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The Market Potential of the Four Gaming Zones of Kansas

The Market Potential of the Four Gaming Zones of Kansas. Presentation to Kansas Lottery Gaming Facility Review Board by Will Cummings / Cummings Associates June 3, 2008. 1. Overview. Cummings background Gravity model methodology Comparisons / “Power Ratings” What is “Potential”?

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The Market Potential of the Four Gaming Zones of Kansas

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  1. The Market Potential ofthe Four Gaming Zonesof Kansas Presentation to Kansas Lottery Gaming Facility Review Board by Will Cummings / Cummings Associates June 3, 2008 1

  2. Overview • Cummings background • Gravity model methodology • Comparisons / “Power Ratings” • What is “Potential”? • Northeast . . . Southeast . . . South-Central . . . Southwest • Summary / Statewide 2

  3. Will E. Cummings Cummings Associates 3

  4. Will Cummings • Graduate of MIT’s Sloan School of Management • Has directed studies of leisure and entertainment businesses in more than forty states, provinces and foreign countries, with particular focus on gaming and wagering • Extensive experience with casinos in Iowa, rest of Midwest, Northeast, and Canada 4

  5. Gravity Model / Casino Analyses • Iowa • New York • New England • Pennsylvania • Michigan • Indiana • South Dakota • New Mexico • The Caribbean • . . . and many more 5

  6. Gov’t Agencies / Regulatory Bodies • Iowa Racing and Gaming Commission • South Dakota Commission on Gaming • Horse Racing Alberta • New Jersey Casino Control Commission • Connecticut Division of Special Revenue • many State Racing Commissions • Massachusetts State Lottery • Virginia State Lottery • Connecticut Lottery Corporation • Atlantic Lottery Corporation 6

  7. Why “Gravity Model?” 7

  8. 8

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  10. 10

  11. “Gravity Models” – Overview • Location • Location • Size • Everything Else 11

  12. Location I: The Closer, the Better 12

  13. Las Vegas Visitation/Distance 13

  14. Las Vegas: slope of the curve 14

  15. Mississippi: steeper slope 15

  16. Laughlin: much steeper slope 16

  17. Casino X: isolated market 17

  18. Casino Y: competition afar 18

  19. Casino Y: less competition close 19

  20. Location I: The Closer, the Better =“Friction” 20

  21. Location II: Reilly’s Law 21

  22. Reilly’s Law: ms ~ S/d2 Where ms : market share S : “size” of each trade center d : distance 22

  23. Newton’s Law: F = m/d2 Where F : gravitational force m : mass (of each body) d : distance 23

  24. Reilly’s Law: ms ~ S/d2 Where ms : market share S : casino size (capacity) d : distance 24

  25. Newton’s Law: F = m/d2 Where F : gravitational force m : mass (of each body) d : distance 25

  26. Reilly’s Law: ms ~ S/d2 Where ms : market share S : casino size (capacity) d : distance / travel time 26

  27. Size Matters 27

  28. Reilly’s Law: ms ~ S/d2 Where ms : market share S : “size” of each trade center d : distance 28

  29. More Slots, More Spending 29

  30. Calculations 30

  31. 31

  32. 32

  33. Other Things Matter, Too 33

  34. “Other Things” that REALLY Matter • Micro-Access • Spaciousness • Slot Mix • Fit & Finish • Management • Marketing / Player Rewards 34

  35. Useful Assets • Hotel • Structured Parking • Variety of Dining Choices • Retail • Entertainment • Players’ Club 35

  36. Comparisons / “Power Ratings” 36

  37. 37

  38. How Do They Do? 38

  39. 39

  40. What is “Potential?” 40

  41. “Potential” involves . . . • Examining more than just one “representative” location • Assume “average” performance? • Or something better? • My “Upside” reasonable, not sky-high 41

  42. Northeast Zone 42

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