RubinBrown Gaming Stats 2013

’13

GAMING STATS COMMERCIAL & TRIBAL

A Publication of RubinBrown LLP

Contents

2 Executive Summary 4 Commercial Gaming Analysis 6 State Gaming Tax Revenues 8 Electronic Gaming Devices 10 Table Games 12 Commercial Gaming Headlines 16 Tribal Gaming Analysis 18 NIGC Regions 20 Significant Tribal Gaming Events 22 Portland Region 23 Sacramento Region 24 Phoenix Region 25 St. Paul Region 26 Oklahoma City Region 27 Tulsa Region 28 Washington D.C. Region 29 Sources and Acknowledgments

RubinBrown’s Gaming Services Group is a diverse team committed to influencing gaming regulation in order to bring efficient, effective, and sustainable compliance programs. We are nationally known for leadership within the Gaming industry, as demonstrated by our influence on gaming regulatory standards. Our success and reputation is a by-product of our commitment to: ▶ Excellence in Quality and Client Service

▶ Thought Leadership ▶ Strategic Partnerships ▶ Diverse and Inspired Team

Disclaimer: Gaming Stats, a publication of RubinBrown LLP, is designed to provide general information regarding the subject matter covered. Although prepared by professionals, its content 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 inside back cover).

WELCOME LETTER

Welcome from RubinBrown’s Gaming Services Practice Leaders Welcome to the 2013 edition of Gaming Stats , published by RubinBrown’s Gaming Services Group. Our objective in issuing the annual Gaming Stats publication is to provide industry stakeholders the most comprehensive overview of the United States casino industry. It is the only report of its kind to include gaming revenues, by state and region, for both commercial and tribal casinos and provide an overview of the significant events that led to revenue results. The accompanying statistical information includes data from 2011 and 2012 and represents 1,005 casinos located across 39 states. While gaming continues to expand across the nation, we recognize the regional and local markets drive performance. New to this year’s publication we included a listing of the top 15 commercial gaming markets. In addition, we are now including both racinos and slots-only facilities in our analysis, resulting in the first national report detailing gaming revenue for all “brick-and-mortar” gaming jurisdictions, both commercial and tribal. When reading this year’s publication you will see consistent themes across the nation. Continued investments in the casino industry have led to expansion and growth, as gaming revenues are at all time highs, surpassing the previous peak attained in 2007. The growth is largely attributed to the expansion of gaming into new states and sovereign tribal nations. While the expansion of gaming has benefited the industry as a whole, it has also created a highly competitive regional market, particularly along state borders. Regional markets such as Kansas City, Chicagoland, Atlantic City and Philadelphia are garnering a lot of attention from state legislatures, as they compete for casino investments and gaming revenue. Looking to the future, the expansion of gaming is not expected to slow; competition will continue to escalate for coveted gaming revenues as gaming expands online in the United States in the years to come. While releasing the report, we would like to thank the gaming industry’s leaders, regulators, and professionals for your support and insights throughout this past year. We hope our publication continues to be a valuable tool to you.

We personally welcome your feedback on this issue of Gaming Stats . Please feel free to contact us directly at Brandon.Loeschner@RubinBrown.com or Daniel.Holmes@RubinBrown.com.

Brandon Loeschner

Daniel Holmes Practice Leader

Practice Leader

Gaming Services Group

Gaming Services Group

2013 Commercial & Tribal Gaming Stats | 1

EXECUTIVE SUMMARY

Introduction The Gaming Stats publication was developed to provide a consolidated comprehensive report on the United States gaming industry. It is the only report of its kind to report on both commercial and tribal casino revenues. The data utilized within this report was obtained from the National Indian Gaming Commission (NIGC) and the various state gaming regulatory authorities. A comprehensive listing of the respective state gaming regulatory authorities is included on the inside back cover. The qualitative data throughout this publication is a compilation of the knowledge gained through various trade publications, attendance at seminars and conferences, conversations with gaming industry leaders, and other external sources. General Industry Overview Gaming is back on-top as revenues climbed to an all-time high in 2012. Commercial and tribal casinos generated an estimated $65.8 billion in 2012, eclipsing the previous peak of $63.6 billion generated in 2007. Breaking the 2012 revenues down between segments, the commercial gaming industry generated $37.4 billion and the tribal gaming industry generated an estimated $28.4 billion.

While gaming revenue broke through the record set prior to the recession of 2008, both tribal and commercial casino operators continue to face lingering challenges from the recession and the reality of gaming expansion. Examples of the challenges can be seen from coast to coast as a California tribal casino was forced to close its doors after defaulting on its debt and a new Atlantic City casino required additional financing to fund its operations through the winter months, only to end up filing for bankruptcy in early 2013. In the heartland, existing casinos could not avoid the reality of casino expansion. In May, Ohio welcomed the first of four new casinos, becoming the twenty-third state to offer commercial gaming and the thirty-ninth state to have a casino within its borders. Further to the west, Kansas saw continued commercial gaming expansion with the opening of a Kansas City, Kansas casino. While these expansions boosted overall revenues, neighboring commercial and tribal casinos experienced declining revenues. Even though casino expansion is cannibalizing existing market revenues, the trend does not appear to be slowing down. With good reason, state legislatures continue to view gaming as an easy way to fill state coffers. In 2012, state gaming tax revenues increased by 8.5% or $661.4 million. The state gaming tax growth rate continues to outpace the overall gaming revenue growth, as new states have imposed gaming tax rates as high as 67.0% of net revenues.

10 Year Trend of United States Gaming Revenues

$68B

$65.78B

$66B

$63.62B

$64B

$62.92B

$62.81B

$62B

$60.17B

$61.10B

$60.78B

$60B

$58B

$55.37B

$56B

$54B

$52B

$50B

$50.67B

$48B

$46B

$45.52B

$44B

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

On the tribal gaming side of the business, the continued expansion does not appear to be slowing either. Tribes continue to see gaming as a vehicle to generate revenues and improve the overall quality of life within their respective nations. In 2012, six of the seven NIGC regions added a new casino and numerous tribes reinvested in their existing facilities by expanding the gaming floors, hotels, restaurants, or resort amenities such as golf courses and spas.

2 | 2013 Commercial & Tribal Gaming Stats

2013 Industry Forecast In 2013, gaming operators will see additional gaming expansion challenges with Massachusetts issuing three full-scale casino licenses and one slots-only license, Maryland legalizing table games, Florida continuing to look at gaming expansion, and countless other states looking to expand gaming. Existing properties will also face increased challenges with more states legalizing video lottery games at local truck stops, restaurants, and bars. Beyond the traditional “brick-and-mortar” casino expansion, 2013 is expected to usher in a new era for the U.S. gaming industry with the operation of legalized interactive gaming (igaming or internet gaming). In 2011, Nevada became the first state to legalize igaming and immediately began the regulating process. Delaware legalized igaming in 2012 and began drafting the regulation and licensing processes. In early 2013, New Jersey became the third state to legalize internet gaming. Throughout 2013, numerous other state legislatures are expected to consider the legalization of internet gaming. The legalization of igaming at the state level has created even greater challenges for tribal gaming operations. Without federal legislation, tribes will be forced to wait on their respective state legislatures before entering the internet gaming industry. With the continued gridlock in Washington D.C. the prospects of federal internet gaming legislation remain dim. Even though existing commercial and tribal casinos will continue to see increasing gaming competition, the United States gaming industry, as a whole, will continue to experience year- over-year increases in gaming revenue. Statistical Notes Gaming Revenue – For purposes of this report, the term gaming revenue is intended to be an all-encompassing term for the various definitions of gaming proceeds as defined by the individual regulatory authorities (e.g. AGR, AGP, and Net Win) and should not be interpreted to equal the American Institute of Certified Public Accountants definition of revenue. Commercial Casinos – Commercial casinos include all “brick-and-mortar” casinos, including dockside casinos, riverboat casinos, land-based casinos, and racinos (slots-only facilities located at racetracks). Other forms of gaming such as card rooms, lotteries, and video lottery terminals located in restaurants and bars have been excluded from the analysis. Tribal Casinos – Tribal casinos are defined as Class II or Class III gaming casinos that operate under the Indian Gaming Regulatory Act or a State-Tribal Gaming Compact. Other forms of tribal gaming, such as gaming machines in truck stops, restaurants, or bars have been excluded from the analysis. Electronic Gaming Devices (EGDs) – Electronic gaming devices include both the traditional slot machines and video lottery terminals (VLTs) located inside a brick-and-mortar casino. VLTs differ from traditional slot machines, as they are connected to a network overseen by the respective state’s lottery commission. The connection to the lottery commission’s network does not impact the game performance or patron experience. Table Games – Table games are defined as live table games that require casino personnel to conduct the game. Electronic table games are included in the electronic gaming machines. When reporting on table games revenue, we have included both house-banked (when a player bets against the casino) and player-banked (when the players bets against an opposing patron) games. For the win per table and table game hold statistics, we excluded player-banked games from the analysis.

2013 Commercial & Tribal Gaming Stats | 3

COMMERCIAL GAMING ANALYSIS

Commercial gaming revenue in the U.S. returned to the levels seen in 2007, prior to the recession. In 2012, gaming revenues increased by 4.9% to $37.4 billion. Of the twenty-three states offering commercial gaming, fifteen experienced revenue growth, seven experienced revenue declines, and Ohio welcomed its first four casinos. While revenues climbing to 2007 levels is a significant milestone for the commercial gaming industry, today’s environment looks significantly different with competition between neighboring states at an all time high.

Top 15 United States Commercial Gaming Markets

Eleven of the fifteen states that had increases in gaming revenues benefited from either a new casino opening in 2012 or having a casino that opened in 2011 operate for a full twelve months. Of the states that experienced revenue declines, six of the seven states saw a neighboring jurisdiction expand commercial gaming operations. New Mexico was the only state without neighboring commercial casino expansion, but experienced increased tribal gaming competition as the Navajo Nation continued their casino expansion. Outside of casino expansion, favorable regulations also catered to gaming growth. Midway through 2012, South Dakota increased the maximum bet limits from $100 to $1,000, which in turn, had a substantial impact on both table games and total gaming revenues. Examining the market-specific data illustrates how gaming expansion has helped return total industry-wide gaming revenues to pre-recession levels at the detriment of pre-existing gaming operations. Illinois gaming revenues increased by $160.8 million, or 10.9%. While impressive, this growth is solely attributed to the revenue generated from the new Rivers Casino, located near Chicago. The casino opened in July 2011, and after benefiting from a full calendar year of operations, saw revenue increase by $239.9

Las Vegas Strip, NV $6,207.23M

Atlantic City, NJ $3,051.87M

Chicagoland, IL & IN $2,068.29M

Detroit, MI $1,416.73M

Saint Louis, MO & IL $1,113.64M

New York, NY $911.36M

Philadelphia, PA $871.02M

Biloxi, MS $830.01M

Tunica, MS $809.49M

Kansas City, MO $801.03M

Boulder Strip, NV $796.67M

Shreveport, LA $713.30M

Lake Charles, LA $686.99M

Reno, NV $644.84M

New Orleans, LA $622.19M

$0

$500M

$1,000M

$1,500M

$2,000M

$2,500M

$3,000M

$3,500M

$4,000M

$4,500M

$5,000M

$5,500M

$6,000M

$6,500M

4 | 2013 Commercial & Tribal Gaming Stats

2012 State Gaming Revenue and Growth Over 2011

ME $0.10B 66.9%

MI $1.42B -0.5%

IN $2.61B -3.1%

WV $0.95B -0.9%

NY $1.80B 43.1%

SD $0.11B 6.4%

RI $0.53B 2.9%

PA $3.16B 4.4%

IA $1.47B 3.0%

OH $0.43B

IL $1.64B 10.9%

NJ $3.05B -8.0%

NV $10.86B 1.5%

CO $0.77B 3.0%

MO $1.77B -2.0%

KS $0.34B 640.6%

DE $0.52B -5.0%

OK $0.11B 6.4%

MD $0.38B 142.6%

NM $0.24B -3.0%

MS $2.25B 0.6%

FL $0.44B 15.9%

LA $2.40B 1.2%

Ohio legalized gaming in 2012 States with negative growth States with positive growth

million in 2012. Gaming revenues increased by $141.4 million (7.3%) in the Chicago market (encompassing 9 casinos in Illinois and Indiana). However, Rivers Casino was the only casino in the Chicago market to generate growth, while the other eight casinos experienced a collective $98.5 million, or 5.6%, decline in gaming revenues. Missouri gaming revenues declined by 2.0% in 2012; however, all three markets that Missouri casinos operate in (Kansas City, St. Louis, and rural communities) experienced growth in gaming revenues. The decline of Missouri gaming revenues was the result of legalized commercial gaming in Kansas and gaming revenues going across the border to the new Kansas City, Kansas casino. In 2012, the Kansas City market saw revenue growth of 8.0% with the opening of the Hollywood Casino at Kansas Speedway; however, only one of the existing five casinos experienced revenue growth. The one casino that did experience growth in 2012 was closed for three months in 2011 from damage sustained by the Missouri River flooding. The other four casinos experienced a $64.4 million, or 9.1%, decline in gaming revenues. New York gaming revenues had the largest increase in terms of total dollars, generating $542.4 million more in 2012. Virtually all of the growth can be attributed to the New York City market and the Resorts World Casino operating for a full calendar year. The Resorts World Casino’s revenue increased by $582.7 million in 2012; however, its fortune came at the expense of the neighboring Yonkers raceway, which saw revenue decline by 12.8% or $79.7 million, and Atlantic City which saw revenues decline by 8.0% or $265.8 million.

Pennsylvania gaming revenues increased by 4.4% in 2012 to $3.16 billion, surpassing New Jersey as the second largest statewide gaming market. However, Pennsylvania still has a long way to go to surpass New Jersey’s peak year of 2006, when the state’s gaming industry generated $5.22 billion. Unique to the national trend, the positive growth in Las Vegas Strip gaming revenues proved that increased regional gaming does not reduce the destination gaming experience that Vegas offers. In 2012, 39.7 million visitors traveled to Las Vegas, which exceeded the previous peak, established in 2007, of 39.2 million visitors. While visitor volumes remain at an all-time high, the Las Vegas Strip gaming revenues have been slow to rebound. In 2012 Vegas gaming revenues only increased by 2.3% to $6.2 billion. While positive, total gaming revenues remain well below the $6.8 billion recorded in 2007. The slow rebound in revenues has been attributed more to the expansion of gaming in Asia and the decline in international high rollers visiting Las Vegas. The expansion of gaming has intensified the competition and come at a cost to pre-existing casino operations; however, gaming expansion continues to produce growth for the overall gaming industry. Furthermore, the trend of gaming expansion does not appear to be slowing down, as both tribal and state governments continue to view gaming as a vehicle to generate revenues for government programs.

2013 Commercial & Tribal Gaming Stats | 5

STATE GAMING TAX REVENUES

In 2012, state gaming tax revenues increased by $661.4 million (8.5%). The state gaming tax growth rate continues to outpace the overall gaming revenue growth, as newer states have imposed gaming tax rates as high as 67.0% of net revenues. This translates to only $0.33 of every dollar earned by a casino goes towards operational expenses, overhead, capital improvements, and net income. As a comparison, the two states offering gaming the longest - Nevada since 1931 and New Jersey since 1976 - have gaming revenue tax rates of 6.75% and 9.25%, respectively. During 2012, Indiana state legislatures decreased the tax rate on racinos, applying the tax rate to 99% of gaming revenues, as opposed to 100%. Looking towards 2013, Indiana legislators are looking at ways to bolster the gaming industry amidst increased competition from commercial casinos in Ohio and Illinois and tribal casinos in Michigan. Measures currently being discussed include the reduction of the overall tax rate, providing a tax credit for promotional awards, eliminating the admissions tax, and authorizing land-based casinos. In Maryland, the state with the nation’s highest gaming tax rate of 67.0%, legislators approved a tax break for casinos. Once implemented, the tax rate on EGD revenues will vary by casino and range from 50.0% to 62.0%, with additional requirements on casino operators to purchase the video lottery terminals. The reduction in tax rates will improve the overall competitiveness of the market and help existing operators handle increased competition from the Baltimore and Prince George’s County casinos.

Gaming Tax Revenues

$104.26M

Colorado

$228.49M

Delaware

$147.89M

Florida

$574.34M

Illinois

$806.56M

Indiana

$334.54M

Iowa

$92.11M

Kansas

$495.60M

Louisiana

$41.23M

Maine

$253.14M

Maryland

$269.18M

Michigan

$272.79M

Mississippi

$471.42M

Missouri

$868.60M

Nevada

$254.95M

New Jersey

$62.79M

New Mexico

$822.67M

New York

$138.18M

Ohio

$20.38M

Oklahoma

$1,441.79M

Pennsylvania

Contrary to the trends seen in Indiana and Maryland, Colorado increased the gaming tax rate, restoring the tax rates seen from 2008 through June 2011.

$317.83M

Rhode Island

$16.68M

South Dakota

$384.70M

West Virginia

$0

$200M

$400M

$800M

$600M

$1,000M

$1,400M

$1,200M

6 | 2013 Commercial & Tribal Gaming Stats

Gaming Revenue Tax Rates

Colorado

• 0.25% - 20.0% graduated tax, with 20.0% applied to gaming revenues in excess of $13 million

• Slot Machines: 43.5% revenue tax contributed to the state; 10.0% revenue contribution to increase horse racing purses; 6.0% towards leasing, upgrading games, and video lottery computer system maintenance; and 40.5% of revenue is retained by the casino • Table Games: 29.4% revenue tax contributed to the state; 4.5% revenue contribution to increase horse racing purses; 66.1% of revenue is retained by the casino

Delaware

Florida

• 35.0% of gaming revenues

• 15.0% - 50.0% graduated tax with 50.0% applied to gaming revenues in excess of $200 million • $3 Admission tax per patron per gaming day

Illinois

• Riverboat casinos: 15.0% - 40.0% graduated tax with 40.0% applied to gaming revenues in excess of $600 million • Racinos: 25.0% - 35.0% graduated tax, on 99.0% of gaming revenues, with 35.0% applied to revenues in excess of $200 million • $3 Admission tax per patron per gaming day, limited to riverboat casinos • Riverboat Casinos: 5.0% - 22.0% graduated tax with 22.0% applied to gaming revenues in excess of $3 million • Racinos: 22.0% - 24.0% revenue tax, with 24.0% applied to (a) operations with table games that generated gaming revenue in excess of $100 million in the prior fiscal or (b) operations located in a county without a riverboat casino • Riverboat casinos: 21.5% of adjusted gross receipts for riverboats to the state and 4.0 - 6.0% to the local parish • Land based casinos: 21.5% of adjusted gross receipts or $60 million (the greater) • Racinos: 18.0% of adjusted gross receipts to support contributions (e.g. purse supplements & associations) and 18.5% of taxable net proceeds, defined as AGR less support contributions, to the state and 4.0% to the local parish • 27.0% of gaming revenues, with 22.0% to the state, 3.0% to local governments, and 2.0% to the Problem Gambling Fund

Indiana

Iowa

Kansas

Louisiana

• Casino: 46.0% of slot revenue and 16.0% of table game revenues • Racino: 40.0% of slot revenue and 16.0% of table game revenues • 67.0% of gaming machine revenues • 20.0% of table game revenues (upon implementation)

Maine

Maryland

Michigan

• 19.0% of gaming revenues, with 10.9% paid to the city of Detroit and 8.1% to the state of Michigan

• 4.0% - 8.0% graduated tax based on monthly gaming revenues, with monthly gaming revenues in excess of $134,000 taxed at 8.0% • 0.4% - 4.0% local tax contingent upon the local governments and monthly revenue

Mississippi

• 21.0% on adjusted gross receipts • $2 Admission tax per patron per excursion (Excursion is defined as a 2 hour period)

Missouri

• 3.5% to 6.75% graduated tax based on monthly gaming revenues, with all monthly revenues in excess of $134,000 taxed at 6.75% • Administrative fees equaling approximately 1.0% of monthly revenue

Nevada

• 8.0% of gaming revenues • 1.25% Casino Reinvestment Development Authority tax or an additional 2.5% state tax • 26.0% of gaming revenues for operators • 10.0% on manufacturer gross revenues from the sale of gaming devices into the state of New Mexico • 45.0% of gaming revenues used for the state education fund • 10.0% of gaming revenue is allocated for gaming machines, including the lottery system administrator • 8.5% - 9.0% of gaming revenue is allocated for advertising, marketing, and promotion expenses

New Jersey

New Mexico

New York

• Full-Scale Casinos: 33.0% of all gross casino revenue • Racinos: 33.5% of all gaming machine revenues

Ohio

Oklahoma

• Graduated tax rate of 10.0% - 30.0% on gaming revenues

• 55.0% of gaming revenue for EGDs • 16.0% of gaming revenue for table games

Pennsylvania

Rhode Island

• Approximately 60.0% of gaming revenues

• 8.0% gaming revenue tax • $2,000 annual gaming device tax per machine

South Dakota

• 53.0% EGD gaming revenue tax (after a 4.0% administrative fee on gross revenue) on racetracks, of which 17.0% is distributed to other private entities within the racing industry • 53.0% EGD gaming revenue tax and a 4.7% capital reinvestment on “Historic Resort” casinos • 35.0% table games gaming revenue tax

West Virginia

2013 Commercial & Tribal Gaming Stats | 7

ELECTRONIC GAMING DEVICES

When examining Electronic Gaming Device (EGD) revenues by state, the growth trends in EGD revenues are generally consistent with the overall gaming revenue growth trends. Maine was the only state to go against this trend, with total gaming revenue growth of 66.9%, as compared to EGD revenue growth of 44.8%. The variance between the growth rates is due to Maine expanding gaming in 2012 to include table games. Other states that had noticeable differences between overall gaming growth and EGD growth were Kansas and Illinois. The two states’ EGD revenue growth rates trailed overall gaming revenue growth by 290 and 265 basis points, respectively. These variances were the result of casino expansions in larger metropolitan areas, which traditionally have increased table game revenues. When analyzing EGD revenues as a percentage of total revenues, the states with fewer large metropolitan areas have a higher percentage. For those states analyzed, EGD revenues represent 77.9% of all comparable total gaming revenues. The states with the highest percentage (excluding states that only offer EGD gaming) were Iowa and South Dakota. Iowa EGD revenues represented 90.9% of all gaming revenues, while South Dakota EGD revenues represented 90.3%. The states where EGD revenues represented the lowest percentage of gaming revenues were Nevada and New Jersey, at 62.5% and 71.8%, respectively. Notably, in 2012, EGDs on the Las Vegas Strip only accounted for 46.9% of the $6.2 billion in gaming revenues. Analyzing the 2012 change in revenue per EGD per day there were several notable fluctuations. In Missouri, the daily EGD win per machine increased by $4.61 even though the state’s EGD gaming revenues declined by 2.4%. The positive increase in daily win per machine was the result of casino operators reducing the number of machines offered. Between January and August, Missouri casinos reduced the number of EGDs by 700 machines, from 19,100 to 18,400. Other significant increases in daily win per machine were experienced in Maine, New York, Pennsylvania, and Rhode Island. The increases in Maine, New York, and Pennsylvania were the result of continued gaming expansion into new markets, while the increase in Rhode Island’s daily win per EGD was organic growth. For states that report coin-in, the average EGD hold percentage was 8.2%, with a range from 6.3% to 9.4%. Nevada continues to have the lowest hold percentage at 6.3%. We continue to see the lack of a statistical correlation between the tax rate and EGD hold

EGD GRAPHS NOTES * Louisiana and Michigan were

excluded from the analysis as gaming revenue is not split between electronic gaming devices and table games. † Kansas, Maryland, Oklahoma, and West Virginia were excluded as the number of gaming machines is not reported on a monthly basis. ‡ Kansas, Maine, Maryland, New Mexico, Oklahoma, and West Virginia were excluded as the Coin-In is not reported.

8 | 2013 Commercial & Tribal Gaming Stats

Electronic Gaming Devices Revenue by State *

$6.75B

$6.50B

$6.70B

$6.78B

$2.25B

$2.00B

$2.41B

$2.47B

$2.37B

$2.32B

$1.75B

$2.34B

$2.19B

$1.50B

$1.89B

$1.91B

$1.25B

$1.60B

$1.56B

$1.00B

$1.30B

$1.33B

$1.27B

$1.38B

$1.26B

$1.80B

$0.75B

$0.50B

$0.16B

$0.38B

$0.33B

$0.04B

$0.29B

$0.25B

$0.24B

$0.25B

$0.74B

$0.72B

$0.68B

$0.69B

$0.11B

$0.11B

$0.09B

$0.10B

$0.06B

$0.09B

$0.51B

$0.53B

$0.47B

$0.45B

$0

$0.38B

$0.44B

Ohio

Iowa

Illinois

Maine

Florida

Kansas

Missouri

Indiana

Nevada

New York

Maryland

Mississippi

Colorado

Delaware

Oklahoma

New Jersey

West Virgina

New Mexico

Rhode Island

Pennsylvania

South Dakota

2011

2012

percentages. This suggests a higher tax rate does not result in the operators establishing a higher hold percentage, which in-turn would diminish a patron’s odds of winning. Rhode Island and Pennsylvania have the highest effective tax rates of the states analyzed, 60.2% and 45.7% respectively; however, their hold percentages were in the middle of 15 states analyzed. Furthermore, New Jersey had the second lowest effective tax rate at 8.4%, but the fifth highest hold percentage at 8.9%.

Revenue per Electronic Gaming Device per Day †

$126.47 $130.02

Colorado

$188.26 $183.64 $194.10 $189.30

Delaware

Florida

$326.60 $333.85

Illinois

$285.13 $285.03

Electronic Gaming Devices Hold Percentages ‡

Indiana

$200.69 $201.97

Iowa

State

2011

2012

$162.89 $181.76 $158.35 $161.65

Maine

Colorado Delaware

6.9%

7.1%

7.8%

7.9%

Mississippi

Florida Illinois Indiana

6.9%

7.0%

$222.49 $227.11

Missouri

8.4%

8.8%

$113.74 $116.26

11.5%

9.2%

Nevada

Iowa

9.1%

9.2%

$232.40 $227.48

New Jersey

Mississippi

7.5%

7.4%

$259.60 $256.24

New Mexico

Missouri Nevada

9.2%

9.3%

$263.52 $287.64

6.3%

6.3%

New York

New Jersey New York

9.1%

9.0%

$201.16

Ohio

$248.64 $255.47

8.1%

7.0%

Pennsylvania

Ohio

n/a

9.4%

$240.31 $247.51

Rhode Island

Pennsylvania Rhode Island South Dakota

7.9%

8.0%

$69.74 $71.06

South Dakota

8.3%

8.2%

8.9%

8.8%

$0

$50

$100

$200

$300

$400

$150

$250

2013 Commercial & Tribal Gaming Stats | 9

TABLE GAMES

When analyzing the table game revenues by individual state, the growth rate in table game revenues does not follow the overall state-wide growth rates, as seen with the EGD growth rates. The increased fluctuation between table game revenue growth and overall gaming revenue growth is attributed to table game revenue only making up approximately 22.1% of all comparable gaming revenues. For example, if a state’s EGD revenues remained unchanged, but table games increased by 10%, the statewide increase in total gaming revenues would only be 2.2%. The states with the most significant differences between table games revenue and total gaming revenue growth were Illinois and South Dakota. (Note: This excludes states with casino expansion in 2012.) Illinois table games revenue increased by 27.3%, which was 16.4 percentage points above the 10.9% growth rate in total gaming revenues. The increase is attributed to Rivers Casino operating for a full twelve months in 2012. Excluding Rivers Casino, the average Illinois table game generated $1,867.96 per day. Meanwhile table games at Rivers Casino generated an average daily win of $6,337.50 per table. (Note: Daily win per table game statistics exclude both poker revenues and quantity of poker tables.) South Dakota table games revenue increased by 17.0%, which was 10.6 percentage points above the 6.4% growth in total gaming revenues. The significant increase is due to South Dakota increasing the maximum bet from $100 to $1,000. When analyzing win per table game per day, there is a noticeable trend between the daily table game win and the state’s population. The states with the highest win per table game per day (Illinois, Pennsylvania, and Nevada) have the highest populations and largest metropolitan centers. Conversely, the states with the lowest daily win per table have the smallest populations. Beyond the daily win per table game fluctuations seen in Illinois and South Dakota, the declining win per table game in Pennsylvania was a significant fluctuation for the industry. In Pennsylvania the monthly table game revenues have continuously increased since table games were introduced in 2010. However, the decline in daily table game win indicates the market is reaching a saturation point, where the addition of new tables provides diminished returns.

TABLE GAMES GRAPHS NOTES * Louisiana and Michigan were excluded from the analysis as gaming revenue is not split between electronic gaming devices and table games. ¹ Ohio and Maine introduced table games in 2012. ² Florida, Maryland, New Mexico, New York, Oklahoma, and Rhode Island are excluded as these states limit gaming to slots-only facilities. †† Delaware, Maine, and Ohio were excluded as the table games revenue amounts reported include player- banked poker, which results in an artificially low win per table per day. ‡ Kansas, Maine, West Virginia and Pennsylvania were excluded from the analysis as table games drop is not reported. ‡‡ Delaware and Ohio were excluded as the reported table games drop amounts include player-banked poker, which results in an artificially inflated hold percentage. † Kansas and West Virginia were excluded from the analysis as the quantity of table games is not reported on a monthly basis.

10 | 2013 Commercial & Tribal Gaming Stats

Table Games Revenue by State * , ¹ , ²

$4.10B

$4.00B

$3.96B

$4.08B

$0.90B

$0.80B

$0.70B

$0.99B

$0.86B

$0.60B

$0.50B

$0.62B

$0.69B

$0.40B

$0.30B

$0.20B

$0.36B

$0.37B

$0.13B

$0.13B

$0.10B

$0.30B

$0.33B

$0.10B

$0.08B

$0.08B

$0.07B

$0.07B

$0.01B

$0.05B

$0.01B

$0.01B

$0.01B

$0.22B

$0.23B

$0.21B

$0.26B

$0.21B

$0.21B

$0

Ohio

Iowa

Illinois

Maine

Kansas

Missouri

Indiana

Nevada

Mississippi

Colorado

Delaware

New Jersey

West Virgina

Pennsylvania

South Dakota

When analyzing the 2011 and 2012 table game hold percentages, there is a statistical correlation between daily win per table and table game hold percentage. This suggests an inverse relationship between hold and daily win per table, as jurisdictions with the lowest hold percentages will generally generate the highest daily win per table. Within the states that generate a higher daily win per table game, the volume of table game play is offsetting the lower hold percentages. The lower hold percentage in these states is attributed to a higher density of skilled table game players that wager larger sums of money, resulting in increased table game volume, and table game rules that are more favorable to the patron, thereby decreasing the house advantage and overall hold percentage.

2011

2012

Revenue per Table Game per Day †, ††

$717.08 $733.41

Colorado

$2,300.47 $2,736.53

Illinois

$1,533.92 $1,581.89

Indiana

$768.80 $852.69

Iowa

$1,048.27 $1,061.19

Mississippi

Table Games Hold Percentages ‡, ‡‡

$1,152.76 $1,134.53

State

2011

2012

Missouri

Colorado Illinois Indiana

20.0%

19.9%

$1,931.58 $2,014.79

15.7%

15.8%

Nevada

17.3%

19.3%

$2,006.41 $1,750.10

Iowa

20.0%

20.9%

New Jersey

Mississippi

16.8%

17.5%

Missouri Nevada

$2,240.12 $2,196.94

19.1%

18.3%

Pennsylvania

13.2%

13.1%

New Jersey South Dakota

14.6%

14.2%

$253.43 $287.67

South Dakota

17.3%

17.9%

$0

$500

$1,000

$2,000

$2,500

$3,000

$4,000

$1,500

$3,500

2013 Commercial & Tribal Gaming Stats | 11

COMMERCIAL GAMING HEADLINES

Colorado Colorado Gaming Commission increases taxes by 5%. On July 1, 2012, the gaming commission reversed last year’s decision to decrease taxes by increasing casino taxes this year. State analysts suggest that the 5% tax increase will generate an additional $6 million in revenue for the state during the fiscal year. Delaware Delaware becomes the first state to legalize full-scale internet gambling and the second to legalize online poker. Lottery tickets, casino games, and poker will be offered on gaming websites for the three racinos in the state. Once licensed, the new sites are expected to generate an additional $7.75 million in revenue for Delaware. Florida Casino expansion comes to a standstill in the Florida House. In January, the hopes of legalizing three full-scale commercial resort casinos was close to becoming a reality with the Senate in favor of expansion. When the topic was addressed in the House, the expansion efforts hit a dead end for 2012. Industry titans, including the Genting Group and Las Vegas Sands, have backed off their petitions for gaming expansion while waiting for lawmakers to analyze the effects of commercial gaming on Florida’s future.

Illinois Employees buy Casino Queen. The Illinois Gaming Board approved the sale through an employee stock ownership plan on December 20, 2012. The general manager and president believe it is the first ESOP in gaming industry history. Still no more casinos in Chicago as lawmakers fail to overturn the Governor’s veto. The plan for five more casinos and a racetrack in the state remains on the voting block for the year. According to estimates, state revenue would increase by $104 million annually if the plan passed. Had the plan passed, existing casinos could have increased the number of gaming positions from 1,200 to 1,600 and the maximum tax rate would have decreased to 40%. Indiana Legislators continue to pursue initiatives to keep Indiana casinos competitive. Indiana casinos are facing an onslaught of competition with new casinos opening in Ohio, tribal casinos expanding in Michigan, and Illinois proposing additional gaming expansion. The state legislature proposed numerous bills to help Indiana casinos compete; the proposed bills included measures that legalize land- based casinos, remove taxes on free-play coupons, discontinue admissions taxes, and expand table games to race tracks.

Iowa Iowa riverboat casinos continue to move onto land. The Harrah’s casino in Council Bluffs is moving the casino floor from the riverboat to the convention center facility within the Harrah’s hotel. Penn National Gaming is bidding on the new land based casino license in Sioux City with the hopes to replace its existing Argosy casino. The city of Davenport is looking to enter the gaming business. In October, the city of Davenport announced plans to purchase the Rhythm City Casino from Isle of Capri for $46 million. The city established a non-profit entity to oversee the casino operations. However, before the deal is complete, the city and non-profit must be licensed by the Iowa Racing and Gaming Commission. If approved, Rhythm City Casino would join Prairie Meadows Racetrack as the only commercial casinos owned by local government.

12 | 2013 Commercial & Tribal Gaming Stats

Kansas The Hollywood Casino at the Kansas Speedway opens early in 2012. The casino features 52 table games and 2,000 slot machines in the 100,000 square foot facility. Officials believe the casino will attract patrons from other states such as Nebraska, Iowa, and Missouri. Kansas Star Casino opens its permanent facility in December 2012. The facility holds 1,800 gaming machines, 45 table games, and 10 poker tables. The casino is also constructing 624 equestrian stables, 186 temporary stalls, and 2 practice arenas which is expected to open to the public in 2015. Louisiana Ameristar Casinos obtains the last riverboat gaming license in the state through the acquisition of Creative Casinos of Louisiana, LLC’s Mojito Pointe project. The project originally included 1,600 slot machines, 60 table games, a 700-room hotel, a full golf course, and spa. By year end, the project’s ownership changed once again, as Pinnacle Entertainment announced the acquisition of Ameristar Casinos. Pinnacle Entertainment opens another luxurious resort and casino along the Mississippi River. In September, L’Auberge Casino & Hotel opened in Baton Rouge, Louisiana. The facility offers 1,500 slot machines, 50 table games, a 12-story hotel, an entertainment center, and a rooftop pool overlooking the Mississippi River.

Maine The Oxford Casino opens its doors in early June with 530 slot machines and a dozen table games. It is the second casino in Maine and most locals believe it will be the last casino to be built for years. Voters rejected two casino expansion measures in 2011. May, Hollywood Casino started offering blackjack, roulette, and poker after voters approved the expansion of table games in late 2011. Maryland Maryland Live! Casino opens its doors in December as the third largest casino in the country. The casino was developed by The Cordish Companies and currently features 4,750 slot machines and table games with plans to add 150 more live table games in 2013. MGM Resorts wins the political battle over Penn National as voters approve Question 7. The approval of Question 7 expands Maryland gaming to include table games and paves the way for a casino near the National Harbor in Prince George’s county. During the campaign, MGM Resorts supported the expansion efforts, while Penn National opposed the expansion in an effort to protect their Hollywood Casino in Charles Town, West Virginia. The two companies collectively spent over $90 million to support their positions. Hollywood Casino in Bangor adds table games to its gambling mix. In

Michigan Proposed amendment to add eight more casinos to the state fails to make the November ballot by one vote. In August the Board of State Canvassers voted to certify the gaming expansion ballot proposal, but the proposal fell short by a single vote. Had the amendment passed, commercial gaming would have expanded outside the city of Detroit. Mississippi Grand Station Casino closes abruptly with patrons still gaming inside due to a canceled foreclosure sale by Bally’s Gaming, Inc. The casino has changed ownership multiple times since it first opened in 1993. The hotel attached to the casino was successfully sold in January. There are talks for a potential buyer for the remaining casino. Rotate Black MS finally receives the Mississippi Gaming Commission approval in August 2012 to begin construction on a $112 million casino resort. Once started, the project is expected to take 14 months to complete and will include a 205-room, four-star hotel. In late December, Royal Black requested an extension on the development in order to solidify funding.

2013 Commercial & Tribal Gaming Stats | 13

COMMERCIAL GAMING HEADLINES

Missouri Isle of Capri opens Missouri’s thirteenth casino in late October 2012, the last remaining license in the state. The casino, located in Cape Girardeau, came with a $135 million price tag. The facility offers over 1,000 gaming positions, including both table games and slot machines. Caesars Entertainment leaves the St. Louis market as Penn National expands its footprint. In May, Caesars announced a deal to sell the Harrah’s Maryland Heights Casino to Penn National Gaming for $610 million. In November, Penn National rebranded the casino as Hollywood Casino St. Louis. The property is Penn National’s second casino in the St. Louis market.

Nevada Nevada Gaming Control Board Technology Division discontinues the pre-approval testing of gambling games and devices. Effective July 1, 2012, the pre-approval of gambling games and devices must be performed by independent testing laboratories, such as Gaming Laboratories International, Inc, as the board closed the state-run testing laboratory. Nevada Gaming Control Board moves forward with online poker. The state is currently working through the licensing of service providers and operators. Included is social game maker Zynga, which would potentially allow patrons to wager real money instead of virtual chips on social games such as Zynga’s Poker. Pinnacle buys Ameristar for $2.8 billion. The sale consisted of $1.9 billion in debt and $869 million in cash. Pinnacle executives stated the acquisition would save the consolidated company around $40 million in costs and boost the bottom line. The acquisition also doubles the number of Pinnacle properties and improves their geographic diversity.

New Jersey Super storm Sandy causes record decrease in New Jersey casino revenues. November revenue was down 27.9% ($68.2 million), with every casino reporting a decrease. The decline continued into December, as revenue declined $21.9 million (8.9%). After opening in April 2012, the $2.4 billion Revel Casino receives its second round of financing to get through the winter season. In December the casino received $150 million in debt financing from JP Morgan Chase bank. The loan will be used to pay existing debt and expand the current offerings through more slot machines and lower priced restaurants. New Mexico Racino companies collectively request fewer racing days, citing increased expenses and revenue declines of 40%. The New Mexico Racing Commission ultimately approved 288 days of live racing for 2013, which equals the number of racing days in 2012. The Horsemen’s Association originally requested 323 racing days. Raton city officials and investment group in talks to build a racino and event center. The complex is anticipated to cost $50 to $75 million. Investors also envision a city-financed events center adjoining the property, attracting visitors throughout the year.

14 | 2013 Commercial & Tribal Gaming Stats

New York Resorts World Casino New York brings in $60 million in net revenue and over one million patrons during July. The racino opened in October 2011 and offers over 5,000 electronic table games and slot machines. In 2012 the racino generated gaming revenue of $672.5 million. Ohio Ohio welcomes commercial gaming with three casinos opening in 2012. In May, Penn National opened the Hollywood Casino in Toledo and Caesar’s Entertainment opened the Horseshoe Casino in downtown Cleveland. In October, Penn National’s Hollywood Casino Columbus opened; it is currently the largest casino in the state, offering more than 3,000 gaming machines. The state’s fourth and final casino, Horseshoe Cincinnati, is set to open in early 2013. Ohio’s slot-only racino, Scioto Downs, provides stiff competition to its full-scale casino competitor, Hollywood Casino - Columbus. Since opening in October, the Hollywood Casino - Columbus has generated $130 per machine per day, which is $24 less than neighboring slots- only racino, Scioto Downs.

Oklahoma Will Rogers Downs experiences its most successful year since reopening five years ago. Most of the success can be attributed to the racino’s extensive simulcast distribution around the country and increasing its stake races to eight. Pennsylvania Pennsylvania surpasses New Jersey for second most in annual gaming revenues while celebrating its sixth straight year of increased slot revenue. The eleven casinos’ total revenue increased 2.7% since last year to $2.5 billion. Sugarhouse had an 11% growth in revenue and led the state in total revenue in 2012. Isle of Capri finally receives a Pennsylvania gaming license. In August 2012, the Pennsylvania Supreme Court ruled in favor of Isle of Capri, granting the company the state’s last resort casino license. Isle will open a casino at its Nemacolin Woodlands Resort, offering 600 slot machines and 28 table games. Rhode Island Voters approve Twin Rivers’ plan to add table games to the slots-only casino. In order to stay competitive with Massachusetts’ legalization of gaming, Twin Rivers plans to add over 65 table games to its facility. Meanwhile, Rhode Island’s other slots-only casino, Newport Grand, is still unable to add table games as voters neighboring the casino rejected its expansion.

South Dakota Legislature raises the bet limits from $100 to $1,000 with minimal resistance. Early in 2012 there were multiple gaming expansion bills introduced into the legislature. Ultimately, Senate Bill 108 passed, raising the maximum bet limit. In July 2012 the higher limits were enacted, which resulted in an immediate increase in statewide gaming revenue. West Virginia Competition from Pennsylvania and Ohio lead to a decline in gaming revenue for the two casinos located in the Northern Panhandle. Meanwhile, the Hollywood Casino in Charles Town continued to lead all other casinos in revenue, generating more revenue than all other West Virginia casinos combined.

2013 Commercial & Tribal Gaming Stats | 15