Georgia Gaming Market Assessment - Pennsylvania Treasury

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• 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
Construction & Development Costs Large Medium Small License Fee $66.5 $66.5 $66.5 Land Cost estimated as a % of Building Costs 20.0% 10.0% 10.0% Development, Construction & Fees Design/Architectural Fees (% of building) 8.5% 8.5% 8.5% Other/Pre-Open (% of gaming rev) 5.0% 5.0% 5.0% Bank Cash (% of gaming rev) 2.0% 2.0% 2.0% Slot Machine Purchases * $22,000 $22,000 $22,000 Square Foot Allocation/Gaming Position Casino 35 35 35 Back of House as a % of casino 50.0% 50.0% 50.0% Other (including F&B) as a % of casino 50.0% 50.0% 50.0% TOTAL Estimated Square Feet Cost per Square Foot Large Medium Small Casino $600 $525 $450 Back of House $250 $250 $250 Other (including F&B) $500 $450 $400 Parking Garage: Space / Position Count 70.0% 50.0% 50.0% Cost per space/ Garage Costs $15,000 $15,000 $15,000 Surface Parking: Spaces / Position Count 30.0% 50.0% 50.0% Cost per space/Surface Lot Costs $4,000 $4,000 $4,000 Contingency 7.0% 6.5% 6.0% * 92% of machines purchased; 8% assumed to be leased participation games. Unit price includes player tracking system At this level of cost per square foot the resulting facilities would be competitive with any currently existing in the Pennsylvania market. Sufficient space is included to provided for backof-house functions and for restaurant, bar and limited retail developments. Assumptions for depreciation of assets are as follows: Depreciation Assumptions Large Medium Small Building as a % of Constructions costs 70.0% 70.0% 70.0% Furniture, Fixtures & Equipment as a % of Construction Costs 30.0% 30.0% 30.0% Depreciation Schedule License 20 20 20 Building & Other Long Term Costs 20 20 20 FF&E 10 10 10 Slot Machines 5 5 5 The Innovation Group Project #054-11 August 2011 Page 86
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
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Pennsylvania Total Population Regio
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$54,000 $52,000 $50,000 $48,000 $46
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Employment Employment is a signific
Page 14 and 15:
Impact of Recession: Regional vs. N
Page 16 and 17:
are the only private companies in t
Page 18 and 19:
Pennsylvania Wilds Vineyards, the L
Page 20 and 21:
PENNSYLVANIA GAMING This section su
Page 22 and 23:
Harrah’s Chester has become the s
Page 24 and 25:
Philadelphia Market The following s
Page 26 and 27:
for 1,700 cars. The first phase ope
Page 28 and 29:
Mt. Airy Mount Airy Casino Resort i
Page 30 and 31:
Western Region The Western Region c
Page 32 and 33:
The Rivers The Rivers Casino is loc
Page 34 and 35:
HISTORICAL SLOTS TRENDS AND SATURAT
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Number of Machines 30,000 25,000 20
Page 38 and 39: Number of Machines 25,000 20,000 15
Page 40 and 41: Slot Revenue ($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 90 and 91: These were then input into a financ
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Georgia Gaming Market Assessment - Pennsylvania Treasury

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