RubinBrown Gaming Stats 2014

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Welcome to the 2014 edition of RubinBrown’s Gaming Statistics publication, which provides a comprehensive review of the United States gaming industry.

’14

GAMING STATS COMMERCIAL & TRIBAL

2014 Commercial & Tribal Gaming Stats | i A Publication of RubinBrown LLP

Contents 2 Commercial Gaming Analysis

5 State Gaming Tax Rates

6 Electronic Gaming Devices

8 Table Games

RubinBrown’s Gaming Services Group adds value to clients through an understanding of gaming regulations and focus on efficient, effective, and sustainable compliance programs. We are nationally known for leadership within the gaming industry. Our success and reputation is a byproduct of our commitment to the following: ▶ Excellence in Quality and Client Service ▶ Thought Leadership ▶ Strategic Partnerships ▶ Diverse and Inspired Team ▶ Integrated Approach and Technical Expertise Across Service Lines

10 Commercial Gaming Headlines

14 Tribal Gaming Analysis

16 NIGC Regions

18 Portland Region

19 Sacramento Region

20 Phoenix Region

21 St. Paul Region

22 Oklahoma City Region

23 Tulsa Region

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).

24 Washington D.C. Region

25 Notes, Sources & Acknowledgments

ii | 2014 Commercial & Tribal Gaming Stats

WELCOME LETTER Welcome from RubinBrown’s Gaming Services Practice Leaders Welcome to the 2014 edition of Gaming Stats , as this edition marks the five year anniversary for the publication. We are excited to continue to provide you with the only comprehensive overview of the entire United States brick-and-mortar gaming industry. This publication includes statistical data from over 1,000 casinos located across 39 states.

When reading this publication, you will learn how the gaming industry continues to grow through market expansion, generating an estimated $66.30 billion in gaming revenues during 2013. However, while market expansion will continue in states like Massachusetts and New York, long-established gaming operators – tribal and commercial alike – are experiencing year- over-year revenue declines. New to this year’s edition of Gaming Stats , we have focused on expanding the data presented and highlighting the opportunities, challenges, and hot topics impacting each state or region covered. Internally, we have also revamped our statistical database to allow us to provide analysis immediately after data is made publically available. We look forward to sharing our analysis of the data with you throughout the year. industry and we enjoy talking ‘gaming’ – gaining insights and perspectives from others while also sharing our own. After all, this publication would not be possible without the support of the gaming industry’s leaders, regulators, and professionals located throughout the nation. We thank you for your continued support and we hope RubinBrown’s Gaming Stats continues to be a valuable tool to you. As with every year, we welcome your feedback and inquiries for additional analysis. We have a deep passion for the

10 Year Trend of United States Gaming Revenues

$70B

$68B

$66.30B

$65.24B

$66B

$63.66B

$64B

$62.96B

$62.76B

$62B

$60.17B

$61.10B

$60.76B

$60B

$58B

$56B

$55.37B

$54B

$52B

$50B

$50.67B

$48B

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Sincerely,

Brandon Loeschner

Daniel W. Holmes

Partner & Gaming Practice Leader

Manager & Gaming Practice Leader

314.290.3324

314.290.3346

brandon.loeschner@rubinbrown.com

daniel.holmes@rubinbrown.com

2014 Commercial & Tribal Gaming Stats | 1

COMMERCIAL GAMING ANALYSIS

The United States commercial casino industry generated $37.83 billion in 2013, expanding by 1.3 percent. The growth in gaming revenue was the result of gaming expansion in new markets, but was tempered by existing markets experiencing declining revenue and market cannibalization. In 2013, there were 23 states with commercial gaming operations. Of these states, six expanded gaming in 2013. Gaming expansion is defined as the opening of new casinos or expanding casino game offerings, such as table games. Ohio had the largest increase in gaming revenues (149.1 percent), as the market benefitted from the existing casinos operating for a full twelve-month period (Ohio’s first casino opened in May 2012) and the opening of three new “slot-only” racinos and one new full-service casino in 2013. Maryland was second to Ohio, with a 98.2 percent increase in gaming revenues. Maryland’s growth is contributed to the state legalizing table games—boosting existing casino revenue more than 46.5 percent, the benefit of a twelve-month period for its largest casino, Maryland Live, and the opening of Rocky Gap Casino, a small resort casino in the western part of the state. Collectively, Ohio and Maryland generated $1.01 billion more in gaming revenues during 2013. With gaming expansion leading to exponential revenue growth in states like Ohio and Maryland, state legislatures often view gaming expansion as a magic formula for increasing tax revenues. However, this formula is no longer holding true as markets are reaching the point of saturation and states are increasingly cannibalizing gaming revenues from neighboring gaming jurisdictions. Casino Gaming Grows, but Regional Revenues Lag (As published in the April 2014 issue of Casino Journal)

Top 20 United States Commercial Gaming Markets

Las Vegas Strip, NV $6,508.08M

Atlantic City, NJ $2,928.36M

Chicago, (IL & IN) $2,102.12M

Detroit, MI $1,349.41M

New York, NY $1,345.08M

Philadelphia, PA $1,160.64M

St. Louis, (MO & IL) $1,038.27M

Biloxi, MS $806.75M

Boulder Strip, NV $786.95M

Kansas City, (MO & KS) $778.51M

Tunica/Lula, MS $735.11M

Shreveport/Bossier City, LA $727.81M

Baltimore, MD & Washington D.C. $673.53M

Reno/Sparks, NV $670.89M

Cincinnati Vicinity (OH & IN) $652.50M

Pittsburg, PA $616.31M

New Orleans, LA $604.88M

Black Hawk, CO $553.08M

Providence, CT $511.71M

Lake Charles, LA $490.22M

Reaching the point of market saturation was most notable in Pennsylvania. In June 2013, Pennsylvania opened its twelfth casino (a

$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

$7,000M

2 | 2014 Commercial & Tribal Gaming Stats

States with Commercial Gaming

2013 COMMERCIAL CASINO REVENUES

$37.83B

1.3%

Positive Growth and No Significant Expansion in 2012 or 2013

Negative Growth and No Significant Expansion in 2012 or 2013

Positive Growth with Significant Expansion in 2012 or 2013

small resort casino); however, the overall market experienced its first year-over-year decline (-1.5 percent) in gaming revenue since the first casino opened in November 2006. States cannibalizing neighboring jurisdictions gaming revenues is most evident in the Kansas City market. In 2011, the Kansas City gaming industry generated $741.50 million in revenue and encompassed five Missouri casinos. In 2012, the Kansas City, Kansas based Hollywood Casino at Kansas Speedway entered the market. The addition of a sixth casino has resulted in the market’s overall gaming revenue increasing by $36.81 million, as the market generated $778.51 million in 2013. However, the expansion of gaming in Kansas has come at a cost to the original five Missouri casinos. In 2013, the new Kansas casino generated $131.17 million in revenue. Assuming the five Missouri-based casinos would have experienced flat revenue growth during 2012 and 2013, the new Kansas casino effectively generated 71.8 percent of its revenue through the cannibalization of Missouri gaming revenues. Looking Forward Overall, the United States commercial gaming industry will continue to grow through the emergence of new markets such as Massachusetts and New York; however, the growth will be mitigated through continued declines in existing markets. With regional casinos facing declining revenues, there are three significant trends to observe going forward in 2014: continued market expansion, partnerships between states, and diversification beyond the gaming floor. Market expansion will be a key area to observe throughout 2014 as state legislatures still view gaming as an industry that can aid in overcoming budgetary gaps. Most notably, the legislative decisions in Illinois and Pennsylvania will be critical for existing operators. Each state is already facing market saturation, but

Negative Growth with Significant Expansion in 2012 or 2013

both legislatures continue to contemplate expansion through new casinos or video lottery terminals in local bars. Meanwhile, Massachusetts and New York will continue to garner attention as the reality of gaming expansion comes closer throughout the respective casino selection processes. Partnerships between states will become more and more prominent, as states work to lobby for the overall growth of the gaming industry. The first example of such partnerships will likely emerge between South Dakota and New Jersey, as the two states are working to link wide-area progressives. The agreement will increase the jackpot dollar amounts, leading to an increase in wagering. The continued legalization of online (interactive) gaming on a state-by-state basis will lead to inter-state compacts. Delaware and Nevada will likely lead the industry, as these states have already agreed to a compact in principal and will continue to work out the technical details in 2014. Diversification beyond the gaming floor will remain critical for regional markets, as the traditional brick-and-mortar industry continues to face an aging demographic. Regional operators will need to learn from the story of the Las Vegas Strip. In 2013, the Las Vegas Strip achieved near-record visitation volume (down 0.1 percent from the record set in 2012), but continued to remain well below pre-recession gaming revenue records ($6.5 billion in 2013 compared to $6.8 billion record set in 2007). The ability for Las Vegas to achieve record visitation volume is attributed to its ability to transform from a gambling town to an entertainment and vacation destination for all generations. As the casino floor target market continues to age, regional operators must identify ways to make their facilities local entertainment destinations that attract the millennial generation.

2014 Commercial & Tribal Gaming Stats | 3

S TATES WITH S IGNIFICANT G AMING E XPANSION IN 2012 OR 2013

GAMING REVENUE $467.59M

GAMING TAX REVENUE $163.66M

FLORIDA

EFFECTIVE TAX RATE 35.0%

9.3%

GAMING REVENUE $365.08M

GAMING TAX REVENUE $98.92M

KANSAS

EFFECTIVE TAX RATE 27.0%

7.0%

7.4%

GAMING REVENUE $2,444.75M

GAMING TAX REVENUE $571.74M

LOUISIANA

EFFECTIVE TAX RATE 23.4%

1.7%

1.2%

GAMING REVENUE $126.27M

GAMING TAX REVENUE $51.44M

MAINE

EFFECTIVE TAX RATE 40.7%

27.3%

24.8%

GAMING REVENUE $748.68M

GAMING TAX REVENUE $416.08M

MARYLAND

EFFECTIVE TAX RATE 55.6%

98.2%

64.4%

GAMING REVENUE $1,707.62M

GAMING TAX REVENUE $452.18M

MISSOURI

EFFECTIVE TAX RATE 26.5%

-3.5%

-4.1%

GAMING REVENUE $1,070.66M

GAMING TAX REVENUE $356.67M

OHIO

EFFECTIVE TAX RATE 33.3%

149.1%

157.4%

GAMING REVENUE $3,110.63M

GAMING TAX REVENUE $1,384.39M

PENNSYLVANIA

EFFECTIVE TAX RATE 44.5%

-1.5%

-4.0%

GAMING REVENUE $558.24M

GAMING TAX REVENUE $318.52M

RHODE ISLAND

EFFECTIVE TAX RATE 57.1%

5.7%

0.2%

COMMERCIAL CASINO REVENUES

GAMING TAX REVENUES

$10.60B

$3.83B

28.0%

44.3%

S TATES WITHOUT S IGNIFICANT G AMING E XPANSION IN 2012 OR 2013

GAMING REVENUE $748.71M

GAMING TAX REVENUE $103.58M

COLORADO

EFFECTIVE TAX RATE 13.8%

-2.3%

-0.7%

GAMING REVENUE $432.06M

GAMING TAX REVENUE $178.89M

DELAWARE

EFFECTIVE TAX RATE 41.4%

-17.0%

-17.1%

GAMING REVENUE $1,551.31M

GAMING TAX REVENUE $536.70M

ILLINOIS

EFFECTIVE TAX RATE 34.6%

-5.3%

-6.6%

GAMING REVENUE $2,331.65M

GAMING TAX REVENUE $702.51M

INDIANA

EFFECTIVE TAX RATE 30.1%

-10.8%

-12.9%

GAMING REVENUE $1,416.72M

GAMING TAX REVENUE $323.93M

IOWA

EFFECTIVE TAX RATE 22.9%

-3.4%

-3.2%

GAMING REVENUE $1,349.41M

GAMING TAX REVENUE $256.40M

MICHIGAN

EFFECTIVE TAX RATE 19.0%

-4.8%

-4.7%

GAMING REVENUE $2,136.62M

GAMING TAX REVENUE $257.63M

MISSISSIPPI

EFFECTIVE TAX RATE 12.1%

-5.1%

-5.5%

GAMING REVENUE $11,142.92M

GAMING TAX REVENUE $903.43M

NEVADA

EFFECTIVE TAX RATE 8.1%

2.6%

4.0%

GAMING REVENUE $2,928.36M

GAMING TAX REVENUE $241.76M

NEW JERSEY

EFFECTIVE TAX RATE 8.2%

-3.7%

-5.2%

GAMING REVENUE $241.87M

GAMING TAX REVENUE $62.78M

NEW MEXICO

EFFECTIVE TAX RATE 26.0%

0.2%

NO CHANGE

GAMING REVENUE $1,925.57M

GAMING TAX REVENUE $877.71M

NEW YORK

EFFECTIVE TAX RATE 45.6%

6.8%

6.7%

GAMING REVENUE $112.85M

GAMING TAX REVENUE $20.63M

OKLAHOMA

EFFECTIVE TAX RATE 18.3%

-0.2%

1.2%

GAMING REVENUE $103.03M

GAMING TAX REVENUE $16.23M

SOUTH DAKOTA

EFFECTIVE TAX RATE 15.8%

-4.1%

-2.6%

GAMING REVENUE $810.23M

GAMING TAX REVENUE $325.81M

WEST VIRGINIA

EFFECTIVE TAX RATE 40.2%

-14.7%

-15.3%

COMMERCIAL CASINO REVENUES

GAMING TAX REVENUES

$27.23B

$4.81B

72.0%

55.7%

4 | 2014 Commercial & Tribal Gaming Stats

STATE GAMING TAX RATES

Early Adopters

RiverBoat Markets

Video Lottery Terminal

Other Markets

RACETRACK & VLT MARKETS

EARLY ADOPTERS

EFFECTIVE TAX RATE 45.5%

EFFECTIVE TAX RATE 8.8%

GAMING LEGALIZED 1931 EFFECTIVE TAX RATE 8.1% 1976 8.2% GAMING LEGALIZED EFFECTIVE TAX RATE

1992 57.1% 1994 41.4% 1994 40.2% 2001 45.6% 2004 44.5% 2006 35.0% 2008 55.6% 1997 26.0% 2004 40.7% 2004 18.3% 2007 27.0% 2009 33.3%

GAMING LEGALIZED

BLENDED TAX RATE: 60.0% EGD & 18.0% TABLE GAMES

GRADUATED TAX RATE: 3.5% - 6.75% (PLUS ADMINISTRATIVE FEES)

RHODE ISLAND

NEVADA

EFFECTIVE TAX RATE

GAMING LEGALIZED

STRAIGHT-LINE TAX RATE: 8.0% OR 10.25%

BLENDED TAX RATE: 59.5% EGD & 33.9% TABLE GAMES

DELAWARE

NEW JERSEY

EFFECTIVE TAX RATE

RACINOS BLENDED TAX RATE: 54.9% EGD & 35.0% TABLE GAMES; HISTORIC RESORTS TAX RATE: 57.7% EGD & 35.0% TABLE GAMES

1990 13.8% 1989 15.8%

GAMING LEGALIZED

STRAIGHT-LINE TAX RATE: 8.0% (PLUS $2,000 ANNUAL FEE PER GAMING)

WEST VIRGINIA

SOUTH DAKOTA

EFFECTIVE TAX RATE

GAMING LEGALIZED

NEW YORK

COLORADO

GRADUATED TAX RATE: 0.25% - 20.0%

STRAIGHT-LINE TAX RATE: 64.0%

EFFECTIVE TAX RATE

GAMING LEGALIZED

BLENDED TAX RATE: 55.0% EGD & 16.0% TABLE GAMES

PENNSYLVANIA

RIVERBOAT MARKETS

EFFECTIVE TAX RATE

EFFECTIVE TAX RATE 24.5%

CASINOS GRADUATED TAX RATE: 5.0% - 22.0%; RACINOS GRADUATED TAX RATE: 22.0% OR 24.0% GRADUATED TAX RATE AND VARIES BY LOCATION: 4.4 % - 12.0% (PLUS ADMINISTRATIVE FEES) GRADUATED TAX RATE: 15.0% - 50.0% (PLUS $2-3 ADMISSION FEE PER PATRON PER DAY) CASINOS STRAIGHT-LINE TAX RATE: 21.5% 1 ; RACINOS STRAIGHT-LINE TAX RATE: 33.17% RIVERBOAT GRADUATED TAX RATE: 5.0% - 40.0% (PLUS $3 ADMISSION FEE PER PATRON PER DAY); RACINOS GRADUATED TAX RATE: 25.0% - 35.0%

1989 22.9%

GAMING LEGALIZED

IOWA

FLORIDA

STRAIGHT-LINE TAX RATE: 35.0%

EFFECTIVE TAX RATE

GAMING LEGALIZED 1990 34.6% EFFECTIVE TAX RATE

GAMING LEGALIZED

BLENDED TAX RATE: 50.0%, 57.0% or 67.0% EGD & 20.0% TABLE GAMES

ILLINOIS

MARYLAND

EFFECTIVE TAX RATE

1991 23.4% 1990 12.1% 1993 30.1% 1993 26.5%

GAMING LEGALIZED

MISSISSIPPI

MICHIGAN OTHER MARKETS 1996 19.0%

EFFECTIVE TAX RATE

EFFECTIVE TAX RATE 25.9%

GAMING LEGALIZED

LOUISIANA

STRAIGHT-LINE TAX RATE: 19.0%

EFFECTIVE TAX RATE

GAMING LEGALIZED

RACINOS STRAIGHT-LINE TAX RATE: 26.0%

INDIANA

NEW MEXICO

EFFECTIVE TAX RATE

CASINOS BLENDED TAX RATE: 46.0% EGD & 16.0% TABLE GAMES; RACINOS BLENDED TAX RATE: 40.0% EGD & 16.0% TABLE GAMES

GAMING LEGALIZED

STRAIGHT-LINE TAX RATE: 21.0% (PLUS $2 ADMISSION FEE PER PATRON PER 2 HOURS)

MISSOURI

MAINE

EFFECTIVE TAX RATE

GAMING LEGALIZED

1 Louisiana casinos include riverboat and land-based operations. Land-based operations are subject to a minimum tax of $60 million, regardless of revenues.

RACINOS GRADUATED TAX RATE: 10.0% - 30.0%

OKLAHOMA

EFFECTIVE TAX RATE

GAMING LEGALIZED

KANSAS

STRAIGHT-LINE TAX RATE: 27.0%

EFFECTIVE TAX RATE

CASINOS STRAIGHT-LINE TAX RATE: 33.0%; RACINOS STRAIGHT-LINE TAX RATE: 33.5%

GAMING LEGALIZED

OHIO

EFFECTIVE TAX RATE

2014 Commercial & Tribal Gaming Stats | 5

ELECTRONIC GAMING DEVICES

Growth In 2013, there were 21 states that reported electronic gaming device (EGD) revenues. Collectively, these states reported a decline in EGD revenues of 0.3% or $85.52 million. While EGD revenue declined slightly, the overall decline includes the EGD revenues generated from 7 new casinos that opened in 2013 and 10 casinos that completed their first full calendar year. The flat to declining EGD revenue amid an increase in the number of casinos highlights the challenges facing today’s gaming industry. Challenges The average age of the traditional EGD patron continues to increase with each year. The increase in the average age is attributed to the differences in technology familiarity between generations. Specifically, the millennial generation grew up with video game technologies that provide high quality digital graphics and an interactive experience. Transitioning these patrons to slot machine players has proven difficult, as the appeal provided by a traditional three-reel slot machine is limited in comparison to today’s video games. Opportunities Responding to the industry’s challenges, the slot machine manufacturing industry is quickly working to develop a more interactive gaming experience that includes group-play bonus rounds, connectivity with social media, and pay-out tables that vary by a patron’s “skill.” Casino operators are identifying new ways to connect with the slot machine players through social media and free-play online gaming sites. Both Caesar’s Entertainment and MGM have developed free-play websites that allow patrons to play the same slot machines offered in the Las Vegas casinos. These online sites have proven effective in maintaining a patron’s engagement and increasing patron visitation and spend.

6 | 2014 Commercial & Tribal Gaming Stats

E LECTRONIC G AMING D EVICES (EGD)

EGD REVENUE $667.92M

REVENUE PER EGD PER DAY $127.62

COLORADO

EGD HOLD % 7.1%

-2.7%

-0.7%

$374.00M

$156.04

DELAWARE

7.7%

-16.5%

-15.0%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$467.59M

$189.88

FLORIDA

7.3%

9.3%

3.6%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$1,283.47M

$311.89

ILLINOIS

8.8%

-6.7%

-6.6%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$2,092.91M

$267.96

INDIANA

9.6%

-9.9%

-6.2%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$1,284.24M

$196.33

IOWA

9.2%

-3.7%

-2.8%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$310.19M

KANSAS

7.3%

EGD REVENUE

NUMBER OF EGDs NOT REPORTED ON MONTHLY BASIS

COIN-IN NOT REPORTED

$105.62M

$168.24

MAINE

22.7%

-4.6%

EGD REVENUE

REVENUE PER EGD PER DAY

COIN-IN NOT REPORTED

$579.87M

$238.32

MARYLAND

53.5%

9.7%

EGD REVENUE

REVENUE PER EGD PER DAY

COIN-IN NOT REPORTED

$1,808.50M

$155.64

MISSISSIPPI

7.4%

-5.1%

-3.7%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$1,497.35M

$214.82

MISSOURI

9.3%

-4.1%

-5.4%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$6,752.66M

$117.98

NEVADA

6.4%

-0.5%

1.5%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$2,064.18M

$216.70

NEW JERSEY

8.8%

-5.8%

-2.1%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$241.87M

$245.96

NEW MEXICO

0.2%

-4.0%

EGD REVENUE

REVENUE PER EGD PER DAY

COIN-IN NOT REPORTED

$299.39

$1,925.57M

NEW YORK

6.6%

6.8%

4.1%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$818.72M

$193.92

OHIO

9.7%

148.1%

-3.6%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$112.85M

OKLAHOMA

-0.2%

EGD REVENUE

NUMBER OF EGDs NOT REPORTED ON MONTHLY BASIS

COIN-IN NOT REPORTED

$2,384.10M

$247.42

PENNSYLVANIA

9.9%

-3.5%

-3.2%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$516.74M

$249.02

RHODE ISLAND

8.2%

-2.1%

0.6%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$92.70M

$73.68

SOUTH DAKOTA

8.8%

-4.4%

3.7%

EGD REVENUE

REVENUE PER EGD PER DAY

EGD HOLD %

$630.77M

WEST VIRGINIA

8.9%

-12.9%

EGD REVENUE

EGD HOLD %

NUMBER OF EGDs NOT REPORTED ON MONTHLY BASIS

ELECTRONIC GAMING DEVICES STATISTICAL NOTES Louisiana and Michigan were excluded from the table as electronic gaming revenue is not reported.

2014 Commercial & Tribal Gaming Stats | 7

TABLE GAMES

Growth In 2013, 17 of the 19 states that permit table games reported table game revenues. Collectively, the 17 states reported an increase in table games revenue of 5.8% or $418.71 million. The expansion of gaming in new markets (encompassing Maryland, Rhode Island, Ohio, and Maine) contributed $357.53 million towards the overall growth of table games. Even though a significant portion of the growth is attributed to market expansion, the states that did not experience a significant growth in gaming still saw table game revenue growth in 2013. Challenges Compliance with the Title 31 reporting requirements is an emerging challenge for the table games segment of the gaming industry. In the Fall of 2013, the Director of the Financial Crimes Enforcement Network (FinCEN) announced at the Global Gaming Expo that FinCEN will be placing greater efforts and scrutiny on gaming operators Title 31 compliance. In addition, FinCEN is looking at increasing the regulations around understanding a patron’s income sources when issuing credit. The potential regulations will be focused on upholding the integrity of the industry; however, operators will have to balance the desire to please customers while adhering to more stringent regulatory standards. Opportunities Opportunities for growth in table game revenues are primarily in the introduction of new gaming jurisdictions and the transition to online table games. Currently, there are four states (Florida, New Mexico, New York, and Oklahoma) that only permit slot-only casinos. Of these four states, New York will most likely be the next state to offer table games as the state approved the expansion of full-scale casino resorts in late 2013. The transition to online gaming is also a significant opportunity for table games. During the first ten months of interactive (online) gaming, the Nevada market generated $8.52 million in online poker revenues. While the revenue was not significant, the possibility of extending online gaming into states with large population centers (e.g. California) provides a significant opportunity for the industry.

8 | 2014 Commercial & Tribal Gaming Stats

T ABLE G AMES (TG)

TG REVENUE $80.79M

REVENUE PER TG PER DAY $789.56

COLORADO

TG HOLD % 20.3%

1.7%

7.5%

$58.06M

DELAWARE

-20.2%

TG REVENUE

PLAYER-BANKED GAMES ARE NOT REPORTED SEPARATELY

$267.85M

$2,938.51

ILLINOIS

17.0%

2.3%

7.3%

TG REVENUE

REVENUE PER TG PER DAY

TG HOLD %

$341.75M

$1,561.21

INDIANA

20.8%

-6.7%

-1.5%

TG REVENUE

REVENUE PER TG PER DAY

TG HOLD %

$132.47M

$860.92

IOWA

20.8%

-0.2%

1.0%

TG REVENUE

REVENUE PER TG PER DAY

TG HOLD %

$54.81M

KANSAS

5.5%

TG REVENUE

PLAYER-BANKED GAMES ARE NOT REPORTED SEPARATELY

$20.65M

MAINE

57.4%

TG REVENUE

PLAYER-BANKED GAMES ARE NOT REPORTED SEPARATELY

$168.81M

$3,305.74

MARYLAND

TG REVENUE

NEW IN 2013

REVENUE PER TG PER DAY

NEW IN 2013

TG DROP NOT REPORTED

$313.79M

$1,022.85

MISSISSIPPI

17.1%

-4.1%

-3.6%

TG REVENUE

REVENUE PER TG PER DAY

TG HOLD %

$209.40M

$1,367.70

MISSOURI

20.3%

0.9%

-2.1%

TG REVENUE

REVENUE PER TG PER DAY

TG HOLD %

$4,183.40M

$2,178.34

NEVADA

13.7%

2.6%

8.4%

TG REVENUE

REVENUE PER TG PER DAY

TG HOLD %

$829.72M

$1,659.33

NEW JERSEY

14.8%

-3.5%

-2.5%

TG REVENUE

REVENUE PER TG PER DAY

TG HOLD %

$251.94M

OHIO

152.2%

TG REVENUE

PLAYER-BANKED GAMES ARE NOT REPORTED SEPARATELY

$729.83M

$2,184.58

PENNSYLVANIA

6.2%

1.8%

TG REVENUE

REVENUE PER TG PER DAY

TG DROP NOT REPORTED

$41.32M

$1,415.15

RHODE ISLAND

TG REVENUE

NEW IN 2013

REVENUE PER TG PER DAY NEW IN 2013

TG DROP NOT REPORTED

$10.33M

$321.00

SOUTH DAKOTA

18.7%

-1.0%

11.6%

TG REVENUE

REVENUE PER TG PER DAY

TG HOLD %

$179.46M

WEST VIRGINIA

-20.4%

TG REVENUE

PLAYER-BANKED GAMES ARE NOT REPORTED SEPARATELY

TABLE GAMES STATISTICAL NOTES Louisiana and Michigan are excluded from the table as table games revenue is not reported.

Florida, New Mexico, New York and Oklahoma are excluded from the table as these states limit gaming to slots-only facilities.

The revenue per table game per day and table game hold percentage statistics only represent house-banked games. States that do not separate revenue between house-banked and player-banked games are excluded from the statistical analysis. The inclusion of player-banked games would reduce the win per table game per day and inflate the overall table game hold percentage.

2014 Commercial & Tribal Gaming Stats | 9

COMMERCIAL GAMING HEADLINES

Colorado Colorado continues to contemplate online gambling. In 2013, a bill to legalize online gambling was proposed, but it never generated momentum. However, that could change in 2014 as the state’s casino executives are taking notice of the success other states are having. In a recent study, online gaming in Colorado could generate an estimated $112.5 million. Delaware Delaware issues $8 million bailout to the state’s casinos. In June 2013, lawmakers passed legislation that sent $8 million to the three casinos in Delaware. The purpose of the bill was to offset the higher costs of vendors who provide slot machines inside the casinos. First month of online gaming in Delaware is a success. In November 2013, $3.8 million was wagered online and 2,800 people registered gaming accounts. While these numbers are not as large as other online gaming jurisdictions, the state remains optimistic.

Florida Florida conducts gambling impact study. On October 28, 2013, the state took testimony from the Spectrum Gaming Group which completed an impact study on the gambling environment and impacts of Florida’s existing gambling industry. Lights go out on gaming expansion. In April 2014, Florida’s House Speaker Will Weatherford said it is highly unlikely that a gaming expansion bill would be passed in 2014, stating “the lights have gone out on this issue (gaming).” Illinois Gaming and Leisure Properties agree to purchase Casino Queen. The investment company will buy the property for $140 million and lease it back to the casino employees, who purchased the casino and hotel last year. The property will be leased for $14 million a year for 15 years with an option to renew for four successive five-year terms. Debates on gaming expansion are becoming a spring ritual. In the spring of 2014, two bills were introduced into the Illinois legislature. Meanwhile, existing casinos are adapting to a shift in the market, as patron admissions are down more than 10.0%. The decline in admissions is the result of previous gaming expansion efforts in the form of video lottery terminals at local bars and restaurants.

Indiana Increases in competition hurt Indiana riverboat casinos. Due to regional competition in Ohio, southeast Indiana casinos reported a decrease in gaming revenue of 28.3% from the prior year. Most bills that were proposed to assist the state’s casinos in 2013 were turned down, and debates on any major changes are not expected to begin until 2015. Iowa The opening of Sioux City’s Hard Rock Casino is stalled. In a lawsuit filed against Sioux City Entertainment, Penn National claims that the Iowa Racing and Gaming Commission violated Iowa law and Penn National’s constitutional rights. The commission selected Sioux City Entertainment’s proposal to build a land-based casino over Penn National’s proposal. Sioux City Entertainment’s Hard Rock Hotel & Casino had been scheduled to open in July 2014, but the case does not go to court until the following December. Scott County Casino LLC purchased Rhythm City Casino from Isle of Capri. The company purchased Rhythm City Casino for $51 million dollars and plans to use the gaming license to build a $110 million land-based casino and hotel along Interstate 80 in north Davenport.

10 | 2014 Commercial & Tribal Gaming Stats

Kansas Kansas Star Casino to build convention center. In addition to the casino’s original plan to build a 20,000 square foot equestrian practice arena, they will build a 10,000 square foot convention center with construction beginning in early 2014. Gaming in southeast Kansas gets a second chance. In April 2014, Kansas lowered the minimum investment for the southeast Kansas license from $250 million to $50 million (plus a $5.5 million application fee). The lowered minimum investment brings new hopes for a commercial casino development which was stalled after the opening of the Quapaw Nation’s Downstream Resort and Casino, located along the Kansas, Oklahoma and Missouri borders. Louisiana Baton Rouge’s Hollywood Casino to reduce workforce. The Louisiana Gaming Control Board approved the casino’s plan to reduce their staff from 525 to 450 employees. The casino claimed the need to reduce the number of employees was due to the opening of Pinnacle Entertainment’s L’Auberge Casino in 2012.

Maine The Oxford Casino completes expansion. Announced shortly after the casino was purchased by Kentucky-based Churchill Downs Inc. for $160 million, the $3.2 million expansion adds 22,000 square feet, 58 slot machines and 4 table games to the casino. Two of the tables being added will be away from the central gaming pit and reserved for high-stakes games. Maryland MGM awarded Maryland’s sixth and final casino license. On December 20, 2013, the Maryland Video Lottery Facility Location Commission voted 5 to 2 to award the license to MGM. MGM plans to build a $925 million casino complex at National Harbor in Prince George’s County. The property is slated to open in mid 2016 and will feature 3,600 slot machines, 140 table games, a concert theater and a 300 suite hotel. Michigan Detroit’s losing streak continues in 2013. Revenues for Detroit’s three commercial casinos declined another 4.8% or $67.32 million in 2013. While weather is a common excuse for revenue declines, increased competition from the Hollywood Casino in Toledo, Ohio proved to be the most significant factor.

Mississippi Proposal for Rotate Black’s casino is approved by the Mississippi Gaming Commission. Once completed, the $130 million casino will boast a 35,000 square foot gaming floor and a 205 room hotel. The proposal was revised several times in order to meet the Mississippi Gaming Commission’s requirements and was approved just before the new 2014 requirements would have been mandatory. Twin River Worldwide Holdings to buy the Hard Rock Hotel & Casino Biloxi. The Rhode Island based company is expected to complete the $250 million sale from Premier Entertainment Biloxi LLC in June 2014. The casino has 1,300 slot machines, 50 table games, and a hotel. Missouri Pinnacle sells Lumiere Place Casino in St. Louis to Tropicana Entertainment for $260 million. The FTC required this ownership shuffle to improve competition in the region following Pinnacle’s purchase of Ameristar. Without the FTC’s intervention, Pinnacle Entertainment would have owned three of the six casinos, generating 59.4% of the gaming revenues, in the St. Louis market.

2014 Commercial & Tribal Gaming Stats | 11

COMMERCIAL GAMING HEADLINES

Nevada Nevada is first to the online (interactive) gaming market. In April 2013, Ultimate Poker became the first website to legally offer online gaming in the United States. While the debate around the legalization of online gaming has captured headlines, the impact of online gaming remains limited. Between April 30, 2013, and February 28, 2014, the Nevada online (interactive) gaming market has only generated $8.52 million in gaming revenues. MGM and Play Studios launch free mobile casino game. On November 6, 2013, MyVegas Slots was released for iOS and Android platforms. This app offers free online slots and is expected to increase MGM’s market reach by 200%. While MGM enters the free online gaming market, Jim Murren, CEO of MGM, continues to state MGM will not pursue online gaming until a “business opportunity exists.”

New Jersey Atlantic City’s Atlantic Club Casino has been shut down. The casino closed in January 2014. Tropicana and Caesars purchased the casino for $23.4 million. Tropicana acquired the gaming machines and table games, while Caesars acquired the 800-plus room hotel. This marks the first time an Atlantic City casino has closed since the arrival of competing casinos in Pennsylvania seven years ago. Online gaming is legal in New Jersey. Representing the most significant gambling expansion since the first casino opened in 1978, websites run by seven Atlantic City casinos in conjunction with online gaming companies have seen nearly 110,000 online gambling accounts created in the four weeks following the state’s legalization of online gaming. Recent estimates predict that online gaming will produce between $200 million to $500 million in gaming revenue during the next year.

New Mexico Albuquerque Downs opens new gaming facility. In July 2013, the Downs opened a new facility with over 65,000 square feet and 750 gaming machines. The facility is nearly double the size of the old facility. The new facility brings new competition to the surrounding tribal gaming casinos. New York The passing of a New York casino referendum paves the way for gaming expansion in the state. The state constitutional amendment, which was passed on November 5, 2013, allows an initial four casinos to be built in upstate New York and existing racetrack gaming houses to transition into full scale casinos. At the end of April 2014, there were more than twenty groups expressing interest in the new casino licenses.

12 | 2014 Commercial & Tribal Gaming Stats

Ohio Horseshoe Casino Cincinnati opens its doors. The last of four casinos that Ohio voters approved in 2009 opened for business on March 4, 2013. The $400 million casino was projected to generate $227 million in revenue in its first year. Ohio’s racinos are off to the races, as the second, third and fourth racinos open. On April 9, 2013, the $88 million Thistledown Racino opened in North Randall. On December 12, 2013, Miami Valley Gaming opened northeast of Cincinnati. On December 18, 2013, The Hard Rock Rocksino opened near Cleveland, Ohio. Oklahoma Oklahoma racinos see another steady year in gaming revenues. The Will Roger Downs Racino, owned by the Cherokee Nation, and Remington Park, owned by the Chickasaw Nation, generated $112.9 million in gaming revenues. When compared to 2012, revenues remained relatively flat, declining by 0.2%.

Pennsylvania Casinos post decrease in year-end gaming machine revenue for the first time since Pennsylvania opened casinos in 2006. The state’s 12 casinos generated a combined $2.38 billion in gaming machine revenue, a 3.5% decline from 2012, and the first decline in 7 years. The dip is a result of increasing competition in nearby states. However, in the commercial gaming industry, Pennsylvania ranks second in gaming machine revenue, behind only Nevada. SugarHouse Casino announces $155 million expansion plans. The expansion will include a banquet hall, a parking garage, an extended riverwalk and bike path, and an increase of 27,000 square feet of gaming floor to make room for an additional 500 slot machines, an additional 30 table games, and a poker room. Rhode Island Twin Rivers Casino debuts table games in Rhode Island. In June 2013, Twin Rivers began operating 80 table games including blackjack, roulette, craps, three card-poker and baccarat. The addition of table games helped Twin Rivers generate revenue growth of 7.1% amid declining gaming machine revenue.

South Dakota Gaming officials seek constitutional amendment to keep up with the competition. The desired amendment will allow roulette, craps and keno to be added to the lineup of already approved games: slot machines, poker and blackjack. The amendment is supported by the Deadwood Gaming Association, which wants to remain competitive with the variety of games offered at nearby tribal casinos. Lawmakers have committed to introducing bills to allow more games in Deadwood in 2014. West Virginia State Lottery Commission approves hybrid gaming system. The newly approved system gives players the option of using electronic touch screens to bet on traditional live table games such as roulette and mini-baccarat. The state is hopeful that this will help racetrack casinos compete with casinos in bordering states.

2014 Commercial & Tribal Gaming Stats | 13

TRIBAL GAMING ANALYSIS

2012 Revenue Analysis Indian gaming revenues grew by 2.8% in 2012, setting a new industry gaming revenue record of $27.91 billion. As the Indian gaming industry continues to grow, the tribes benefitting from gaming still only represent 42.7% of the 565 federally recognized tribes. At the end of 2012 the industry consisted of 241 tribal nations, operating 425 casinos, located in 28 states.

While the Indian gaming industry continues to produce year-over- year revenue increases, existing casinos are facing challenges from increases in competition. In 2012 the average revenue per casino was $65.66 million, which remained $1.2 million below the $66.86 million peak established prior to the economic recession starting in 2008. The increase in competition is the product of two primary factors that include: Expansion of Indian Gaming: Since 2008, there have been 20 new casinos that have opened. While the increased number of casinos has provided more tribes with access to the economic benefits produced by gaming; it has increased the competition and reduced the market share held by tribes with existing casinos. Expansion of Commercial Gaming: Since 2008, tribes in Connecticut, Kansas, New York, New Mexico, and Oklahoma have endured the negative impacts of increased competition from commercial gaming expansion. The expansion of state gaming has reduced tribal gaming revenues which is used to further the economic develop of tribal communities. Looking forward, the Indian gaming industry can anticipate further increases in competition and existing operators should anticipate declining revenues. The finalized 2013 industry data will not be released until late July 2014; however, preliminary estimates indicate the collective Indian gaming industry will see revenue decline or remain relatively flat (growth of -1.0% to 2.0%).

Five Year History of Indian Gaming Revenues

$28.00B

13%

$27.91B

$27.75B

12%

$27.50B

11%

$27.25B

10%

$27.15B

$27.00B

$26.74B

$26.75B

$26.50B

$26.48B

$26.50B

5.77%

$26.25B

$26.00B

$25.75B

$25.50B

2.07%

1.77%

$25.25B

$25.00B

0.45%

0.51%

$24.75B

FY 2008

FY 2009

FY 2010

FY 2011

FY 2012

3 Year Compounded Annual Growth Rate

14 | 2014 Commercial & Tribal Gaming Stats

Indian Gaming Facilities by State

Number of Tribes Operating Gaming Facilities

Number of Class II and Class III Gaming Facilities

State

Alaska

Idaho

Oregon

23 38

32 49

Washington

Portland Region

61 61

64 64

California

Sacramento Region

Arizona

Colorado

Nevada

22 48

New Mexico

Phoenix Region

32 *

Iowa

Michigan

Minnesota

Critical Trends to Watch in 2014 Federal Recognition: The ability for Congress to enact meaningful legislation, providing tribes protection from infringements on tribal sovereignty, remains critical for future tribal development. Specific issues facing tribal development include obtaining a tribal general welfare exclusion in federal law, achieving a Carcieri and Patchack fix, and receiving equal treatment during the development of online gaming. State Negotiations: In 2014, New Mexico and Michigan gaming compact negotiations will be critical to observe. In New Mexico, 5 of the 14 tribes are renegotiating their compacts, while 6 of the 12 Michigan tribes are renegotiating their compacts. The outcome of these negotiations will likely establish a precedent mirrored by other states when other tribal-state gaming compacts expire in the coming years. Internet Gaming: The prospect of legalized internet gaming on a federal level remains uncertain as the technology, player safety and the ability to regulate the industry on a national level continue to raise concerns. With limited optimism in federal legislation, tribes are taking alternative steps, most notably the Tribal Internet Gaming Alliance, to capitalize on the economic benefits generated from internet gaming. NIGC Compliance: In 2012 the NIGC issued new regulations for Class II gaming (25 CFR Part 543); however, compliance with these regulations did not take effect for most tribes until 2014. Complying with the new standards will be a focus for operators, while gaming commissions will be challenged with developing and updating testing programs to assess compliance with the new regulations.

Montana

Nebraska

North Dakota

South Dakota

Wisconsin

Wyoming

St. Paul Region

60 *

120

Oklahoma †

Texas

Oklahoma City Region

Kansas

59 64

Oklahoma †

Tulsa Region

18 *

Alabama

Connecticut

Florida

Louisiana

Mississippi

New York

North Carolina

Washington D.C. Region

241

425

* In order to not double count tribes with casino operations in multiple states, we have adjusted the regional total reported for the “Number of Tribes Operating Gaming Facilities.” As a result of this adjustment, the regional total does not sum to the individual state totals.

† There are 241 tribes operating casinos in 28 states. The state of Oklahoma is included in both the Oklahoma City and Tulsa Regions.

2014 Commercial & Tribal Gaming Stats | 15

NIGC REGIONS

St. Paul

Portland

Sacramento

MS AL

Washington D.C.

Phoenix

Tulsa

Oklahoma City

NIGC Regional Analysis Using the NIGC statistical data, the Indian gaming industry is broken into seven regions. The Oklahoma market continues to lead the nation in growth, as the Oklahoma City and Tulsa Regions produced the highest growth rates (6.6% and 5.8% respectively). Meanwhile, the Washington D.C. and Sacramento Regions saw the lowest growth rates, but continue to generate the most revenue per casino ($249.74 and $108.72 million respectfully). Collectively, the Washington D.C. and Sacramento Regions generate 49.1% of the industry’s revenue. Significant trends to note by region include the following: The Portland Region has the most consistent growth rate (4.9% 5-Year CAGR). The region’s steady growth is attributed to the absence of gaming expansion and tribes continuing to reinvest in their existing facilities.

The Sacramento Region continues to adapt to the new environment after the economic recession in 2008. In 2012, gaming revenue remained $838.0 million less than the $7.80 billion generated in 2007. As tribes are adjusting to lower revenues, they are facing the continued threat of legalized online gaming. The Phoenix Region saw the strongest year of growth since the economic recession of 2008, increasing revenue by 3.9%. The increase in growth can be attributed to the overall economic market continuing to improve and the Navajo Nation’s expansion into gaming. The region is also becoming a focal point for how future compact renewals will be conducted, as 5 Pueblo nations and the state of New Mexico are currently working through the compact renewal process. The St. Paul Region saw the largest year-over-year increase in revenue growth (5.1% growth in 2012 compared to 2.5% in 2011). The region has also garnered international attention through the development of the Tribal Internet Gaming Alliance (TIGA) treaty. In October 2013, the Lac du Flambeau Tribe became the first tribe to ratify the treaty and TIGA is currently exploring the opportunity to establish an inter-jurisdictional agreement for internet gaming with the Isle of Man.

Gaming Revenues by Region

Portland $2.88B 10.3%

Washington D.C. $6.74B 24.2%

Sacramento $6.96B 24.9%

Tulsa $2.02B 7.2%

Oklahoma City $1.80B 6.5%

Phoenix $2.72B 9.7%

St. Paul $4.80B 17.2%

16 | 2014 Commercial & Tribal Gaming Stats

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