PRESIDENT S MESSAGE. Frank J. Fahrenkopf, Jr. President and CEO American Gaming Association

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2 PRESIDENT S MESSAGE The American Gaming Association (AGA) is pleased to present the 2006 State of the States: The AGA Survey of Casino Entertainment. As in past years, the 2006 State of the States survey presents a comprehensive look at the U.S. commercial casino industry, including the contributions of the industry to state and local economies, as well as its national impact. This year s survey, as it did in 2005, also includes detailed national and state-by-state economic data on the growing racetrack casino sector. Hurricanes Katrina and Rita brought unprecedented challenges to the commercial casino industry last year, but the numbers indicate that despite these hardships, the industry remained strong, serving as a vital source of jobs, tax revenues and tourism dollars in the communities where we operate. This report includes an in-depth look at casino visitation, as well as a profile of the American casino gambler. It also includes results of public opinion polling indicating acceptability of casino gaming remains high. This year s survey also features the results of a new poll of Internet gamblers. While AGA member companies currently are not involved in the online gaming market, there is no doubt online gaming has captured the attention of the news media, members of Congress and the American public. This survey takes a closer look at the small but growing percentage of Americans who participate in online gaming, giving us a snapshot of who they are, how and why they gamble online, and their attitudes about the activity. This year s survey includes many of the special features we debuted in our 0th anniversary edition last year, including an expanded section on poker, a detailed chart of various forms of gaming across the country and a pocket guide to the key facts presented in the survey. Each year, we strive to make State of the States your definitive resource on the U.S. commercial casino industry, and this report once again fulfills that mission. We hope it will serve as a valuable reference tool for you throughout the year. Frank J. Fahrenkopf, Jr. President and CEO American Gaming Association

3 NOTES Statistics Notes Because the American Gaming Association (AGA) represents the commercial casino industry, this survey strives to give the reader a detailed picture of that particular segment of the gaming industry. For the purposes of this survey, we have defined commercial casinos to include private sector (i.e., nongovernmental) land-based, riverboat and dockside casinos as well as racetrack casinos in Iowa and Louisiana. As in 2005, Native American casinos are noted only under the Casino Locations by Category section. The map includes Class III locations, which are compacted (state-negotiated), Las Vegas-style casinos, as well as Class II locations, which are noncompacted casinos offering bingo and/or electronic bingo devices. Information on racetrack casino operations, which are hybrids of casinos, lotteries and parimutuel facilities, is documented separately in the Spotlight on Racetrack Casinos and State-by- State Economic Impact: Racetrack Casinos sections in order to provide a more complete picture of the overall economic contributions of this important industry sector. For Iowa and Louisiana, where gaming operations include both commercial casinos and racetrack casinos, statistics from both types of facilities are included in overall commercial casino figures for the state. In the State-by-State Economic Impact: Racetrack Casinos section, there is a significant difference in the percentage of revenues retained by operators in states where gaming machines at pari-mutuel facilities are operated by the state lottery versus those states in which gaming licensees are the owners and operators of gaming machines. In the case of the former, the gaming machines are called Video Lottery Terminals (VLTs) and the lottery commission takes in all revenues before making distributions to stakeholders such as track owners, breeders and others. States that operate in this manner include Delaware, New York, Rhode Island and West Virginia. Five other states Iowa, Louisiana, Maine, New Mexico and Oklahoma operate and tax their gaming machines at pari-mutuel facilities more similarly to traditional casino states. That is, regulations allow operators to earn gross revenues before requiring those operators to pay out taxes, supplements to purses at the tracks, etc. One exception is Maine, where the state levies a percent tax on gross revenue before taxing net revenue as well. In the case of either regulatory environment, the data provided detailing the percentage of revenues retained by operators should in no way be interpreted as profit margin. These are revenues earned before paying other non-gaming taxes and employee salaries, as well as a host of other operating expenses. State visitation figures reported in the Economic Impact section will not equal the total visitor figure reported in the Casino Visitation section because most riverboat states have controlled access and, therefore, count individual visits (each time a patron enters a casino), while land-based casinos count total visitors (who may enter casinos multiple times during a single visit). Unless otherwise noted, all statistics in this survey are for calendar year Polling Notes Figures reported in the polling data may not add up to 00 percent because of rounding.

4 CONTENTS EXECUTIVE SUMMARY 2 NATIONAL ECONOMIC IMPACT OF CASINO ENTERTAINMENT 4 Spotlight on Racetrack Casinos STATE-BY-STATE ECONOMIC IMPACT Commercial Casinos Colorado Illinois Indiana Iowa Louisiana Michigan Mississippi Missouri Nevada New Jersey South Dakota Racetrack Casinos Delaware Iowa Louisiana Maine New Mexico New York Oklahoma Rhode Island West Virginia SPECIAL SECTION: GAMBLING AND THE INTERNET 2 CASINO VISITATION 28 SPOTLIGHT ON POKER 30 CASINO CUSTOMERS: WHO ARE THEY? 33 AMERICAN PERCEPTIONS OF CASINO ENTERTAINMENT 34 APPENDIX 35 Glossary of Gaming Terms Index of Charts Methodology Acknowledgements AGA Survey of Casino Entertainment

5 EXECUTIVE SUMMARY EXECUTIVE SUMMARY National Economic Impact of Casino Entertainment In 2005, the U.S. commercial casino industry continued its recent trend of significant growth, despite major challenges brought by Hurricanes Katrina and Rita. Last year, the 455 commercial casinos in states generated more than $30 billion in gross gaming revenue for the first time, a nearly 5 percent increase over 2004 totals. Overall, commercial casinos employed more than 354,000 people and provided wages totaling $2.6 billion in The industry also continued to be a major contributor to state and local economies, distributing more than $4.9 billion in direct gaming taxes, a more than 5 percent increase over 2004 contributions. All but one state had an increase in gross gaming revenues in 2005, with Nevada (+0.3 percent) exhibiting the most significant growth. Mississippi, whose Gulf Coast gaming industry was drastically affected by Hurricane Katrina, was the only state with a decrease in revenues (-.3 percent). Also of note, 2005 marked the first time gross gaming revenues in Nevada surpassed $ billion, and in New Jersey surpassed $5 billion. Spotlight on Racetrack Casinos The racetrack casino sector also continued to grow in 2005, as racetrack casinos opened for the first time in Maine and Oklahoma and enjoyed their first full year of operation in New York. The 29 operational racetrack casinos in nine states generated more than $3. billion in gross gaming revenue, a more than 9 percent increase over 2004 totals. Racetrack casinos distributed $.28 billion in direct gaming taxes to state and local governments, a nearly 20 percent increase over the previous year, and employed more than 7,000 people. Every racetrack casino state witnessed a healthy increase in gross gaming revenues in 2005, led by New York (+53.3 percent) and New Mexico (+39.7 percent). Louisiana (+6.2 percent) also witnessed double-digit increases. Special Section: Gambling and the Internet For the first time, State of the States includes an in-depth survey of individuals who gamble online. While polling indicates only 4 percent of Americans gamble online, this new form of entertainment has in a very short time gone from barely registering with the public and elected officials to being a major story in the nation s media and the subject of intense debate in Washington. The survey, conducted by Peter D. Hart Research Associates, provides an interesting snapshot of the men and women who gamble on the Internet. According to the results, the online gambler is younger, more highly educated and more affluent than both the general public and the patrons of traditional bricks-and-mortar casinos. In fact, results show the median age of the online gambler is only 3 years old. Online gamblers also are very active on the Internet, using it as a tool to conduct many day-today activities, and they frequently participate in other forms of gambling. The survey also shows that online gambling truly is an emerging phenomenon 70 percent of online gamblers say they started playing only in the last two years. However, there is confusion among online gamblers about the legality of what they re doing. Fewer than one in five (9 percent) online gamblers realize or are willing to admit that online AGA Survey of Casino Entertainment

6 EXECUTIVE SUMMARY CONTINUED gambling is currently illegal in the United States. Also, despite the fact that they regularly gamble online, many are concerned about the integrity of the games. More than half (55 percent) agree at least somewhat that online casinos find ways to cheat players, and 46 percent believe other players who gamble online find ways to cheat. Casino Visitation and Participation A full quarter of the total U.S. population (25 percent) visited a casino in 2005, according to Harrah s Entertainment/TNS NFO polling data. The 52.8 million casino visitors made a total of 322 million trips 3 million more trips than were made in Results of a 2006 public opinion poll conducted by Luntz, Maslansky Strategic Research reveal that casino gambling continues to be second only to playing the lottery in terms of popularity among the various forms of gambling. The poll indicates that 35 percent of Americans visited a casino during the past year, which is equal to the percentage who reported visiting in Among American adults, slightly more males (39 percent) than females (32 percent) visited a casino in 2005, and more than one-third of all casino visitors (35 percent) hailed from Western states. The North Central and South regions slightly increased their share of casino visitors last year, while the Northeast witnessed a slight decline in its share. Spotlight on Poker The poker boom that began in 2004 continued last year, with nearly one in five American adults (8 percent) reporting they played poker in According to polling results, younger adults (2-39 years old) continue to play poker more than any other age group, with more than one-third indicating they played in the past year. And nearly twice as many men as women reported playing poker in 2005 (25 percent vs. 3 percent). Poker enthusiasts play the game in a variety of venues. More than three-quarters (78 percent) of poker players reported playing with friends and family in the past year, and 27 percent have played in a casino or tournament. One in 0 reported playing on the Internet for money. When asked about their outlook on the future of poker in America, more than two-thirds predict the boom is here to stay. Revenues from poker also increased in In Nevada and New Jersey, the only commercial casino states that track poker revenue, Americans spent more than $207 million on organized poker in 2005, a whopping 37 percent increase over 2004 totals. There also were 545 card rooms in five states. Among them, the four states that track card room revenues generated more than $ billion in annual revenue last year. American Perceptions of Casino Entertainment Survey results also indicate that overall acceptability of casino gambling remains high, with nearly 80 percent indicating it is acceptable for themselves or others. Americans also continue to view casino gambling as a question of personal choice and as a valuable part of a community s entertainment and tourism options AGA Survey of Casino Entertainment 3

7 NATIONAL ECONOMIC IMPACT OF CASINO ENTERTAINMENT CASINO LOCATIONS BY CATEGORY Commercial Casino Racetrack Casino,2,3 Tribal Casino 5,6 Card Room 4 Electronic Gaming Device In Rhode Island, there are video lottery terminals operating at a closed jai alai fronton, not considered a racetrack casino, but a pari-mutuel facility. 2 Racetrack casinos in Florida and Pennsylvania are legal but not yet operational. Pennsylvania also has legalized stand-alone slot facilities, but there are none operating. 3 The states with racetrack casinos operate Class III gaming machines. There are two racinos in Alabama not indicated on this map that have Class II machines only, which are legal only in the counties where they operate. 4 Native American casinos noted here include both Class II and Class III facilities. States with Class II gaming only are Alabama, Alaska, Florida, Nebraska, Texas and Wyoming. 5 The states with card rooms indicated here do not include states that have commercial casinos with poker facilities. 6 The card rooms in Washington operate blackjack and other house- or player-banked card games in addition to poker. 7 The electronic gaming devices operating in the states indicated on this map are recognized as legal operations. There are some states with similar facilities, but the machines may not be authorized. Sources: American Gaming Association, National Indian Gaming Commission, State Gaming Regulatory Agencies 7 CASINOS PER STATE State Alabama 3 * Alaska 3 * Arizona 24 California Colorado 46 º 2 Connecticut 2 Delaware 3 Florida + 7 * 5 2 Idaho 6 Illinois 9 Indiana 0 Iowa Kansas 5 Louisiana ,4 Maine Michigan 3 7 Minnesota 32 Mississippi 29 2 Missouri Montana Nebraska * Nevada ,200 New Jersey 2 New Mexico 5 2 New York 5 7 North Carolina 2 North Dakota 7 Oklahoma 3 83 Oregon 9 2,044 Pennsylvania + Rhode Island 2 South Dakota 36 º,460 Texas 2 * Washington West Virginia 4,742 Wisconsin 27 Wyoming * TOTAL ,247 Number 6 of States *Class II games only ºLimited-stakes gaming +Legalized but not operational As of December Located at the racetracks 3 Includes racetrack casinos 4 Includes only locations with the maximum number of devices (20) Video lottery terminals 5 slots or fewer 5 Includes only locations with gross gaming revenue of at least $ million 6 Racetrack casinos in Florida and Pennsylvania are legal but not yet operational AGA Survey of Casino Entertainment

8 NATIONAL ECONOMIC IMPACT OF CASINO ENTERTAINMENT CONTINUED In 2005, U.S. commercial casinos: Employed 354,92 people Paid wages of $2.6 billion Contributed $4.93 billion in direct gaming taxes Earned $30.29 billion in gross gaming revenue COMMERCIAL CASINO TAX REVENUE BY STATE, 2004 vs $ Millions 2005 $ Millions CO IL IN IA LA MI MS MO NV NJ SD +.6% -6.5% +2.3% +5.7% +8.6% +8.8% -9.4% +2.7% +7.4% +4.2% +5.0% Source: State Gaming Regulatory Agencies Iowa revised its tax contribution figures after the release date of the 2005 State of the States report. This year s report has been amended to reflect the more accurate data. 2 The 2005 State of the States incorrectly excluded local parish taxes in its 2004 tax revenue figure. This year s report has been amended to correct this error. 3 Figure does not include taxes paid by two gaming properties that were unable to access records to participate in the AGA s data-gathering efforts. U.S. commercial casinos contributed $4.93 billion in direct gaming taxes to state and local governments in 2005, a 5. percent increase over 2004 contributions. Increases occurred in all but two states, and both Michigan and Louisiana saw double-digit increases in contributions. Decreased contributions in Illinois can be attributed to the mid-year reduction of the gaming tax rate in that state. The Mississippi decrease is a product of the closure of several Gulf Coast casino properties in the wake of Hurricane Katrina AGA Survey of Casino Entertainment 5

9 NATIONAL ECONOMIC IMPACT OF CASINO ENTERTAINMENT CONTINUED EMPLOYMENT Commercial Casino Jobs by State, 2004 vs State Change Nevada 9, , % New Jersey 45,50 44,542-2.% Mississippi 28, , % Louisiana 20,048 3,4 8,47-7.9% Indiana 7,377 5, % Missouri,200,00-0.9% Illinois 8,628 8, % Iowa 8,799 8,56-2.7% Colorado 7,703 8, % Michigan 7,572 7,87-5.% South Dakota,830, % (CY03) (CYO4) Total 349,20 354,92 +.6% 0-0,000 0,00-20,000 20,00-30,000 30,00-40,000 40,00-50,000 50,000+ Sources: State Gaming Regulatory Agencies, State Gaming Associations, Individual Properties Figure for locations with gross gaming revenue in excess of $ million for FY05. 2 For Mississippi properties affected by Hurricane Katrina, figures represent totals as of the end of second quarter Louisiana properties affected by Hurricanes Katrina and Rita submitted pre-storm employment data for this report. 4 Figure does not include employees from two gaming properties that were unable to access records to participate in the AGA s data-gathering efforts. Commercial casinos continued to be an important job source in 2005, employing more than 354,000 people last year. Employment numbers in Colorado, Illinois, Nevada and South Dakota all increased in 2005, as did overall commercial casino employment. Commercial Casino Wages, $ Billions 5 Commercial casino employees earned $2.6 billion in wages (including benefits and tips) in 2005, a slight increase over 2004 figures. 2 $.5 $.8 $2.2 $2.6 $0.9 $ Sources: State Gaming Regulatory Agencies, Individual Commercial Casino Properties AGA Survey of Casino Entertainment

10 NATIONAL ECONOMIC IMPACT OF CASINO ENTERTAINMENT CONTINUED CONSUMER SPENDING U.S. Consumer Spending on Commercial Casino Gaming, Total consumer spending at U.S. commercial casinos totaled $30.29 billion in 2005, marking the first time commercial gaming revenues have surpassed $30 billion. The figure represents a 4.7 percent increase over 2004 totals, indicating the resilience of the industry in the wake of last year s hurricanes, as well as the increasing popularity of commercial gaming. $ Billions $22.2 $28.93 $26.5 $25.7 $27.02 $24.5 $ $9.7 $8.2 $7. $ Sources: Christiansen Capital Advisors ( ) State Gaming Regulatory Agencies ( ) State-by-State Consumer Spending on Commercial Casino Gaming, 2004 vs State Change Colorado $ million $ million +4.% Illinois $.78 billion $.799 billion +4.7% Indiana $2.369 billion $2.44 billion +.9% Iowa $.064 billion $.06 billion +3.9% Louisiana $2.63 billion $2.232 billion +3.2% Michigan $.89 billion $.229 billion +3.4% Mississippi $2.780 billion $2.467 billion -.3% Missouri $.473 billion $.532 billion +4.0% Nevada $0.562 billion $.649 billion +0.3% New Jersey $4.807 billion $5.08 billion +4.4% South Dakota $78.09 million $ million +7.% Source: State Gaming Regulatory Agencies In 2005, consumer spending on commercial casinos increased in every state except Mississippi, which was impacted by the closure of its Gulf Coast casinos after Hurricane Katrina. Both Iowa and Nevada exhibited double-digit increases. Also of note, 2005 marked the first time consumer spending on commercial casinos in New Jersey has exceeded $5 billion AGA Survey of Casino Entertainment 7

11 NATIONAL ECONOMIC IMPACT OF CASINO ENTERTAINMENT CONTINUED Commercial Casino Spending vs. Other Spending Choices, 2005 $275 $42.39 $08.59*. Commercial Casinos 2. Home Remodeling 3. Quick-Service Meals 4. Wireless Services* 5. Cable Television 6. Cosmetics and Toiletries 7. Sporting Equipment 8. Amusement/Theme Parks 9. U.S. Movie Box Office Sales $30.29 $63.09 $48 $8.7 $.2 $ * Figure for July 2004 July Sources: -American Gaming Association; 2-National Association of Home Remodeling Industries; 3-National Restaurant Association; 4-Cellular Telecommunications and Internet Association; 5-National Cable and Telecommunications Association; 6-Kline Company s Cosmetics and Toiletries USA Annual Survey; 7-Sporting Good Manufacturers Association; 8-International Association of Amusement Parks and Attractions; 9-Motion Picture Association of America Consumers in 2005 spent less on commercial casinos than on wireless services or cable television, but more than they spent on sporting goods or movie tickets. Top 20 U.S. Casino Markets, 2005 LOCATION REVENUE Las Vegas Strip, Nev. $6.03 billion 2 Atlantic City, N.J. $5.08 billion 3 Chicagoland, Ind./Ill. $2.44 billion 4 Detroit, Mich. $.229 billion 5 Tunica/Lula, Miss. $.87 billion 6 Connecticut $ million 7 St. Louis, Mo./Ill. $ million 8 Reno/Sparks, Nev. $ million 9 Boulder Strip, Nev. $ million 0 Shreveport, La. $84.23 million Source: The Innovation Group Based on 245 days of operation in LOCATION REVENUE Lawrenceburg/Rising Sun/ Elizabeth/Vevay, Ind. $ million 2 Kansas City, Mo. (includes St. Joseph) $78.56 million 3 Downtown Las Vegas, Nev. $654.2 million 4 Laughlin, Nev. $62.8 million 5 Biloxi, Miss. $ million 6 New Orleans, La. $534.4 million 2 7 Black Hawk, Co. $53.88 million 8 Lake Charles, La. $ million 3 9 Council Bluffs, Iowa $ million 20 Charles Town, W. Va. $44.2 million 2 Based on 330 days of operation in 2005, with the exception of Harrah's New Orleans, which did not reopen until 2006 due to damage from Hurricane Katrina. 3 Based on 348 days of operation in As in 2004, five U.S. commercial casino markets had total gross gaming revenues exceeding $ billion last year. The ranking stayed relatively static from 2004 to 2005, with the exception of those markets most dramatically affected by Hurricanes Katrina and Rita AGA Survey of Casino Entertainment

12 NATIONAL ECONOMIC IMPACT OF CASINO ENTERTAINMENT CONTINUED SPOTLIGHT ON RACETRACK CASINOS Racetrack Casino Tax Distributions to State and Local Governments, 2004 vs $ Millions 2005 $ Millions (FY 04) (FY 05) DE IA LA 3 ME NM NY 3 OK RI WV +5.% -4.2% +6.2% N/A +42.6% +53.3% N/A +0.% +5.3% Source: State Gaming Regulatory Agencies Iowa and West Virginia revised their racetrack casino tax distribution figures after the release date of the 2005 State of the States report. This year s report has been amended to reflect the more accurate data. 2 The 2005 State of the States incorrectly excluded local parish taxes in its 2004 tax revenue figure. This year s report has been amended to correct this error. 3 There are no 2004 statistics for Maine and Oklahoma because racetrack casinos in the states only became operational in In 2005, racetrack casinos alone contributed $.28 billion to state and local governments where they operated, a 9.6 percent increase over 2004 figures. Racetrack casino tax contributions increased in every state except Iowa, where a reduction of the gaming tax rate on racetrack casinos led to a decrease in contributions. The biggest increases occurred in New York (+53.3 percent), which experienced its first full year of racetrack casino operations in 2005, and New Mexico (+42.6 percent), where one facility enjoyed its first full year of operation and others increased the number of machines available..74 Racetrack Casino Jobs by State, 2004 vs State Change Delaware 2,370 2, % Iowa 2,207 2, % Louisiana,856 2, % Maine _ 2 37 N/A New Mexico % New York,83 2, % Oklahoma _ N/A Rhode Island,057, % West Virginia 4,404 4,79-5.% Total 4,225 7, % Racetrack Casino State Source: State Gaming Regulatory Agencies Louisiana properties affected by Hurricanes Katrina and Rita submitted pre-storm employment data for this report. 2 There are no 2004 statistics for Maine and Oklahoma because racetrack casinos in these states only became operational in Overall, racetrack casinos employed more than 7,000 people in 2005, a more than 20 percent jump over 2004 figures. The increase was primarily due to the ramp-up of employment levels at properties in New Mexico, New York and Louisiana that opened in late 2004, as well as the expansion of a number of properties in other states AGA Survey of Casino Entertainment 9

13 NATIONAL ECONOMIC IMPACT OF CASINO ENTERTAINMENT CONTINUED Consumer Spending on Racetrack Casinos, $ Billions $2.86 $3.2 $2.2 $2. $ Source: State Gaming Regulatory Agencies In 2005, consumer spending at racetrack casinos topped $3 billion for the first time, representing a 9. percent increase over 2004 totals. Top 0 U.S. Racetrack Casino Markets, 2005* Location Revenue Charles Town, W.Va. $44.2 million 2 Providence, R.I. $ million 3 Dover/Harrington, Del. $ million 4 Delaware Park/Wilmington, Del. $ million 5 Chester, W.Va. $ million 6 Wheeling, W.Va. $94.72 million 7 Des Moines, Iowa $8.26 million 8 Council Bluffs, Iowa $25.58 million 9 Lake Charles/Vinton, La. $20.4 million 0 Shreveport, La. $0.26 million Source: The Innovation Group *New Mexico does not report revenue by individual facility. State-by-State Consumer Spending on Racetrack Casinos, 2004 vs $ Millions 2005 $ Millions DE IA LA ME NM NY OK RI WV +4.7% +6.3% +6.2% N/A +39.7% +53.3% N/A +7.% +5.6% Source: State Gaming Regulatory Agencies There are no 2004 statistics for Maine and Oklahoma because racetrack casinos in these states only became operational in Consumer spending on racetrack casinos increased in every state in New York exhibited the most significant growth (+53.3 percent), as 2005 was the first full year of operations for racetrack casinos in that state. New Mexico also exhibited strong growth (+39.7 percent), due to one property s first full year of operation and expansion at other facilities in the state also witnessed the advent of racetrack casinos in Maine and Oklahoma AGA Survey of Casino Entertainment

14 STATE-BY-STATE ECONOMIC IMPACT: COMMERCIAL CASINOS Despite major challenges brought by Hurricanes Katrina and Rita, the overall U.S. commercial casino industry in 2005 continued to be a major contributor to the national economy and to the states and local communities where it operates. Last year, the commercial casino industry which included 455 casinos nationwide generated more than $30 billion in gross gaming revenue for the first time ever, of which $4.93 billion was paid in direct gaming taxes. The industry employed 354,92 individuals, who earned $2.6 billion in salaries, including benefits and tips. Gross gaming revenues exhibited healthy growth in every state but Mississippi, where Hurricane Katrina forced the closure of its Gulf Coast casinos for the entire fourth quarter of Nevada witnessed the most significant increase (+0.3 percent), primarily due to increased visitation and the opening of several major new properties and property additions last year. Also of note, Illinois in 2005 witnessed increases in gross gaming revenue and casino employment for the first time since 2002, most likely due to the mid-year adjustment of state gaming tax rates to pre-2003 levels. COLORADO Current # of Operating Casinos 46 Gaming Format Land-based (limited-stakes) Casino Employees 8,029 Casino Employee Wages $ million (includes tips and benefits) Gross Casino Gaming Revenue $ million Gaming Tax Revenue $0.07 million How Taxes Spent Local communities, historic preservation, general fund Legalization Date November 990 First Casino Opening Date October 99 State Gaming Tax Rate Graduated tax rate with a maximum tax of 20% on gaming revenue Mode of Legalization Statewide vote, legislative action Visitor Volume Data not available Source: Colorado Gaming Association, Colorado Gaming Control Board Central City Black Hawk Cripple Creek 2006 AGA Survey of Casino Entertainment

15 STATE-BY-STATE ECONOMIC IMPACT: COMMERCIAL CASINOS CONTINUED ILLINOIS Current # of Operating Casinos 9 Gaming Format Riverboat, dockside Casino Employees 8,987 Casino Employee Wages $ million (includes tips and benefits) Gross Casino Gaming Revenue $.799 billion Gaming Tax Revenue $ million How Taxes Spent Economic development, local government Legalization Date February 990 First Casino Opening Date September 99 State Gaming Tax Rate Graduated tax rate from 5% to 50% of gross gaming revenue, $2 to $3 admissions tax Mode of Legalization Legislative action Visitor Volume 5.32 million Sources: Illinois Casino Gaming Association, Illinois Gaming Board Reflects admissions and wagering tax rates as of July, Previous Illinois tax rate was graduated between 5% and 70% of gross gaming revenue, with a $3 to $5 per patron admissions tax. Rock Island E. Peoria Alton Elgin Aurora Joliet E. St. Louis Metropolis INDIANA Current # of Operating Casinos 0 Gaming Format Riverboat, dockside Casino Employees 5,060 Casino Employee Wages $57.09 million (includes tips and benefits) Gross Casino Gaming Revenue $2.44 billion Gaming Tax Revenue $ million How Taxes Spent Economic development, local government Legalization Date November 993 First Casino Opening Date December 995 State Gaming Tax Rate Mode of Legalization Visitor Volume Sources: Casino Association of Indiana, Indiana Gaming Commission Graduated tax rate from 5% to 35% of gross gaming revenue, $3 per patron admission tax Local option vote, legislative action million Michigan City E. Chicago Gary Hammond Lawrenceburg Rising Sun Evansville Markland Dam Elizabeth AGA Survey of Casino Entertainment

16 STATE-BY-STATE ECONOMIC IMPACT: COMMERCIAL CASINOS CONTINUED IOWA Current # of Operating Casinos 3 (0 riverboats, 3 racetrack casinos) Gaming Format Riverboat, dockside, racetrack casinos Casino Employees 8,56 Casino Employee Wages $ million (includes tips and benefits) Gross Casino Gaming Revenue $.06 billion Gaming Tax Revenue $ million How Taxes Spent Infrastructure improvements, local government, general fund, schools and universities, the environment Legalization Date July 989 First Casino Opening Date April 99 State Gaming Tax Rate Graduated tax rate with a maximum tax of up to 22% on gross gaming revenue at riverboats and up to 24% at racetracks with slots and table games Mode of Legalization Local option vote, legislative action Visitor Volume 2.28 million Sources: Iowa Gaming Association, Iowa Racing and Gaming Commission Sioux City Altoona Marquette Dubuque Clinton Osceola Davenport Bettendorf Council Bluffs Burlington Fort Madison LOUISIANA Current # of Operating Casinos 8 (4 riverboats, land-based, 3 racetrack casinos) Gaming Format Riverboat, land-based, racetrack casinos Casino Employees 8,47, 2 Casino Employee Wages $ million (includes tips and benefits) 2 Gross Casino Gaming Revenue $2.232 billion Gaming Tax Revenue $53.7 million 2 How Taxes Spent General fund, city of New Orleans, public retirement systems, state capitol improvements, rainy day fund Legalization Date July 99 First Casino Opening Date October 993,2, 3, 4 State Gaming Tax Rate Riverboat casinos: 2.5% Land-based casino: $60 million annual tax or 2.5% of gross gaming revenue, whichever is greater Racetrack casinos: 8.5% tax on gross gaming revenue, 8% of net revenue paid to horsemen, 4% of the above net revenue then paid to local parish Mode of Legalization Local option vote, legislative action Visitor Volume 32.5 million Sources: Casino Association of Louisiana, Louisiana Gaming Control Board Louisiana properties affected by Hurricanes Katrina and Rita submitted pre-storm employment data for this report. 2 Figure does not include data from two gaming properties that were unable to access records to participate in the AGA s data-gathering efforts. 3 Riverboat casinos pay an additional 4% to 6% to local governing authorities under the terms of local boarding fee agreements. 4 Bally s New Orleans pays 8.5% to 2.5% in gross gaming revenue, depending on monthly revenues. Shreveport Bossier City Vinton Opelousas Lake Charles Baton Rouge New Orleans Kenner 2006 AGA Survey of Casino Entertainment 3

17 STATE-BY-STATE ECONOMIC IMPACT: COMMERCIAL CASINOS CONTINUED MICHIGAN Current # of Operating Casinos 3 Gaming Format Land-based Casino Employees 7,87 Casino Employee Wages $ million (includes tips and benefits) Gross Casino Gaming Revenue $.229 billion Gaming Tax Revenue $33.93 million How Taxes Spent Public safety, capital improvements, youth programs, tax relief, neighborhood development and improvement, infrastructure repair and improvement Legalization Date December 996 First Casino Opening Date July 999 State Gaming Tax Rate 24% tax on gross gaming revenue (.9% to city of Detroit, 2.% to state of Michigan); effective tax rate of 23.02% (including taxes and fees) Mode of Legalization Local advisory vote, statewide voter referendum, legislative action Visitor Volume Data not available Source: Michigan Gaming Control Board MISSISSIPPI Current # of Operating Casinos 29 Gaming Format Dockside, land-based Casino Employees 28,820 2 Casino Employee Wages Gross Casino Gaming Revenue Gaming Tax Revenue How Taxes Spent $ million (includes tips and benefits) $2.467 billion $30.72 million Infrastructure repair and improvement, public safety, housing, education, transportation, health care services, youth counseling programs Legalization Date 990 First Casino Opening Date August 992 State Gaming Tax Rate Graduated tax rate on first $34,000 of gaming revenue, with all subsequent gaming revenue taxed at 8%; up to 4% additional tax on gaming revenues may be imposed by local governments Mode of Legalization Local option vote, legislative action Visitor Volume million Sources: Mississippi Casino Operators Association, Mississippi Gaming Commission Mississippi passed legislation in Sept allowing onshore gaming along the Gulf Coast. 2 For properties affected by Hurricane Katrina, figures include totals as of the end of second quarter Lula Greenville Vicksburg Natchez Bay St. Louis Detroit Tunica/Robinsonville Biloxi Gulfport AGA Survey of Casino Entertainment

18 STATE-BY-STATE ECONOMIC IMPACT: COMMERCIAL CASINOS CONTINUED MISSOURI Current # of operating casinos Gaming format Riverboat (continuous boarding) Casino Employees,00 Casino Employee Wages $285 million (includes tips but not benefits) Gross Casino Gaming Revenue $.532 billion Gaming Tax Revenue $43.90 million How Taxes Spent Education, local public safety programs, disordered gambling treatment, veterans' programs, early childhood programs Legalization Date August 993 First Casino Opening Date May 994 State Gaming Tax Rate 20% tax on gross gaming revenue, $2 per patron admission fee, per excursion, split between home dock community and the state Mode of Legalization Statewide vote, local option vote, legislative action Visitor Volume 53.7 million Sources: Missouri Gaming Association, Missouri Gaming Commission La Grange St. Joseph Riverside North Kansas City Kansas City Boonville St. Charles St. Louis Maryland Heights Caruthersville NEVADA Current # of operating casinos 268 Gaming format Land-based Casino Employees 202,209 Casino Employee Wages $7.859 billion (includes tips and benefits) Gross Casino Gaming Revenue $.649 billion Gaming Tax Revenue $ million (includes fees) How Taxes Spent Education, local governments, general fund Legalization Date 93 First Casino Opening Date 93 State Gaming Tax Rate Mode of Legalization Visitor Volume Graduated tax rate with a maximum tax of 6.75% on gross gaming revenue; additional fees and levies may be imposed by counties, municipalities and the state adding approximately % to the tax burden Legislative action 5.57 million Sources: Nevada Gaming Control Board, Nevada Commission on Tourism Statistics for locations with gross gaming revenue in excess of $ million for FY '05. McDermitt Jackpot Elko Wells Winnemucca Battle West Reno Mtn. Wendover Carson City Lovelock Ely Gardnerville Lake Tahoe Fallon Hawthorne Beatty Tonopah Mesquite Amargosa Valley N. Las Vegas Indian Spgs. Las Vegas Pahrump Henderson Primm Searchlight Laughlin 2006 AGA Survey of Casino Entertainment 5

19 STATE-BY-STATE ECONOMIC IMPACT: COMMERCIAL CASINOS CONTINUED NEW JERSEY Current # of Operating Casinos 2 Gaming Format Land-based Casino Employees 44,542 Casino Employee Wages $.243 billion (includes tips but not benefits) Gross Casino Gaming Revenue $5.08 billion Gaming Tax Revenue $490.9 million How Taxes Spent Senior citizens, disabled, economic revitalization programs Legalization Date 976 First Casino Opening Date 978 State Gaming Tax Rate 8% tax on gross gaming revenue, plus a commodity investment alternative obligation of.25% of gross gaming revenue (or an investment alternative 2.5% on gross gaming revenue); 4.25% tax on casino complimentaries Mode of Legalization Statewide vote, legislative action Visitor Volume million Sources: New Jersey Casino Control Commission, South Jersey Transportation Authority Atlantic City SOUTH DAKOTA Current # of Operating Casinos 36 Gaming Format Land-based (limited-stakes; $00 maximum bet) Casino Employees,955 (CY 2004) Casino Employee Wages $38.8 million (includes tips and benefits) Gross Casino Gaming Revenue $83.56 million Gaming Tax Revenue $2.53 million How Taxes Spent 40% Department of Tourism, 0% Lawrence County, 50% commission fund Legalization Date 989 First Casino Opening Date November 989 State Gaming Tax Rate Mode of Legalization Visitor Volume Source: South Dakota Gaming Commission 8% tax on gross gaming revenue, gaming device tax of $2,000 per machine per year Statewide vote, local option vote, legislative action Data not available Deadwood AGA Survey of Casino Entertainment

20 STATE-BY-STATE ECONOMIC IMPACT: RACETRACK CASINOS Racetrack casinos continued to be a vital segment of the U.S. commercial casino industry in 2005, generating more than $3. billion in gross gaming revenue, a more than 9 percent increase over totals for the previous year. Racetrack casinos also continued to significantly contribute to state and local economies where they operate, distributing $.28 billion in direct gaming taxes to state and local governments, a nearly 20 percent increase over 2004 figures. Employment at racetrack casinos also jumped more than 20 percent from 2004 to 2005, with racetrack casinos employing more than 7,000 people last year saw the advent of racetrack casinos in Maine and Oklahoma, as well as the first full year of operations in New York, leading that state to exhibit the most significant revenue growth of any racetrack casino state. In fact, every racetrack casino state exhibited gross gaming revenue growth in 2005, primarily due to facility expansions and the first full year of operations at a number of locations. DELAWARE Current # of Operating Racinos 3 Public/Private Arrangement Racino Employees 2,854 Gross Racino Gaming Revenue $ million Distributions to State/Local Govt. $ million Revenue Retained by Operator 48% How Taxes Spent General fund Legalization Date 994 First Racino Opening Date 995 Mode of Legalization Legislative action Source: Delaware Lottery Publicly run video lottery terminals with distributions to operators Harrington Wilmington Dover IOWA Current # of Operating Racinos 3 Public/Private Arrangement Privately operated facilities with slot machines and table games Racino Employees 2,358 Gross Racino Gaming Revenue $ million Distributions to State/Local Govt. $84.9 million Revenue Retained by Operator 76.4% How Taxes Spent Infrastructure improvements, local government, general fund, schools and universities, the environment Legalization Date 994 First Racino Opening Date 995 Mode of Legalization Local option vote, legislative action Source: Iowa Racing and Gaming Commission In July 2004, Iowa became the first state to legalize table games at its racetrack casinos. In 2005, one racetrack casino in the state had table games. Council Bluffs Altoona Dubuque 2006 AGA Survey of Casino Entertainment 7

21 STATE-BY-STATE ECONOMIC IMPACT: RACETRACK CASINOS CONTINUED LOUISIANA Current # of Operating Racinos 3 Public/Private Arrangement Privately operated facilities with slot machines Racino Employees 2,697 Gross Racino Gaming Revenue $ million Distributions to State/Local Govt. $62.59 million Revenue Retained by Operator 62.8% How Taxes Spent General fund, purses and local parishes Legalization Date 994 First Racino Opening Date 994 Mode of Legalization Local option vote, legislative action Source: Louisiana Gaming Control Board Louisiana properties affected by Hurricanes Katrina and Rita submitted pre-storm employment data for this report. Bossier City Vinton Opelousas MAINE Current # of Operating Racinos Public/Private Arrangement Privately operated facility with slot machines Racino Employees 37 Gross Racino Gaming Revenue $4.6 million Distributions to State/Local Govt. $.99 million Revenue Retained by Operator 52.2% How Taxes Spent Education, health care, agriculture and gambling control board administration Legalization Date 2004 First Racino Opening Date November 2005 Mode of Legalization Local option vote, legislative action Sources: Maine Gambling Control Board, Penn National Gaming, Inc. Bangor AGA Survey of Casino Entertainment

22 STATE-BY-STATE ECONOMIC IMPACT: RACETRACK CASINOS CONTINUED NEW MEXICO Current # of Operating Racinos 5 Public/Private Arrangement Privately operated facilities with slot machines Racino Employees 67 Gross Racino Gaming Revenue $ million Distributions to State/Local Govt. $53.36 million Revenue Retained by Operator 54.7% How Taxes Spent General fund, problem gambling treatment Legalization Date 997 First Racino Opening Date 999 Mode of Legalization Legislative action Source: New Mexico Gaming Control Board Farmington Albuquerque Ruidoso Sunland Park Hobbs NEW YORK Current # of Operating Racinos 5 Public/Private Arrangement Racino Employees 2,36 Gross Racino Gaming Revenue $ million Distributions to State/Local Govt. $ million Revenue Retained by Operator 20.2% How Taxes Spent Public education Legalization Date 200 First Racino Opening Date 2004 Mode of Legalization Legislative action Sources: New York Racing and Wagering Board OKLAHOMA Current # of Operating Racinos 3 Public/Private Arrangement Publicly run video lottery terminals with distributions to operators Privately operated facilities with slot machines Racino Employees 909 Gross Racino Gaming Revenue $7.4 million Distributions to State/Local Govt. $74,63 Revenue Retained by Operator 6% How Taxes Spent Education and purses Legalization Date November 2004 First Racino Opening Date October 7, 2005 Mode of Legalization Statewide question on ballot Sources: Oklahoma Horse Racing Commission, State of Oklahoma - Office of the State Auditor and Inspector Based on operations from October 2005 through December 2005 Batavia Hamburg Farmington Monticello Oklahoma City Saratoga Springs Claremore Sallisaw 2006 AGA Survey of Casino Entertainment 9

23 STATE-BY-STATE ECONOMIC IMPACT: RACETRACK CASINOS CONTINUED RHODE ISLAND Current # of Operating Racinos 2 Public/Private Arrangement Racino Employees,055 Gross Racino Gaming Revenue $40.9 million Distributions to State/Local Govt. $257.7 million Revenue Retained by Operator 27.95% How Taxes Spent General fund Legalization Date 992 First Racino Opening Date 992 Mode of Legalization Legislative action Source: Rhode Island Lottery Publicly run video lottery terminals with distributions to operators Lincoln Newport WEST VIRGINIA Current # of Operating Racinos 4 Public/Private Arrangement Publicly run video lottery terminals with distributions to operators Racino Employees 4,79 Gross Racino Gaming Revenue $93.59 million Distributions to State/Local Govt. $ million (FY 05) Revenue Retained by Operator 42.7% How Taxes Spent Education, senior citizens and tourism Legalization Date 994 First Racino Opening Date 994 Mode of Legalization Local option vote, legislative action Source: West Virginia Lottery Wheeling Cross Lanes Chester Charles Town AGA Survey of Casino Entertainment

24 SPECIAL SECTION: GAMBLING AND THE INTERNET Only 4 percent of U.S. residents gamble online, according to public opinion polling conducted by Luntz, Maslansky Strategic Research. Despite this fact, Internet gambling has become a major story in the nation s media and the subject of intense debate in Washington. But who are the online gamblers? According to a recent survey conducted by Peter D. Hart Research Associates, Inc., the profile of an Internet gambler is that of an under 40, college-educated male who makes more than $60,000 per year, plays poker and casino games in about equal numbers, and gambles on the Internet not because he expects to make money, but because it is entertaining and convenient. And, interestingly enough, he believes it is more likely than not that the online casinos he frequents as well as his fellow online gamblers are trying to cheat him. The Hart survey polled 552 Internet gamblers, employing a screen to ensure all respondents were age 2 or older and had placed a wager over the Internet within the past year either by playing poker or online casino games, or by betting on sporting events, not including NCAA tournament pools and fantasy sports leagues. According to the results, more than two-thirds (68 percent) of online gamblers surveyed were male, compared to a nearly even split between men (53 percent) and women (47 percent) who are bricks-and-mortar casino customers. Online gamblers also are quite young. The median age for online gamblers is 3, and nearly 70 percent are younger than 40. Online gamblers also are a relatively affluent group, with nearly one in five earning more than $00,000 a year. The survey indicates online gamblers are extremely computer savvy, with the vast majority using the Internet to perform a number of regular day-to-day tasks. Online gamblers also are active in other forms of gaming. Seventy-three percent participated in a lottery and more than two-thirds (67 percent) visited a casino during the last 2 months. The survey also shows that online gambling is an emerging phenomenon, with 38 percent of online gamblers indicating they just started the activity in the last year and 70 percent saying they started in the last two years. In an open-ended question about why they gamble online, nearly half of respondents indicated the biggest reason is convenience. Fewer than one in 0 said the primary reason for gambling online is for a chance to win money. The survey revealed a great deal of confusion about the legality of online gambling. Fewer than one in five (9 percent) online gamblers realize or are willing to admit that online gambling currently is illegal in the United States. A general survey of all Americans revealed similar confusion. Finally, in perhaps the most interesting result of the survey, online gamblers reported they are concerned about the integrity of online games. Despite the fact that they regularly gamble online, more than half (55 percent) agree at least somewhat that online casinos find ways to cheat players, and 46 percent believe other players who gamble online find ways to cheat. *Comparative data for bricks-and-mortar casino customers for this section was taken from results of the 2006 national opinion poll conducted by Luntz, Maslansky Strategic Research. WHAT PERCENTAGE OF AMERICANS GAMBLE ONLINE? 4% Online Gamblers Despite the growing attention focused on Internet gaming, the percentage of Americans who gamble online still is small roughly 4 percent of the total U.S. population. The figure has doubled in the past year, however, signaling the growing popularity of the activity. Source: Luntz, Maslansky Strategic Research 2006 AGA Survey of Casino Entertainment 2

25 SPECIAL SECTION: GAMBLING AND THE INTERNET CONTINUED ONLINE GAMBLERS: WHO ARE THEY? Gender While men and women make up nearly equal percentages of the total population of U.S. casino visitors (53 percent vs. 47 percent), the gender gap is much wider among the population of Internet gamblers, which includes more than twice as many men as women (68 percent vs. 32 percent). 68% 32% Online Gamblers 53% 47% U.S. Casino Customers Male Female Sources: Peter D. Hart Research Associates, Inc., and Luntz, Maslansky Strategic Research Age Online gamblers tend to be much younger than people who visit traditional U.S. casinos the median age is only 3 years old. In fact, nearly 70 percent of online gamblers are under the age of 40, while this same age group makes up less than a quarter of the population of traditional U.S. casino visitors. 2% 5% 4% 32% 43% 26% Online Gamblers 9% 4% 37% 8% 20% U.S. Casino Customers Sources: Peter D. Hart Research Associates, Inc., and Luntz, Maslansky Strategic Research Education Online gamblers are more likely to have attended college than traditional U.S. casino visitors. Fully 6 percent of online gamblers have at least a college degree, and more than one-quarter have at least some post-graduate-level education. 9% 2% 35% Online Gamblers 25% 28% 2% 7% 2% 5% 2% 4% 33% U.S. Casino Customers Some High School Completed High School Vocational School or Some College 4-Year College Graduate Some Post- Graduate Education Post-Graduate Degree Sources: Peter D. Hart Research Associates, Inc., and Luntz, Maslansky Strategic Research AGA Survey of Casino Entertainment