The Market Potential of the Four Gaming Zones of Kansas

1. The Market Potential ofthe Four Gaming Zonesof Kansas Presentation to Kansas Lottery Gaming Facility Review Board by Will Cummings / Cummings Associates June 3, 2008 1

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

3. Will E. Cummings Cummings Associates 3

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

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

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

7. Why “Gravity Model?” 7

8. 8

9. 9

10. 10

11. “Gravity Models” – Overview • Location • Location • Size • Everything Else 11

12. Location I: The Closer, the Better 12

13. Las Vegas Visitation/Distance 13

14. Las Vegas: slope of the curve 14

15. Mississippi: steeper slope 15

16. Laughlin: much steeper slope 16

17. Casino X: isolated market 17

18. Casino Y: competition afar 18

19. Casino Y: less competition close 19

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

21. Location II: Reilly’s Law 21

22. Reilly’s Law: ms ~ S/d2 Where ms : market share S : “size” of each trade center d : distance 22

23. Newton’s Law: F = m/d2 Where F : gravitational force m : mass (of each body) d : distance 23

24. Reilly’s Law: ms ~ S/d2 Where ms : market share S : casino size (capacity) d : distance 24

25. Newton’s Law: F = m/d2 Where F : gravitational force m : mass (of each body) d : distance 25

26. Reilly’s Law: ms ~ S/d2 Where ms : market share S : casino size (capacity) d : distance / travel time 26

27. Size Matters 27

28. Reilly’s Law: ms ~ S/d2 Where ms : market share S : “size” of each trade center d : distance 28

29. More Slots, More Spending 29

30. Calculations 30

31. 31

32. 32

33. Other Things Matter, Too 33

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

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

36. Comparisons / “Power Ratings” 36

37. 37

38. How Do They Do? 38

39. 39

40. What is “Potential?” 40

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

42. Northeast Zone 42

43. 43

44. 44

45. 45

46. 46

47. 47

48. 48

49. 49

50. 50