RubinBrown Gaming Stats 2010

Commercial Gaming Stats

2010

A Publication of RubinBrown LLP

Executive Summary

Introduction RubinBrown is pleased to introduce the first edition of the Commercial Gaming Stats. As the recession has taken its toll on the U.S. and tourism has dropped, gaming in the Midwest has surprisingly held steady and, in some cases, even thrived as demonstrated by the opening of new properties and the expansion of existing facilities. comprehensive and comparative report of key gaming statistics of commercial gaming operations (excluding racinos) in Illinois, Indiana, Iowa, and Missouri. The statistics include high level national and regional comparisons as well as detailed state-by-state information of 2009 gross gaming revenues, tax contributions, admissions, electronic gaming devices, table games, and incident reports for the Midwest commercial casinos. Within the U.S., there are 445 commercial land-based and riverboat casinos in 13 states. The four Midwest states referenced in this publication comprise 22 percent of the 2009 adjusted gross receipts of the 13 states with commercial gaming. Missouri was only one of three states that experienced an increase in gaming revenue in 2009. Information used to compile the statistics provided in the following pages was obtained from the state gaming regulatory authorities and the American Gaming Association (please see page 17 for the complete listing). The RubinBrown Hospitality & Gaming Industry Group is proud to present this valuable reference tool. We encourage gaming operators and regulators to use these statistics as one of many tools in benchmarking and evaluating gaming operations. The Commercial Gaming Stats was created in order to provide a

Contents 1 Executive Summary 2 National Comparison 3 State Gaming Tax Revenues 4 Regional Comparison 9 Illinois Gaming Statistics 11 Indiana Gaming Statistics 13 Iowa Gaming Statistics 15 Missouri Gaming Statistics 17 RubinBrown’s Hospitality & Gaming Services

General Industry Economic Update Just a few years ago, Las Vegas was the center of growth for the hospitality and gaming industry, with increasing gaming revenues and hotel occupancies in excess of 95 percent. Today, the majority of the construction projects in Las Vegas sit incomplete and under bankruptcy protection or on an indefinite suspension. In contrast, casinos within the Midwest have seen continued economic investment despite the recession. Capital projects continue and revenues have increased because travelers are choosing to stay closer to home instead of traveling to bigger destinations. In addition, the increased legalization of commercial gaming has presented new challenges to existing commercial and tribal casinos as they are faced with more competition while trying to continue to enhance revenue. While the scenarios differ by property, jurisdiction and tribe, properties that succeed will share three common traits: • Strong patron loyalty through services and reward programs that exceed patron expectations • Leadership in technological innovation that improves the patron experience and reduces expenses incurred by the property • Commitment to a philosophy of continuous improvement of internal

processes while complying with stringent regulatory oversight

Overall, growth is expected to be focused on the creation of new regional markets and expanding those that already exist.

1 | Raise Your Expectations

National Comparison

Adjusted Gross Receipts by State (Millions)

In 2009, the U.S. gaming industry continued to struggle with revenues down 6.46 percent from 2008. The most significant declines were felt in formerly robust states like Nevada and New Jersey, which suffered double digit reductions in revenue. Only three of the 13 states with legalized commercial gaming experienced gains in 2009, due primarily to changes in restrictive gaming regulations such as the elimination of wager or loss limits. A number of states have legalized gaming in order to overcome budget deficits and increase tax revenue. The trend of increased legalization is expected to continue as more states benefit financially from commercial gaming. Recent gaming legalization includes: • Delaware – Sports Books • Illinois - Video gaming terminals at licensed establishments (bars and truck stops) • Kansas – Opened first Commercial Gaming property • Maryland – Slot Parlors From a market share perspective, Nevada continues to dominate the landscape with more than one-third of the market. The east coast dominance currently owned by New Jersey could be challenged in the coming years by Pennsylvania’s current and proposed growth. • Ohio – Commercial Gaming • Pennsylvania – Table Games

2009

2008

% Change

Colorado

735

716

2.65% -8.92% -3.41% -0.84% -6.17% -1.54% -9.41% 2.85% -10.40% -13.25% 21.60% -0.04% -6.45% NA

Illinois Indiana

1,429 2,379

1,569 2,463

Iowa

945

953 NA

Kansas* Louisiana Michigan Mississippi

2

2,053 1,339 2,465 1,730

2,188 1,360 2,721 1,682

Missouri Nevada

10,393

11,599

New Jersey Pennsylvania South Dakota

3,943 1,965

4,545 1,616

102

102

Total

$29,480

$31,514

*The first commercial Kansas casino opened on December 15, 2009, therefore there is no information to report prior to 2009.

National – Percentage of Gaming Industry

MI 5%

IL 5%

IA 3%

CO 2%

MO 6%

KS & SD <1%

PA 7%

LA 7%

NV 36%

IN 8%

MS 8%

NJ 13%

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State Gaming Tax Revenues

Gaming Tax Revenues by State

States with established gaming operations struggled as a whole (i.e. MO, CO, PA increased) in 2009 with decreased tax revenue from gaming operations. In fact, from 2008 to 2009, most states suffered losses in their gaming tax revenues. The gaming tax rates vary widely by state. Pennsylvania has the highest rate of 55 percent while Nevada has the lowest tax rate of 6.75 percent. In general, Midwest states report a rate between 20-35 percent. Also noteworthy, only three of the 13 states charge an admissions tax on patrons entering the casino floor.

2008

2009

$1.2B

$800M

$400M

$0

Iowa

Illinois

Indiana

Nevada

Kansas*

Missouri

Michigan

Louisiana

Colorado

Mississippi

New Jersey

*The first Kansas casino opened on December 15, 2009, therefore there is no information to report prior to 2009.

Pennsylvania

South Dakota

National – Tax Revenues

State

Effective Gaming Revenue Tax Rate

Description of Gaming Tax Rates

Colorado

0.25 - 20% Graduated tax rate from .25% - 20%, with all adjusted gross proceeds in excess of $13 million taxed at 20%. 15 - 50% Graduated tax rate from 15% - 50%, with all adjusted gross receipts in excess of $200 million taxed at 50%, plus an admission tax of $2 - $3 per patron per gaming day. 15 - 40% Graduated tax rate from 15% - 40%, with all adjusted gross receipts in excess of $600 million taxed at 40%, plus an admission tax of $3 per patron per gaming day.

Illinois

Indiana

Iowa

5 - 22%

Graduated tax rate from 5% - 22%, with all adjusted gross receipts in excess of $3 million being taxed at 22%. Gross gaming revenue tax of 27% with 22% being paid to the state, 3% to the locality, and 2% to the state problem gambling fund. Riverboats incur a tax rate of 21.5% of adjusted gross receipts with additional local taxes determined by locality. Land-based casinos incur the greater of 21.5% of adjusted gross receipts or $60 million.

Kansas

27%

Louisiana

21.5%

Michigan

19 - 24% Permanent facilities pay a flat tax of 19% on gross gaming revenue, while temporary facilities pay a flat tax rate of 24%.

Mississippi

4 - 8%

Graduated tax rate from 4% - 8%, with all adjusted gross receipts in excess of $134,000 taxed at 8%. Additional local taxes up to 4% of revenues, as well as annual licensing and gaming device taxes. Adjusted gross receipts tax of 21%, plus an admissions tax of $2 per patron per excursion.

Missouri Nevada

21%

3.5 - 6.75% Graduated tax rate from 3.5% to 6.75%, with all monthly gross gaming revenue in excess of $134,000 taxed at 6.75%, with additional local, gaming devices, regulatory, and entertainment taxes. 9.25 - 10.5% Gross gaming revenue tax of 8% plus either a community investment alternative obligation tax of 1.25% or an investment alternative of 2.5%. An additional tax of 4.25% charged on Casino complimentaries.

New Jersey

Pennsylvania South Dakota

55%

Gross terminal revenue tax rate of 55%.

8%

Gross gaming revenue tax of 8% plus an annual gaming device tax of $2,000 per machine per year.

3 | Raise Your Expectations

Regional Comparision

Three Year Trend of Adjusted Gross Receipts

While traditional gaming states have seen revenues drop significantly

in the last few years, casinos throughout the Midwest have weathered the recession with mixed results as gaming has

$3B

$2.25B

become more regionally focused. As noted in the graph, Iowa and Missouri have remained relatively stable or seen modest increases, while Illinois and Indiana have been impacted more adversely. Where there has been growth in regional gaming, it has been a product of the economy forcing consumers to stay closer to home, increased legalization, and the construction of “Vegas-style” casinos within regional communities.

$1.5B

$750M

$0

Illinois

Indiana

Iowa

Missouri

2007

2008

2009

Regional – Patrons & Adjusted Gross Receipts

# of Casinos

Patrons

% of Total Patrons

Adjusted Gross Receipts

% of Total AGR

Illinois

Chicago Vicinity St. Louis Vicinity

4 2 3 9

7,351,319 3,401,037 3,666,404 14,418,760

9% $893,973,000 4% $231,743,000 5% $303,201,000 18% $1,428,917,000

14%

3% 5%

Other Communities

Illinois Total

22%

Indiana

Chicago Vicinity

5 3 3

14,077,898 7,216,498 5,142,599 26,436,995 6,800,217 3,281,986 6,187,547 16,269,750

17% $1,198,101,091 9% $691,199,919 6% $489,456,251 32% $2,378,757,261 8% $443,067,736 4% $178,811,640 7% $323,240,141 19% $945,119,517

18% 11%

Southeastern Indiana Ohio River Communities

7%

Indiana Total

11

36%

Iowa Metropolitan Communities Mississippi Communities Central Iowa Communities

5 4 5

7% 3% 5%

Iowa Total

14

15%

Missouri

Kansas City Vicinity St. Louis Vicinity Other Communities

4 4 4

10,669,302 12,344,023 2,814,234 25,827,559

13% $719,923,380 15% $818,709,540 3% $191,682,841 31% $1,730,315,761

11% 13%

3%

Missouri Total

12

27%

Midwest Region Total

46

82,953,064

100% $6,483,109,539

100%

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Regional Comparision – continued

Detailed Analysis of Casinos

Illinois

Indiana

Iowa

Missouri

Number of Properties Casino Square Feet Average Square Feet

9

11

14

12

322,335 35,815

710,113 64,556

409,862 29,276

774,800 64,567

Average Number of Table Games

26

68

25

44

Average Number of EGDs

1,119

1,766

923

1,077

Effective Tax Rate*

34.67%

32.06%

21.94%

27.11%

*Effective tax rate accounts for adjustments to AGR, admission taxes, and graduated brackets.

Three Year Trend of Patrons by State

Regional gaming has benefited from the economic downturn as consumers spend less on travel. Patron attendance increased in 2009 for most Midwest states, with the exception of Illinois, which has been adversely effected by legislative acts and an increase in gaming in neighboring states. With regard to average casino square feet, note that both Missouri and Indiana are much larger than Illinois and Iowa. This is primarily due to the high number of table games in those states. Illinois possesses the highest casino win per patron at $99.10, while Iowa’s casino win per patron is 41% lower at $58.09. Overall, the outlook for future growth in the Midwest appears positive. As more states look to reduce deficits and gain tax revenue, it is anticipated that regional gaming will increase in future years.

30M

24M

18M

12M

6M

0

Illinois

Indiana

Iowa

Missouri

2007

2008

2009

Casino Win and Tax per Patron

$100

$40.00

$99.10

$89.98

$34.36

$67

$26.67

$28.85

$66.99

$58.09

$18.16

$33

$13.33

$12.74

$0

$0

Illinois

Indiana

Iowa

Missouri

Casino Win per Patron

Revenue Tax Incurred per Patron

5 | Raise Your Expectations

Regional Electronic Gaming Devices & Table Game Analysis Illinois has the highest adjusted gross receipts (AGR) in relation to their electronic gaming devices (EGD) and table games (TG). However, it is ranked lower than Indiana in total gaming revenues. Of the four states analyzed, Iowa has the lowest AGR and number of electronic gaming device and table games in the region. The electronic gaming device hold is relatively consistent between the four states, with a spread of 2.3 percent. Illinois reports the lowest electronic gaming device hold at 7.8 percent. Overall, there is an inverse relationship between table hold and AGR per day. However, the AGR per table is impacted by other factors including population demographics and propensity to spend.

Electronic Gaming Devices Analysis

10.10%

$400

11.00%

9.03%

8.92%

$341.16

$266

7.33%

$278.06

7.80%

$216.86

$184.05

$133

3.67%

0%

$0

Illinois

Indiana

Iowa

Missouri

AGR per EGD per Day

Average EGD Hold

Table Games Analysis

21.41%

21.33%

$3K

22.00%

19.33%

17.33%

$2K

14.67%

$2,033.86

$1,495.96

$1K

7.33%

$1,038.86

$599.60

0%

$0

Illinois

Indiana

Iowa

Missouri

AGR per Table Game per Day

Average Table Game Hold

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Regional Comparision – continued

Regional Disciplinary Action The graph and table depict the disciplinary actions reported in the Missouri and Indiana Gaming Board meeting minutes. To provide a summary of the disciplinary actions taken by these two states, the incidents have been summarized by category and the top 10 fines incurred have been listed. A linear relationship between the incident and fine amount cannot be drawn as each fine is independently reviewed by state regulatory bodies.

• Indiana properties reported a total of 52 incidents resulting in $408,200 in fines. The average fine per incident equals $7,850. • Missouri properties reported a total of 34 incidents resulting in $240,000 in fines. The average fine per incident equals $7,058.

Note: Detailed disciplinary action information for Iowa and Illinois could not be summarized as the information was not readily available. • Illinois incidents and disciplinary actions were not readily available in

the meeting minutes with the exception of one fine. A

property was fined $100,000 related to casino personnel being restricted from discussing confidential matters with gaming enforcement agents.

Summary of Disciplinary Actions by Category

Number of Incidents

Cumulative Percentage

100%

40

80%

32

60%

24

16

40%

20%

8

0

0%

Security Operations

EGD Operations

Table Game Operations

Information Technology

Reporting to Onsite Gaming Officers

Communication Between Departments

Improper Marketing Campaigns

Reporting to State Gaming Commission

Count Room Operations

7 | Raise Your Expectations

Summary of Top Ten Disciplinary Action Fines

State

Fine Amount $124,000

# of Incidents Included in Fine

Incident Category

Incidents

1)

Indiana

5

- Reporting to Onsite Gaming Officers - Improper Marketing Campaigns

- Failure to notify gaming enforcement agents of altercation - Ordered gaming software not approved by the state regulatory board - Filed incorrect tax form - Removed EGD from service without notifying the gaming commission - False advertising related to celebrities attending grand opening ceremonies - Seven underage individuals gained access to the casino floor within one month - Violated rules related to the inspection of playing cards - Two underage individuals gained access to the casino floor - Unused playing cards left unsecured - Table fill procedures improperly followed - Three violations of sensitive key rules - Violation of solicitation of tips by personnel in supervisory position - Casino allowed licensee to work with expired badge - Gaming enforcement agents were not notified of employee terminations on a timely basis - Violations of opening table game balances - Violation of access to sensitive keys - Failure to timely report criminal activity to gaming enforcement agents - Underage individuals gained access to casino floor - Tip box was unsecured and defective - EGD reconciliation was not performed for one gaming day - Underage individuals gained access to casino floor - Violation of internal controls concerning rakes not exceeding ten percent of all sums wagered in a pot - Failure to report information to the gaming commission, resulting in an incorrect progressive amount - Violation of dedicated coverage on a progressive jackpot - Violation of sensitive key rules - Violation of allowing only authorized personnel to have access to assets - Untimely reporting to the commission of incidents that the licensee believes to be a violation of the law or control standards - Sold liquor to intoxicated persons

2)

Missouri

$70,000

7

- Security Operations

3)

Indiana

$40,000

4

- Table Game Operations - Security Operations

4)

Indiana

$27,500

5

- Security Operations

5)

Indiana

$26,500

4

- Reporting to Onsite Gaming Officers - Table Game Operations - Security

6)

Indiana

$26,500

3

- Reporting to Onsite Gaming Officers - Table Game Operations - EGD Operations - Security Operations - Table Game Operations

7)

Indiana

$26,500

2

8)

Missouri

$25,000

1

- Reporting to the State Gaming Commission

9)

Indiana

$22,500

3

- Security Operations

10) Missouri

$20,000

2

- Reporting to the State Gaming Commission - Security Operations

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Illinois Gaming Statistics

Overall in 2009, Illinois-based casinos experienced a decline in AGR of nearly 9 percent. The Chicago market’s decline was even more severe at 14 percent. Smaller Illinois communities experienced an 8 percent increase over 2008. The overall decline in Illinois is attributed to the struggling economy, the continued negative impact of the smoking ban, and increased competition from Missouri properties with the repeal of Missouri’s loss limit in November 2008.

On the legislative front, the need to generate greater tax revenues led to the enactment of the Video Gaming Act in July 2009. This legislation legalized video gaming terminals at licensed establishments such as bars and truck stops (up to five terminals in each). However, the act also provided counties and municipalities the option to ban the devices in their communities.

Grand Victoria Casino

Hollywood Casino

Harrah’s Joliet

Empress

Jumers

Par-A-Dice

Argosy

Casino Queen

Harrah’s Metropolis

Illinois Gaming Statistics

Legalization Date

February 1990

First Casino Opening Date

September 1991

Current Number of Commercial Gaming Properties

9

2009 Commercial Gaming Admissions

14,418,760

2009 Commercial Casino Revenue

$1,428,917,000

2009 Commercial Gaming Tax Revenue

$495,385,167

City

Gaming Square Feet

% of Statewide Revenues

% of Statewide Admissions

Chicago Vicinity Empress

Joliet Elgin Joliet

50,000 29,850 39,000 41,384

8.40%

7.74%

Grand Victoria Casino

20.51% 19.51% 14.16% 62.56%

14.69% 17.46% 11.10% 50.99%

Harrah’s

Hollywood Casino

Aurora

Chicago Total

160,234

St. Louis Vicinity Argosy Casino Queen St. Louis Total Other Communities Harrah’s

Alton

23,000 40,000 63,000

5.89%

8.04%

East St. Louis

10.33% 16.22%

15.55% 23.59%

Metropolis Rock Island

30,985 42,000 26,116 99,101

8.24% 4.93% 8.05%

7.45% 8.71% 9.26%

Jumers

Par-A-Dice

Peoria

Other Communities Total

21.22%

25.42%

9 | Raise Your Expectations

In the wake of former Illinois Governor Rod Blagojevich’s scandal that resulted in his departure from office, a racketeering lawsuit was filed by a group of casinos against Blagojevich and a prominent racetrack owner over the controversial law in which casinos were forced to subsidize struggling live racing operations. In the suburban Chicago area, construction will soon begin on the state’s 10th licensed casino, which is slated to open in 2011. Legislation is being considered to allow gambling within Chicago’s city limits as well as to allow free alcoholic beverages at casinos to promote increased gambling. Overall, the Chicago market is the strongest from a revenue standpoint, as its leads in AGR per square foot, patron, electronic gaming devices, and table games. Illinois casinos in the Chicago area have an AGR per patron of $121.61, which is much stronger than the $85.11 produced by their Indiana-based competition. The St. Louis metropolitan market in Illinois yields an AGR per patron of $68.14, which is slightly higher than the competing Missouri properties, which report $66.32. The properties located in the smaller communities generated the least revenue per square foot; however, they netted $82.70 in AGR per patron, $14.56 more than the eastern St. Louis metropolitan market. The smaller communities yielded the least AGR per table game and electronic gaming device, while producing the highest hold percentages.

Adjusted Gross Receipts by Region

$1.5B

$1B

$500M

$0

Chicago Vicinity

St. Louis Vicinity

Other Communities

2007

2008

2009

Adjusted Gross Receipts Analysis

$121.61

$6K

$130

$5,579.17

$82.70

$68.14

$86

$4K

$3,059.52

$3,678.46

$43

$2K

$0

$0

Chicago Vicinity

St. Louis Vicinity

Other Communities

AGR per Square Foot

AGR per Patron

Electronic Gaming Devices Analysis

8.96%

8.04%

$500

9.00%

$481.47

6.13%

6.00%

$333

$253.56

$216.05

3.00%

$166

0%

$0

Chicago Vicinity

St. Louis Vicinity

Other Communities

AGR per EGD per Day

Average EGD Hold

Table Games Analysis

20.44%

$3K

21.00%

17.14%

16.60%

$2K

14.00%

$2,968.73

$1,384.44

$1,189.13

7.00%

$1K

0%

$0

Chicago Vicinity

St. Louis Vicinity

Other Communities

AGR per Table Game per Day

Average Table Game Hold

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Indiana Gaming Statistics

Majestic Star II

While still experiencing a downturn, the gaming industry in Indiana has not suffered as severely as other states. Indiana’s casino revenues dropped in 2009 3.4 percent from the prior year, as compared to the national 6.5 percent decline. Indiana’s gaming revenues fared better than its neighboring states

due in part to continuing capital investments in new operations, including: • June 2009 - New Hollywood casino opened, replacing the former Argosy property. • April 2009 – French Lick opened a golf course and resort designed by Pete Dye. • January 2009 – Blue Chip opened a new 22 story hotel.

Blue Chip

Ameristar

Majestic Star

Horseshoe - Hammond

Hollywood Casino

French Lick

Grand Victoria

Belterra

Horseshoe - Elizabeth

Casino Aztar

Indiana Gaming Statistics

Legalization Date

November 1993

First Casino Opening Date

December 1995

Current Number of Commercial Gaming Properties

11

2009 Commercial Gaming Admissions

26,436,995

2009 Commercial Casino Revenue

$2,378,757,261

2009 Commercial Gaming Tax Revenue

$762,730,283

Gaming Square Feet

% of Statewide Revenues

% of Statewide Admissions

Chicago Vicinity Ameristar Blue Chip Horseshoe Majestic Star Majestic Star II Chicago Total

East Chicago Michigan City

53,492 65,000 108,000 43,000 40,261 309,753

11.65% 7.89% 22.16% 4.65% 4.02% 50.37% 4.79% 3.52% 12.27% 20.58% 6.51% 4.63% 17.91% 29.05%

12.29% 9.65% 20.77% 5.27% 5.27% 53.25% 4.91% 4.23% 10.31% 19.45% 7.06% 5.68% 14.56% 27.30%

Hammond

Gary Gary

Southeastern Indiana Casino Aztar

Evansville French Lick

38,360 45,200 86,600

French Lick Horseshoe

Elizabeth

Southeastern Total

170,160

Ohio River Communities Belterra

Florence Rising Sun

40,200 40,000 150,000 230,200

Grand Victoria

Hollywood

Lawrenceburg

Ohio River Total

11 | Raise Your Expectations

Adjusted Gross Receipts by Region

While overall revenues in Indiana declined, patronage increased 4 percent from 25.4 million to 26.4 million. In 2009, the Indiana Gaming Commission also began an examination of Indiana’s industry as compared to other states. Topics include land-based casinos, non-smoking accommodations, and competitiveness with tribal casinos. Going forward, Indiana will face increased competition from Ohio’s recent legalization of commercial gaming and the addition of Illinois’ tenth casino in the Chicago suburbs. Even though the Chicago area casinos have Indiana’s highest AGR per square foot, they are still 31 percent less than the competition on the Illinois side. The AGR per patron is also lower in the Chicago vicinity as compared to the other regions. This statistic is consistent with the trend in large metropolitan communities, as these properties offer additional non-gaming attractions that increase admissions figures. The casinos in Southeastern Indiana have the highest EGD hold in the state, which could potentially boost AGR per EGD, but may account for why patronage is only 19.46% of the total state admissions, while being located in a larger market like Cincinnati. With regard to table games, an inverse relationship exists between table hold and AGR per table. This is consistent with the overall trend observed in the Midwest states examined. Additionally, the AGR per table followed the population centers as the Chicago vicinity is the largest, followed by the Cincinnati market, and then the other Ohio River Communities, respectively.

$1.3B

$867M

$433M

$0

Chicago Vicinity

Southeastern Indiana Ohio River Communities

2007

2008

2009

Adjusted Gross Receipts Analysis

$100

$4K

$95.78

$95.18

$3,867.92

$3,002.92

$2.7K

$90

$2,876.45

$85.11

$80

$1.3K

$70

$0

Southeastern Indiana

Ohio River Communities

Chicago Vicinity

AGR per Square Foot

AGR per Patron

Electronic Gaming Devices Analysis

13.17%

$290

14.00%

$285.45

$260.51

$279.04

$193

11.00%

9.22%

9.02%

8.00%

$97

5.00%

$0

Southeastern Indiana

Ohio River Communities

Chicago Vicinity

AGR per EGD per Day

Average EGD Hold

Table Games Analysis

$1,900

22.00%

$1,817.37

21.59%

$1,250

20.33%

$1,271.68

$1,168.10

19.56%

18.67%

$633

18.52%

16.10%

$0

St. Louis Vicinity Southeastern I diana

Other Communities Ohi River Communities

Chicago Vicinity ica icinity

AGR per Table Game per Day

Average Table Game Hold

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Iowa Gaming Statistics

The statewide performance of Iowa’s casinos was relatively stable in 2009, with patron admissions down 3.3 percent and adjusted gross receipts descending only 0.2 percent. Declining revenues at certain properties showed that Iowa is certainly not immune to the current recession, but

the state as a whole has fared better than others. This is largely due to certain existing properties moving to new, more “Vegas-style” facilities which has allowed them to attract patrons from a wider market resulting in significant increases in revenues. Iowa, which has no state-imposed limits on the number of gaming licenses issued, received four new

Diamond Jo’s - Northwood

Wild Rose - Emmetsburg

Isle of Capri - Marquette

Isle of Capri - Waterloo

Diamond Jo’s - Dubuque

Argosy

Wild Rose - Clinton

Riverside Casino

Isle of Capri Bettendorf

Harrah’s

Terrible’s Lakeside

Rhythm City Catfish Bend

Ameristar

Iowa Gaming Statistics

Legalization Date

July 1989

First Casino Opening Date

September 1991

Current Number of Commercial Gaming Properties

14

2009 Commercial Gaming Admissions

16,269,750

2009 Commercial Casino Revenue

$945,119,517

2009 Commercial Gaming Tax Revenue

$202,611,979

City

Gaming Square Feet

% of Statewide Revenues

% of Statewide Admissions

Metropolitan Communities Ameristar

Council Bluffs

38,500 20,498 33,406 28,729 29,062

16.72% 6.01%

13.43% 6.60%

Argosy Harrah’s

Sioux City

Council Bluffs

9.45% 8.76% 5.94%

8.69% 7.21% 5.87%

Isle of Capri Rhythm City

Bettendorf Davenport

Metropolitan Total

150,195

46.88%

41.80%

Mississippi River Communities Catfish Bend

Burlington Dubuque Marquette

23,000 35,859 18,747 19,681 97,287 38,946 41,964 29,000 36,200 16,270 162,380

4.10% 7.46% 3.21% 4.15%

4.95% 7.83% 2.41% 4.98%

Diamond Jo’s Isle of Capri

Wild Rose

Clinton

Mississippi River Communities Total

18.92%

20.17%

Central Iowa Communities Diamond Jo’s

Northwood

8.38% 8.38% 9.11% 5.34% 2.99%

7.60% 9.28% 12.64% 5.10% 3.41% 38.03%

Isle of Capri

Waterloo Riverside Osceola

Riverside Casino Terrible’s Lakeside

Wild Rose

Emmetsburg

Central Iowa Total

34.20%

13 | Raise Your Expectations

Adjusted Gross Receipts by Region

applicants for casino licenses in November of 2009 (the selection process is expected to take at least six months). In addition, there is significant new gaming-related legislation being considered in 2010. The gaming industry in the Mississippi River Communities and Central Iowa are comparable statistically because casinos in these regions are significantly smaller (in size and number of gaming devices) than in the metropolitan communities. The larger metropolitan communities also experience a significantly higher AGR per patron. Interestingly, this trend does not hold true for the metropolitan casinos in other states. In Iowa, there appears to be a positive correlation between table hold and AGR per table, which is dissimilar to the relationship noted in the other states. On the legislative front, Iowa is currently working on bills that could: • Eliminate live greyhound racing (there are two existing facilities) • Allow major poker tournaments at casinos • Permit bars to install video gaming devices • End the existing requirement that communities vote every eight years on whether or not to retain the casinos within their jurisdiction • Legalize betting on professional sports How much of this legislation actually passes in 2010 will have a great impact on Iowa’s gaming industry.

$500M

$333M

$167M

$0

Metropolitan Communities

Mississippi River Communities

Central Iowa Communities

2007

2008

2009

Adjusted Gross Receipts Analysis

$65.00

$3K

$70

$54.00

$52.00

$2,950.00

$46

$2K

$1,991.00

$1,838.00

$23

$1K

$0

$0

Metropolitan Communities

Mississippi River Communities

Central Iowa Communities

AGR per Square Foot

AGR per Patron

Electronic Gaming Devices Analysis

9.10%

$210

9.10%

$210.00

$169.00

$160.00

8.90%

$140

8.80%

8.70%

$70

8.70%

8.50%

$0

Metropolitan Communities

Central Iowa Communities

Mississippi River Communities

AGR per EGD per Day

Average EGD Hold

Table Games Analysis

$800

23.00%

$728.00

22.00%

21.67%

$533

$533.00

$502.00

21.35%

20.33%

$266

20.40%

19.00%

$0

Metropolitan Communities

Central Iowa Communities

Mississippi River Communities

AGR per Table Game per Day

Average Table Game Hold

www.rubinbrown.com | 14

Missouri Gaming Statistics

Missouri continued its trend of increasing revenues, a feat made all the more impressive by the economic environment in which it occurred. Several events can be attributed to Missouri’s increased revenues, including:

• Smoking ban enacted by Illinois in 2007, which has caused many patrons to frequent the properties on the Missouri side • Missouri’s elimination of the $500 loss limit (per two hours of play) • Continued growth and success of Lumiére Place Casino in downtown St. Louis

Mark Twain

Terrible’s

Argosy

Harrah’s

Ameristar

Ameristar

Lumiére Place

Harrah’s

Isle of Capri

Isle of Capri Boonville

President Casino

Lady Luck

Missouri Gaming Statistics

Legalization Date

August 1993

First Casino Opening Date

May 1994

Current Number of Commercial Gaming Properties

12

2009 Commercial Gaming Admissions

25,827,559

2009 Commercial Casino Revenue

$1,730,315,761

2009 Commercial Gaming Tax Revenue

$469,057,774

City

Gaming Square Feet

% of Statewide Revenues

% of Statewide Admissions

Kansas City Vicinity Ameristar

Kansas City

140,000 62,000 63,300 21,400 286,700 130,000 120,000 75,000 18,000 343,000

13.99% 11.50% 11.30%

14.04% 10.44% 10.76%

Argosy Harrah’s

Riverside

North Kansas City

Isle of Capri

Kansas City

4.81%

6.07%

Kansas City Total

41.60%

41.31%

St. Louis Vicinity Ameristar

St. Charles

17.28% 17.03% 11.70%

16.05% 14.28% 15.21%

Harrah’s

Maryland Heights

Lumiére Place

St. Louis St. Louis

President

1.31%

2.25%

St. Louis Total

47.32%

47.79%

Other Communities Isle of Capri

Boonville

28,000 45,300 53,800 18,000

4.79% 1.95% 2.14% 2.20%

4.56% 1.65% 2.23% 2.46%

Lady Luck Mark Twain

Caruthersville

La Grange St. Joseph

Terrible’s

Other Communities Total

145,100

11.08%

10.90%

15 | Raise Your Expectations

St. Louis area revenues are expected to increase again in 2010 as the 13th licensed property, River City Casino, is unveiled in south St. Louis City in early 2010. While the new property is expected to increase overall gaming revenues for the state, the increase may be offset by the uncertain future of the President Casino. AGR totals for the western Missouri properties may be adversely affected since new competition will soon be entering the Kansas City market. In 2011, Hollywood Casino is expected to open in Wyandotte County, which will be Kansas’ second commercial casino. AGR per patron is highest in the non- metropolitan communities. This may be due in part to the fact that the metropolitan-area casinos are considered more “Vegas-style” and offer more non-gambling attractions. These entertainment venues allow properties to attract higher patron volume; however, gaming revenues per patron tend to be lower since the patron’s primary purpose varies between gaming and non-gaming activities. Missouri follows the trend experienced in most other states, in which the non- metropolitan communities have the lowest AGRs and the lowest EGD holds, but the highest table holds. While casinos in non-metropolitan areas are, on average, about half the size of those in larger cities (and have significantly less tables and EGDs), they experience about two-thirds of the patronage which boosts their average statistics.

Adjusted Gross Receipts by Region

$900M

$600M

$300M

$0

Kansas City Vicinity

St. Louis Vicinty

Other Communities

2007

2008

2009

Adjusted Gross Receipts Analysis

$69

$3K

$2,511.07

$2,386.81

$68.11

$67

$2K

$63.48

$1,321.04

$66

$1K

$66.32

$65

$0

Kansas City Vicinity

St. Louis Vicinity Other Communities

AGR per Square Foot

AGR per Patron

Electronic Gaming Devices Analysis

9.20%

$240

$230.62

9.18%

8.97%

$160

$237.98

8.99%

$138.52

8.73%

$80

8.66%

8.50%

$0

Kansas City Vicinity

St. Louis Vicinity

Other Communities

AGR per EGD per Day

Average EGD Hold

Table Games Analysis

$1,200

24.00%

$1,149.67

$1,054.06

23.17%

$800

22.33%

$652.51

20.67%

$400

20.98%

20.96%

19.00%

$0

Kansas City Vicinity

St. Louis Vicinity

Other Communities

AGR per Table Game per Day

Average Table Game Hold

www.rubinbrown.com | 16

RubinBrown Hospitality & Gaming Services

RubinBrown’s Hospitality and Gaming Services Group consists of well-trained, dedicated professionals who are familiar with the specific accounting, tax and business aspects of the gaming industry. Beyond these traditional services, we also offer specialized knowledge of the industry and familiarity with the many specific challenges and issues encountered by gaming operations. We have the expertise to evaluate the overall effectiveness of a casino’s operations and analyze the performance of the various phases Assurance and Accounting Services • Audits, reviews and compilations of financial statements • Audits of pension and 401(k) plans • Adjusted Gross Receipts and Regulatory Compliance Audits Consulting Services • Policy and procedure development and documentation • Internal control and operation reviews • Contract compliance and accounts receivable reviews • Inventory controls review • Forensic accounting • Payment card industry (PCI) data security standards review • ERP and application audit • Pre and post system implementation review • Cash flow and financing analysis within the gaming industry. Specialized serviced include:

Information Technology Consulting • System procedures and controls consulting • Integration with other operating systems and general ledger packages • Retail inventory management system implementation • MAS90 and Great Plains implementation, support, and training Tax Compliance and Consulting

• Federal, state and local tax preparation • Real estate and personal property tax

• Sales and use tax compliance • Employment taxes compliance • Wealth management • Retirement and estate planning

SOURCES: American Gaming Association Colorado Department of Revenue - Division of Gaming Illinois Gaming Board Indiana Gaming Commission Iowa Racing and Gaming Commission Kansas Racing and Gaming Commission Louisiana Gaming Control Board Michigan Gaming Control Board Mississippi Gaming Commission Missouri Gaming Commission Nevada Gaming Control Board New Jersey Casino Control Commission Ohio Secretary of State Pennsylvania Gaming Control Board South Dakota Gaming Commission

Contact:

Todd Pleimann, CPA Managing Partner – Kansas City todd.pleimann@rubinbrown.com 913-499-4411

Chelle Adams, CPA Partner-In-Charge Gaming Services Group chelle.adams@rubinbrown.com 314-290-3329

17 | Raise Your Expectations

Notes

www.rubinbrown.com | 18

Saint Louis Office One North Brentwood Blvd. Saint Louis, Missouri 63105

Kansas City Office 10975 Grandview Dr., Building 27 Suite 600 Overland Park, Kansas 66210

ph: 314.290.3300 fax: 314.290.3400

ph: 913.491.4144 fax: 913.491.6821

www.rubinbrown.com