RubinBrown Gaming Stats 2011

Commercial & Tribal Gaming Stats A Publication of RubinBrown LLP 2011

Welcome Letter

Contents 1 Welcome Letter

2 Executive Summary 3 National Comparison 4 State Gaming Tax Revenues 5 Regional Comparison 13 Colorado Gaming Statistics 17 Illinois Gaming Statistics 21 Indiana Gaming Statistics 25 Iowa Gaming Statistics 29 Missouri Gaming Statistics 33 National Indian Gaming Analysis 35 Regional Indian Gaming Analysis 37 Arizona Indian Gaming Analysis 39 Colorado Indian Gaming Analysis 40 Kansas Indian Gaming Analysis 41 New Mexico Indian Gaming Analysis 43 Oklahoma Indian Gaming Analysis 47 RubinBrown’s Hospitality & Gaming Services

Welcome from RubinBrown’s Hospitality and Gaming Partner-in-Charge RubinBrown’s Gaming Services Group is pleased to present the 2011 edition of Gaming Stats. As our presence within the gaming industry continues to expand, so has our publication. From the Commercial side, this year’s publication has been

expanded to include the state of Colorado. In addition, we expanded the analysis within electronic gaming devices and table games to include hold percentages by denomination and hold percentages by game type, respectively. With our continued expansion into Indian Country, we are excited to introduce a section specifically related to Tribal Gaming. We have highlighted statistics on a National and Regional level. We have also included detailed analysis for Arizona, Colorado, Kansas, New Mexico, and Oklahoma. Thank you to the many gaming industry leaders for your support and insights. We hope our publication continues to prove to be a valuable comprehensive tool throughout the year. I personally welcome your feedback on this issue of Gaming Stats. Please feel free to email me directly at chelle.adams@rubinbrown.com.

Chelle F. Adams Partner-in-Charge Hospitality and Gaming Industry Group

DISCLAIMER: Gaming Stats, a publication of RubinBrown LLP, is designed to provide general information regarding the subject matter covered. Although prepared by professionals, its contents should not be construed as the rendering of advice regarding specific situations. If accounting, legal or other expert assistance is needed, consult with your professional business advisor. Please call RubinBrown with any questions (contact information is located on the back cover).

1 | Raise Your Expectations

Executive Summary

Introduction The RubinBrown Gaming Stats publication was created in order to provide a comprehensive and comparative report of key gaming statistics of commercial gaming operations (excluding racinos) in Colorado, Illinois, Indiana, Iowa, and Missouri and tribal gaming operations in Arizona, Colorado, Kansas, New Mexico, and Oklahoma. The statistics include high level national and regional comparisons as well as detailed state-by-state information of 2010 gross gaming revenues, tax contributions, admissions, electronic gaming devices, table games, and incident reports for the commercial and tribal casinos. Within the U.S., there are 458 commercial land-based and riverboat casinos in 14 states. The five states referenced in this publication comprise 25 percent of 2010 adjusted gross receipts of the 14 states with commercial gaming. Colorado and Missouri were the only two of the five states referenced that experienced an increase in gaming revenue in 2010. From a tribal perspective, there are 240 tribes operating 447 Class II and Class III casinos in 29 states. The five states referenced in this publication represent 36 percent of the Class II and Class III tribal casinos in the U.S. Information used to compile the statistics provided in the following pages was obtained from the state gaming regulatory authorities, the American Gaming Association, and the National Indian Gaming Commission (see page 48 for the complete listing of sources). General Industry Economic Update As our nation continues to feel the effects of the 2007 Great Recession, it is clear that the gaming industry is not recession proof. Operators and tribes have felt the impact of reduced consumer spending, mergers, bankruptcies, stricter lending requirements, and stalled capital projects. Although the gaming industry suffered their worst decline over the past three years, the rebound is starting to occur. Predictions anticipate it will take many years for the industry to recover to pre-2007 revenues. However, the gaming industry continues to expand through changes in gaming legalization, updates in technology, and expansion into new markets. Gaming dollars remain a strong source of revenue for states and tribes throughout the United States.

Tribal While Tribal gaming properties have been able to avoid the high tax rates imposed by state regulators, they have been challenged by a shortage of lenders within the capital markets. In early 2010, the Wells Fargo Bank, N.A. v. Lake of the Torches Economic Development Corporation decision brought into question the recourse available to lending institutions. Since this decision, lenders have severely limited or stopped lending to tribal gaming organizations based on the fear, that in the event of default, tribal sovereignty or the application of the Indian Gaming Regulation Act (IGRA) would limit the lender’s ability to recoup their investment. Beyond the lending climate, Tribal casinos continue to feel the impact of regional casino openings and increased competition. Major tribal operators continue to seek new opportunities in commercial gaming to boost their brands and leverage their loyalty programs.

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National Comparison

Commercial Overall, the U.S. gaming industry continues to suffer, but stabilized in 2010 with a slight increase in adjusted gross receipts of .34% over 2009. The industry has not seen an increase in revenue in the past three years. However, as gaming revenues continue to stabilize, its popularity within state legislatures has increased. In 2010, numerous states have pushed for the expansion of gaming including such states as Ohio, Pennsylvania, and Maryland. While states see casinos as a path to balancing state budgets, existing commercial gaming operators have been challenged to find new ways to invest in their properties, amidst reduced revenues and burdensome tax rates that in some jurisdictions exceed 50% of gross gaming revenue. 2011 Industry Forecast Although not recession proof, the gaming industry is resilient. Improved economic conditions are predicted to trigger a recovery in late 2011. The industry will continue to see mergers, a strong focus on customer loyalty programs, and the expansion of non-gaming amenities such as entertainment venues, restaurants, spas, and golf courses to attract patrons to the casinos’ complete destination experience. Properties will rely on advances in technology such as server- based gaming, promotional coupons, and hand held wagering devices to appeal to Generation Y patrons. The consensus is that 2011 will be a turning point for the industry; however, the U.S. gaming industry will soon face a major challenge with the legalization of internet gaming in the U.S. on the rise.

Adjusted Gross Receipts by State (Millions)

2009

2010

% Change

Colorado

735

760

3.40% -4.06% -1.30% -1.59%

Illinois Indiana

1,429 2,379

1,371 2,348

Iowa

945

930

Kansas* Louisiana

2

38

1,800.00%

2,053

1,986

-3.26%

Maryland** Michigan Mississippi

NA

28

NA

1,339 2,465 1,730

1,378 2,390 1,788

2.91% -3.04% 3.35% 0.12% -9.59% 26.51% 3.92% 0.34%

Missouri Nevada

10,393

10,405

New Jersey Pennsylvania South Dakota

3,943 1,965

3,565 2,486

102

106

Total

$29,480

$29,579

*The first commercial Kansas Casino opened on December 15, 2009, therefore the percentage increase is not representative of a full year’s operations. **The first commercial Maryland casino opened September 27, 2010, therefore no information to report prior to 2010.

National – Percentage of Commercial Gaming Industry

MI 5%

IL 5%

IA 3%

CO 3%

MO 6%

KS, MD & SD <1%

PA 8%

LA 7%

NV 35%

IN 8%

MS 8%

NJ 12%

3 | Raise Your Expectations

State Gaming Tax Revenues

Commercial Gaming Tax Revenues by State

Consistent with overall commercial gaming revenues, state gaming tax revenues had mixed results in 2010. Of the 13 states that had commercial gaming in both 2009 and 2010, 7 states recorded increases and 6 states recorded declines in state tax revenues. However, most interesting is the fact that total taxes paid increased more than total revenue. In 2010 commercial gaming revenues increased by $99 million, or 0.34%, while the aggregate taxes paid increased by $182 million, or 3.41%. The larger increase in taxes paid is attributed to the substantial growth in states with higher tax rates, such as Pennsylvania. Prior to 2010, Pennsylvania claimed the highest tax rate with 55 percent of Electronic Gaming Device (EGD) revenues being paid to the state. In September, Maryland celebrated the opening of its first casino and began imposing a 67 percent tax rate on EGD revenues. In general, Midwest states impose a tax rate between 20-35 percent. Also noteworthy, only three of the 14 states charge an admissions tax on patrons entering the casino floor.

$1.3B

$867M

$433M

$0

Iowa

Illinois

Indiana

Nevada

Kansas*

Missouri

Michigan

Louisiana

Colorado

Mississippi

Maryland**

New Jersey

Pennsylvania

South Dakota

2009

2010

*The first commercial Kansas Casino opened on December 15, 2009, therefore the percentage increase is not representative of a full year’s operations. **The first commercial Maryland casino opened on September 27, 2010, therefore no information to report prior to 2010.

National – Commercial Gaming Tax Revenues

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%.

Illinois

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. 27% Gross gaming revenue tax of 27%, with 22% paid to the state, 3% to the locality, and 2% to the state problem gambling fund. 21.5% 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. 67% Gross gaming revenue tax of 67% with 48.5% - 51% to the Maryland Education Trust Fund, 7% to horse racing purse account, 5.5% to local impact grants, 2.5% to race track facilities renewal account, 2% to Maryland Lottery, and 1.5% to small, minority and women-owned businesses. 19 - 24% Permanent facilities pay a flat tax of 19% on gross gaming revenue, while temporary facilities pay a flat tax rate of 24%. In 2010 the one pre-existing temporary facility was converted to a permanent facility. 4 - 8% Graduated tax rate from 4% - 8%, with all monthly 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. 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. 16% and 55% A gross gaming revenue tax of 16% is imposed on all table games, with 14% paid to the state and 2% to the locality. A gross gaming revenue tax of 55% is imposed on all electronic gaming devices, with 34% applied to property tax relief, 12% to the horse racing industry, 5% to the Economic Development and Tourism Fund and 4% to local government. 5 - 22% Graduated tax rate from 5% - 22%, with all adjusted gross receipts in excess of $3 million taxed at 22%. 21% Adjusted gross receipts tax of 21%, plus an admissions tax of $2 per patron per excursion.

Indiana

Iowa

Kansas

Louisiana

Maryland

Michigan

Mississippi

Missouri

Nevada

New Jersey

Pennsylvania

South Dakota

8%

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

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Regional Comparison

Three Year Trend of Adjusted Gross Receipts

Consistent with national trends, regional gaming appears to have stabilized in 2010. The five dominant states within the region experienced a $21 million decline in revenues during 2010, which was much improved over the $74 million decline in 2009. On a state by state basis, Colorado and Missouri continued the trend of upward growth in gaming revenues. Their resiliency throughout the economic uncertainty has been attributed to favorable

$2.5B

$2B

$1.5B

$1B

$500M

$0 $0

Colorado

Illinois

Indiana

Iowa

Missouri

2008

2009

2010

legislation and continued economic investment by

commercial gaming operators. Meanwhile, Illinois, Indiana, and Iowa finished 2010 with modest

With regard to average square feet per property, the average Missouri and Indiana casinos are nearly twice the size of its neighboring states. This is primarily attributed to the industry finding ways to move away from the more traditional riverboat casino design to what appears to be a land based facility. This has also afforded Missouri and Indiana properties the ability to offer more table games and EGDs.

declines in revenues. Most notably, Illinois appears to be stabilizing from the 2007 smoking ban and economic downturn with only a 4.06% decline in revenues. While this was the largest decline in the region, it is much improved compared to the 8.91% and 20.91% declines in 2009 and 2008, respectively. When comparing the regional states, Indiana continues to be the dominant leader in overall revenues and casino size, while Colorado has the highest number of casinos. The disparity between the number of casinos in Colorado compared to the other states is due to Colorado limiting gaming to three specific cities and not imposing strict limitations on the number of gaming licenses in the state. Also noteworthy, the increased competition in Colorado is aided through the lowest effective tax rate in the region.

Comparison of Casinos by State

Colorado

Illinois

Indiana

Iowa

Missouri

2010 Gaming Revenues Number of Properties Casino Square Feet Average Square Feet

$759,610,323 $1,370,946,000 $2,348,451,170

$930,032,711 $1,787,915,041

37

9

11

14

12

391,824 10,590

322,335 35,815

710,113 64,556

409,862 29,276

774,800 64,567

Average Number of Table Games

8

26

68

25

44

Average Number of EGDs

407

1,144

1,754

914

1,646

Effective Tax Rate*

14.09%

34.00%

31.93%

21.95%

27.19%

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

5 | Raise Your Expectations

Regional Electronic Gaming Device Analysis While Illinois trails Indiana and Missouri in overall casino size, they lead the region in average revenue per gaming device. In 2010, Illinois recorded the highest AGR per EGD per day in the region with an average of $319.23. Interestingly, Illinois also had the second lowest hold percentage of 8.04%. However, while Illinois leads the region in revenue per EGD, their margin over neighboring states continues to decrease. In 2010, Illinois daily average revenue per EGD was only $24.84 greater

Electronic Gaming Device Analysis

$400.00

10.00%

8.00%

$266.67

6.00%

$133.33

4.00%

$0

Colorado

Illinois

Indiana

Iowa

Missouri

AGR per EGD per Day

Average EGD Hold

than Indiana, as compared to the $63.10 margin it claimed in 2009. Of the five states analyzed, Colorado had both the lowest average daily revenue per EGD and the lowest hold percentage. This is most likely indicative of the increased competition that exists within the Colorado market. Examining EGD hold percentages by denomination, the overall state comparison was consistent with the average hold. Colorado, having the lowest total average hold, was the lowest or second lowest in all denomination categories. Indiana and Missouri, having the highest total hold percentages, tended to have the highest EGD

hold by denomination, with only one exception. Missouri had the second lowest nickel hold percentage in 2010. Overall, the states exhibited the industry trend of the penny machines having a hold percentage between 10 – 12%, while the higher denominations had a hold percentage between 5 – 7%.

Electronic Gaming Device Hold Percentage by Denomination

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0%

$0.01

$0.05

$0.25

$1.00

$5.00

Colorado

Illinois

Indiana

Iowa

Missouri

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Regional Comparison – continued

Regional Table Games Analysis

Table Games Analysis

Similar to EGD revenues, Illinois led the region in average daily revenue per table game with an average of $2,006.84. In 2010, Colorado surpassed Iowa producing average daily revenue per table game of $672.88, as compared to $531.96 in 2009 (a 26.5% increase). The dramatic increase is attributed to 2010 being the first full year after Colorado increased

$3K

24.00%

$3K

$2K

18.00%

$2K

$1K

$1K

12.00%

the maximum allowed table game wager. The only other state to record an increase in average daily revenue per table game was Missouri, which recorded a 0.8% increase over 2009. Table hold percentages displayed an inverse relationship with the states having the lowest hold percentages producing the highest average daily revenue per table game. This inverse relationship is consistent with the trends noticed in prior years, as the lower hold percentage tends to keep players playing longer and ultimately losing more. Examining table game hold percentages by game type, the overall comparison of hold percentages remained consistent, with Colorado having the lowest hold in all four game types. The comparison of games reflected industry trends with Blackjack yielding the lowest hold of approximately 15%, while Roulette and Poker produced $0 $0

6.00%

Colorado

Illinois

Indiana

Iowa

Missouri

AGR per Table Game per Day

Average Table Game Hold

some of the highest hold percentages. In comparing the House Bet Poker games, there was significant fluctuation across the region, as the type of poker games varied from state to state. When analyzing the table game hold percentage, one must consider the varying factors, including population demographics and variations in game rules.

Table Game Hold Percentage by Game Type

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0%

Blackjack

Craps

Roulette

House Bet Poker Games

Colorado

Illinois

Indiana

Iowa

Missouri

7 | Raise Your Expectations

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Regional Comparison – continued

Regional Disciplinary Action The graph below categorizes the disciplinary actions taken by the Colorado Limited Gaming Commission, Indiana Gaming Commission, and the Missouri Gaming Commission. To provide a summary of the top disciplinary actions, the top 10 fines incurred have been listed. A linear relationship between the incident and the fine amount cannot be drawn as each fine is independently reviewed by state regulatory bodies. Overall, there were 77 fines levied by the three states related to 125 incidents. Incidents related to security oversight or failure was the most common occurrence with 47 individual incidents, equaling 38% of all incidents evaluated. While a direct correlation between incident and fine amount could not be determined, the highest fines related to systematic failures to comply with regulations associated with the treatment of intoxicated and underage patrons. • Missouri properties incurred a total of 43 fines related to 57 individual incidents, resulting in $885,000 in fines. The average per incident equals $15,526. Missouri

exhibited a high intolerance for failing to recognize egregiously intoxicated patrons and the admittance of underage patrons. • Indiana properties incurred a total of 26 fines related to 60 individual incidents, resulting in $291,500 in fines. The average fine per incident equals $4,858. Indiana’s most common incidents related to the failure to communicate with state regulators, admittance of underage patrons, and violations of rules designed to protect voluntarily excluded persons. • Colorado properties incurred a total of 8 fines related to 8 individual incidents, resulting in $59,750 in fines. The average fine per incident equals $8,536. The majority of the fines levied in Colorado related to unauthorized searches of the Gambling Payment Intercept registry or failure to timely report information to the Colorado Department of Child Support Enforcement. (Note: Detailed disciplinary information for Iowa and Illinois could not be summarized as the information was not readily available.)

Summary of Disciplinary Actions by Category

100% 100%

50

40

80% 80%

60% 60%

30

40% 40%

20

20% 20%

10

0%

0%

0

Table Game Operations

Reporting to State Gaming Commission

Cage Operations

EGD Operations

Improper Marketing Campaigns

Surveillance Operations

Count Room Operations

Security Operations

Number of Incidents

Cumulative Percentage

9 | Raise Your Expectations

Summary of Top Ten Disciplinary Action Fines

State

Fine Amount

# of Incidents Included in Fine

Incident Category

Incidents

1 Missouri

$75,000

1

- Security Operations

- An intoxicated patron was allowed to gamble, leave the casino floor, and depart the facility only to be stopped by three civilians. Surveillance tapes showed the patron falling down and showing signs of obvious intoxication in front of numerous personnel. - The illegal use of cocaine by two security shift managers while on duty along with the failure of multiple employees having knowledge of the incidents and repetitve failure to disclose the incidents. - Admittance of an underage patron to the casino floor, served the patron alcoholic beverages, and allowed the patron to gamble for over fifteen hours. During review of surveillance tapes it was determined that the under aged patron interacted with 33 casino personnel without being checked for an ID. The action was the result of multiple violations that included the following: - Casino failed to timely notify the Gaming agents of the termination of four employees - Casino allowed three underage people onto the casion floor - Violation of rule regarding playing card specifications - Violation of rule regarding storing and locking of chips - Casino did not follow the procedure submitted for a monthly promotion - An intoxicated person was permitted to continue gambling, leave the casino floor, and exit the facility, before being stopped by two security officers. There were ten violations that included the following eight incidents: - Main bank accountability sheets not including correct amounts - Cage being observed making exchanges without documentation - Audible alarms not sounding when redemption kiosks were open - Safe keeping receipts missing cage cashiers and patrons’ signature and not including patrons’ photos - Coupons not being scanned or manually input - Table games supervisor not inspecting dice for evidence of tampering at the end of the gaming day The disciplinary action was the result of multiple violations that included the following: - Admittance of an underage patron to the gaming floor - Violation of Voluntary Exclusion Program rules - Allowing an employee to work with an expired badge and untimley reporting of employee terminations - Continued to use the services of a supplier that failed to renew its license - Failure to disclose a substantial owner when applying for a gaming license The disciplinary action was the result of multiple violations that included the following: - Allowing an employee to work with an expired badge and untimley reporting of employee terminations - Admittance of an underage patron to the gaming floor - Table games jackpot slips not containing dealer signature - Patrons allowed in drop area during bill validator drops - Violation of sensitive key regulations - Violation of non-value chip regulations - Use of playing cards that did not meet state specifications - Permitting access to the inside of a slot machine - Admittance of an underage patron to the gaming floor, serving the patron alcohol and permitting the patron to gamble The disciplinary action was the result of multiple violations that included the following: - Failure to test a coin machine before placing it in service - Untimely reporting of employee terminations - Failure to require employees to wear gaming badges

2 Missouri

$75,000

1

- Security Operations

3 Missouri

$75,000

1

- Security Operations

4 Indiana

$70,000

5

- Security Operations - Table Game Operations - Reporting to State Gaming Commission

5 Missouri

$50,000

1

- Security Operations

6 Missouri

$50,000

10

- Table Game Operations - Cage Operations - Surveillance and Security Operations

7 Indiana

$49,000

5

- Security Operations - Marketing Operations - Reporting to the State Gaming Commission

8 Indiana

$36,500

6

- Reporting to the State Gaming Commission - Security Operations - Table Game Operations - EGD Operations

9 Missouri

$35,000

1

- Security Operations

10 Indiana

$31,500

1

- Reporting to the State Gaming Commission - EGD Operations - Table Game Operations - Cage Operations

- Violation of card storage regulations - Violation of found money regulations - Improper completion of chip transfers - Improper verification of funds

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Regional Comparison – continued

Regional Patron and Casino Win Analysis Overall, the region saw 463,279 (0.6% increase) more patrons in 2010 as compared to 2009. Market share remained relatively stable across all states, with Indiana and Missouri increasing patron admissions. Looking at the individual markets, the St. Louis, Missouri market saw the largest increase in patrons, gaining 1.6 million more patrons in 2010. The market increase is attributed to the addition of a new property that lured patrons away from the two St. Louis, Illinois properties. In 2010, Iowa was the only state to increase the average casino win per patron, increasing from $58.09 in 2009 to $59.29 in 2010. Illinois was able to produce constant returns as the win per patron of $99.10 was the same as

last year. Meanwhile, the two states that saw increases in patrons experienced a decline in casino win per patron. Indiana recorded the largest percentage decrease of 1.68%. The state tax per patron varied with Illinois and Indiana benefitting the most from having the highest effective tax rates in the region. Overall, the regional gaming outlook remains positive with aggregate patrons and revenues increasing in 2010. With the continued economic recovery and ongoing expansion of gaming in Illinois, Iowa, and Missouri, it is anticipated that regional gaming will continue to grow in the coming years.

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

7,090,487 3,081,170 3,662,577 13,834,234

8.5% $857,949,000 3.7% $205,801,000 4.4% $307,196,000 16.6% $1,370,946,000

13.3%

3.2% 4.8%

Other Communities

Illinois Total

21.3%

Indiana

Chicago Vicinity

5 3 3

14,761,173 4,864,061 6,919,393 26,544,627 6,518,008 3,027,416 6,139,624 15,685,048

17.7% $1,198,866,982 5.8% $473,419,173 8.3% $676,165,015 31.8% $2,348,451,170 7.8% $429,380,731 3.6% $175,240,485 7.4% $325,411,495 18.8% $930,032,711

18.6%

Southern Communities Ohio River Communities

7.4%

10.5% 36.5%

Indiana Total

11

Iowa Metropolitan Communities Mississippi River Communities

5 4 5

6.7% 2.7% 5.1%

Central Iowa Communities

Iowa Total

14

14.4%

Missouri

Kansas City Vicinity St. Louis Vicinity Other Communities

4

10,506,998 13,984,552 2,860,884 27,352,434

12.6% $714,140,125 16.8% $880,282,035 3.4% $193,492,881 32.8% $1,787,915,041

11.1% 13.7%

4*

4

3.0%

Missouri Total

12

27.8%

Region Total 100% *The Missouri St. Louis Vicinity operated with 5 casinos from March through June 2010, as River City Casino opened in March and the President Casino was closed in June 2010. 46 83,416,343 100% $6,437,344,922

11 | Raise Your Expectations

Three Year Trend of Patrons by State

30M 30

24M 24M

18M 18

12M 12

6M 6

0

0

Illinois

Indiana

Iowa

Missouri

2008

2009

2010

Casino Win and Tax per Patron

$40 $40

$100

$26 6

$67

$13 13

$33

$0 $0

$0

Illinois

Indiana

Iowa

Missouri

Casino Win per Patron

Revenue Tax Incurred per Patron

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Colorado Gaming Statistics

In 1990, casino gaming was legalized in the state of Colorado, with three specific areas designated for development: Black Hawk, Central City, and Cripple Creek. Black Hawk is the largest area with 17 properties which generate 73.65% of the state’s gaming tax revenue. Central City is located one mile from Black Hawk and generates 17.7% of the state’s gaming tax revenue. Therefore, within a few mile radius, more than 90% of the state’s commercial gaming tax revenue is generated. Cripple Creek, located just west of Colorado Springs, creates the remaining 8.65% of commercial gaming tax revenue for the state.

Central City

Black Hawk

Cripple Creek

Colorado Gaming Statistics

Legalization Date

November 1990

First Casino Opening Date

October 1991

Current Number of Commercial Gaming Properties

37

2010 Commercial Casino Revenue

$759,610,323

2010 Commercial Gaming Tax Revenue

$107,020,950

Black Hawk

Cripple Creek

Central City

% of Statewide Revenues

73.65%

17.70%

8.65%

% of Statewide Gaming Devices

57.78%

27.08%

15.14%

Properties

Ameristar

Billy's Casino

Century Casino

Black Hawk Station

Brass Ass Casino

Doc Holliday Casino II Dostal Alley Saloon & Gambling Emporium

Bull Durham Saloon & Casino

Bronco Billy's Sports Bar & Casino

Bullwhackers Casino

Buffalo Billy's Casino

Easy Street

Canyon Casino

Century Casino Cripple Creek

The Famous Bonanza

Fitzgeralds's

Century Casinos

Fortune Valley Hotel & Casino

Gilpin Hotel Casino

Colorado Grande Casino

Johnny Z's Casino

Golden Gates Casino

Double Eagle Hotel & Casino

Golden Gulch Casino

Gold Creek Casino

Grand Plateau Casino

Johnny Nolon's

Isle of Capri Casino

J.P. McGill's

Lady Luck Casino Midnight Rose Hotel & Casino The Lodge Casino at Black Hawk Wildwood Casino at Cripple Creek Mardi Gras Red Dolly Casino, Inc.

Riviera Black Hawk Wild Card Saloon

13 | Raise Your Expectations

The total revenue for Cripple Creek casinos suffered in 2010 due to the closing of two properties, Gold Rush and Imperial Casino Hotel. Black Hawk and Central City improved their revenues, in part due to the opening of a new casino, Johnny Z’s, in Central City, and the enactment of Amendment 50. allowed the maximum bet at Colorado casinos to be raised from $5 to $100. The amendment also allowed casinos to include additional table games, such as craps and roulette, along with the permitting properties to remain open 24 hours a day. The new maximum bets and extended operating hours went into effect on July 2, 2009. With 2010 being the first full year of the amendment’s enactment, casino revenue increased Amendment 50 was passed by Colorado voters in 2009, which

Adjusted Gross Proceeds by Region

$600M

$400M

$200M

$0

Black Hawk

Central City

Cripple Creek

2008

2009

2010

Table Games Adjusted Gross Proceeds by Region

$70M

3.4% in 2010, compared to 2009 revenues, in spite of the country’s recession.

$47M

$23M

$0

Black Hawk

Central City

Cripple Creek

2008

2009

2010

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Colorado Gaming Statistics – continued

Electronic Gaming Device Analysis

The casinos in Black Hawk have the highest EGD and table game AGR on average amongst the Colorado casinos. EGDs in Black Hawk acquired $156.59 of AGR per day on average. Central City casinos produced a hold percentage of 8.91% for $.50 slots which was the highest on average of their EGDs. Black Hawk and Cripple Creek casinos’ $.01 slots produced the highest hold of EGDs on average (9.71% and 8.21%).

$160.00

7.10%

$106.67

6.77%

$53.33

6.43%

$0

6.10%

Black Hawk

Central City

Cripple Creek

AGR per EGD per Day

Average EGD Hold

Electronic Gaming Device Hold Percentage by Denomination

10.00%

8.33%

6.67%

5.00%

3.33%

1.67%

0%

$0.01

$0.05

$0.25

$0.50

$1.00

$5.00

$25.00

Black Hawk

Central City

Cripple Creek

15 | Raise Your Expectations

Table Games Analysis

Table Games in Black Hawk received $882.83 of AGR per day on average. Black Hawk’s AGR per day for table games and for EGDs is double the average of table game and EGD AGRs for Central City and Cripple Creek. Across the Colorado casinos in Black Hawk, Central City, and Cripple Creek, roulette produced the highest hold percentage amongst table games on average (24.27%, 24.55%, 27.36%).

$1K

24.00%

$666.67

20.00%

16.00%

$333.33

12.00%

$0

Black Hawk

Central City

Cripple Creek

AGR per Table Game per Day

Average Table Game Hold

Table Game Hold Percentage by Game Type

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0%

House Bet Poker

Blackjack

Craps

Roulette

Black Hawk

Central City

Cripple Creek

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Illinois Gaming Statistics

Illinois saw revenues from riverboat gaming fall to their lowest levels in a decade in 2010. While revenues from horse racing and lotteries remained flat, commercial gaming revenues fell by 4.06%. Overall gaming admissions declined by 4.05% as well. A stagnant economy, increased competition in the St. Louis market and the 2007 ban on smoking in Illinois’ commercial gaming properties continue to negatively affect revenues. While revenues and patron levels continue to decline, the State Legislature continues to look for new ways to generate gaming tax revenues. Late in 2010, the Illinois State Senate proposed and passed gambling expansion legislation that would have cleared the way for several new land based casinos located in Chicago, Park City, Rockford, Danville, and southern Cook County.

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

2010 Commercial Gaming Admissions

13,834,234

2010 Commercial Casino Revenue

$1,370,946,000

2010 Commercial Gaming Tax Revenue

$466,092,093

City

Gaming Square Feet

% of Statewide Revenues

% of Statewide Admissions

Chicago Vicinity Empress

Joliet Elgin Joliet

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

10.46% 20.94% 17.98% 13.20% 62.58%

9.15%

Grand Victoria Casino

15.35% 16.00% 10.76% 51.26%

Harrah’s

Hollywood Casino

Aurora

Chicago Vicinity Total

160,234

St. Louis Vicinity Argosy

Alton

23,000 40,000 63,000

5.64% 9.37%

7.48%

Casino Queen

East St. Louis

14.79% 22.27%

St. Louis Vicinity Total

15.01%

Other Communities Harrah’s

Metropolis Rock Island

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

8.21% 5.79% 8.41%

7.03% 9.99% 9.45%

Jumers

Par-A-Dice

Peoria

Other Communities Total

22.41%

26.47%

17 | Raise Your Expectations

This legislation would have also allowed Illinois’ licensed horse racing facilities to operate 6,300 electronic gaming devices on their properties. The bill met heavy opposition from the existing properties and was slated to be voted on in the Illinois House at the end of the 2010 legislative session. However, the bill was never called to the floor for a vote by the Speaker of the House and the measure was essentially rejected without ever coming to a vote. In July of 2011, Illinois will see its tenth commercial gaming facility open its doors in Des Plaines, a western suburb of Chicago. The 147,000 square-foot complex will include a 43,000 square-foot casino with 1,200 gambling positions, including a high limit area. Almost a decade in the making, the as-yet-to- be-named facility will be located near Chicago’s O’Hare airport and is expected to generate $150 million in annual tax revenue in addition to creating over 1,000 new, permanent jobs. Regionally, Illinois’ Chicago area casinos continue to show significantly higher AGR per square foot and AGR per patron figures than their competition directly across the state line in Indiana. Chicago market casinos saw their AGR and admissions decrease in 2010. Only the newly named Hollywood Casino (formally the Empress) in Joliet saw significant increases in AGR and admissions during 2010. The increases recognized by the Hollywood Casino are attributed to a dismal 2009 where the facility temporarily closed for three months due to fire damage that occurred during renovations.

Adjusted Gross Receipts by Region

$1.1B

$733M

$367M

$0

Chicago Vicinity

St. Louis Vicinity

Other Communities

2008

2009

2010

Adjusted Gross Receipts Analysis

$6K

$130.00

$86.67

$4K

$2K

$43.33

$0

$0

Chicago Vicinity

St. Louis Vicinity

Other Communities

AGR per Square Foot

AGR per Patron

www.rubinbrown.com | 18

Illinois Gaming Statistics – continued

Electronic Gaming Device Analysis

The Chicago vicinity saw average AGR per EGD per day decrease by 8.72% while the average EGD hold increased from 8.04% to 8.29%. Average AGR per table game and average table holds remained fairly stable during 2010. Illinois casinos in the St. Louis region saw revenue and admissions figures continue to decline sharply in 2010. This region saw average hold for both EGD and table games increase substantially over 2009, while average AGR per EGD per day and average AGR per table game per day decreased by 10.89% and 9.97%, respectively. The declines in the St. Louis market are attributable to the impact of Pinnacle Entertainment opening the River City casino in the southern suburbs of St. Louis.

$600.00

9.00%

$333.33

6.00%

$166.67

3.00%

$0

0%

Chicago Vicinity

St. Louis Vicinity

Other Communities

AGR per EGD per Day

Average EGD Hold

Electronic Gaming Device Hold Percentage by Denomination

13.00%

10.83%

8.67%

6.50%

4.33%

2.17%

0%

$0.01

$0.05

$0.25

$0.50

$1.00

$5.00

$25.00

Chicago Vicinity

St. Louis Vicinity

Other Communities

19 | Raise Your Expectations

Commercial gaming properties in smaller communities in Illinois

Table Games Analysis

experienced varying degrees of success in 2010, with the overall classification recognizing a 1.32% increase in revenues, as aggregated revenue and admission data stayed fairly stable. The Par-A-Dice casino in Peoria saw annual AGR remain relatively unchanged even as admissions decreased by 2.06%, while significant decreases in annual AGR and admissions at Harrah’s Metropolis were offset by large AGR and admission increases at Jumer’s Casino in Rock Island. Illinois’ small market casinos were the only region to see increases in average AGR per EGD per day and average AGR per table game per day, while also being the only region to have a decrease in average EGD and table game hold percentages.

$4K

20.00%

18.33%

$3K

$1K

16.67%

16.00%

$0

Chicago Vicinity

St. Louis Vicinity

Other Communities

AGR per Table Game per Day

Average Table Game Hold

Table Game Hold Percentage by Game Type

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0%

Caribbean Stud Poker

Blackjack

Craps

Roulette

Three Card Poker

Other House Bet Poker

Chicago Vicinity

St. Louis Vicinity

Other Communities

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Indiana Gaming Statistics

After experiencing a smaller downturn than many of the worst hit states in 2009, Indiana saw its gaming revenues decline again in 2010, by a marginal 1.27%. Indiana also saw its overall admissions decline by 0.4% in 2010 following a 4% increase in patronage in 2009. After seeing major capital improvements to many facilities in prior years, capital expenditures involving existing commercial gaming properties in Indiana were minimal. In 2009, the Indiana General Assembly commissioned a Gaming Study Committee to investigate several issues surrounding commercial gaming in Indiana, including the potential impact of increased outside competition from neighboring states. The commission expressed several findings which included the following:

Majestic Star II

Blue Chip

Ameristar

Majestic Star

Horseshoe - Hammond

Grand Victoria Hollywood Casino

French Lick

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

2010 Commercial Gaming Admissions

26,544,627

2010 Commercial Casino Revenue

$2,348,451,170

2010 Commercial Gaming Tax Revenue

$749,802,694

City

Gaming Square Feet

% of Statewide Revenues

% of Statewide Admissions

Chicago Vicinity Ameristar Blue Chip Horseshoe Majestic Star Majestic Star II

East Chicago Michigan City

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

10.43% 7.58% 23.78%

11.41% 9.67% 23.15% 5.69% 5.69% 55.61%

Hammond

Gary Gary

4.82% 4.44%

Chicago Vicinity Total

51.05%

Southern Communities Casino Aztar

Evansville French Lick

38,360 45,200 86,600

4.89% 3.47% 11.80% 20.16% 6.02% 4.16% 18.61% 28.79%

4.78% 3.97% 9.57%

French Lick Horseshoe

Elizabeth

Southern Communities

170,160

18.32%

Total

Ohio River Communities Belterra

Florence Rising Sun

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

6.35% 5.03% 14.69% 26.07%

Grand Victoria

Hollywood Ohio River

Lawrenceburg

Communities Total

21 | Raise Your Expectations

Adjusted Gross Receipts by Region

The Blue Chip Casino and Resort, which opened in 2009, saw 30% of its potential revenue siphoned off by the Four Winds Casino located in New Buffalo, Michigan. The Blue Chip also faces increased competition over existing revenues from both the Michigan based Firekeepers and Gun Lakes tribal casinos. If granted licenses, new casinos in both Gary and Fort Wayne, Indiana could significantly decrease revenues to neighboring commercial gaming properties in Indiana, but net tax revenue would likely increase for the state. Indiana may be better able to compete with out-of-state gaming facilities if riverboats were allowed to convert to land based gaming operations. If riverboat casinos were allowed to convert to land based operations, the commission concluded that these casinos should be required to maintain operations within the same municipality in which they currently reside.

$1.3B

$867M

$433M

$0

Chicago Vicinity

Southern Communities

Ohio River Communities

2008

2009

2010

Adjusted Gross Receipts Analysis

$4K

$100.00

$3K

$90.00

$80.00

$1K

$0

$70.00

Chicago Vicinity

Southern Communities

Ohio River Communities

AGR per Square Foot

AGR per Patron

www.rubinbrown.com | 22

Indiana Gaming Statistics – continued

Electronic Gaming Device Analysis

The Chicago area casinos saw their overall AGR for the fiscal year remain essentially identical to that of 2009, while their EGD and table holds remained fairly constant as well. The Chicago based casinos also held higher AGR per square foot, AGR per EGD, and AGR per table game ratios than both the Ohio River and Southern Communities, but, as is typical of gaming operations in larger metropolitan regions, the Chicago region had the lowest AGR per patron. Even though admissions were down by 4.13%, the Ohio River Community casinos (near Cincinnati, Ohio) only saw their AGR decrease by 2.18% from 2009 to 2010. In 2011, these properties will look to continue to instill patron loyalty and prepare for the expansion of gaming in Ohio. During 2010, Ohio selected a partnership group between Dan Gilbert and Caesar’s Entertainment to construct a Horseshoe branded casino in downtown Cincinnati. The Ohio based casino is not anticipated to open until late 2012, providing time for the Indiana casino industry to plan for the increased competition.

$300

11.00%

7.33%

$200

$100

3.67%

$0

0%

Chicago Vicinity

Southern Communities

Ohio River Communities

AGR per EGD per Day

Average EGD Hold

Electronic Gaming Device Hold Percentage by Denomination

13.00%

10.83%

8.67%

6.50%

4.33%

2.17%

0%

$0.01

$0.05

$0.25

$0.50

$1.00

$5.00

$25.00

Chicago Vicinity

Southern Communities

Ohio River Communities

23 | Raise Your Expectations

Table Games Analysis

Examining EGD and table games during 2010, the Ohio River Communities casinos experienced declines in both average revenues per EGD and table game. However, the hold percentages for EGDs and table games moved in opposite directions. In 2010, the average EGD hold percentage decreased from 13.17% to 10.22%, while the average table game hold percentage rose from 19.56% to 20.91%. Nonetheless, the region still recorded the highest hold percentages when compared to the other two Indiana regions. Consistent with the rest of Indiana, the Southern Indiana Communities saw a 3.28% and 5.41% decline in revenues and admissions, respectively. Casinos in Southern Indiana Communities also had the lowest EGD hold of each of the State’s regions for the second straight year. In 2010, the region recognized an average hold of 7.38%, as compared to 9.02% in 2009.

$1.8K

21.00%

$1.2K

19.33%

$600

17.67%

16.00%

$0

Chicago Vicinity

Southern Communities

Ohio River Communities

AGR per Table Game per Day

Average Table Game Hold

Table Game Hold Percentage by Game Type

40.00%

33.33%

26.67%

20.00%

13.33%

6.67%

0%

Blackjack

Craps

Poker

Roulette

Baccarat

Chicago Vicinity

Southern Communities

Ohio River Communities

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