global gaming ks -01december2010

Kansas Lottery Gaming Facility Review Board

Presented by: Global Gaming KS, LLC

In Topeka, Kansas, December 01, 2010.

Global Gaming KS, LLCKansas Lottery Gaming Facility Review Board MeetingTopeka, Kansas, 01 December 2010

Presentation Outline

1. Mistakes in Estimates and Analysis

2. Flaws in Market Analysis

3. Global Gaming’s Conservative Development Plans

4. Primary Considerations

5. Close

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Introduction


Introduction

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Introduction

Global Gaming KS, LLCKansas Lottery Gaming Facility Review Board Meeting

1. Mistakes in Estimates and AnalysisApples and oranges have been compared in Gaming Revenue Projections!

Topeka, Kansas, 01 December 20105

2012 Year 1 Year 2 Year 3 Year 4 Year 5 (FBO)

GGS As-Submitted 126,290,000 128,662,500 140,707,500 140,707,500 156,585,000 170,000,000

GGS with State Proposed Inflation Factor 133,981,061 140,589,514 158,366,291 163,122,205 186,978,149 202,997,000

Cummings Projection 62,100,000 (*) - 141,200,000 - 155,800,000 160,500,000

Note: Considered Year-2012 as a partial year.

Gaming Revenue Projections


1. Mistakes in Estimates and AnalysisApples and oranges have been compared in Gaming Revenue Projections!


• Time to achieve full build-out

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1. Mistakes in Estimates and AnalysisGlobal Gaming’s Permanent v. Peninsula Gaming’s Interim Facility Considerations


• The Consultants appeared to assume no material Revenue differential or impact would exist between:

• Global Gaming’s permanent facilities with complete amenities on Day-One

v.• Peninsula Gaming’s smaller

interim facility without full amenities with on-going construction impact on customers.

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Global Gamingat Day-One

Peninsula Gamingat Day-One

Facility Square Footage 260,000 100,000

Casino Square Footage 73,000 44,000

Entertainment and Convention Center

Square Footage 33,000 for permanent 1,400-seat

premium indoor center Equestrian Center used as

temporary casino

Number of Restaurants and

Bars

1. The Brewhouse2. Liberty Deli3. Las Vegas-Style Buffet4. Bellini's Steak Seafood & Pasta5. The Bank Lounge Bar6. Roulettes Center Bar 50-seat snack bar & kiosks

Number of Slots 1,300 1,310Number of Tables 60 32

RV Park availability YES NO

Golf Course availability YES NO

Hotel YES NO


1. Mistakes in Estimates and AnalysisGlobal Gaming’s Travel Plaza Revenue Impact


2014 Incremental

Gaming Revenue Visitors

Travel Plaza Cummings Estimate of GGS' Travel Plaza 2.9m 20,000

Wells Gaming Research's Estimate of GGS' Travel

Plaza 5.0m 100,000

Equestrian CenterWells Gaming Research's Estimate of the Peninsula

Gaming Equestrian Center 2.45m 33,000


1. Mistakes in Estimates and AnalysisGlobal Gaming’s Travel Plaza Revenue Impact


• It is important to understand the Travel Plaza strategy!

• It is important to understand all of the amenities of the Travel Plaza.

• It is important to understand the Travel Plaza will not be opened until it has direct I-35 access.

• It is important to understand the Travel Plaza will cater to the gaming needs of its customers via dedicated gaming space, complying with the law.

• Finally, our practical experience demonstrates up to 10% incremental gaming Revenue or up to $20m.

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2. Flaws in Market AnalysisInherent Flawed Assumptions in the Gravity Model Analysis –


The Cummings Gravity Model projects a 22% difference in Revenues between proposed facilities at Exit 19 and at Exit 33.

The disparity can be attributed to two broad assumptions in the Model:

• Distance Assumptions

• Attractiveness Assumptions

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2. Flaws in Market AnalysisAdditional Distance to a Facility Matters to Wichita Residents


• Cummings assumes Revenue declines 38% as the distance from a primary market doubles.

• Detailed of our analysis begins of p. 7 of our full report. The description of adjustments we proposed begins on p. 16.

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• The analysis incorrectly assumes the Oklahoma border casinos have the attraction of a destination such as a grouping of casinos in Atlantic City, where in reality these border casinos do not constitute a destination because of their lack of amenities, competitive game offerings, fewer number of games per facility and lack of geographic proximity.

• Even if one accepted the Oklahoma border casinos as a destination, the analysis would still not recognize the quality disparity between the Global Gaming property in Sumner County and these other facilities. For example, in Atlantic City, Borgata outperforms most other casinos as does L’Auberge in Louisiana and Wynn compared to Circus Circus in Las Vegas.

2. Flaws in Market AnalysisAttractiveness Assumption

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• Distance assumptions between Exit 19 and Exit 33 reduces the difference by a total of 10% (from 22% to 12%).

• The cumulative attractiveness changes by an additional 8% (from the remaining 12% to 4%).

• The remaining 4% may be attributed to other factors and partially to distance, which we do not believe is material.

2. Flaws in Market AnalysisNet Result of Our Adjustments to Gaming Revenues

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• Global Gaming will open a 260,000 square foot permanent destination facility with hotel, with complete amenities, on Day-One, irrespective of any market changes.

• Global Gaming’s future development (20% of investment) is being phased over a number of years. However, we have clearly indicated that this can be accelerated as the market dictates.

• Our management contract provides for a “time out” to review the effect of any Wyandotte development on destination plans. This is prudent for the State as it allows us to judge the right competitive response to the Wyandotte’s proposed development.

• We have proven development experience in responding to competitive changes that has led us to the Number 1 position in gaming in the State of Oklahoma.

3. Global Gaming’s Conservative Development Schedule – Management Contract Provisions

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• Our facility proposes 1,300 slots and 60 table games on Day-One, in a permanent facility.

• We proposed incrementally adding to the slots capacity to a total of 2,000 in three tranches every 24 months. We have clearly stated, and state again, that this schedule will be accelerated as the market dictates.

3. Global Gaming’s Conservative Development Schedule – Deployment of Additional Slot Games

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4. Primary ConsiderationsWe respectfully submit to the Review Board the following four considerations in your deliberations:

I. We have financial capability and commitment that is not market dependant: financial capability is not a simple “pass/ fail” test.

II. We have significant management, operational, and development capability and experience: As Management Matters.

III. We are strongly committed to the Exit 19 location: As the Site matters.

IV. We have a clear plan to support the Sumner County community: As strong community involvement matters.

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4. Primary ConsiderationsFinancial Capability

We have financial capability and commitment that is not market dependant: Financial capability is not a simple “pass/ fail” test.

• We have a firm commitment from Jefferies for funding, not subject to market availability. This will be executed subject to obtaining the license and regulatory approvals and minor outstanding due diligence items.

• We have shown to the Financial Consultant our equity capability.• We have no market debt and have shown to the Financial Consultant a highly liquid balance sheet

with liquid assets of many hundreds of $millions. This reflects our substantial business operations (some 50 plus) and our conservative approach to business.

• The strength of your balance sheet matters, in weathering future market changes such as downturn in the credit market or a Wyandotte development.

• Finally, financial capability matters in ensuring the ability to carry out future development plans and commitments.

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4. Primary ConsiderationsManagement, Operational and Development Capability

We have significant management, operational, and development capability and experience: As Management Matters.

• We currently operate 13,000 slots (or 27% of the Oklahoma market) and hold the Number 1 gaming position in Oklahoma, a densely populated and competitive gaming market (there are an estimated total of 47,000 slots in Oklahoma).

• We are the Number 1 private employer in Oklahoma.• We have developed 16 gaming properties including Riverwind Casino and the adjacent gaming

properties of Goldsby Gaming Center and Newcastle Gaming that collectively have $250m p.a. in gaming revenue.

• We have developed four hotels including a $70m, 395 suites and rooms, four-star hotel.• We have amassed 2.3 million customers along the I-35 corridor.• We have other substantial businesses including healthcare, energy, banking and manufacturing.• We have developed a number of large scale greenfield developments of a non-gaming nature such as

a new hospital in Ada, OK for over $150m.• Stan Fulton, an industry recognized leader, is a financial partner who also brings additional advisory

capacity and also substantial financial capability.

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4. Primary ConsiderationsCommitment to Exit 19

We are strongly committed to the Exit 19 location: As the Site matters.

• We had the choice of a site at Exit 33 and three separate sites at Exit 19,• We deliberately chose our current one clear site as:

Refuting suggestion of significant differential in revenue between Exit 19 and 33 Having readily available infrastructure with a 10 to 1 infrastructure and land cost

advantage over Exit 33 sites (allowing substantially more of the investment to be directed to destination quality)

Having overwhelming community support Supporting the belief that the location affords the greatest potential for economic

development impact on Sumner County Having no legal issues

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4. Primary ConsiderationsStrong Community Involvement Matters

We have a clear plan to support the Sumner County community: As strong community involvement matters.

• We have a strong track record in community development and have previously spoken of this.

• A recent article in The Wichita Eagle evidenced this track record.• Global Gaming amended our Sumner County development agreement to contribute a

minimum of $1.5m p.a. to education, health, and economic community development activities in Sumner County.

• If selected, Sumner County will form a 501(3)(c) Sumner County Foundation to distribute the funds. This will be composed of the mayors of each of the 11 cities in Sumner County with the Chair of the Sumner County Commissioners. Some initial formulas for the distribution of funds have been established.

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global gaming ks -01december2010

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