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  • 1. COMPARING THE SUMNER COUNTY SUBMISSIONS William R. Eadington December 1, 2010
  • 2. SIMILARITIES BETWEEN THE APPLICANT SUBMISSIONS • Applicant companies have similar histories, similar scope of casino operations • Similar regional presence in their respective markets – Oklahoma for Global Gaming Solutions – Iowa and Louisiana for Peninsula • Similar target audiences, with respect to existing casino operations – Roughly three star hotel operations, similar in food offerings • Both applicants have some experience with racinos (Remington Park and Evangeline Downs) • Both have developed greenfield casino sites into successful casino operations • Did they use the same architects? – Similar visualization of what a Kansas Prairie-inspired casino should look like
  • 3. 11
  • 4. BOTH APPLICANTS OPERATE ATTRACTIVE FACILITIES ELSEWHERE
  • 5. ICE HARBOR DEVELOPMENT, DUBUQUE (2009)
  • 6. BOTH APPLICANTS OFFER INTERESTING “SWEETENERS” FOR SUMNER COUNTY
  • 7. 19
  • 8. GLOBAL GAMING SOLUTIONS • All data taken from www.casinocity.com • WinStar World Casino (Thackerville, OK) – Proximity to Dallas market; about a one hour drive – 5,800 slots, 114 table games, 395 hotel rooms, 380,000 sq. ft. of gaming space; 395 hotel rooms & suites • Includes all restaurant, lounge, back-of-house in sq. footage computation – Claim of being 3rd largest casino in the world (probably based on slot count or casino square footage, not revenues or visitation or CAPEX) – Gaming revenues: perhaps $300 m to $400 m (consultant’s estimate) • Riverwind Casino (Norman, OK) – 2,498 slots and 55 tables, 219,000 sq.ft. of gaming space; 100 hotel rooms => gaming revenues of perhaps $125 m to $175 m • Remington Park (Oklahoma City, OK) – 750 slot machines, 55,000 sq.ft. of gaming space; no hotel rooms => gaming revenues of $74.5 m (12 months ending 8-10) • Treasure Valley Casino (Davis, OK) – 402 slot machines, 4 table games, 9,440 sq.ft. of gaming space; 59 hotel rooms => gaming revenues of perhaps $10 m to $15 m
  • 9. PENINSULA GAMING • All data taken from www.casinocity.com • Diamond Jo Dubuque – 975 slot machines, 17 table games; 35,000 sq. ft. of gaming space; no hotel => gaming revenues $68.4 m (FY 2010) • Diamond Jo Worth – 965 slot machines, 33 table games; 38,500 sq. ft. of gaming space; 102 hotel rooms => gaming revenues of $80.2 m (FY 2010) • Amelia Belle – 822 slot machines, 17 table games; 30,000 sq. ft. of gaming space; no hotel => gaming revenues of $44.4 m for 12 months ending 9/30/10 • Evangeline Downs – 1,627 gaming machines, no table games; 80,000 sq. ft. of gaming space; no hotel => gaming revenues of $113.5 M for 12 months ending 9/30/10
  • 10. OTHER OBSERVATIONS ON GLOBAL GAMING SOLUTIONS • Tribal casinos are self-regulated – They have not been subject to state regulation • No direct experience to date in running an Auto Racing Facility – They will have to hire the needed expertise • Race Track is more than 60 months (5 years) out on submitted plans; funded by outside partners • Tax differentials between Kansas and Oklahoma create incentives to redirect customers from Kansas to Oklahoma casinos – However, given regional nature of markets, customers are going to stay within 100 mile radius of their residences => it may be hard to persuade them to migrate to a lower tax environment • I-35 Corridor argument is a bit contrived – The Interstate itself is not a tourist attraction – The company does understand the local TX, OK market
  • 11. • I-35 destination market experience. • Proven development and operational expertise in destination properties. • Substantial financial capability. • Proven record in economic development in local communities. • Proven record in expanding facilities to extract market potential. 3. Key Advantages of Global Gaming as the State’s Operator Wellington, Sumner County, Kansas. October 28, 2010 INTERESTING COINCIDENCE, BUT I-35 IS NOT A DESTINATION IN ITS OWN RIGHT IS THE I-35 CORRIDOR A STRATEGIC ADVANTAGE?
  • 12. OTHER OBSERVATIONS ON PENINSULA GAMING • Experience with regulatory bodies in Iowa and Louisiana • No direct experience to date in running an Equestrian Events Center – They will have to hire the needed expertise • Distance from their other casinos will limit their ability to cross-market • The indictment issue in Iowa should be taken into consideration by the Review Board
  • 13. AN UNORTHODOX SOURCE OF INFORMATION: WWW.TRIPADVISOR.COM
  • 14. TRIPADVISOR COMMENTS ON WINSTAR WORLD CASINO QUALIFIER: POSSIBLE LOADING OF RESULTS FROM THE MARKETING DEPARTMENTS OF CASINOS REFERENCED. ALSO, CASINO PATRONS CAN BE A CRITICAL BUNCH OF PEOPLE. • Trip Advisor rating at about 2.5 (out of 5); 35 reviews • Lots of complaints on tight slots, 50 cents to $1 ante per hand at Blackjack – Some note that this is the norm in Oklahoma – Characteristics of a monopoly situation, i.e. used in Morongo Casino in Palm Springs, CA (closest to LA market) before competition became more heated in that area • Very large casino but cheap construction (industrial style building, poor AC) – World Cities theming is not very effective • Numerous complaints on the food; some compliments on free coffee & soft drinks on casino floor – Complaints about unfriendly employees • Numerous customers compared Winstar against Shreveport (3 hours drive from Dallas, compared to 1 hour) – On balance, Shreveport comes out better in comparison
  • 15. TRIPADVISOR COMMENTS ON RIVERWIND CASINO • TripAdvisor rating at about 2.0 (out of 5); 18 reviews • Lots of complaints on tight slots, 50 cents ante per hand at Blackjack, expensive mixed drinks (though free soft drinks and coffee) – Limited service from casino employees • Some compliments on the facility and the hotel rooms; none on the gambling conditions (too expensive, cannot win, etc.) • Cigarette smoke, poor ventilation mentioned in some references
  • 16. TRIPADVISOR COMMENTS ON REMINGTON PARK • TripAdvisor rating at 5 (out of 5); 1 review • Patron liked the Silk’s Restaurant, ambience; surprisingly pleased
  • 17. TRIPADVISOR COMMENTS ON PENINSULA CASINOS • No reviews on the Dubuque or Worth casinos – 4 reviews on the Woodfire Grill Restaurant at Diamond Jo Dubuque (average score 4.5 out of 5) • No reviews on Evangeline Downs or on Amelia Belle
  • 18. TRIPADVISOR COMMENTS ON OTHER REGIONAL CASINOS • Ameristar Casino, Kansas City, MO – Rating of about 4.0, 27 reviews – Comments mainly on the hotel • Argosy Casino, Kansas City, MO – Rating of about 4.0, 31 ratings – Comments mainly on the hotel • Eldorado Casino, Shreveport, LA – Rating of about 4.0, 84 ratings – Comments mainly on the hotel • Sam’s Town, Shreveport, LA – Rating of about 3.5, 86 ratings – Complaints over smoke in casino, unfriendly staff, charging for internet, etc. • Mohegan Sun, Uncasville, CT – Rating of about 4.0, 624 ratings – Some reviewers mixed up Foxwoods and Mohegan Sun • Foxwoods, Ledyard, CT – Rating of about 3.0, 37 ratings – Complaints over tight machines, dirty bathrooms, poor service
  • 19. MAJOR AREAS FOR COMPARISON OF THE APPLICANTS • Does an Auto Racing Facility have a stronger or weaker attractiveness to a Sumner County casino resort than an Equestrian Center? – Is the difference in planned development and opening of these facilities an important consideration? • Is the revenue generating capability of the Mulvane location over Wellington an important consideration? – There is going to be some difference, ceteris paribus, but one can dispute the magnitudes • Are there marked differences between the two applicants in terms of the physical facilities offered? – Does either one have the capability to outdraw the other if all other influences were the same • Are there marked differences between the two applicants in terms of management styles and philosophies? – Can the marketing or HR strategy of one company lead to better performance than the other?
  • 20. THE TRAVEL TIME ISSUE • 14 miles in difference between Exit 19 and Exit 33 translates into about an additional 12 minutes of travel time in each direction (11 minutes at 76 miles per hour; 10 minutes at 84 mph) • Survey results (such as those provided to Global Gaming by Jayhawk Consulting Services) are not good indicators of how people are actually going to act – Far better to observe behavior than to ask people how they would behave in a hypothetical situation • Assume increased travel time is 25 minutes per trip (round-trip) for Mulvane v. Wellington casino – If the alternative Site B in Mulvane is selected, then assume all the numbers below should be cut by 40% to 50% • For someone who would travel 4 times per month (48 times per year) to a Mulvane casino from Wichita is going to have to travel a total of 20 hours more per year, and will have to travel about 1,350 more miles per year to get to a Wellington casino site – At a cost of $0.50 per mile for transport, this would amount to an additional $675 per year on gasoline, maintenance, wear-and-tear, etc. – If travel time is valued at $18.81/hour (average wage rate in Wichita), then the additional travel time cost to the individual would amount to an additional $375 per year. (Note: the assumption is that the opportunity cost of driving time is the wage rate, i.e. the person could be working instead, or values his free time at that rate.) • Because it is more expensive to go to a casino in Wellington relative to Mulvane (at the rate of about $22 per trip, based on the above assumptions), it is reasonable that Wichita consumers would make fewer trips to Wellington, all other considerations held constant
  • 21. Wells Gaming Research
  • 22. Wells Gaming Research