Unique House Commission to Study Gaming Condition of Rhode Island January 23, 2003.


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Friendliness skill stretched out into some gaming pretty much as enthusiasm for gaming spread broadly (around 1990) Economic and Fiscal Impact Studies ...
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Uncommon House Commission to Study Gaming State of Rhode Island January 23, 2003

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Background Crowe, Chizek and Company LLP 8 th Largest Consulting & Accounting Firm Nationally Formed in 1942 in South Bend, IN 15 workplaces broadly, from Grand Rapids to Fort Lauderdale Work Experience Hospitality mastery stretched out into some gaming pretty much as enthusiasm for gaming spread broadly (around 1990) Economic and Fiscal Impact Studies Testimony before State and Local governments in Indiana Louisiana Mississippi Ohio Wisconsin

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Ameristar Argosy Aztar Binion/Horseshoe Blue Chip Caesars Harrah\'s Hyatt Pinnacle Trump Representative Clients Boykin Lodging Centaur Churchill Downs Keeneland Scioto Downs Turfway Park Numerous Native American Indian tribes (e.g., Ho-Chunk, Pokegan, Grand Traverse Band, Big Cypress Seminole)

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Indiana? Yes! Positions Third in FY 2001 Tax Revenue from Gaming $688M $529M $493M Source: State gaming controllers and affiliations

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Fastest Growing Gaming Markets: 2000-2001 Nationally: up 4.9%, to $25.7 Billion +13.1% +34.5% +4.0% +5.9% +10.3% Source: State gaming controllers and affiliations

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Industry Overview As the business gaming industry has extended all through the United States, the gross yearly income has relentlessly expanded to over $140B in 2001. Gaming incomes are produced from pari-mutuel wagering, lotteries, clubhouse, legitimate bookmaking, bingo and Indian reservations. Over the previous decade, spending on clubhouse gaming has expanded essentially, from 11.5B in 1990 to an expected $47B in 2001 ($28.1B barring unreported Native American gaming movement).

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Industry Overview Nearly every state in the US offers some type of betting: Lotteries Resorts like Las Vegas, Atlantic City, Biloxi Riverboats in Illinois, Indiana, Louisiana, Missouri, Iowa, and all through the country\'s heartland Over 150 Indian reservations

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States with Lotteries

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States with Casinos (Riverboat or Land-based)

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States with Native American Casinos

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States with Lotteries, Casinos (Commercial or Native American) or Pari-mutuel

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Industry Overview – Beyond Nevada and New Jersey Riverboat gaming was initially settled in the Midwest with the State of Iowa in 4/91; Illinois followed in 11/91 and Indiana in 12/95. Riverboat gaming income for the year finished December 31, 2001 in Illinois and Indiana neared $2B: YE 12/31/01 (in 000s) Illinois $1,783,958 Indiana $1,841,841 TOTAL $3,625,799

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Industry Overview – Beyond Nevada and New Jersey Admission and wagering charges exacted by the conditions of Illinois and Indiana in 2001 added up to $1.1 billion (excluding the state pay charges on the benefits). Different states in the Midwest which lead riverboat gaming and their related 2001 gaming incomes are noted underneath: YE 12/31/01 (in 000\'s) Iowa $886,996 Missouri $1,049,216 Michigan has three business gambling clubs working in Detroit. These opened somewhere around 1999 and 2000 in impermanent offices. Consolidated clubhouse incomes in 2001 were marginally over $1B.

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Native American Casinos Throughout the US there are roughly 290 tribal gaming operations which produced $12.7B in incomes in 2001 (under 10% of the aggregate industry*). * Source: National Indian Gaming Association

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States With Greatest Gaming Tax Revenues $688M $529M $342M $493M $375M Source: State gaming controllers and affiliations

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Central 30% (22%) Northeast 27% (19%) West 36% (23%) South 20% (36%) Northeast is Undersupplied % of Nationwide Casino Visits in 2001 (% of U.S. Populace in Parentheses) Source: Harrah\'s Entertainment, Inc./NFO WorldGroup, Inc.

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Demographics Typical Casino Patron = "Regular American" Patrons contrasted with U.S. Populace: Caucasian (76% versus 76% of aggregate populace) Married or drew in (61% versus 59%) Male (45% versus 48%) Median age more than 21 (45 versus 46) At minimum some school (55% versus 52%) Median family unit pay ($50k versus $41k) cubicle (46% versus 41%) Homeowner (73% versus 68%) Sources: American Gaming Association, Harrah\'s Entertainment, Inc. furthermore, Bear, Stearns & Co. Inc.

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How to Get There - Our Market Study of West Warwick Methodology: Demand-driven/Market-driven Bottom-up methodology Don\'t subscribe to "IYBITWC" theory Back-testing shows we\'re moderate Example (from our 2000 figure of Indiana\'s 2001 business sector):

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How to Get There - Our Market Study of West Warwick

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Market 2000 Adult 2001 Census Geography Adult Adult % % Who Visits per County Census Pop\'n Estimate Factor Pop\'n of Pop\'n Game Year (33.2%) (6.0) Bristol, RI 50,648 36,334 51,173 100% 36,711 71.7% 12,188 73,128 Kent, RI 167,090 123,109 169,224 100% 124,681 73.7% 41,394 248,365 Newport, RI 85,433 62,870 85,218 100% 62,712 73.6% 20,820 124,922 Providence, RI 621,602 438,952 627,314 100% 442,986 70.6% 147,071 882,427 Washington, RI 123,456 87,180 125,991 100% 88,970 70.6% 29,538 177,228 New London, CT 259,088 185,834 259,065 5% 9,291 71.7% 3,085 18,507 Windham, CT 109,091 76,567 110,162 30% 23,196 70.2% 7,701 46,206 Norfolk, MA 650,308 478,556 653,232 100% 480,708 73.6% 159,595 957,570 Middlesex, MA 1,465,396 1,080,509 1,463,454 100% 1,079,077 73.7% 358,254 2,149,522 Plymouth, MA 472,822 330,414 481,059 80% 268,936 69.9% 89,287 535,721 Suffolk, MA 689,807 550,466 682,062 100% 544,285 79.8% 180,703 1,084,217 Worcester, MA 750,963 528,847 762,207 50% 268,383 70.4% 89,103 534,618 Total Market 5,445,704 3,979,638 5,470,161 3,429,935 1,138,738 6,832,430 Note that short of what one-fourth (22.0%) of the business sector appearance may be gotten from Rhode Island inhabitants. How to Get There - Potential West Warwick Gaming Market

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Annual Visitation 6,832,430 Win per Visit $100.00 (Note 1) Adjusted Gross Gaming Revenue $683,243,000 State Fiscal Impact (at 25% Tax Rate) $170,810,750 Note 1 : Indiana - 11/02 average $89.22 Argosy riverboat - 11/02 $108.97 Illinois - 12/02 average $102.00 Illinois - FYTD 12/02 average $97.00 Elgin riverboat - FYTD 12/02 $136.00 How to Get There - Potential West Warwick Fiscal Impact

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A Regulatory Framework for Rhode Island Gaming Overview: Enabling Legislation Regulatory Body Regulatory Standards Enforcement and Penalties

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A Regulatory Framework for Rhode Island Gaming Enabling Legislation Local Developer Agreements Provide for immediate, neighborhood "compacts" with designer: Local expenses/charges Local enlisting/acquiring necessities Infrastructure subsidizing Community association Charitable exercises Licensing prerequisites Owner/administrator Suppliers Occupations

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A Regulatory Framework for Rhode Island Gaming Enabling Legislation (cont.) Create administrative body Number of magistrates/executives Powers and obligations of the body Address political commitments by licensees Set working parameters Minimum legitimate age Permissible recreations/wager sums Cash or cashless wagering? Working hours/date-book

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A Regulatory Framework for Rhode Island Gaming Regulatory Body Commission arrangements Commissioner criteria Geographic representation Professional aptitudes – bookkeeping/account, law, government, social administrations Political gathering connection equalization Appointment power Governor, Legislature, blend Commission staff

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A Regulatory Framework for Rhode Island Gaming Regulatory Body (cont.) Funding Sources Fees and evaluations e.g., permitting and related examinations Wagering charge income First cut ("off the top") e.g., examinations and general expenses of regulation Fixed sum Activity-based tolls Licensee pays genuine expenses as/when brought about e.g., all implementation and disciplinary procedures

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A Regulatory Framework for Rhode Island Gaming Regulatory Body Example: Indiana Gaming Commission Seven Commissioners Three-year amazed terms Three from Lake Michigan regions, three from Ohio River districts, one from neither Up to four from same political gathering At minimum one from law authorization, one CPA, one lawyer Executive Director and staff of 36 15 connected with Field Audit capacity SFY 2001 spending plan of $15 million 56% financed through licensee repayments 18% subsidized from expenses and fines 26% supported from wagering charge apportionments

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A Regulatory Framework for Rhode Island Gaming Regulatory Standards/Duties Conduct permitting/reestablishment process Investigate candidates/licensees for reasonableness Investigate affirmed guideline infringement Administer implementation/disciplinary activities Collect repayment by licensee of all managerial or requirement costs Report Illinois offers a sample of good month to month reporting (Appendix)

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A Regulatory Framework for Rhode Island Gaming Enforcement and Penalties Cash business = requirement for tight controls Regulatory specialists on location amid every working hour Continual review/testing of security and reporting controls Need for quick, successful examinations and punishments Fines must be legitimately scaled to have power Example: $95k fine for inability to unveil an agreement (Illinois) Example: $8k fine to grant access to a minor (Indiana) Example: 3-day semi shutdown for shameful promoting (Indiana) Casino administrator was required to "make great" to representatives and its host group so the shutdown was income nonpartisan to them

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Appendices A: Illinois Gaming Board Monthly Riverboat Casino Report (December, 2002) B: Useful References

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Appendix A : Illinois Gaming Board Monthly Riverboat Casino Report December 2002

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Appendix B : Useful References Indiana Riverboat Gaming Laws (IC § 4-33) http://www.ai.org/authoritative/ic/code/title4/ar33/index.html Illino

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