Casino Gaming in Massachusetts: An Economic, Fiscal and Social Analysis Carl Jenkins, CPA/ABV Managing Director, CBIZ Tofias

1 Background Commissioned by the Greater Boston Chamber of Commerce and completed in 2008 Examined critical issues including: – Demand for casino gaming – Potential gaming revenue – Socioeconomic effects Analysis and report are based upon: – Public data – Casino patronage and expenditure patterns in other states – Documented models and methodology – Interviews with policymakers and stakeholders – Forecasts and projections

2 Economic Impact Revenue will be dependent on the specific circumstances of the particular region and type of development. Origins of Revenue 1) Destination Effect: Drawing visitors from outside the host region. Spending by casino patrons from outside the region increases the aggregate amount of economic activity within the region. 2) Recapture Effect: Residents of the host region will be less likely to engage in gaming activities outside of the region. These individuals will patronize casino gaming within the host region. 3) Substitution Effect: Casino gaming cause a reallocation of expenditures by individuals within the region. The increased expenditures for casino gaming will cause a decrease in expenditures on other forms of consumption or in net savings.

3 Economic Impact Destination Resort Casinos: – Establishments that offer amenities and entertainment options that extend beyond gaming – Including luxury hotel, high-end retail shopping and dining, golf courses, sports arenas and convention facilities Analysis assumes the development of three destination casinos in different regions of Massachusetts and does not include the possibility of tribal casinos. Current plans for development now include: – Three destination casinos (Category 1) – One slot parlor (Category 2)

4 Fiscal Impact Basis for Revenue Projections Projected Revenue – Market Size: $2.15 billion in gross gaming revenues (GGR) Assumptions of 2008 Report Current Expenditures and Requirements Estimated dollars spent by Massachusetts residents on casino gaming in CT, ME, RI $800 million$909 million Initial license fee for Massachusetts$200 million $85 million for Category 1 $25 million for Category 2 Massachusetts gaming tax on GGR27% 25% for Category 1 40% for Category 2

5 Socioeconomic Impact Employment Opportunities Social impacts are difficult to quantify as studies are contradictory – Potential Social Benefits: increased employment, higher average income – Social Costs: infrastructure, added fiscal pressure on surrounding area, housing, schools – Disputed Effects: crime, bankruptcy, problem gaming – Other Employment Report Projections for 3 Casinos Current Projections for 3 Casinos Estimates for Revere Casino (1 casino) Casino17,000 – 20,00012,000 – 15,0004,000 Construction10,000 – 11,5007,500 – 9,0002,500

6 Contact Information Carl F. Jenkins, CPA/ABV, CFE, MST Managing Director, CBIZ Tofias Forensic, Litigation and Valuation Services Group  Direct: (617) 