Georgia Gaming Market Assessment - Pennsylvania Treasury

• LARGE
o $250.0 million + in gaming revenue
o 3,000 to 4,000 gaming positions
• MEDIUM
o $175.0 TO $250.0 million in gaming revenue
o 2,500 to 3,000 gaming positions
• MEDIUM/SMALL
o $135.0 to $175.0 million in gaming revenue
o 1,800 to 2,100 gaming positions
• SMALL
o $100.0 to $125.0 million in gaming revenue
o 1,500 to 1,800 gaming positions
• OUTLIER
o $75.0 to $100.0 million in gaming revenue
o Under 1,500 gaming positions
The financial assumptions used in the preparation of the return analysis are presented in the
following table.
Financial Assumptions
Large Medium
Medium/
Small Small Outlier
Year 1 Gaming Revenues ($M) $280.0 $206.0 $140.8 $106.4 $69.0
Growth 2.0% 2.0% 2.0% 2.0% 2.0%
Effective Tax Rate 46.5% 46.5% 46.5% 46.5% 46.5%
EBITDA Margin 22.0% 22.0% 19.5% 19.0% 18.0%
Gaming License $66.5 $66.5 $66.5 $66.5 $66.5
Construction & Development Costs $275.1 $179.9 $125.8 $105.8 $83.8
Total Project Costs (excluding Financing costs) $341.6 $246.4 $192.3 $172.3 $150.3
# of Gaming Positions 3,540 2,675 1,970 1,710 2,100
Cap/Ex as percentage of revenues 2.5% 2.5% 2.5% 2.5% 2.5%
Exit Multiple of EBITDA 4.5 4.5 4.5 4.5 4.5
Discount Rate
Source: The Innovation Group
12% 12% 12% 12% 12%
As a basis for this analysis, Earnings before Interest, Taxes, Depreciation, and Amortization,
(“EBITDA”) were estimated for each category. The effective gaming tax rate, competitive
pressures and operating costs for Pennsylvania properties were considered in this estimation.
The larger facilities that generate a higher win per gaming position will likely be more efficient
and therefore have a slightly higher EBITDA margin.
The assumptions used to determine the estimated construction and development costs are
outlined in the following table.
The Innovation Group Project #054-11 August 2011 Page 85