ANALYSES AND COMMENTS REGARDING AN

ENTERTAINMENT AND GAMING DESTINATION

IN
EAST HARTFORD, CONNECTICUT

APRIL 2015

A CBRE COMPANY

A CBRE Company

April 22, 2015

This document contains three separate, but related, discussions relating to the possible
development of an entertainment and gaming destination (casino) on a site on
Interstate 84 in East Hartford, Connecticut. The discussions, prepared at various points
in time since the fall of 2014, are as follows:
Estimates of Impact/Potential Slot Win (Revenues)
An East Hartford (I-84) Site vs. an I-91 Site
Estimates of Stabilized Payroll
ESTIMATES OF IMPACT/POTENTIAL WIN
In November 2014, PKF Consulting USA prepared a report for the Vince Group, Inc.
that: discussed the impacts that the new MGM Casino in Springfield, Massachusetts
could have on the Mohegan Sun and Foxwoods Casino Resorts in Connecticut;
estimated what levels of slot win could be expected by a casino located along Interstate
84 in East Hartford; and, estimated how such a casino could somewhat mitigate the
impacts of MGM on the Connecticut-based resorts. The following is the Summary of
Conclusions and Estimates excerpt from that report.
SUMMARY OF CONCLUSIONS AND ESTIMATES
The following are the major observations, conclusions and estimates presented in this
report:

The two gaming resorts in Connecticut, Mohegan Sun and Foxwoods, have
experienced declining levels of slot win since 2006, except for post-recession
2010, due to increased gaming competition throughout the defined region.
These declines, some 26.5 percent from calendar 2006 to calendar 2013,
have occurred in spite of continuous improvements made at each resort to
make them as relevant and competitive as possible.

As projected herein, when casinos open in Massachusetts, particularly in

Springfield, the slot revenues of the Connecticut casinos could be further
impacted by an estimated $195 million in 2018, with slot tax revenues to the
State possibly declining another $49 million or so in that year.

A casino in Springfield, Massachusetts will logically constitute the greatest

threat to the two existing Connecticut casinos due to Springfields location
just across the Connecticut-Massachusetts border a short drive from the
Hartford metro area.

Even without additional competition from Massachusetts in the interim, slot

revenue levels are expected to be fairly stagnant in Connecticut in the nearterm. In addition to the projects underway at Mohegan Sun and Foxwoods,

th

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Slots-Only Casino in East Hartford, Connecticut

April 22, 2015

additional opportunities need be sought to further protect and stimulate

gaming levels in Connecticut.

It is assumed herein that both of the Tribes with casinos in Connecticut would
participate in the Casino in East Hartford for several reasons. First, their
approval would be needed to develop another casino in the State. Second,
the two-year or so lead time before the Springfield MGM opens would
enable them to further develop and strengthen their already strong cadres of
loyal players, especially in central and western Connecticut. Finally, as
demonstrated/postulated herein, participation in the East Hartford Casino
would recapture a material portion (some $39 million, or 20 percent) of their
potential gross slot revenue losses to Springfield (and the other
Massachusetts gaming venues) in year one (2018).

A casino in East Hartford would be much more convenient to players in

Hartford, New Haven and Waterbury than would the Springfield MGM Casino
and even Mohegan Sun (the closer of the two existing Connecticut casinos).
As proximity is one the major factors in the selection of a gaming venue, the
East Hartford location would favor this Casino in attracting slot patrons from
western and central Connecticut.

A casino in East Hartford would also increase gaming revenues for the State
of Connecticut by: (1) introducing more Hartford-area residents (those who
so far have not chosen to travel to the existing casinos) to gaming as a form
of entertainment; (2) increasing the visit frequencies of Hartford-area players;
and, (3) tapping into the now-untapped and significant Hartford area hotel
guest market (the existing casinos are generally too far for them to visit in
meaningful numbers). These sources of demand are estimated to produce
some $14.9 million in new or incremental slot revenues for the casino,
representing some $3.7 million in incremental tax revenues for the State.

A casino in East Hartford is projected to achieve slot wins of some $81.6

million in 2018 with gaming in Massachusetts or $155.5 million in 2017
before the entry of competition from Massachusetts.

The table on the following page summarizes our estimates of gross slot wins for the
casinos in the State of Connecticut for each assumed gaming scenario in 2018 and the
East Hartford slots casino only scenario in 2017, all assuming casino development in
eastern New York State, and compares those to the 2013 gross slot wins reported for
Mohegan Sun and Foxwoods.

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April 22, 2015
Mohegan
Sun
Foxwoods
Gross Slot Wins (000) - 2013
Gross Slot Wins (000) - 2018:
"Base" Wins (000) - No New Casinos in
MA and CT (But in NYS)
Wins (000) With New Casinos in MA Only
Wins (000) With New Casinos in MA and
East Hartford
Gross Slot Wins (000) - 2017:
"Base" Wins (000) - No New Casinos in
MA and CT (But in NYS)
Wins (000) With New Slots Casino in East
Hartford Only

East
Hartford

Total

Versus "Base" Cases

Gross Win Taxes - 25%

$682,765 $591,518

$0 $1,274,283

$678,653 $547,618
$568,737 $462,718

$0 $1,226,271
$0 $1,031,455

-$194,816

-$48,704

$551,001 $452,209

$81,628 $1,084,839

-$141,432

-$35,358

$665,346 $553,150

$0 $1,218,496

$597,148 $502,940

$155,519 $1,255,608

$37,112

$9,278

Based on the estimates summarized in the preceding table and at an approximate tax
rate of 25 percent of gross slot win (in actuality, 10 percent of each casinos promotional
slot play is not taxed), the State of Connecticut is projected to lose close to $50 million
in slot-related gaming tax revenues in 2018 if the casinos open in Massachusetts.
If a casino is developed in East Hartford, however, the States slot-related tax revenue
loss would be reduced by some $13 million to approximately $35 million in 2018.
If the East Hartford casino is developed, the States slot tax revenues are projected to
actually increase by some $11.3 million in the year 2017 before the Massachusetts
casinos open.
DISCUSSION OF EAST HARTFORD VS. I-91 NORTH LOCATIONS
In early 2015, PKF Consulting was requested to present some of our thoughts regarding
a potential casino site in East Hartford, particularly as to how a casino at that location
might perform versus a casino on a site located along I-91 north of Hartford.
We were not retained to prepare any comparative estimates of gaming (slot) revenue
for a possible casino along that portion of I-91, so our comments are mostly qualitative
in nature. We see the main two issues for consideration to be:
Which site would produce the highest levels of total and incremental
gaming revenue for its owners and gaming tax revenues for the State?
Which site would have the least overall net negative impact on the existing
casinos at Mohegan Sun and Foxwoods?
As to issue #1, we believe that the basic localized distribution of the central
Connecticut residential population, more convenient accessibility for patrons from the
Greater Waterbury and New Haven areas, the nature and volume of traffic on I-84
versus I-91 (impulse patron capture) and the concentration of hotels in and around
Hartford will combine to produce a higher level of gaming revenue (and gaming revenue
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April 22, 2015

taxes) than would a casino located along I-91 north of Hartford, say in the Enfield/East
Windsor area. The following paragraphs present the key factors leading to our
conclusion.
Relating to the residential market, we prepared a rudimentary stick map to indicate the
approximate locations of the towns in Hartford County and their 2013 populations. We
also determined the approximate mid-point on I-91, from a drive-time perspective,
between downtown Hartford and the MGM site in Springfield. (Based on Microsoft
MapPoint, this mid-point occurs right around Windsor Locks, a drive of some 13 minutes
or 11.5 miles from both downtown Hartford and MGM.) The following is the map we
prepared.
HARTFORD COUNTY, CT TOWNS AND 2013 POPULATIONS
I-91 to Springfield
Hartland
2,131

Suffield
15,788

Enfield
44,748

Granby
11,323

91,775

East Granby
5,212
Windsor Locks
Mid-Point Drive to Hartford & Springfield
12,573

Mid-Point Drive to Hartford & Springfield

East Windsor
11,406

Canton
10,357

Simsbury
23,824

Windsor
29,142
Bloomfield
20,673

South Windsor
25,846

Avon
18,386

Burlington
9,494

I-291
782,638

West Hartford
63,371
Farmington
25,613

Hartford
125,017

I-84 to Massachusetts
East Hartford
11,406

Bristol
60,568
Plainville
17,820

New Britain
72,939

Newington
30,756

Manchester
58,211

Wethersfield
2,651
Glastonbury
34,768

Southington
43,661

Berlin
20,590

Rocky Hill
19,915

Marlborough
6,431

Red numbers = towns with >20,000 populations

Based on the preceding, over 780,000 Hartford County residents live closer to a
Hartford/East Hartford location than to the MGM site and, all things being equal, would
likely gravitate most often to a casino in Hartford/East Hartford if they wished to play
slots. By comparison, only 92,000 live closer to MGM and would likely gravitate there if
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slot play was the objective. In fact, there is only one town north of mid-point line, Enfield,
with a 2013 population in excess of 20,000. Most of the larger towns and their
populations are located much closer to East Hartford than to Enfield/East Windsor.
Thus, a casino south of the mid-point line would be much more convenient to more
residents than would be MGM.
The map below indicates the total populations for each major zip code in the area from
2007. The darker the shade of green (the darkest green represents 60,000 persons
within a particular zip code), the higher the population. As the map indicates, there are
significantly more darker-shaded areas from Hartford/East Hartford to the south than
there are north of Hartford. Obviously, if the many zip codes within the City of Hartford
were aggregated, the City would be the darkest green on the map with a population
over 125,000.

Proximity, typically measured by driving times, is a key factor in gaming revenue

generation, and even more so for slot players. A closer casino will not only increase
gamer visit frequency but can also convince a non-gamer to give it a try as the venue
is so convenient.
Being more proximate to the population concentrations in not only Hartford County and
its environs, along with Greater Waterbury to the west and Greater New Haven to the
south, a casino in East Hartford could be expected to create more new residential
gamers and generate more visits from existing gamers than would a casino in
Enfield/East Windsor or anywhere above the line north of Hartford. (Note: This new
or incremental slot demand would help mitigate the slot migration from Mohegan Sun
and Foxwoods to MGM and lessen the MGM impact on State gaming tax revenues.)
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Slots-Only Casino in East Hartford, Connecticut

April 22, 2015

From the junction of I-91 and I-84, patrons of a casino built in Enfield/East Windsor
would need to travel approximately 11 further miles than they would to get to a similar
facility developed in East Hartford.
Additionally, as presented in our November 2014 report, we believe that there is some
$9.2 million (in 2018 dollars) in untapped slot win from the estimated 1.7 million
Hartford-area adult hotel guests from 2.7 million occupied rooms in 2013 that is
currently not being captured by either Mohegan Sun or Foxwoods, as they are now too
far removed for a convenient side trip, as Mohegan Sun is a minimum 45-minute drive
from the Marriott/Convention Center in downtown Hartford and Foxwoods is even
further distant. A casino in East Hartford would be only an 8-minute drive from the
Marriott versus an approximate 15-minute drive to Enfield/East Windsor and a some 25minute drive to MGM. (Note: This new or incremental slot demand would again help
mitigate the slot migration from Mohegan Sun and Foxwoods to MGM and lessen the
MGM impact on State gaming tax revenues.) According to PKF Hospitality Research,
some 55 percent of the guest rooms in the Hartford market are located in or south of
downtown Hartford (where the convention center is located). Thus, a casino in East
Hartford should be more convenient to more hotel guests and their potential incremental
gaming expenditures.
Finally, 2013 traffic count data from CTDOT reports that I-84 in East Hartford carries
some 130,900 vehicles each day versus some 94,900 vehicles on I-91 in East Windsor.
That 38 percent, or 36,000-vehicle, difference is certainly a major factor in favor of East
Hartford even without considering that I-384 also has an exit onto Silver Lane to the
East Hartford site. It is entirely logical, in our opinion, that the volume (and anticipated
capture) of impulse business that could be expected from the additional 36,000
vehicles per day going past the East Hartford site would be significant.
While we have no data indicating the make-up of the traffic in either area (e.g. throughtravelers versus commuters), it could be expected that the traffic counts near
Enfield/East Windsor are inflated for several factors:

First, by the significant volume of residents of Connecticut and

Massachusetts passing by Enfield/East Windsor en route to and from
Bradley International Airport, which serves much of central New England.
These travelers are unlikely to stop at a casino while going to or coming from
the Airport.

Second, there are certainly through-travelers, who are likely somewhat less
apt to pull over and visit a casino for a few hours, utilizing both I-84 and I-91.
Interstate 91 is the primary interstate to and through northern New England,
while I-84 is one of the two interstates connecting the New York City
metropolitan area with the Greater Boston area, the primary tourist
destination to the northeast. I-91 traffic in the winter months, particularly on
the weekends, is populated with skiiers heading to Vermont and New
Hampshire who would be unlikely to pull-off along I-91 to patronize a casino.
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April 22, 2015

Third, we would intuitively think that more locals (the primary gaming
market) would commute into Hartford from East Hartford on I-84 than
commute via I-91 either from Hartford to around Springfield, or from around
Springfield to Hartford. Further, according to the U.S. Census ACS five-year
estimates as of 2010, some 20,400 residents of the Pioneer Valley in
Massachusetts (Hampden and Hampshire Counties) interstate-commute
daily to major Hartford-area employers (e.g. Mass Mutual, Aetna, The
Hartford, Travelers, United Technologies, Hamilton Sundstrand, Pratt &
Whitney, Travelers, Voya Financial, Lincoln Financial, United Health Care,
Cigna, MetLife, Alstom, etc.). Even after allowing for multiple-occupancy of
some of these vehicles, these commuters could equate to 15,000 cars per
day. It is highly likely that any of these commuters who wish to visit a casino
after work would opt to continue onward to MGM in Springfield and be much
closer to home when their gaming visit (which may include some
consumption of alcoholic beverages) is completed rather than breaking their
commute less than half-way home.

The relative positioning of the two potential casino site areas under discussion, East
Hartford and East Windsor, in relation to contributing highways for each site clearly
favors the East Hartford site, as East Windsor is almost exclusively fed by I-91 and
Route 5, while the East Hartford site can look to not only I-84, but also I-91, I-384 and
Routes 5, 2 and 15 as material feeders. The East Hartford site sits virtually at the
virtual confluence of all of these primary thoroughfares.
Issue #2 of capturing demand from Mohegan Suns and Foxwoods existing customer
bases is a legitimate concern for the MTGA. Either an I-84 or an I-91 casino can be
expected to impact both properties to an extent. In our November 2014 report, PKF
projected an impact (loss) to a casino in East Hartford of 2.6 percent on Mohegan Suns
slot win in 2018 and a 1.9 percent impact on Foxwoods slot win in that year. But, as
East Hartford is only some 10 minutes closer to either Mohegan Sun or Foxwoods than
is Enfield/East Windsor, the differences in the degrees of impact between the two
possible sites are minimal and should not be a material deciding factor in choosing
between casino sites on I-84 or I-91, in our opinion. Frankly, we would fear that a
majority of the residents of the Hartford area, particularly from east, west and south of
Hartford, would get on I-91 and, after driving up to 30 minutes to get that far, would elect
to bypass a casino in the Enfield/East Windsor area and drive an extra 10 minutes to
get to MGM in Springfield, likely a far more sizable gaming and entertainment venue.
That fear would be greatly alleviated if those residents only had to drive to a site in East
Hartford and save the 25-minute additional drive to MGM.
Further, and importantly, it is estimated that a casino in East Hartford is projected to
recapture close to $39 million in Connecticut resident slot revenue that would have been
lost to MGM Springfield in 2018 plus generate incremental slot revenues from

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Hartford-area residents and hotel guests of close to $15 million, a significant portion of
which could not be expected from a casino in East Windsor.
Finally, we believe the East Hartford opportunity in mind would provide a building that
should be relatively easy to convert to gaming and related uses with adequate surface
parking, room for expansion (with restaurants at/added to each end of the existing
building?) and ready access to two interstates and two interstate exits. The East
Hartford building in mind has been an entertainment venue for decades and, thus, is
already an established destination for entertainment. Further, with its existing use, the
approval process should be far less cumbersome for East Hartford than for Enfield/East
Windsor and a casino operation could most likely be open much sooner in East
Hartford.
With closer proximity and more avenues of access to larger concentrations of both
Connecticut residents and Hartford-area hotel guests, we believe the East Hartford
opportunity would generate more base and incremental gaming revenues than any I-91
North location and, hence, more overall gaming revenue to help mitigate the impact of
MGM on Mohegan Suns and Foxwoods slot revenues and the State of Connecticut in
the form of gaming revenue taxes.
All of these factors lead us to believe that a casino off I-84 in East Hartford would have
a greater net economic benefit to Mohegan Sun, Foxwoods and the State than would a
site significantly north of Hartford on I-91.
ESTIMATES OF STABILIZED PAYROLL
PKF Consulting was asked to estimate the number of jobs (FTEs) and payroll and
related expenses that might be expected on the basis of the revenue estimates
prepared by us in November 2014.
We prepared independent cursory estimates based on a staffing schedule without the
benefit of input from either Mohegan Sun or Foxwoods. Had we been preparing such
estimates for formal third-party use/reliance, we would have availed ourselves of that
input.
Based on our estimates of gross slot win/revenues of $81.6 million for 2018 (in inflated
dollars) for the casino, with MGM in operation, we estimated that the East Hartford
casino could expect the following in that year:

241 FTE employees

Payroll of approximately $9.8 million
Payroll and benefits of approximately $13.7 million
Average payroll and benefits per FTE of approximately $56,900

Should the casino open before the MGM in Springfield, its revenue levels would be
much higher during that period (as discussed in our November 2014 report) and the
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related numbers of employees and payroll and related benefit expenses would be
materially higher as well.
*

As in all studies of this type, the estimated results assume and are based upon competent
and efficient management of all of the gaming venues and presume no significant changes
in the regional gaming industry apart from the additions of the subject casino, the MGM
Springfield and the Wynn Casino in Everett. The conclusions reached are based upon our
present knowledge of the subject areas gaming market; however, the casino win
estimates are based on revenue data available as of the completion of our fieldwork for the
original report, concluded on November 10, 2014.
Since the estimated results are based on estimates and assumptions that are subject to
uncertainty and variation, we do not represent them as results that will actually be
achieved.
This letter and its contents may not be quoted in any appraisal, prospectus or offering
memorandum without our prior written consent.

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