1

ECONOMIC IMPACTS OF

PROPOSED GAMING

FACILITIES

SOUTH EAST GAMING ZONE

June 10, 2015

Kansas Lottery Gaming Facility

Review Board

2

AGENDA IN BRIEF

1. About Civic

Economics

2. Our task in Kansas

3. Economic Impact

101

4. Economic impact

related to

construction

4. Economic impact

related to operations

5. Competitive impacts

on existing business

6. Discussion

3

ABOUT CIVIC ECONOMICS

• Established in 2002

• Matt Cunningham in

Chicago; Dan

Houston in Austin

• “Economic analysis

and strategic planning

for sustainable

prosperity.”

4

OUR TASK IN KANSAS

• Essentially the same

scope of work that we

conducted in 2008,

2009, and 2010

• Evaluate the

prospective economic

impacts of each

proposed casino

project

• Two distinct activities

studied:

– Construction

– Operations

• Our focus is on

facilitating

comparison of

competing proposals

5

ECONOMIC IMPACT 101

• Employment is the total

number of Kansans employed

both on a full and part time

basis in a given industry.

• Labor Income is the amount

of salaries and benefits paid to

Kansas employees.

• Economic Output is the total

production or sales derived

from the project. For this

study, the total construction

costs and casino revenue are

the basis for output.

• Direct effects capture the

initial impact created. For

construction impacts, this is

based on the amount spent in

each of a variety of categories.

• Indirect effects are additional

impacts derived from

businesses providing products

• Induced effects are the result

of increased household

spending due to the direct and

indirect effects

6

IMPACT: CONSTRUCTION

• Construction impacts

are one-time events

• The licensee builds

infrastructure and

buildings, then

purchases goods

needed to operate

• Classify expenditures

for analysis

– Isolate those unlikely

to be made in Kansas

– All others are used in

the analysis

• Simple rule: The more

you spend, the

greater the impact

7

IMPACT: CONSTRUCTION

Applicant Submission Category IMPLAN Category Applied Notes

Buildings Construction of new commercial structures

Land NoneLand purchases are not factored into

economic impacts

Land improvements, excluding

landscapingConstruction of new commercial structures

Landscaping Construction of new commercial structures

Soft Costs, i.e. engineering,

architectural, development fees Architectural and engineering services

Financing costs NoneFinancing costs were not factored into

the economic impacts

Public sector infrastructure Construction of new highways and streets

Rolling stock Motor vehicle and parts dealers

Furniture, fixtures and equipment None

Floor and wall treatments None

Gaming equipment None

APPLICANT SUBMISSION AND MODEL INPUT CORRESPONDENCE

CONSTRUCTION ECONOMIC IMPACT ANALYSIS

Assumed purchases of these industry-

specific items would be made out of

state

8

IMPACT: CONSTRUCTION Direct Indirect Induced Total Relative

EMPLOYMENT

CAMPTOWN 126 33 54 213

KANSAS CROSSING 238 69 104 411

CASTLE ROCK 537 151 236 924

WAGES

CAMPTOWN 7.5 1.9 2.2 11.6$

KANSAS CROSSING 14.2 4.0 4.3 22.5$

CASTLE ROCK 32.8 8.5 9.7 51.0$

ECONOMIC OUTPUT

CAMPTOWN 18.2 6.1 6.9 31.2$

KANSAS CROSSING 35.8 12.8 13.5 62.0$

CASTLE ROCK 77.4 26.2 30.5 134.2$

CONSTRUCTION IMPACTS SUMMARY (2015$)2015 Gaming Facility Proposals

Total workers, including full-time and part-time

Total wages paid to workers identified above ($ Millions)

Total revenues associated with construction ($ Millions)

Source: Applicant Submissions, IMPLAN, Civic Economics

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IMPACT: OPERATIONS

• A very different analysis, as you will see

• In many analyses, the applicant commits

to a phased development process,

requiring the analysis of multiple scenarios

• In this case, we have just one scenario:

– The third year of operations, roughly calendar

year 2019

10

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Number of Slot Machines 750 Number of Slot Machines 625 Number of Slot Machines 1400

Number of Gaming Tables 20 Number of Gaming Tables 16 Number of Gaming Tables 51

Number of Hotel Rooms 62 Number of Hotel Rooms 123 Number of Hotel Rooms 200

Estimated gaming revenue: Applicant 47,600,000$ Estimated gaming revenue: Applicant 47,200,000$ Estimated gaming revenue: Applicant 91,700,000$

Estimated gaming revenue: Union 43,900,000$ Estimated gaming revenue: Union 39,000,000$ Estimated gaming revenue: Union 47,800,000$

Estimated gaming revenue: Cummings 34,600,000$ Estimated gaming revenue: Cummings 36,600,000$ Estimated gaming revenue: Cummings 59,800,000$

Average of Union & Cummings 39,250,000$ Average of Union & Cummings 37,800,000$ Average of Union & Cummings 53,800,000$

Ratio of Union/Cummings to Applicant 0.82 Ratio of Union/Cummings to Applicant 0.80 Ratio of Union/Cummings to Applicant 0.59

Hotel Revenue 1,259,387$ Hotel Revenue 3,156,403$ Hotel Revenue 4,412,910$

Food & Beverage Revenue 5,948,629$ Food & Beverage Revenue 1,923,941$ Food & Beverage Revenue 5,131,835$

Retail Revenue 156,137$ Retail Revenue 120,105$ Retail Revenue -$

Entertainment -$ Entertainment 131,772$ Entertainment -$

Other Revenue -$ Other Revenue (Fees and Leases) 166,055$ Other Revenue (Fees and Leases) 2,803,015$

CASTLE ROCK

PROJECT SCOPE

GAMING REVENUE PROJECTIONS

ADJUSTED NON-GAMING REVENUE PROJECTIONS

CAMPTOWN KANSAS CROSSING

ADJUSTED REVENUE FORECASTS, 2019 (in 2019 dollars)

Based on contractually obligated develoment scheduled for completion by opening

GAMING REVENUE PROJECTIONS GAMING REVENUE PROJECTIONS

ADJUSTED NON-GAMING REVENUE PROJECTIONS ADJUSTED NON-GAMING REVENUE PROJECTIONS

SOURCE: Applicant Submissions, Cummings Associates, Union Gaming

PROJECT SCOPE PROJECT SCOPE

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Union Union Union

Estimated Gaming Revenue 43,900,000$ Estimated Gaming Revenue 39,000,000$ Estimated Gaming Revenue 47,800,000$

Cummings Cummings Cummings

Estimated Gaming Revenue 34,600,000$ Estimated Gaming Revenue 36,600,000$ Estimated Gaming Revenue 59,800,000$

Estimated Gaming Export 13,500,000$ Estimated Gaming Export 15,900,000$ Estimated Gaming Export 48,100,000$

Estimated Gaming Import Substitution 5,400,000$ Estimated Gaming Import Substitution 5,200,000$ Estimated Gaming Import Substitution 7,300,000$

Net or New Revenue 18,900,000$ Net or New Revenue 21,100,000$ Net or New Revenue 55,400,000$

Net as a % of Gaming Revenue 54.6% Net as a % of Gaming Revenue 57.7% Net as a % of Gaming Revenue 92.6%

Union/Cummings Revenue 39,250,000$ Union/Cummings Revenue 37,800,000$ Union/Cummings Revenue 53,800,000$

New Economic Activity in Kansas 21,440,029$ New Economic Activity in Kansas 21,791,803$ New Economic Activity in Kansas 49,841,472$

New Gaming Spending by Kansans 17,809,971$ New Gaming Spending by Kansans 16,008,197$ New Gaming Spending by Kansans 3,958,528$

CASTLE ROCK

NET GAMING REVENUES IN KANSAS CASINOS, 2019 (2019$)

Based on contractually obligated development scheduled for completion by opening

KANSAS CROSSINGCAMPTOWN

SOURCE: Union Gaming, Cummings Associates, Civic Economics

13

Performance Template Category IMPLAN Category Notes

Estimated gaming revenue Gambling industries (except casino hotels)

Modified first in terms of total revenue

produced as estimated by the Union

and Cummings reports. Also adjusted

to only account for import substitution

and export effects.

Hotel revenue Hotels and motels, inlcuding casino hotels

Food revenue Full-service restaurants

Retail revenue Miscellaneous store retailers

Other revenue Miscellaneous store retailers

APPLICANT SUBMISSION AND MODEL INPUT CORRESPONDENCE

OPERATION ECONOMIC IMPACT ANALYSIS

Modified to represent the same

proportion of gaming revenue the

casinos presented before the gaming

revenue was modified by Union and

Cummings

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Direct Indirect Induced Total Relative

EMPLOYMENT

CAMPTOWN 237 47 44 328

KANSAS CROSSING 185 45 39 269

CASTLE ROCK 404 96 84 584

WAGES

CAMPTOWN 5,753,325 2,027,618 1,821,141 9,602,084$

KANSAS CROSSING 4,890,699 1,891,861 1,587,120 8,369,679$

CASTLE ROCK 10,654,843 4,080,560 3,448,454 18,183,857$

ECONOMIC OUTPUT

CAMPTOWN 23,504,152 6,803,769 5,752,601 36,060,522$

KANSAS CROSSING 21,987,618 6,321,048 5,013,359 33,322,026$

CASTLE ROCK 48,318,779 13,689,574 10,892,921 72,901,275$

Source: Applicant Submissions, IMPLAN, Civic Economics

OPERATING IMPACTS SUMMARY - 2019 (2019$)2015 Gaming Facility Proposals

Total workers, including full-time and part-time

Total wages paid to workers identified above ($ Millions)

Total revenues associated with construction ($ Millions)

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LOCAL SPENDING PATTERNS

• What we excluded from NET Revenues is

simply:

– New gaming spending by Kansas residents as a

result of the new facility

• Where does that money come from?

– Nearly all of it from household discretionary budgets

– We cannot know how much would have been spent in

Kansas

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LOCAL SPENDING PATTERNS

• Diversion varies greatly by location of the facility

• State line locations tend to reduce the proportion

of revenue driven by diversion

New Gaming Spending as

a % of Gaming Revenue 45%New Gaming Spending as

a % of Gaming Revenue 42%New Gaming Spending as

a % of Gaming Revenue 7%

New Gaming Spend by

Kansans (In Millions) 17.8$ New Gaming Spend by

Kansans (In Millions) 16.0$ New Gaming Spend by

Kansans (In Millions) 3.6$

CASTLE ROCK

NEW GAMING SPENDING BY KANSANS, 2019 (2019$)

Based on contractually obligated development scheduled for completion by opening

CAMPTOWN KANSAS CROSSING

SOURCE: Union Gaming, Cummings Associates, Civic Economics

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Thank You

• Learn more about

Civic Economics at

CivicEconomics.com

• For more information

about this project,

please contact:

Dan Houston

dhouston@

civiceconomics.com

512.587.7964

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Direct Indirect Induced Total Relative

EMPLOYMENT

CAMPTOWN 126 33 54 213

KANSAS CROSSING 238 69 104 411

CASTLE ROCK 537 151 236 924

WAGES

CAMPTOWN 7.5 1.9 2.2 11.6$

KANSAS CROSSING 14.2 4.0 4.3 22.5$

CASTLE ROCK 32.8 8.5 9.7 51.0$

ECONOMIC OUTPUT

CAMPTOWN 18.2 6.1 6.9 31.2$

KANSAS CROSSING 35.8 12.8 13.5 62.0$

CASTLE ROCK 77.4 26.2 30.5 134.2$

CONSTRUCTION IMPACTS SUMMARY (2015$)2015 Gaming Facility Proposals

Total workers, including full-time and part-time

Total wages paid to workers identified above ($ Millions)

Total revenues associated with construction ($ Millions)

Source: Applicant Submissions, IMPLAN, Civic Economics

Direct Indirect Induced Total Relative

EMPLOYMENT

CAMPTOWN 237 47 44 328

KANSAS CROSSING 185 45 39 269

CASTLE ROCK 404 96 84 584

WAGES

CAMPTOWN 5,753,325 2,027,618 1,821,141 9,602,084$

KANSAS CROSSING 4,890,699 1,891,861 1,587,120 8,369,679$

CASTLE ROCK 10,654,843 4,080,560 3,448,454 18,183,857$

ECONOMIC OUTPUT

CAMPTOWN 23,504,152 6,803,769 5,752,601 36,060,522$

KANSAS CROSSING 21,987,618 6,321,048 5,013,359 33,322,026$

CASTLE ROCK 48,318,779 13,689,574 10,892,921 72,901,275$

Source: Applicant Submissions, IMPLAN, Civic Economics

OPERATING IMPACTS SUMMARY - 2019 (2019$)2015 Gaming Facility Proposals

Total workers, including full-time and part-time

Total wages paid to workers identified above ($ Millions)

Total revenues associated with construction ($ Millions)