Georgia Gaming Market Assessment - Pennsylvania Treasury

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HISTORICAL SLOTS TRENDS AND SATURATION ANALYSIS The following section will present the historical slot machine performance and trends for the Pennsylvania casinos. The performance of the casinos is broken down into the regional markets and presented on a property by property basis. For each market and property, we have presented the total slot revenue and win per unit on a trailing 12 month basis for the first stabilized month of operations. In some cases properties opened in the middle of the month. Also, we have shown the inventory or number of machines compared to the win per unit. For each section The Innovation Group highlighted any relevant trends and observations. In the first few years of operation, gaming markets typically are highly elastic—that is, as new gaming positions are added there is little impact on existing supply or on overall WPP. However, as supply comes into balance with demand for gaming, adding new gaming positions causes WPP in a market to decrease, as a portion of revenues generated by new positions comes at the expense of the existing supply. The size of that portion (i.e., the ratio of cannibalization versus new revenues) depends upon the level of saturation in any particular market. The Pennsylvania markets have until recently been characterized as emerging markets with steep growth trends. As the markets have ramped up, new supply has been readily absorbed by latent demand. However, recent trends show greater market maturation, and the introduction of new supply into markets has resulted in lower WPP and cannibalization of existing supply. Statewide The Commonwealth of Pennsylvania has demonstrated positive trailing 12 month slot revenue growth since November 2007. This indicates that the market is still maturing and should continue its growth as the casinos in the market begin to stabilize. The steeper slope of revenue growth from November 2007 through November 2008 was fueled by the introduction of gaming at Philadelphia Park (Parx) and Harrah’s Chester Downs. The continued growth from January 2009 through January 2011 was explained by new entrants into the market and the absorption of latent demand in the market. The slot machine Win per Unit (WPU) for the state peaked at $300 in November of 2007 and has declined year-over-year through March 2010. From March 2010 to current, WPU has stabilized at approximately $250, which indicates the start of a saturated market. Below is a chart showing the trailing 12 months of total slot revenue and WPU over the same period for the State of Pennsylvania The Innovation Group Project #054-11 August 2011 Page 31
Slot Revenue ($MM) $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Nov-07 Jan-08 Source: PGCB, The Innovation Group Slot Revenue and Win Per Unit (Trailing 12 Months) Penn National Feb 08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Meadows Exp Sands May 09 Mar-09 May-09 The state has continually added machines from November 2006 through current with the introduction of new properties. Within the past six months the number of machines has started to stabilize with the exception of the addition of machines due to the opening of Sugarhouse in September 2010. As the number of machines has increased in the state, WPU has continued to decrease and begun to stabilize in September 2010. The Innovation Group Project #054-11 August 2011 Page 32 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 Slot Revenue WPU May-10 Tables Jul 10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Win per Unit
Page 2 and 3: Pennsylvania Statewide Gaming Marke
Page 4 and 5: INTRODUCTION The Innovation Group w
Page 6 and 7: ECONOMIC AND DEMOGRAPHIC ANALYSIS A
Page 8 and 9: Pennsylvania Total Population Regio
Page 10 and 11: $54,000 $52,000 $50,000 $48,000 $46
Page 12 and 13: Employment Employment is a signific
Page 14 and 15: Impact of Recession: Regional vs. N
Page 16 and 17: are the only private companies in t
Page 18 and 19: Pennsylvania Wilds Vineyards, the L
Page 20 and 21: PENNSYLVANIA GAMING This section su
Page 22 and 23: Harrah’s Chester has become the s
Page 24 and 25: Philadelphia Market The following s
Page 26 and 27: for 1,700 cars. The first phase ope
Page 28 and 29: Mt. Airy Mount Airy Casino Resort i
Page 30 and 31: Western Region The Western Region c
Page 32 and 33: The Rivers The Rivers Casino is loc
Page 36 and 37: Number of Machines 30,000 25,000 20
Page 38 and 39: Number of Machines 25,000 20,000 15
Page 40 and 41: Slot Revenue ($MM) $1,000 $900 $800
Page 42 and 43: Slot Revenue ($MM) $700 $600 $500 $
Page 44 and 45: Western Region Presque Isle was the
Page 46 and 47: Pittsburgh Market The Pittsburgh Ma
Page 48 and 49: Population/Slot Supply Ratios Adult
Page 50 and 51: Statewide Machine Development: 2003
Page 52 and 53: Eastern Region Performance: 2003 Re
Page 54 and 55: Poconos+BethSands: 2003 Report vs.
Page 56 and 57: With an aggressive marketing and bu
Page 58 and 59: Atlantic City currently offers appr
Page 60 and 61: number of slots from 1998 to 2008,
Page 62 and 63: to include a minimum of three games
Page 64 and 65: Yonkers Gaming Performance Year Rev
Page 66 and 67: Hollywood Casino and Ocean Downs Cu
Page 68 and 69: West Virginia Statewide Table Perfo
Page 70 and 71: Poker Revenue West Virginia Table P
Page 72 and 73: gamer visits thus generated are the
Page 74 and 75: The Innovation Group Project #054-1
Page 76 and 77: The following table shows the rates
Page 78 and 79: Baseline 2010 ($MMs) Eastern Alt. S
Page 80 and 81: 2014 Status Quo ($MMs) Eastern Alt.
Page 82 and 83: The table on the following page sho
Page 84 and 85:
Location Alternatives As shown on t
Page 86 and 87:
limited individual potential, its i
Page 88 and 89:
• LARGE o $250.0 million + in gam
Page 90 and 91:
These were then input into a financ
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Georgia Gaming Market Assessment - Pennsylvania Treasury

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