1. ECONOMIC ANALYSIS OF CASINO APPLICANTS IN MISSOURI MARTIN ROMITTI, PH.D. DIRECTOR OF ECONOMIC & PUBLIC POLICY RESEARCH UMASS DONAHUE INSTITUTE

2. Missouri Existing Casinos In November 1992 a referendum to allow riverboat gambling was approved by 64% of Missouri voters. Missouri riverboat gaming casinos must be located within 1,000 feet of the main channel of the Missouri and Mississippi rivers. Proposition A in 2008 repealed the law that prevents gamblers from losing no more than $500 in two hours and placed a cap on the number of casino licenses in Missouri at 13.

3. Overview Missouri Gaming Commission  Issue: Last License along Big Rivers Conflicting Market Research Community Interest Many Goals  Answer the “Economic” Question: Objective Analysis Research Talent and Tools Existing and Proposed Casinos Sized by Total Gaming Positions

4. Study Process  Background Data Collection and Research Existing and New Applicant Questionnaires Customer Data by Zip Code Analysis of Newer Casinos and 2008 Illinois Smoking Ban  Develop and Test Gravity Model Set up Gravity Model in GIS Use Collected Data from Casinos to Fine Tune Model Develop Worst, Average, and Best Case Scenarios  Conduct Economic Impact Analysis Apples-to-Apples Comparisons Test Scenarios Relative Impact to Community

7. Background Data Collection and Research Current Casino Environment and Trends

8.  Speedway Casino Opens in 2012  Estimated 2012 AGR Impacts: Kansas Speedway AGR: $175M Net New Total Market AGR: $57M (33%) Missouri Loss 2012 AGR: $118M (-16%) Kansas City Speedway Casino Impacts Kansas Speedway Casino Zip Code AGR Probability Estimates

9. Develop and Test Gravity Model  Use Collected Data from Casinos to Fine Tune Model Geographic Market Areas (30-Mi. Urban, 60-Mi. Rural) Adjust Distance Exponent for Customer Attraction Kansas CitySt. LouisSoutheast MO

10. Develop and Test Gravity Model  Develop Worst, Average, and Best Case Scenarios Consider Alternatives Worst Case: Gravity model only Average Case: Middle point between Worst/Best Cases Best Case: In urban scenarios reduce gravity model cannibalization by 3% for each casino given St. Louis example. In rural scenario no displacement given distance to nearest existing casino of over 80 miles. How Do Different Scenarios Alter the Results (if clear winner in ALL scenarios then stronger case)

12. Conduct Economic Impact Analysis  Research Findings Final Findings different than Applicant Figures All Scenarios point to IOC – Cape Girardeau for Economic and Gaming Revenue Impact In December 2010, the MGC unanimously selected IOC – Cape Girardeau in public meeting.

13. Community Context EMPLOYMENT  Paragon-Sugar Creek has largest direct employment but when displacement considered it would be much smaller. IOC – Cape Girardeau, with the smallest direct employment, would have the largest percentage impact to labor pool. WAGES  Higher wages in KC and St. Louis Metro. IOC - Cape Girardeau wages closer to the Metro’s average than the other applicants. GROSS REGIONAL PRODUCT  IOC - Cape Girardeau and Casino Celebration have similar GRP. Impact to local economy larger in Cape Girardeau than other Metro locations.

14. ECONOMIC ANALYSIS OF CASINO APPLICANTS IN MISSOURI PREPARED BY UMASS DONAHUE INSTITUTE