oct chisholm creek presentation final

Lottery Gaming Facility Manager presentation to the Lottery Gaming Facility Review Board

October 26, 2009

Presented by:Lakes Entertainment, Inc.

REPRESENTATIVES PRESENT

Lakes Entertainment, Inc: Parent company of proposed manager and equity partnerLyle BermanTim CopeRichard BienapflRichard BienapflMike Montross

Och-Ziff Real Estate: Parent company of proposed equity partnerNicholas HeckerNicholas HeckerMark Schwartz

Clairvest Group, Inc: Parent company of proposed equity partnerAly ChampsiAly Champsi

Hnedak Bobo Group: ArchitectRick Gardner

MKEC Engineering Consultants, Inc (MKEC): Civil Engineer Kurt YowellMark Buckingham

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OWNERSHIP STRUCTURE

Lakes Entertainment

17%

Och-Ziff Real Estate50%

Clairvest Group33%

• Lakes, Clairvest & Och-Ziff are the only equity owners of Chisholm Creek Casino Resort.

• Lakes Entertainment will manage Chisholm Creek Casino Resort.Lakes Entertainment will manage Chisholm Creek Casino Resort.

• Three other groups that were involved in bringing the project together (Foxwoods, Double Down, Rick Worner) are being paid fixed fees, but have no ownership in the casino project & no casino management rolehave no ownership in the casino project & no casino management role.

• Double Down will also develop and operate a hotel. 3

AGENDA

I. Key Review Board considerations II Wh Chisholm Creek Casino Resort is aII. Why Chisholm Creek Casino Resort is a

win for the citizens of Kansas:» Project certainty

» First class destination casino» First-class destination casino

» Experienced management team

III. Answers to consultants’ questions

The images, renderings, drawings, written and oral statements contained in this presentation are for illustrative purposes only, since final engineering and architectural plans are in the process of being developed and may vary from this presentation. In the event that any portion of this presentation, including but not limited to the oral and written statements herein, conflict with Exhibit C of Chisholm Creek Casino Resort LLC’s Lottery Gaming Facility Management Contract, Exhibit C shall control. 4

Key Review Board yConsiderations

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KEYCONSIDERATIONS

Does this contract maximize revenues for the State of Kansas? Yes.• Despite today’s economic conditions, the Review Board’s consultants project

revenues from Phase I to range from $144 to $163 million.

Does this contract encourage tourism? Yes.• We will develop a true destination casino with a state-of-the-art gaming experience

and first-class non-gaming amenities that include a bar with a live entertainment venue, three restaurants and a hotel with conference and meeting space.

• Exceptional design will create a must-see attraction. Unparalleled customer service will generate repeat visitation. g p

• The Review Board’s consultants estimate over two million annual visitors to Chisholm Creek. This will make the destination one of the most visited tourist attractions in the area.

Does this contract serve the interest of the people of Kansas? Yes.• The all-cash proposal gives certainty.

The property will be a first class destination casino• The property will be a first-class destination casino.• The property will be managed by an experienced operator.

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Project Certaintyj y

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PROJECT CERTAINTY

• We are proposing a 100% equity-funded project in order to provide maximum certainty and speed of opening to the St t f KState of Kansas.

Th j t ld b h d ith i iti l i t t• The project would be phased, with an initial investment (including privilege fee) of approximately $150 million - all cash.

• The Review Board’s consultants have verified our partnership’s ability to fund this investment (if Lakes ispartnership s ability to fund this investment (if Lakes is unable to meet its funding obligations, our partners have agreed to cover any shortfalls).

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PROJECT CERTAINTY

Why choosing a responsible, all-equity project matters: numerous overly-ambitious and undercapitalized casino projects sit unfinished across the country today. Seneca Casino

Buffalo NYEchelon Buffalo, NY

Revel

EchelonLas Vegas, NV

Atlantic City, NJ

FontainebleauLas Vegas, NV

Margaritaville Biloxi, MS

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A First-Class Destination Casino

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FIRST-CLASS DESTINATION

•Chisholm Creek will be one of the top attractions in the region because of location, size of the investment, first-class gaming experience and its quality service. 11


• Estimated $125 million initial investment excluding $25 million privilege fee

Phase Iprivilege fee

• Direct access to I-35• 1,500 guest parking spaces; 400 employee spaces and at least

25 i d25 oversized spaces• 1,300 slot machines with room to quickly expand to 1,500 if

demand dictates30 t bl i l di bl kj k l tt & b t• 30 table games including blackjack, craps, roulette, & baccarat

• 250-seat or larger buffet• 30-seat or larger café offering around-the-clock service • 125-seat multi-function entertainment restaurant composed of a

steakhouse, elevated sports bar on the casino floor, and seating that converts to a live music venue/nightclub

• Emergency services building to benefit all of Sumner County

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Potential interior styles for Phase I.

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• Commitment from third-party developer to open hotel as

Phase I (continued)

p y p ppart of Phase I

• Hotel to be operational no later than six months after the casino openingcasino opening

• Minimum of 100 hotel rooms

• Minimum of seven luxury suites

• Pool

• Exercise room

5 000 f f l i f i i d• 5,000 square feet of multi-function meeting and conference facilities

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• $225 million total investment (excluding $25 million

Total build-out will include, at a minimum:

$ ( g $privilege fee)

• 2,000 slot machines

• 50 table games

• 12,000 square feet of convention space

• 150 hotel rooms50 ote oo s

• Five restaurants

• 30,000 square feet of entertainment space15


A first-class development team.

• We have commenced an aggressiveWe have commenced an aggressive pre-development schedule to be able to start construction as soon as possible should we be awarded the license.

Harrah’s Prairie Band Hotel & Convention Center

Hnedak Bobo Group

license.

• Key members of the team include:– Civil Engineer: MKEC

Wind Creek Atmore Casino & Hotel

Hnedak Bobo Group

g– Architect: Hnedak Bobo Group– Interior Design: Cagley and Tanner

Design– Structural: Uzun & Case– MEP/FP: FEA Consulting Engineers– Specialty Lighting: John Levy Lighting

Westin Memphis Beale Street Hotel

Hnedak Bobo Group

– Landscape Architecture: TBG Partners

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The contemporary prairie-style theme is appropriate for the market.

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The contemporary prairie-style theme is appropriate for the market.


Phase I PlanPhase I Plan

Commitment from third-party developer to build Phase I hotel which may not be physically connected to casino building as depicted in this rendering. 19


Phase I will be a first-class destination.

Phase I ProgramPhase I Program

Commitment from third-party developer to build Phase I hotel which may not be physically connected to casino building as depicted in this rendering. 20


Site plan focused on ease of access, I-35 visibility and future build-out.

Master PlanMaster Plan

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Site plan focused on ease of access, I-35 visibility and future build-out.

Floor PlanFloor Plan

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MKEC Engineering Consultants, Inc. (MKEC) is a Wichita-based, 160-member, full-service engineering and land planning firm founded in 1982.

S f thi j t MKEC h l t dSo far on this project, MKEC has completed:• ALTA and topographic surveys• Phase I environmental assessment• USACE jurisdictional determination• Assessment of utility corridors (right-of-way)

A t f tilit id• Assessment of utility providers• Assessment of potential roadway

improvements

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Project schedule will benefit from cooperation:• Area municipalities• Utility providers • KDOT• KTA

S C t• Sumner County

MKEC is actively addressing:• Detailed drainage analysis• Detailed drainage analysis • Utility supplier agreements (water, sewer, gas, electric)• Traffic study• PlattingPlatting• Permitting and regulatory requirements• Geotechnical investigation

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Local issues of water, sewer, gas, electric service & traffic are being addressed by MKEC

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The I-35 location will be convenient for travelers and mitigate local traffic impact.

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Preliminary site drainage plan.

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Experienced Management Team

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EXPERIENCED MANAGMENT

• Lakes Entertainment, Inc. is a publically traded company on NASDAQ: LACO.

• Lakes began as Grand Casinos, Inc. in 1991 and has developed and managed 11 gaming destinations across p g g gthe United States.

• In total Lakes has overseen the operation and• In total, Lakes has overseen the operation and development of more than 6,000 hotel rooms; 60 restaurants; 50 retail outlets; 17,000 gaming devices and multiple golf coursesand multiple golf courses.

• Lakes currently manages a total of 5,500 slot machines, y g , ,150 table games, 13 restaurants and 3,300 employees at three separate locations.

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• Lakes has a full in-house staff to oversee development and operation. • More details on Lakes can be found in the supplemental hand-out.

Lakes Entertainment Organizational Chart

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• Lakes is a dedicated corporate citizen– Last year Lakes managed properties & staff gave over $6 million to charities

and local organizationsAll L k i l l t l d t b ti– All Lakes senior level property personal are encouraged to become active members in the local community and join charitable, civic and tourism organizations

– All Lakes managed properties have a responsible gaming programg p p p g g p g– All Lakes managed properties offer career development programs and

continuing education opportunities for employees

L k ti fi t l ith 40 d i th t• Lakes properties are first class with over 40 awards in the past year alone including:– 20 first place awards – Midwest Gaming & Travel Magazine

Best Customer Satisfaction in N California JD Powers & Associates– Best Customer Satisfaction in N. California – JD Powers & Associates– Best Gaming – Casino Player Magazine– Award of Excellence - Wine Spectator– Silver Addy - American Advertising FederationS e ddy e ca d e t s g ede at o

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• Grand Casino Mille Lacs opened in 1991 with no hotel, 690 restaurant seats and limited meeting space. In future phases the project was expanded to 284 hotel rooms, over 800 restaurant seats and 18,000 sq. ft. of meeting space. 32


• Grand Casino Hinckley opened in 1992 with no hotel and 2,000 sq. feet of entertainment space. In future phases the project was expanded to over 450 rooms and 20,000 sq. feet of entertainment space. 33


• Grand Casino Gulfport opened in 1993 with no hotel rooms or entertainment space. It quickly grew to 1,000 rooms and 21,000 square feet of meeting and entertainment space. 34


• Grand Casino Biloxi opened in 1994 with no hotel and no meeting space. It quickly grew to 1,492 rooms and 79,000 sq. feet of meeting and event space. 35


• Grand Casino Coushatta opened in 1995 with no hotel and limited entertainment space. It quickly grew to 380 rooms and 22,000 sq. feet of meeting and entertainment space. 36


• Grand Casino Tunica opened in 1996 with 756 rooms and modest entertainment space. It grew to over 1,300 rooms and over 100,000 sq. feet of meeting and entertainment space. 37


• Four Winds Casino Resort opened in 2007. It consistently has over 95% occupancy in its 165-room hotel. Phase II expansion plans are being reviewed now by Lakes’ tribal partner. 38


• Red Hawk Casino held its grand opening earlier this year. The master plan for this project include hotel rooms and an event center.

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EXPERIENCEDMANAGMENT

• In addition to gaming product, we have developed and managed over 2,000 hotel rooms; over 10,000 restaurant seats; 47 retail outlets and over 55,000 sq. feet of entertainment space in phase one of past projects.

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Note: Cimarron has only been open for three years Development efforts for a second property are currently in process Four Winds has been

• After phase I, our projects have added over 4,000 hotel rooms, 12 restaurants, 4 golf courses and over 300,000 sq. ft. of meeting and entertainment space

Note: Cimarron has only been open for three years. Development efforts for a second property are currently in process. Four Winds has been open two years and expansion plans and plans for secondary locations are under review. Red Hawk has been open less than one year.

entertainment space.

• Lakes has a proven history of continually increasing the offerings at its properties. 41

Answers to Consultants’ Questions

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CONSULTANTS’QUESTIONS

Is funding for the project certain?

• Yes, this is an all-cash proposal. • The Review Board’s consultants have verified our group’s ability to

perform.• If Lakes is unable to meet its funding obligations, our partners have

agreed to cover any shortfalls.

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Is this a destination casino?

• We will develop a true destination casino with a state-of-the-art gaming experience and first-class non-gaming amenities that include a bar with a live entertainment venue, three restaurants and a hotel with conference and meeting space.

• Exceptional design will create a must-see attraction. Unparalleled p g pcustomer service will generate repeat visitation.

• The Review Board’s consultants estimate over two million annualThe Review Board s consultants estimate over two million annual visitors to Chisholm Creek. This will make the destination one of the most visited tourist attractions in the area.

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When will you add a hotel?

• We recently signed a binding agreement with a third party that obligates them to open a hotel on our site within six months after the casino opens.

• We are subsidizing development and operation of this hotel.

W ill ti t dd dditi l h t l ti• We will continue to add additional hotel rooms over time.

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Why are your projections so much lower than the consultants for Phase I and so much higher than the consultants for Phase II?

• Given the uncertainty surrounding any new development, our Phase I projections reflect a conservative estimate that we would h t dhope to exceed.

• Our Phase II projections were based on calendar year 2022 and assumed an annual inflation rate of 3%. Cummings and Wells G i R h b th d 2015 i th i ti H d llGaming Research both used 2015 in their assumption. Had all three groups used the same assumptions for the year 2022 we would have projected $230 million, Cummings $237 million and Wells $253 millionWells $253 million.

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What assurances are there that the project will be developed to its full potential?

• We are committed to build out the full project.

• Rather than guess what the market wants we will add amenitiesRather than guess what the market wants, we will add amenities based on customer feedback, which will allow for a more successful overall project for the State.

L k h t k d f ddi iti t i ti• Lakes has a proven track record of adding amenities to existing projects.

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Is this the best contract for Kansas?

• Absolutely. The proposal has certainty. It is a first-class destination casino and will have an experienced managementteam.

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Does this contract maximize revenues for the State of Kansas? Yes.• Despite today’s economic conditions, the Review Board’s consultants project

revenues from Phase I to range from $144 to $163 million.

Does this contract encourage tourism? Yes.• We will develop a true destination casino with a state-of-the-art gaming experience p g g p

and first-class non-gaming amenities that include a bar with a live entertainment venue, three restaurants and a hotel with conference and meeting space.

• Exceptional design will create a must-see attraction. Unparalleled customer service will generate repeat visitationwill generate repeat visitation.

• The Review Board’s consultants estimate over two million annual visitors to Chisholm Creek. This will make the destination one of the most visited tourist attractions in the area.

Does this contract serve the interest of the people of Kansas? Yes.• The all-cash proposal gives certainty. • The property will be a first-class destination casino.• The property will be managed by an experienced operator.

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Thank YouThank You.Questions?

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oct chisholm creek presentation final

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