Little Vegas Casinos Czech Republic

1. Little VegasCasinosCzech Republic ECON Project Dr. Amacher Fall 2004

3. Introduction • Jonathan Scott • Sara Morgan-Dyke • Thy (Kat) Nguyen • Paige Burns • Dolapo Ogunsanlu • Marcus Onvani

4. Introduction • Our Existing Company • American • Financially Secure • Casino Operator in US and Western Europe • Look to Expand into Central and Eastern Europe • All Economic Indicators Point to The Czech Republic

5. Outline I. Political Environment II. Economy/ Demographics III. Tourism IV. Our Proposal V. Means of Differentiation VI. Potential Problem Areas VII. Competition VIII. Conclusion

6. I. Political Environment • Geography

7. I. Political Environment • Geography • Westernmost, most affluent of Warsaw Pact • Landlocked: Slovak, Poland, Germany, Austria

8. I. Political Environment • History • 1948-1989: Czechoslovakia • 1989: Velvet Revolution • 1993: Czech Republic Social & Economic system changes

9. I. Political Environment • Current Status • Political Structure • Parliamentary Republic • Multi-party democratic political system • Current status of national/international relationships • OECD, WTO, NATO • EU : May 1st, 2004

10. II. Economy/Demographics • Population Statistics/ Demographics • Population • Education • Per capita Income

11. II. Economy/Demographics • National Economical Models • Monopoly regulation • Financial Data • GDP: $69.9B • Per capita: $5,560

12. III. Tourism • Government encouragement • Rising Tourism • Reasons for Increase • Historically intact cities • Fall of communism - 1989 • Proximity to wealthy nations • Inexpensive country to visit (Low CPI)

13. Outline I. Political Environment II. Economy/ Demographics III. Tourism IV. Our Proposal V. Means of Differentiation VI. Potential Problem Areas VII. Competition VIII. Conclusion

14. IV. Our Proposal • Our Existing Company • Financially Stable • Looks to invest in The Czech Republic

15. IV. Our Proposal • Business Type

16. IV. Our Proposal • Entry Strategy • Construct NEW Casinos in 3 cities • Prague • Znojmo (Austrian Border City) • Karlovy (German Border City)

18. IV. Our Proposal • Financing Options • Invest with Internal Funds • Retain Control • Initial Public offering • Increased costs of flotation • Deal with Board and Shareholders • Loss of Control

19. IV. Our Proposal • Dominant Currency is the Koruna (K) • Current Exchange Rate $1=24.27K • Recommendation: Hedge Currency Risk by purchasing currency options • Exchange Rate Risk Source: www.bot.or.th

20. IV. Our Proposal • Marketing Scheme • Media Coverage • Free Travel from Germany and Austria • Billboards in those countries, en route

21. IV. Our Proposal • Profit Proposal • Transworld owns 3 casinos in Czech

22. IV. Our Proposal • Amacher Business Plan • Who are my customers? • What are their expectations? • How are we going to exceed their expectations?

23. V.Monopolistic Segment of our Business • Atmosphere • American Style • Sports Gambling • Customer Service Driven • Dining Featuring an Internationally Diverse Selection • Shows/ Concerts • American Theme • American Celebrity Actors

24. V. Other Means of Differentiation • Barriers to Entry • Food • Complimentary Alcoholic Beverages • Hospitality/Training • Travel

25. Outline I. Political Environment II. Economy/ Demographics III. Tourism IV. Our Proposal V. Means of Differentiation VI. Potential Problem Areas VII. Competition VIII. Conclusion

26. VI. Potential Problem Areas Problem #1: Requirements to Obtain a Casino Operating License • Minimum amount of capital • Clean criminal record • Monitoring system • Fund public benefit programs • CASINO OWNERS MUST BE CZECH CITIZENS!!!!!!!

27. VI. Potential Problem Areas • American Board of Directors • Czech Management and Employees • Work with a Czech Company who holds the Casino License. • Manage All Operations and Lease Gaming Equipment to the Czech Company. • We receive management fees based on a percentage of profits and receive equipment lease fees. Response #1: Requirements to Obtain a Casino Operating License

28. VI. Potential Problem Areas Problem #2: Recent casino bombing

29. VI. Potential Problem Areas • New legislature making casino licenses more difficult to obtain • This incident was limited to a dispute between members of an Israeli organized crime group, not between rivaling casinos. Problem #2: Recent casino bombing con’t

30. VI. Potential Problems Areas Problem #2…..Possibly to our advantage? • Act now: Open a casino while gaming licenses are still easy to obtain. (A future barrier to entry for other companies.) • As a clean and honest company, we have nothing to worry about.

31. VII. Competition: Industry Level: Other Entertainment Competition in Prague: • Opera • Theater • Concerts • Galleries • Museums • Clubs • Cinema • Planetarium

32. VII. Competition: Casino Level: Major Competition In Prague: Casino Admiral: • Largest Casino in the Czech Republic • The most professional managed casino in town. • Upscale bar. • Prime Location on top of the Palace of Culture Casino Palais: • Elegant interior makes it a stop among tourists who aren’t even gambling!

33. VII. Competition:

34. VII. Competition:

35. VII. Competition: Casino Level: In Prague: Few large casinos Proposal: One extra-large casino In Karlovy: One small casino Proposal: One midsize casino In Znojmo: Two small casinos Proposal: One midsize casino

36. VIII. Conclusion • Summary • Czech is geographically desirable • Favorable political environment • Increasing tourism, booming industry • We propose 3 casinos in Czech Republic • Our atmosphere and style is unique, giving us a competitive advantage • We have identified potential problem areas and used them to our advantage • Internally Financed • Long-term objective: approach near monopoly status