kansas entertainment presentation
DESCRIPTION
Kansas Racing & Gaming CommissionCasino Proposalhttp://krgc.ks.gov/TRANSCRIPT
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Overview
• BestTeam
• BestProject• BestBrands• BestFinancialReturnforKansas
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OwnershipStructure
KansasEntertainment,LLC
Gaming/HotelOpera?ons:
DennisGomes
Development,Retail&EntertainmentOpera?ons:
JoeWeinberg
Event/RaceOpera?ons:
JeffBoerger
CordishCompanyEnDty:
KansasEntertainmentInvestors,LLC
JoeWeinberg,President
ISCEnDty:
KansasSpeedwayDevelopmentCorp.
JeffBoerger,President
50% 50%
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BestPartnerforState&LocalGovernment
LonghistoryofworkingproducDvelywithboththeUnifiedGovernment&theState
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BestPartnerforState&LocalGovernment
PartnershipwiththeKansasLoReryhasshownoutstandingreturnsforKansas 6
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ISCHasNa?onalReach
7
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PowerofISCVideo
8
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TheCordishCompany
PrivatelyHeldforFourGeneraDons9
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LongTermVision 10
TheCordishCompany
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DiversePor\olio&Developments 11
TheCordishCompany
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TheCordishCompany
ExtensiveDevelopmentReach&Assets12
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Cordish+ISC+HardRock
TremendousCombinedStrength 13
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Cordish+ISC+HardRock
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TheCordishCompany
DesDnaDonGamingDevelopment15TheimageaboveandthoseusedonsubsequentpagesareofHardRockHotelandCasinos
thatweredevelopedbyaCordishCompanyaffiliatefortheSeminoleTribeofFlorida
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UpscaleHotels 16
TheCordishCompany
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StateoftheArtCasinos17
TheCordishCompany
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DesDnaDonResortAmeniDes 18
TheCordishCompany
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PowerfulEntertainmentDistrict19
TheCordishCompany
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FullIntegraDonDrivesVisitaDon20
TheCordishCompany
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Non‐gamingdesDnaDonentertainmentsignificantlyincreasesgamingrevenues 21
TheCordishCompany
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ShortestPaybackofAnyMajorCasinos22
TheCordishCompany
0
2
4
6
8
10
12
FloridaHardRockHotel&Casinos
Mirage MoheganSun
Borgota Paris Bellagio TajMahal BeauRivage
Mandalay
(yearsto
payba
ck)
Source:SeminoleTribeofFlorida
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SuperiorFinancialResults1Source:SeminoleTribeofFlorida2Source:ThomasWeiselPartnersLLCResearchReport3Source:GoldmanSachsGlobalInvestmentResearch
(4)Source:MoheganTribalGamingAuthority,SECFiling,10‐KFiling,NOTE:OperaDngIncomeshownforFY2007endedSept.30,200723
TheCordishCompany
$0
$100
$200
$300
$400
$500
$600
$700
$800
FloridaHardRocks(1)
PennNatl(3) Wynn(2) Boyd(2) LasVegasSands(2)
Ameristar(2) MoheganGaming(4)
PinnacleEnter.(2)
2007Opera?ngIncome
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CordishHardRockFloridaVideo
24
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25
TheCordishCompany
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26
TheCordishCompany
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TheWalk–AtlanDcCity,NJ
27
TheCordishCompany
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CordishProjectsChangeCommuniDes28
TheCordishCompany
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CommunityInvolvement29
TheCordishCompany
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WorldClassDesignTeam
REPRESENTATIVEPROJECTS
Developer: TheCordishCompany SeminoleHardRockHotel&CasinoHollywood&Tampa;IndianaLive!
LeadArchitect: KlaiJubaArchitects MandalayBay;“W”LasVegas;HardRockLasVegas;FourSeasonLasVegas
InteriorDesigners: CleoDesign MGMCasinoLasVegas;MGMCasinoDetroit;BeauRivageBiloxi;HiltonLasVegas
LaurenceLeeAssociates
BorgataAtlanDcCity;HardRockHollywood&Tampa;KapaluaBayHawaii
Engineer: Burns&McDonnell SprintCenterKansasCity;TrumanSportsComplexKansasCity
30
TheCordishCompany
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Management
• DennisGomes– 34YearsGamingExperience– LicensedinNevada&NewJersey– BackgroundIncludes:
• President&CEO,ResortOperaDons‐TropicanaHotels&Casinos,LasVegas,NV&AtlanGcCity,NJ(AztarCorp.)
• President&COO–TrumpTajMajal
• President&COO–GoldenNuggetHotel&Casino• Sr.VicePresident,CasinoOperaDons–HiltonHotels&Casinos,LasVegas,NV
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Management
DennisGomes
CEO
Gaming/HotelOpera?ons
RobertZiRo
EVP
Food&Beverage
SherryAmos
EVP
Marke?ng
AaronGomes
VP
Marke?ng
RobertAmbrose
EVP
SlotOpera?ons
PeterIng
VP
SlotOpera?ons
DonKneisel
EVP
I.T.
DavidGenDle
EVP
Administra?on
JeanPrice
Director
Administra?on
LatoruaChinn
Manager
DiversityCompliance
FredBurford
EVP
Finance
ShawnMcCloud
VP
Finance
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Management
YEARSOFGAMINGEXPERIENCE
SherryAmos ExecuDveV.P.‐MarkeDng 24
RobertAmbrose V.P.‐SlotOperaDons 20
FredBurford ExecuDveV.P.‐Finance 25
DavidA.GenDle V.P.‐AdministraDon 24yearswithFBI
PeterIng V.P.–SlotOperaDons 12
DonaldW.Kneisel,II V.P.‐Info.Technology 24
AaronGomes V.P.‐OperaDons 3
ShawnK.McCloud V.P.‐StrategicPlanning 15
JeanPricePreikszaiDs DirectorofCorp.Admin. 28
RobertZiRo ExecuDveV.P.‐Food&Bev. 28
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GamingComplianceExper?se
OperaDonsteamhasdecadesofexperiencerunningvenuesinthemostdemandinggamingmarkets
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GamingComplianceExper?se
• MulDplemembersoftheteamhavehadsignificantexperienceingamingregulaDonandlawenforcement• NevadaGamingControlBoard
• NewJerseyDivisionofGamingEnforcement
• FBI
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Security&Surveillance,InternalControls&InformaDonTechnologyPlansarefullydeveloped
andhavebeensubmiRed 36
GamingComplianceExper?se
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CommitmenttoDiversity
KansasSpeedwayandCordishmeetorexceedMBE/WBE/LBEGoals
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%
4thStreetLive!
CapitalCenter‐PhaseI
CapitalCenter‐PhaseII
Pier4OfficeBuilding
KansasCityLive!ProfessionalServices
KansasCityLive!Construc?onServices
PowerPlant
KansasSpeedway‐ProfessionalServices
KansasSpeedway‐Construc?onServices
KansasSpeedway‐Materials/Supplies
Goal Performance
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CommunityVideo
38
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Overview
• BestTeam
• BestProject• BestBrands• BestFinancialReturnforKansas
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BestLoca?on
OnlylocaDonwitheasyaccessandvisibilitytobothI‐70andI‐435 41
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BestLoca?on
OnlySiteWithInfrastructureInPlace42
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IntegratedDesign
• IntelligentMasterplanning • IntegraDonwithKansasSpeedway
43• UnmatchedAbilitytoExpand
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LuxuryDes?na?onResort
300RoomLuxuryHotelwith50Suites
44
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HighEnergyCasino
3,000Slots&140TablesatOpeningWithRoomforExpansion45
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IntegratedDesign
• 275,000SquareFeetDesDnaDonRetail,Dining&Entertainment• LiveMusicVenue
46
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• 1.5millionsquarefeet • Undergroundstructuredparking47
IntegratedDesign
• Cross‐CurrentofPedestrianTraffic
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IntegratedDesign
DesDnaDonpool,fitnesscenter&spaoverlookingspeedway
48
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HighEnergyCasino
49
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HighEnergyCasino
50
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ModernLuxuryDesign
51
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IntegratedDesign
Live!DistrictDrivesTourism&GamingRevenue
52
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IntegratedDesign
ExtensiveMeeDng&ConvenDonFaciliDes
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CommunityShugleSystem
54
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TemporaryCasino
55
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• OpenInEightMonths
• $209MillionAnnualRevenue
• 2000slots
• 75tablegames
56
TemporaryCasino
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ExpansionCapabili?es
Hotel/Casino
Expansion
CasinoExpansion
57
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World‐ClassDes?na?on
58
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Overview
• BestTeam
• BestProject• BestBrands• BestFinancialReturnforKansas
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GlobalBrandPresence
60
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UnparalleledBrandRecogni?on
85%
NaDonalfamiliaritywithHardRockBrand
61Source:ZogbyInternaGonalResearch
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HardRockDrivesTourism
76%
NaDonalVisitorstoHardRockProperDesFromOutofState
62Source:ZogbyInternaGonalResearch
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FamiliarityWithHardRockBrand
0
10
20
30
40
50
Hard Rock Mohegan Sun Pinnacle Golden
51
22
0 3
36
4 4 3
33
6 3 3
(percent)
National Kansas Statewide KC DMA
Hard Rock Is Exponentially Stronger Than Other Options:
• 2.5 – 50 Times Better Nationally
• 8 – 12 Times Better Statewide
• 5.5 – 11 Times Better in KC
63Source:ZogbyInternaGonalResearch
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RegionalTargetMarkets
64
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BrandStrength=Visits
65Source:ZogbyInternaGonalResearch
0
5
10
15
20
25
30
35
40
45
50
HardRock LegendsSun Pinnacle Golden
42
21
3 3
47
27
20 22
KansasStatewide KCDMA
Statewideinterestinvisi?ngaHardRockisatleastdoublethatofanyotherpossiblecasino.
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HardRockPreferenceIsClear
0
10
20
30
40
50
60
70
80
HardRock LegendsSun Pinnacle Golden
35
11 8
8
71
40 43
46
(percent)
Kansas Statewide KC DMA
Amongthosewhosaytheyare“VeryInterested”invisi?ngacasinointhefuture,moresaytheyareveryinterestedinvisi?ngHardRockoverotherpossiblecasinobrands.
66Source:ZogbyInternaGonalResearch
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AffluentCustomersLoveHardRock
0
10
20
30
40
50
60
Hard Rock Legends Sun Pinnacle Golden
58
9 10
8
54
30 28 29
(per
cent
)
Kansas Statewide KC DMA
Those making more than $75,000 a year say they are more likely to visit the Hard Rock than any other brands. Hard Rock scores much better as a regional destination than other brands.
67Source:ZogbyInternaGonalResearch
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UnparalleledRela?onshipsWithCorporateLeaders
68
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CorporateDecisionsMakersVisitKansasSpeedway
• Therewereover550companiesinvolvedassponsorsinNASCARlastyear
• OurteamisuniquelyposiDonedtoleverageeventsattheSpeedwaytobringconvenDonbusinesstoKCK
• Decision‐makingexecuDvesspendtheirenDredayonSpeedwayproperty
69
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RacingFansLikeCasinos
• 57.5%ofKansasSpeedwayfansvisitedacasinointhepast12months
• Ourfansare27%morelikelythantheaveragepersoninKansasCitytovisitacasino
• FansoftheIndyRacingLeagueare85%morelikelytovisitacasino
70Source: Scarborough Research 2007
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GeneralMarke?ngStrategy
• Cross‐marketwithSpeedway&tenants
• CreateuniqueVIPexperiencesforbestcustomers
• UseRewardsProgramandCRMtomaximizecustomervalue
• LeverageHardRockbrandstrengthandracingeventsinmarkeDngthattargetstourists
71
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Overview
• BestTeam
• BestProject• BestBrands• BestFinancialReturnforKansas
72
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BestOverallReturn
GrossGamingRevenues(millions)
0 100 200 300 400 500 600
27% 29% 31%
73
AddiDonal1%VoluntaryFee
toUnifiedGovernment
FeePercentagetoPublicSector
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BestTotalFinancialPackage
$75,000,000
$80,000,000
$85,000,000
$90,000,000
$95,000,000
$100,000,000
$105,000,000
$110,000,000
$115,000,000
HardRock Golden Pinnacle LegendsSun
FeestoKansas FeestoProblemGaming FeestoLocalGovernment
$113M $111M
$108M $108M
(Assumes$400milliongrossgamingrevenue) 74
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(Assumes$500milliongrossgamingrevenue)
$105,000,000
$110,000,000
$115,000,000
$120,000,000
$125,000,000
$130,000,000
$135,000,000
$140,000,000
$145,000,000
$150,000,000
HardRock Golden Pinnacle LegendsSun
FeestoKansas FeestoProblemGaming FeestoLocalGovernment
$135M$135M
$142.5M
$147M
75
BestTotalFinancialPackage
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GamingRevenueForecast
$300
$310
$320
$330
$340
$350
$360
$370
$380
$390
Year1 Year2 Year3 Year4 Year5
(Millions)
Slotmachines PitRevenue Poker&cardgames
$349.3M
$376.2M
$358M$367M
$385.6M
76(Assumes3,000slotmachinesand140tablegames)
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Non‐GamingRevenueForecast
77
$0
$10
$20
$30
$40
$50
$60
$70
$80
Year1 Year2 Year3 Year4 Year5
(millions)
Hotel Food Beverage Conven?on Entertainmnent Retail Other
$67.7M $69.9M $74.2M$72M
$65.4M
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ResidentVisita?on
78
‐
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
Year1 Year2 Year3 Year4 Year5
TotalGamingVisitsPerYear TotalNon‐GamingVisitsPerYear
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ResidentEconomicImpact
79
$275
$285
$295
$305
$315
$325
$335
$345
$355
$365
Year1 Year2 Year3 Year4 Year5
(millions)
GamingSpendPerYear Non‐GamingSpendPerYr.
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TouristVisita?on
80
‐
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
Year1 Year2 Year3 Year4 Year5
TotalGamingVisitsPerYear TotalNon‐GamingVisitsPerYr.
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TouristEconomicImpact
81
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Year1 Year2 Year3 Year4 Year5
(millions)
GamingSpendPerYear Non‐GamingSpendPerYr.
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ForecastSummary
82
$250
$300
$350
$400
$450
$500
Year1 Year2 Year3 Year4 Year5
(millions)
GamingTotal Non‐GamingTotal
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PublicSectorSummary
83
$0
$20
$40
$60
$80
$100
$120
$140
Year1 Year2 Year3 Year4 Year5
(millions)
StateRevenue PropertyTaxes Sales&UseTax
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KeynotesofFinancingPlan
• OwnersofKansasEntertainmenthavesignificantliquidityandfinancingcapabiliDesin‐house
• Ownershaveimpeccabletrackrecordswithfinancingcommunityoverseveraldecades
• MulDplethird‐partysourcesindicatedhighconfidenceindebtfinancingforourproject
84
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FinancingPlan:Sources
85
$90
$333
$141
$141
DelayedDrawTermLoan TermLoan(s) CordishEquity/Cash ISCEquity/Cash
(millions)
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FinancingPlan:Uses
86
$415
$105
$32
$25
$9 $25
$15$80
HardCosts SopCosts Con?ngencyFinancingCosts&Fees Pre‐OpeningOpera?ons LicensingFeeCageCash&WorkingCapital Pre‐FundedInterestReserve
(millions)
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Schedule
87
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FinalVideo
88
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AppendixASummary
89
• FeePercentageProposaltoState:– 27%totaltaxonfirst$350mmofAnnualGrossGamingRevenue
– 29%totaltaxonGGRbetween$350mmand$400mm
– 31%totaltaxonGGRabove$400mm
• HighestCharitableContribuDons:
– AddiDonal1%ofGGRtoUnifiedGovernmentbeyondstatutoryminimum
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AppendixBProposedFeesComparison
90
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AppendixCGamingRevenueProjecDon
91
All figures in $000’s
• Gaming revenue forecasts based on detailed market assessment by Innovation Group, the market leader in gaming market analyses.
• Based on 3,000 slot machines and 140 table games. • Kansas Entertainment, LLC believes 3,000 machines is correct
and realistic initial number. This is also consistent with finding of Christiansen Capital Advisors, advisors to State.
• Slot machine capacity would be increased if validated by market demand.
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AppendixDNon‐GamingRevenueProjecDon
92
All figures in $000’s
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AppendixEEconomicImpact–ResidentsVisitaDon
93
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AppendixFEconomicImpact–TouristVisitaDon
94
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AppendixGSummaryFinancialProjecDons
95
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AppendixHReturnstoPublicSector
96
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AppendixIFinancingPlan:Sources&Uses
97