KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
ECONOMIC IMPACT OF
PROPOSED GAMING FACILITIES
SOUTH CENTRAL GAMING
ZONE – SUMNER COUNTY
DECEMBER 1, 2010
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
BRIEF AGENDA
• About Civic Economics
• Overview of Scope
• Economic Impact Approach
• Economic Impact of Construction
• Economic Impact of Operations
• Non-Gaming Amenities
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
About Civic Economics
• Established in 2002
• Matt Cunningham in
Chicago, Dan
Houston in Austin
• Diverse practice in
scope and geography
• Not a gaming/tourism
practice
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Scope of Work
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Scope of Work
• Economic impact of construction and
operations of proposed facilities
– Development of IMPLAN inputs from
applicant submissions and Wells/Cummings
• Review of competition for non-gaming
activities
– Focus on this year’s unusual amenities
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Economic Impact Approach
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Economic Impact Approach
• IMPLAN, an industry-standard tool built on
input-output modeling
• Impacts calculated on a statewide basis
• Focus is on equitable treatment of
applicants
– Developed a single model for both applicants
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Economic Impact Approach
• Used data supplied by applicants where
possible
– Any adjustments made for all applicants using
the same methodology
– Adjusted gaming and non-gaming revenues
and employment projections
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
NET Economic Impacts
• The most important thing to learn today:
– Economic impact analysis must focus on
activity that is new to the study area
– Activity that simply moves from one location
or firm to another is not new to the area, and
may be harmful to the local economy
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
NET Economic Impacts
• Export Revenue:
• This refers to the portion of gaming revenues derived from non-Kansas visitors that would not, absent the proposed casino, have occurred in Kansas.
• Import Substitution Revenue:
• This refers to the portion of gaming revenues derived from Kansas residents that would, absent the proposed casino, have occurred outside of Kansas.
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Economic Impact Reporting
• Economic impacts are comprised of three
separate categories.
– Economic Output is the total production or
sales derived from the project.
– Employment is the total number of Kansans
employed both on a full and part time basis in
a given industry.
– Wages is the amount of salaries and benefits
paid to Kansas employees.
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Economic Impact Reporting
• For each of the categories listed above a
direct effect, indirect effect, and induced
effect has been calculated.
– Direct effects capture the initial impact created.
– Indirect effects are additional impacts derived
from businesses providing products or services to
the selected industries.
– Induced effects are the result of increased
household spending due to the direct and indirect
effects.
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Construction Impacts
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Construction Impacts
• Temporary economic activity associated
with designing and building facilities and
associated infrastructure
• Used projected costs through 2016, but
assumed all activity in 2011
– FBO for Peninsula, not for Global
• Simply put, relative cost of proposed
facilities drives relative outcomes
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Construction Impacts
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Construction Impacts
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Operating Impacts
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Operating Impacts
• Used 2014 for first full year of analysis
– Comparable to last year’s 2013 analysis
• Steps to determine inputs:
– Gaming revenue and operational scale
– Calculation of net impacts from Cummings
and Wells analyses
– Final input modification for labor costs
• Wells/Cummings do not include Park City
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Operating Impacts
• Three Scenarios for each proposal
– 2014: Development as proposed
– 2016: Development as proposed
– 2016: Assuming full build out
• Peninsula proposes FBO by 2016, so numbers are
unchanged in final scenario
• Note: Did not calculate impacts on
Peninsula alternate site. Impact reduced in
proportion to gaming revenue.
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Operational Scale
• Applicants projected both non-gaming and
gaming revenues
– Gaming revenue applied here is average of
Cummings and Wells mid-case
• Non-gaming revenues were adjusted in
proportion to average Wells/Cummings
and applicant gaming estimates
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Revenue Forecasts
Number of Slot Machines 1550 Number of Slot Machines 1500
Number of Gaming Tables 60 Number of Gaming Tables 52
Number of Hotel Rooms 80 Number of Hotel Rooms 150
Number of Restaurants 3 Number of Restaurants 3
Estimated gaming revenue: Applicant 140,438,700$ Estimated gaming revenue: Applicant 165,812,555$
Estimated gaming revenue: Wells 108,685,160$ Estimated gaming revenue: Wells 178,683,731$
Estimated gaming revenue: Cummings 141,200,000$ Estimated gaming revenue: Cummings 192,100,000$
Average of Wells & Cummings 124,938,360$ Average of Wells & Cummings 185,391,866$
Ratio of Wells/Cummings to Applicant 0.89 Ratio of Wells/Cummings to Applicant 1.12
Hotel Revenue 1,953,483$ Hotel Revenue 4,201,793$
Food & Beverage Revenue 8,661,821$ Food & Beverage Revenue 13,254,002.59$
Retail Revenue 73,394$ Retail Revenue 1,235,116.12$
Entertainment 1,565,747$ Entertainment N/A
Other Revenue (Travel Plaza) 6,227,404$ Other Revenue (Fees and Leases) 926,959.33$
ADJUSTED REVENUE FORECASTS, 2014 (in 2014 dollars)
Based on contractually obligated development scheduled for completion by 2014
GAMING REVENUE PROJECTIONS
ADJUSTED NON-GAMING REVENUE PROJECTIONS
PROJECT SCOPEPROJECT SCOPE
SOURCE: Applicant Submissions, Wells Scenario 3, Cummings GB4, PB4, Civic Economics
PENINSULA GAMING, MULVANE
GAMING REVENUE PROJECTIONS
ADJUSTED NON-GAMING REVENUE PROJECTIONS
GLOBAL GAMING, WELLINGTON
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Revenue Forecasts
Number of Slot Machines 1800 Number of Slot Machines 2000
Number of Gaming Tables 60 Number of Gaming Tables 60
Number of Hotel Rooms 80 Number of Hotel Rooms 300
Number of Restaurants 3 Number of Restaurants 4
Estimated gaming revenue: Applicant 155,694,600$ Estimated gaming revenue: Applicant 202,342,739$
Estimated gaming revenue: Wells 120,499,558$ Estimated gaming revenue: Wells 209,183,759$
Estimated gaming revenue: Cummings 155,800,000$ Estimated gaming revenue: Cummings 213,400,000$
Average of Wells & Cummings 138,149,779$ Average of Wells & Cummings 211,291,880$
Ratio of Wells/Cummings to Applicant 0.89 Ratio of Wells/Cummings to Applicant 1.04
Hotel Revenue 2,230,486$ Hotel Revenue 8,199,540$
Food & Beverage Revenue 9,524,790$ Food & Beverage Revenue 15,105,642$
Retail Revenue 80,524$ Retail Revenue 1,223,782$
Entertainment 1,889,621$ Entertainment 7,259,386$
Other Revenue (Travel Plaza) 7,985,813$ Other Revenue (Fees and Leases) 1,056,459$
ADJUSTED REVENUE FORECASTS, 2016 (in 2016 dollars)
GLOBAL GAMING, WELLINGTON PENINSULA GAMING, MULVANE
GAMING REVENUE PROJECTIONS GAMING REVENUE PROJECTIONS
ADJUSTED NON-GAMING REVENUE PROJECTIONS ADJUSTED NON-GAMING REVENUE PROJECTIONS
SOURCE: Applicant Submissions, Wells Scenario 4, Cummings GB5, PB5, Civic Economics
PROJECT SCOPE PROJECT SCOPE
Based on contractually obligated develoment scheduled for completion by 2016
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Revenue Forecasts
Number of Slot Machines 2000 Number of Slot Machines 2000
Number of Gaming Tables 60 Number of Gaming Tables 60
Number of Hotel Rooms 200 Number of Hotel Rooms 300
Number of Restaurants 5 Number of Restaurants 4
Estimated gaming revenue: Applicant 172,994,000$ Estimated gaming revenue: Applicant 202,342,739$
Adjusted up based on 200 additional slots
Estimated gaming revenue: Wells 135,385,558$ Estimated gaming revenue: Wells 209,183,759$
Estimated gaming revenue: Cummings 160,528,732$ Estimated gaming revenue: Cummings 213,400,000$
Average of Wells & Cummings 147,957,145$ Average of Wells & Cummings 211,291,880$
Ratio of Wells/Cummings to Applicant 0.86 Ratio of Wells/Cummings to Applicant 1.04
Hotel Revenue 2,478,318$ Hotel Revenue 8,198,930$
Food & Beverage Revenue 10,583,100$ Food & Beverage Revenue 15,104,517$
Retail Revenue 89,471$ Retail Revenue 1,223,691$
Entertainment 2,099,579$ Entertainment 7,258,845$
Other Revenue (Travel Plaza) 8,873,126$ Other Revenue (Fees and Leases) 1,056,381$
ADJUSTED REVENUE FORECASTS, 2016 (in 2016 dollars)
Based on applicant's proposed full build-out
GLOBAL GAMING, WELLINGTON PENINSULA GAMING, MULVANE
GAMING REVENUE PROJECTIONS
ADJUSTED NON-GAMING REVENUE PROJECTIONS*ADJUSTED NON-GAMING REVENUE PROJECTIONS
SOURCE: Applicant Submissions, Wells Scenario 4, Cummings GB6, PB5, Civic Economics
Values carried from above
* Non-gaming revenue for Global is projected to increase in proportion to additional slot machines
PROJECT SCOPE PROJECT SCOPE
GAMING REVENUE PROJECTIONS
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Net Gaming Revenue Adjustment
• Cummings and Wells analysis allows an
estimate of gaming revenue flows among
states
• This analysis uses the sum of:
– Import Substitution
– Export
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Money Flows Across State Lines
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Money Flows Across State Lines
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Money Flows Across State Lines
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Adjustment for Labor Cost
• Applicant submissions over three years are
widely divergent on jobs and labor costs
• IMPLAN assumes excessive labor relative to
revenue for a new industry in Kansas
• Solution: We have applied the average of
current applicant labor cost submissions:
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Finally, on to the numbers …
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Operating Impact
YEAR OPERATOR TOTAL OUTPUT
2014 GLOBAL 118,749,883$
PENINSULA 144,652,664$
2016 GLOBAL 136,237,230$
PENINSULA 188,994,697$
2016 FBO GLOBAL 156,263,782$
PENINSULA 188,994,697$
Source: Applicant Submissions, IMPLAN, Civic Economics
OPERATING IMPACTS COMPARISON
ECONOMIC OUTPUT IN THEN-YEAR DOLLARS
RELATIVE IMPACTS
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Operating Impact, Global
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Operating Impact, Peninsula
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Non-Gaming Competitive Impacts
• New Gaming Spending
• Non-Gaming Amenities
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
New Gaming Spending by Kansans
• Remaining projected revenue after NET is new gaming spending by Kansans
• This is money that previously went to other discretionary activity
• Beyond scope here to evaluate sources of that money, but totals are as follows
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
New Gaming Spending by Kansans
• Primary competitive impact on region is
diversion of discretionary spending to
gaming from other activities
• In comparing proposals, these values
should be thought of as an offset against
economic impact gains from gaming
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Standard Non-Gaming Amenities
• Global
– Food and beverage
services
– Hotel rooms
– Entertainment venue
– Golf course
improvements
• Peninsula
– Food and beverage
services
– Hotel rooms
– Entertainment venue
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Novel Non-Gaming Amenities
• Global Road Race
Course
– To open after 2016, so
not included in impact
analysis above
– Rough cost of $7
Million
• Peninsula Equestrian
Center
– Arena, barns, and
support facilities for
horse shows, rodeos,
etc.
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Global Road Race Course
• Global has not provided an impact study or data
that would allow us to produce one
• Global did not include incremental gaming
revenue from track in submissions
• Auto racing and gaming may well make a
complementary match, as anticipated at Kansas
Speedway
• Should additional information appear, Civic
Economics will review at Board’s request
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Peninsula Equestrian Center
• Peninsula provided a
study by Crossroads
Consulting estimating
events, attendance,
and impact
• Civic Economics was
asked to consider the
reasonability of that
study
• We reviewed that and
another Crossroads
study for York County,
SC
• We do not take a
position on the
gaming benefits of
horse facilities
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Crossroads Study
• Use of IMPLAN
appears solid
• Outputs of a model
are driven by inputs,
so that is the issue
here
• Are estimates of
events, usage,
visitation, and visitor
spending reasonable
for this facility?
• Two items for
comparison:
– OKC Fair Park
– York County, SC
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Crossroads Assumptions
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Crossroads Impact Findings
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
State Fair Park, OKC
• Peninsula Facility
• 560 stalls (400
Permanent)
• Indoor arena seating
~4000 for equine
events
• State Fair Park
• 2520 stalls (1189
permanent)
• Indoor arena seating
~10,000 for equine
events
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
State Fair Park, OKC
• 2010 events (from
okstatefairpark.com):
– 27 distinct events,
some of which overlap
– 114 event days
– Average 4.2
days/event
– Assuming usage days
at 1.179, total usage at
134 days
• “Horse Show Capital
of the World”
• Site does not include
visitation numbers
• Unable to find
economic impact
study of the facility
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
OKC State Fair Park vs. Peninsula
• OKC accommodates
3x to 4x as many
horses
• Primary arena seats
more 2x
• 27 events, 114 event
days, 134 usage days
• Crossroads forecasts
usage of 75% - 88%
of that achieved at far
larger OKC facility
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
York County, SC
• Crossroads provided
feasibility and impact
study to York County
in 2009
• Multi-Use Events
Center highly focused
on equine and ag
events
• Separate design
study proposes 300-
600 stalls with an
indoor, climate-
controlled arena
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
York County, SC
• Due to different event
classes, cannot make
clear comparisons
between event
forecasts
• Mid-, high-impact
events (25-28)
comparable to
estimates for Sumner
(21-24)
• Visitation forecast for
Sumner exceeds
those for York by
~2.5x
• Visitor difference
drives difference in
total spending and
impacts
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Crossroads: Two Questions
• How can Sumner
facility perform at
75% or better
compared to much
larger OKC?
• Why is visitation
forecast much higher
at Sumner than at
York?
• Your satisfaction with these answers will drive
Board’s reading of Morowitz estimates of
incremental gaming revenue due to facility.
KRGC: FACILITIES REVIEW BOARD MEETING
DECEMBER 1, 2010, TOPEKA, KANSAS
Thank you.
CivicEconomics.com
dhouston@ or mattc@