3% 10,207 $7,430,499 $6,078,08730 20,184 42.7% 122.5% 10,545 $7,677,101 $6,070,51332 9,674 40.8% 126.7% 4,999 $3,639,042 $2,774,48934 5,077 39.1% 111.4% 2,211 $1,609,587 $1,180,29836 3,702 37.5% 102.4% 1,423 $1,036,195 $729,02038 5,950 36.2% 104.1% 2,239 $1,629,893 $1,097,59840 16,531 34.9% 92.0% 5,305 $3,861,894 $2,483,48642 9,252 33.7% 94.0% 2,932 $2,134,624 $1,307,90744 12,881 32.6% 102.4% 4,303 $3,132,800 $1,824,83446 8,300 31.6% 95.5% 2,506 $1,824,637 $1,008,24948 6,059 30.7% 94.8% 1,763 $1,283,211 $671,24050 8,846 29.8% 86.1% 2,272 $1,653,993 $817,355

- 28 - October 2010

Geogaphic Segment (Other County/MSA) # of Adults

Distance Factor

Income Factor




Oklahoma City MSA 840,402 15.2% 100.7% 128,655 $93,661,097 $476,648Tulsa MSA 639,602 14.4% 100.7% 92,562 $67,385,033 $241,996Alfalfa 4,486 15.8% 79.7% 565 $411,415 $44,450Barber 3,754 15.8% 94.0% 557 $405,855 $69,498Barton 19,634 14.4% 91.0% 2,579 $1,877,707 $613,597Blaine 9,940 12.4% 64.1% 791 $575,715 $16,006Butler 45,349 32.6% 103.0% 15,238 $11,093,468 $7,758,542Chase 2,189 19.0% 95.4% 398 $289,394 $29,987Chautauqua 2,905 17.4% 84.4% 427 $310,546 $24,687Coffey 6,388 15.0% 100.9% 965 $702,453 $29,960Comanche 1,423 13.0% 92.1% 170 $123,887 $13,638Cowley 24,230 32.6% 87.0% 6,881 $5,009,226 $1,666,046Dickinson 14,396 16.0% 91.8% 2,111 $1,536,484 $91,081Elk 2,324 17.7% 81.8% 337 $245,671 $27,487Ellsworth 4,995 14.6% 90.5% 659 $479,720 $153,109Garfield 40,571 17.5% 93.7% 6,660 $4,848,376 $270,220Grant 3,450 13.3% 84.7% 389 $283,534 $4,249Greenwood 5,172 21.1% 84.8% 926 $673,857 $74,176Harper 4,404 22.5% 88.4% 875 $636,704 $215,854Harvey 24,201 29.4% 97.9% 6,972 $5,075,906 $3,479,346Kay 31,740 22.9% 88.8% 6,455 $4,698,880 $35,045Kingfisher 10,401 13.9% 102.2% 1,476 $1,074,627 $7,489Kingman 5,737 25.1% 98.0% 1,411 $1,027,541 $696,308Kiowa 2,147 15.0% 91.7% 294 $214,391 $33,396Lyon 24,173 18.6% 79.3% 3,572 $2,600,545 $302,349Major 5,485 13.6% 89.1% 664 $483,153 $16,921Marion 9,269 20.1% 82.9% 1,544 $1,123,749 $461,157Mcpherson 21,209 21.7% 99.4% 4,564 $3,322,863 $2,269,773Montgomery 24,784 13.9% 87.0% 2,995 $2,180,514 $66,785Morris 4,569 15.0% 92.8% 638 $464,233 $71,307Noble 8,051 13.0% 88.3% 928 $675,345 $11,874Nowata 7,837 12.2% 76.3% 731 $531,977 $2,921Payne 52,578 17.3% 87.8% 7,985 $5,812,981 $182,039Pratt 6,832 18.0% 94.8% 1,165 $848,244 $297,293Reno 46,395 22.5% 92.7% 9,660 $7,032,564 $4,268,359Rice 7,122 17.5% 82.1% 1,024 $745,704 $362,087Saline 38,804 17.7% 95.4% 6,567 $4,780,973 $1,333,145Stafford 3,226 15.9% 83.9% 430 $313,010 $104,360Washington 36,317 13.1% 100.6% 4,785 $3,483,179 $70,489Wilson 7,266 15.8% 82.8% 951 $692,074 $52,285Woods 6,091 14.2% 90.3% 782 $569,457 $81,235Woodson 2,693 16.5% 77.1% 342 $248,622 $13,972Less: Double Counting (1) ($6,038,644)

Traffic Intercept $2,664,500 (1) The State consultant has not been clear where the model switches between drive times and zip codes/counties. Because of this, portions of the drive-time radius fall into neighboring counties. To avoid double counting, some of the slot spend that the model is allocating to the counties has been deducted.


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Appendix #4 – Jayhawk Consulting Services Report

REPORT OF PUBLIC OPINION SURVEY By Jayhawk Consulting Services

PURPOSE Global Gaming Solutions (GGS) contacted Jayhawk Consulting Services (JCS) to conduct a public opinion survey to determine how voters in Wichita, Kansas feel about the distance they would have to travel to attend a casino in their area. Specifically, would they go to a casino located 30 minutes from South Wichita in the same numbers as they would one only 20 minutes away. The following is the report of the results of that survey. These results are confidential between JCS and GGS. With the submission of this report, these results become the property of GGS and any release of the information herein is their responsibility. PROCEDURES This survey was conducted by telephone on August 27 and 28, 2010. Calls were made from a list of voters, residing in Wichita, Kansas who voted in the last two general elections. Although this survey has no connection to an impending election, we have found through the years that interviewing frequent voters gives us a more reliable "feel" of the total population. Frequent voters, almost by definition, are more active citizens in their community and more accurately reflect that community's attitudes regarding the important issues of the day. We completed a total of 400 interviews. This number gives the survey results with a sampling error of approximately plus-or-minus 4%.

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RESULTS First, have you, in the past year, gone to a casino to gamble? Yes - 21% No - 79% (IF "yes")How many times? (The following are the actual responses, not percentages, of the 83 persons who answered "yes" to the previous question. The number in basic text is the number of times one had gone to a casino, and the second (bold face) number is the number of persons who made that choice.) 1 - 20 4 - 3 10 - 2 24 - 4 2 - 27 6 - 2 12 - 4 30 - 2 3 - 12 8 - 3 18 - 1 52 - 3 If a destination casino were located on Interstate 35, about 20 minutes south of Wichita, would you visit it? Y - 27% N - 64% Not sure - 9%

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(IF "yes")How many times per year, would you go? (Again, the following are the actual responses of the 107 persons who answered "yes" to the previous question. The number in basic text is the number of times one would go to a local casino, and the second (bold face) number is the number of persons who made that choice.) 1 - 8 5 - 7 12 - 8 50 - 2 2 - 26 6 - 3 15 - 3 52 - 3 3 - 16 7 - 6 20 - 4 4 - 15 10 - 3 35 - 3 If the casino were 30 minutes south of Wichita, would you still be likely to visit it? Yes - 26% No - 64% Not sure - 10% (IF "yes")How many times per year, would you go? (Again, the following are the actual responses of the 105 persons who answered "yes" to the previous question. The number in basic text is the number of times one would go to the more-distant local casino, and the second (bold face) number is the number of persons who made that choice.) 1 - 10 5 - 10 12 - 7 50 - 2 2 - 25 6 - 5 15 - 3 52 - 3 3 - 12 7 - 5 20 - 4 4 - 14 10 - 2 35 - 3

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SUMMARY First, we would note that about 1 in 5 (21%) residents of Wichita attended a casino to gamble within the past year. We have no frame of reference or recent past experience to know if that is low, high or about the average for a Kansas community. Secondly, the percentage of people who would go to a casino goes up, to 27%, if the casino is located about 20 minutes south of Wichita. This difference is significant, statistically speaking, for a sample of this size. However, we were a bit surprised that bringing the casino to within 20 minutes of Wichita only increased participation by 6 percent. In other words, reducing travel time from several hours down to 20 minutes did not have the major impact on participation that we had expected. Thirdly, on a related matter, adding another 10 minutes of travel time to get to the casino made no significant difference in the amount of participation by the public. Our results showed a drop from 27% to 26%, but that difference is not significant as a statistical measurement. There is one other comparison which we feel needs to be made regarding the results of this survey. We know that there is no difference between the number of participants as it relates to the "20 minute" casino and the "30 minute" casino. But what about the number of times they may attend? Looking at the earlier question, would gamblers go less often if the casino were further away? To determine the answer to this question we developed what we will call the "gambler participation" scale. It works like this - for the "20 minute" casino, 8 people said they would go 1 time per year, that equals 8 points. Also, 26 people said they would go 2 times per year for 52 points, 16 said they would go 3 times for 48 points, and so on. Using the same procedure for the "30 minute" casino, 10 said they would go 1 time per year (10 points), 25 would go 2 times (50 points), 12 would go 3 times (36 points) and so on. Using this method for comparison, the "gambler participation" score for the "20 minute" casino is 875, or an average participation, per gambler, of 8.18, and the similar numbers for the "30 minute" casino are 857 points and an

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average, per gambler, of 8.16. We're not sure at what point this difference would be significant, but surely a difference of 0.02 on a factor total of about 8, must be of almost NO validity. ANALYSIS We can say with complete certainty and professional confidence that, based on our survey of 400 randomly-selected Wichita voters, there would be no real difference in the number of gamblers, or amount of gambler participation, with a casino location difference of 10 minutes travel time. In fact, given the comparison of participation currently, with as much as several hours travel time, and the level of participation with a casino practically in one's own "back yard", we could say with some confidence that travel distance is of very low priority when a gambler considers how much they will be involved. We hope this information will be of assistance to Global Gaming Solutions as you pursue your goals, whatever they might be. We appreciate this opportunity to be of assistance. Please contact us with any questions you have about the survey or this report.

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