Potential Impact of New Casinos On Existing Sparks, Nevada Casinos

Potential Impact of New Casinos

On Existing Sparks, Nevada Casinos

Potential Impact of New Casinos

On Existing Sparks, Nevada Casinos

September 28, 2005 Presentation to:AD HOC Committee on Non-restricted

Gaming

The City of Sparks, Nevada

Prepared By:

Wells Gaming Research495 Apple Street, Suite 205

Reno, NV 89502

September 28, 2005 Presentation to:AD HOC Committee on Non-restricted

Gaming

The City of Sparks, Nevada

Prepared By:

Wells Gaming Research495 Apple Street, Suite 205

Reno, NV 89502

August 2005 Wells Gaming Research Slide 2

Potential Impact of New Casinos on Existing Sparks Casinos

Scope of Work Current Status & Trends - Tribal Gaming Impact Demographic Projection 1,440 square miles to 2010 Gravity Model - Local Gaming Market

Player Counts Existing Casinos - Meeting With Management Local Market Attraction Factors

Survey of Sparks Gamblers Potential New Casino Locations 7 in Sparks, 2 in Reno Estimate Impact on Existing Sparks Casinos


Figure 1-1 Five Year Compound Growth Rate in Gaming Revenues

Washoe County - All Non-Restricted Locations 1980 - 2004

-0.02

-0.01

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Washoe Co.

IGRA1988

67 Tribal Casinos Open in CA(38), WA(21), & OR(8)

CA Prop 5March 2000

Economic SlowdownJan 2001

Silver Legacy OpenedJuly 1995

Source: Wells Gaming Research

Thunder Valley

Opened Jun 2003

911

54 CACasinos

12/04

89 Tribal CasinosCA,WA,OR

First Wave of Tribal Casinos

Second Wave




Figure 2-10Washoe County Gaming vs. RetailAnnual Revenue -Fiscal Years in $Millions

$3,500$3,750$4,000$4,250$4,500$4,750$5,000$5,250$5,500$5,750$6,000$6,250$6,500

1996 1997 1998 1999 2000 2001 2002 2003 2004

$900$925$950$975$1,000$1,025$1,050$1,075$1,100$1,125$1,150$1,175$1,200

Retail Gaming

Retail Sales Gaming Win



Figure 1-2Summary of Casino Statistics for Washoe County

for 1995, 2000, & 12 Months Ended June 30, 2005

Before Proposition 1-A After Proposition 1-A

Gaming Statistics 1995 2000% Chg

1995 -200012-Months

Ended 6-2005

% Chg 2000 -12 months

Ended 6-2005


Ended 6-2005

Player Counts 10,913 10,123 -7% 6,798 -33% -38%

Number of Locations 48 40 -17% 37 -8% -23%

Gaming Capacity

Slot Machines 29,324 28,698 -2% 23,729 -17% -19%

Table Games 989 836 -15% 662 -21% -33%

Win per Unit

Slot Machines $64 $80 25% $90 13% 41%

Table Games $623 $790 27% $779 -1% 25%

Gaming Revenues

Slot Machines $687,784,000 $839,516,000 22% $777,902,000 -7% 13%

Table Games $224,740,000 $241,635,000 8% $188,208,000 -22% -16%

Total $972,599,000 $1,128,851,000 16% $1,006,056,000 -11% 3%

Data Sources: Nevada GCB Monthly Revenue Reports & WGR, July 2005.



Figure 2-1 Casinos in US 2003 - 2004

Type of Casino# of

States# of

CasinosRevenue in

Billions of $'s

Commercial Casinos 11 443 $27.0

Racetrack Casinos 8 15 $2.2

Tribal Casinos 28 330 $16.7

Total 35 788 $45.9

Data Sources: American Gaming Association, National Indian Gaming Association, & Wells Gaming Research.



Figure 2-2Annual Gaming Revenue for Tribal Casinos Located in Region II 1

(Dollars in Thousands)

Description# of

Casinos Gaming Revenues Change % Change

1999 - WGR 39 $1,200,000

FY 2001 - NIGC 48 $2,891,522 $1,691,522 141%

FY 2002 - NIGC 51 $3,678,095 $786,573 27%

FY 2003 - NIGC 54 $4,699,889 $1,021,794 28%

FY 2004 - NIGC 52 $5,788,332 $1,088,443 23%

Footnote 1 : The National Indian Commission includes California & northern Nevada in Region II even through there are no Tribal casino located in northern Nevada.

Data Sources: National Indian Gaming Commission & Wells Gaming Research, August 2005.



Figure F2-11Airline Passengers Deplaned at Reno-Tahoe International

Airport

Final Destination - Reno-Tahoe Jan 96 through Jul 05

125,000

150,000

175,000

200,000

225,000

250,000

275,000

300,000

325,000

350,000

375,000

Jan-96Mar-96May-96Jul-96Sep-96Nov-96Jan-97Mar-97May-97

Jul-97Sep-97Nov-97Jan-98Mar-98May-98Jul-98Sep-98Nov-98Jan-99Mar-99May-99




Jul-05

Airline Passengers Deplaned at Reno-Tahoe International Airport

Deplaned

Sept-ll-2001Data Source: Airport Authority of Washoe Co., Chart by WGR

American buys Reno Air1998 - Aug 1999

Trend: Down 75 k per month or 27%, but turning up



Figure 2-3Closest California Tribal Casinos

Existing & Future Casinos

Casino Name# of Slots

# of Tables

# of Rooms

Player

Counts1

Utilization Percent

Est Gaming

Rev/Yr2

Existing Casinos$'s in

Millions Jackson Rancheria 1,854 41 146 792 37% $141

Thunder Valley 2,929 94 0 1,417 40% $375

Cache Creek 2,486 129 200 1,206 36% $332

Total Existing 7,269 264 546 3,415 38% $848

Future Casinos San Pablo 2,500 100 0 $400

Foothill Oaks 2,000 80 250 $194

Total Future 4,500 180 250 $594

Grand Total 11,769 444 796 $1,442

Reno / Sparks Total 20,236 592 15,175 6,071 24% $894

(1) Player counts conducted Nov-Dec 2004.

(2) All revenue estimates by WGR except Foothill (by developers).

Data Source: Wells Gaming Research, January 2005.



Figure 2-4Potential Impact of Two New Northern California Casions

to the Reno/Sparks Gaming Market

Casino# of

Gamblers# of

Annual TripsEstimated Gross Gaming Revenue

San Pablo -33,135 -99,404 -$14,910,660

Shingle Springs -9,071 -27,212 -$3,401,539

Total -42,206 -126,617 -$18,312,199

Source: Wells Gaming Research.



Figure 1-5 Summary of Population & Median Household Income Projections

Population Subregions 2000 2004 2005 2006 2007 2008 2009 2010

Avg Annual Growth

Rate 2000-2005

Avg Annual Growth

Rate 2005-2010

Total Population 338,954 390,709 399,531 411,310 422,547 433,876 443,557 451,586 3.3% 2.5%

Adult Population 240,405 276,690 282,731 290,726 298,322 306,084 312,784 318,377 3.3% 2.4%

Median Household Incomes:

Subregions $49,301 $56,987 $59,089 $61,268 $63,528 $65,871 $68,300 $70,819 3.7% 3.7%

State of Nevada $44,581 $51,547 $53,452 $55,428 $57,477 $59,601 $61,805 $64,089 3.7% 3.7%

US $41,994 $48,005 $49,638 $51,326 $53,072 $54,877 $56,744 $58,674 3.4% 3.4%

Data Sources: Bureau of Business & Economics, UNR & Wells Gaming Research, August 2005.



Figure 1 - 3 Sparks Casino Gaming Revenues for 2005

Comparison of Total Revenues with Local Market Revenues

(In Thousands of Dollars)

Gaming Revenues Dollar Amount

Total Gaming Revenues for 11 Non-restricted Locations in Sparks for the 12 Months Ended June 30, 2005 $161,876

Estimated 2005 Gaming Revenues from Local Residents at 10 Existing Casinos $109,088

Percent of Sparks Gaming Revenues that are Generated by Local Residents 67%

Data Source: Wells Gaming Research, August 2005.



Figure 1 - 4Estimated Impact of Potential New Casinos in 2010On the Gaming Revenues of Ten Existing Sparks Casinos

In Millions of Dollars

Single Casino ScenariosLow

ImpactHigh

ImpactLow % Impact

High % Impact

Scenario 1 Tierra Del Sol -$13.4 -$21.1 -10% -16%

Scenario 2 Sparks Galleria -$5.6 -$14.2 -4% -11%

Scenario 3 Copper Canyon -$2.2 -$6.2 -2% -5%

Scenario 4 Wingfield Springs -$8.6 -$15.9 -7% -12%

Scenario 5 Downtown Sparks -$1.2 -$2.9 -1% -2%

Scenario 6 Steamboat Station -$3.1 -$4.1 -2% -3%

Scenario 7 Convention Station -$3.8 -$7.1 -3% -5%

Multiple Casino ScenariosLow

ImpactHigh

ImpactLow % Impact

High % Impact

Scenario 8 = Casinos 1 & 2 -$16.8 -$28.2 -13% -22%

Scenario 9 = Casinos 1, 2, & 3 -$18.3 -$31.5 -14% -24%

Scenario 10 = Casinos 1 & 6 -$16.5 -$25.1 -13% -19%

Scenario 11 = Casinos 1, 3, 6, & 7 -$21.1 -$34.1 -16% -26%

Scenario 12 = Casinos 1, 2, 3, 6, & 7 -$24.3 -$40.2 -19% -31%

Scenario 13 = All Seven Casinos -$27.5 -$44.2 -21% -34%

Source: Wells Gaming Research, August 2005.

$24.6 &19%

$37.0 &29%

Expanded Scope of Tierra Del Sol

Announced Sept 23, 2005



Figure 3-1Scenario 1 - One New Casino - Tierra Del Sol

Estimated Impact on Gaming RevenuesFor 10 Existing Sparks Casinos

Base Case - If No New Casinos are BuiltYear 2005 2006 2007 2008 2009 2010

10 Existing Sparks Casinos $109,088,000 $113,412,000 $117,480,000 $121,604,000 $125,423,000 $128,912,000

Low Case - One New Casino - Tierra Del Sol is BuiltYear 2005 2006 2007 2008 2009 2010


Impact on 10 Existing Sparks Casinos $0 $0 -$11,173,000 -$11,933,000 -$12,705,000 -$13,400,000

% Impact -10% -10% -10% -10%

High Case - One New Casino - Tierra Del Sol is BuiltYear 2005 2006 2007 2008 2009 2010



% Impact -15% -16% -16% -16%

Data Source: Wells Gaming Research, September 2005.



Figure 3-1aRevised Scenario 1 - One New Casino - Tierra Del Sol


With increased attraction factors for Peppermill and Tierra Del Sol

Base Case - If No New Casinos are BuiltYear 2005 2006 2007 2008 2009 2010


Low Case - One New Casino - Tierra Del Sol is BuiltYear 2005 2006 2007 2008 2009 2010



% Impact -14% -14% -15% -15%

High Case - One New Casino - Tierra Del Sol is BuiltYear 2005 2006 2007 2008 2009 2010



% Impact -18% -18% -19% -19%

Data Source: Wells Gaming Research, Revised September 27, 2005.



Figure 3-2Scenario 2 - One New Casino - Sparks Galleria


Base Case - If No New Casinos are Built

Year 2005 2006 2007 2008 2009 2010


Low Case - One New Casino - Sparks Galleria is Built

Year 2005 2006 2007 2008 2009 2010



% Impact -4% -4% -4% -4%

High Case - One New Casino - Sparks Galleria is Built

Year 2005 2006 2007 2008 2009 2010



% Impact -11% -11% -11% -11%




Figure 3-3Scenario 3 - One New Casino - Copper Canyon



Year 2005 2006 2007 2008 2009 2010


Low Case - One New Casino - Copper Canyon is Built

Year 2005 2006 2007 2008 2009 2010


Impact on 10 Existing Sparks Casinos $0 $0 $0 -$2,063,000 -$2,154,000 -$2,239,000

% Impact -2% -2% -2%

High Case - One New Casino - Copper Canyon is Built

Year 2005 2006 2007 2008 2009 2010



% Impact -5% -5% -5%




Figure 3-4Scenario 4 - One New Casino - Wingfield Springs



Year 2005 2006 2007 2008 2009 2010


Low Case - One New Casino - Wingfield Springs is Built

Year 2005 2006 2007 2008 2009 2010



% Impact -6% -6% -7%

High Case - One New Casino - Wingfield Springs is Built

Year 2005 2006 2007 2008 2009 2010



% Impact -12% -12% -12%

Data Source: Wells Gaming Research, September 2005



Figure 3-5Scenario 5 - One New Casino - Downtown Sparks



Year 2005 2006 2007 2008 2009 2010


Low Case - One New Casino - Downtown Sparks is Built

Year 2005 2006 2007 2008 2009 2010



% Impact -1% -1% -1% -1%

High Case - One New Casino - Downtown Sparks is Built

Year 2005 2006 2007 2008 2009 2010



% Impact -2% -2% -2% -2%




Figure 3-6Scenario 6 - One New Casino - Steamboat Station



Year 2005 2006 2007 2008 2009 2010


Low Case - One New Casino - Steamboat Station is Built

Year 2005 2006 2007 2008 2009 2010



% Impact -2% -2% -2%

High Case - One New Casino - Steamboat Station is Built

Year 2005 2006 2007 2008 2009 2010



% Impact -3% -3% -3%




Figure 3-7Scenario 7 - One New Casino - Convention Station



Year 2005 2006 2007 2008 2009 2010


Low Case - One New Casino - Convention Station is Built

Year 2005 2006 2007 2008 2009 2010


Impact on 10 Existing Sparks Casinos $0 $0 $0 $0 -$3,695,000 -$3,782,000

% Impact -3% -3%

High Case - One New Casino - Convention Station is Built

Year 2005 2006 2007 2008 2009 2010


Impact on 10 Existing Sparks Casinos $0 $0 $0 $0 -$6,899,000 -$7,064,000

% Impact -6% -5%




Figure 3-8Scenario 8 - Two New Casinos - Tierra Del Sol & Sparks Galleria



Year 2005 2006 2007 2008 2009 2010


Low Case - Two New Casinos - Tierra Del Sol & Sparks Galleria

Year 2005 2006 2007 2008 2009 2010



% Impact -12% -12% -13% -13%

High Case - Two New Casinos - Tierra Del Sol & Sparks Galleria

Year 2005 2006 2007 2008 2009 2010



% Impact -21% -21% -21% -22%

Data Source: Wells Gaming Research, September 2005



Figure 3-9Scenario 9 - Three New Casinos - Tierra Del Sol, Sparks Galleria, & Copper Canyon



Year 2005 2006 2007 2008 2009 2010


Low Case - Three New Casinos - Tierra Del Sol, Sparks Galleria, & Copper Canyon

Year 2005 2006 2007 2008 2009 2010



% Impact -12% -14% -14% -14%

High Case - Three New Casinos - Tierra Del Sol, Sparks Galleria, & Copper Canyon

Year 2005 2006 2007 2008 2009 2010



% Impact -21% -24% -24% -24%




Figure 3-10Scenario 10 - Two New Casinos - Tierra Del Sol & Steamboat Station



Year 2005 2006 2007 2008 2009 2010


Low Case - Two New Casinos - Tierra Del Sol & Steamboat Station

Year 2005 2006 2007 2008 2009 2010



% Impact -10% -12% -12% -13%

High Case - Two New Casinos - Tierra Del Sol & Steamboat Station

Year 2005 2006 2007 2008 2009 2010



% Impact -15% -19% -19% -19%




Figure 3-11Scenario 11 - Four New Casinos - 2 in Sparks & 2 in Reno

Tierra Del Sol, Copper Canyon, Steamboat Station & Convention StationEstimated Impact on Gaming Revenues

For 10 Existing Sparks Casinos


Year 2005 2006 2007 2008 2009 2010


Low Case - Four New Casinos - Tierra Del Sol, Copper Canyon, Steamboat, & Convention Ctr.

Year 2005 2006 2007 2008 2009 2010



% Impact -10% -13% -16% -16%

High Case - Four New Casinos - Tierra Del Sol, Copper Canyon, Steamboat, & Convention Ctr.

Year 2005 2006 2007 2008 2009 2010



% Impact -15% -22% -26% -26%




Figure 3-11aRevised Scenario 11 - Four New Casinos - 2 in Sparks & 2 in Reno

Tierra Del Sol, Copper Canyon, Steamboat Station & Convention StationEstimated Impact on Gaming Revenues


With increased attraction factors for Peppermill and Tierra Del Sol


Year 2005 2006 2007 2008 2009 2010


Low Case - Four New Casinos - Tierra Del Sol, Copper Canyon, Steamboat, & Convention Ctr.

Year 2005 2006 2007 2008 2009 2010



% Impact -14% -18% -20% -21%

High Case - Four New Casinos - Tierra Del Sol, Copper Canyon, Steamboat, & Convention Ctr.

Year 2005 2006 2007 2008 2009 2010



% Impact -18% -24% -28% -29%

Data Source: Wells Gaming Research, September 27, 2005.



Figure 3-12Scenario 12 - Five New Casinos - 3 in Sparks & 2 in Reno

Tierra Del Sol, Sparks Galleria, Copper Canyon, Steamboat Station, & Convention StationEstimated Impact on Gaming Revenues



Year 2005 2006 2007 2008 2009 2010


Low Case - Five New Casinos - Tierra Del Sol, Galleria, Copper Canyon, Steamboat, & Convention

Year 2005 2006 2007 2008 2009 2010



% Impact -12% -16% -19% -19%

High Case - Five New Casinos - Tierra Del Sol, Galleria, Copper Canyon, Steamboat, & Convention

Year 2005 2006 2007 2008 2009 2010



% Impact -21% -27% -31% -31%




Figure 3-13Scenario 13 - Seven New Casinos - 5 in Sparks & 2 in Reno

Tierra Del Sol, Sparks Galleria, Copper Canyon, Wingfield Springs, Downtown Sparks, Steamboat Station, & Convention Station



Year 2005 2006 2007 2008 2009 2010


Low Case - Seven New Casinos - 5 in Sparks & 2 in Reno are Built

Year 2005 2006 2007 2008 2009 2010



% Impact -13% -18% -21% -21%

High Case - Seven New Casinos - 5 in Sparks & 2 in Reno are Built

Year 2005 2006 2007 2008 2009 2010



% Impact -22% -30% -34% -34%




Survey Highlights - 300 Sparks Gamblers Restricted Gaming - Sparky’s Type Facility:

• 63% visit• 56% dine• 20% show• 16% gamble

Non-restricted Gaming - Casinos with 16 or more slots: • 79% visit • 74% dine • 33% show • 32% gamble



Survey Highlights - 300 Sparks Gamblers 2000 WGR survey - 53.3% of Sparks adults

gamble at casinos

Gambling frequency: • 4.7 times/month

• 55.9 times/year

Casinos where gambled most: • Sparks 63%

• Reno 37%



Survey Highlights - 300 Sparks Gamblers Casinos where also gambled:

• Sparks 40%• Reno 60%

Reasons for selection of casino where gambled most:• Near where I live 24% • Went there to eat 22% • More comfortable 10% • Friendlier staff 10%



Survey Highlights - 300 Sparks Gamblers Casino games played most often:

• Video poker 33%

• Video slots 29%

• Reel slots 22%

• Total slots 84%

• Table games 12%

• Other games 4%



Survey Highlights - 300 Sparks Gamblers Theoretical casino win per visit $33.19 Gambling time per visit about 2 hours Gambling budget per visit $102 mean $40 median Sparks gambler’s views about new neighborhood

casinos:• For 59%• Against 39%



Survey Highlights - 300 Sparks Gamblers Demographics:

• Average length of residence in Sparks 14 years

• Single family residence 72% Apt 17%

• Own home 75% rent 25%

• Gender female 65% male 35%

• Average age 52.5 years

• Average income $59,498

• Employed full time 47% part time 10%



Figure 2-5Reno/Sparks Player Counts

for 1995, 2000, & the 12 Months Ended June 2005


Player Counts 1995 2000

% Chg 1995 - 2000

12-Months Ended 6-2005


Ended 6-2005


Ended 6-2005

Reno / Downtown 6,714 5,704 -15% 2,992 -48% -55%

Reno / Other 2,214 2,510 13% 2,246 -11% 1%

Sparks 1,985 1,909 -4% 1,560 -18% -21%

Total 10,913 10,123 -7% 6,798 -33% -38%




Figure 2-6 Number of Casino Locations

for 1995, 2000, & the 12 Months Ended June 30, 2005


Number of Locations 1995 2000% Chg

1995-200012-Months

Ended 6-2005

% Chg 2000 -12 months Ended 6-2005


Ended 6-2005

Sparks 10 8 -20% 8 0% -20%

Reno 28 22 -21% 17 -23% -39%

Washoe County 48 40 -17% 37 -8% -23%




Figure 2-7Gaming Capacity



Gaming Capacity 1995 2000% Chg

1995-200012-Months

Ended 6-2005



Ended 6-2005

Slot Machines

Sparks 5,056 5,044 0% 4,588 -9% -9%

Reno 20,938 20,283 -3% 15,519 -23% -26%

Washoe County 29,324 28,698 -2% 23,729 -17% -19%

Table Games

Sparks 113 96 -15% 79 -18% -30%

Reno 772 644 -17% 507 -21% -34%

Washoe County 989 836 -15% 662 -21% -33%




Figure 2-8 Win per Unit for Sparks, Reno, & Washoe County



Win per Unit 1995 2000% Chg

1995-200012-Months

Ended 6-2005



Ended 6-2005

Slot Machines

Sparks $61 $77 26% $82 7% 35%

Reno $66 $82 24% $95 16% 45%

Washoe County $64 $80 25% $90 12% 40%

Table Games

Sparks $466 $506 9% $595 18% 28%

Reno $671 $875 30% $840 -4% 25%

Washoe County $623 $790 27% $779 -1% 25%




Figure 2-9Gaming Revenues for Sparks, Reno, & Washoe County



Revenue 1995 2000% Chg

1995-200012-Months

Ended 6-2005



Ended 6-2005

Slot Machines

Sparks $113,116,000 $142,341,000 26% $137,939,000 -3% 22%

Reno $507,155,000 $610,218,000 20% $540,341,000 -11% 7%

Washoe County $687,784,000 $839,516,000 22% $777,902,000 -7% 13%

Table Games

Sparks $19,207,000 $17,764,000 -8% $17,168,000 -3% -11%

Reno $189,141,000 $206,271,000 9% $155,368,000 -25% -18%

Washoe County $224,740,000 $241,635,000 8% $188,208,000 -22% -16%

Totals

Sparks $139,010,000 $165,349,000 19% $158,904,000 -4% 14%

Reno $743,968,000 $854,587,000 15% $728,652,000 -15% -2%

Washoe County $972,599,000 $1,128,851,000 16% $1,006,056,000 -11% 3%


Potential Impact of New Casinos On Existing Sparks, Nevada Casinos

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