1 MARKET ASSESSMENT

1.1 Market Summary Approximately seven of every 10 adults placed a wager of some type at least once in 2012. Americans wagered approximately $900 billion at casinos and racetracks, playing lottery games, and on other forms of legal betting. The estimated $100 billion to $300 billion wagered annually in the U.S. on sports events and the more than $100 billion in estimated online bets are not included in this total. The bulk of total wagers is returned to the wagering public as winnings. Gross gaming revenue, or the amount retained by casinos, racetracks, lotteries, and other gaming hosts, totaled $96.5 billion in 2012. Distribution by type of activity is as follows (sources: American Gaming Association [www.americangaming.org], National Indian Gaming Commission [www.nigc.gov], state gaming commissions, and state lotteries): Casinos - Land-based/riverboat casinos and racinos: $37.3 billion - Tribal casinos:* $27.4 billion Lotteries: $27.0 billion Parimutuel wagering (thoroughbred, harness, and greyhound racing, and jai-alai): $ 2.6 billion Card rooms (poker): $ 1.2 billion Charitable bingo: $ 800 million Sports books: $ 170 million
* Most recent data is for 2011

1.2 State-by-State Summary All but two states Hawaii and Utah allow some form of wagering. Forty (40) states allow casinos. Parimutuel wagering is legal in 41 states. Forty-four (44) jurisdictions (i.e., 43 states and the District of Columbia) operate lotteries. The following is a summary of gaming and wagering allowed in each state:
Casinos Parimutuel

Alabama: Alaska: Arizona: Arkansas: California: Colorado: Connecticut:

o T T T T T T

T o T T T T T

Lottery

o o T T T T T

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Delaware: District of Columbia: Florida: Georgia: Hawaii: Idaho: Illinois: Indiana: Iowa: Kansas: Kentucky: Louisiana: Maine: Maryland: Massachusetts: Michigan: Minnesota: Mississippi: Missouri: Montana: Nebraska: Nevada: New Hampshire: New Jersey: New Mexico: New York: North Carolina: North Dakota: Ohio: Oklahoma: Oregon: Pennsylvania: Rhode Island: South Carolina: South Dakota: Tennessee: Texas: Utah: Vermont: Virginia: Washington: West Virginia: Wisconsin: Wyoming:

T o T o o T T T T T o T T T T* T T T T T T T o T T T T T T T T T T o T o T o o o T T T T

T o T o o T T T T T T T T T T T T o T T T T T T T T o T T T T T T o T o T o o T T T T T

T T T T o T T T T T T T T T T T T o T T T o T T T T T T T T T T T T T T T o T T T T T o

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notes: T indicates activity; o indicates this type of gaming and wagering is not allowed * recent legislation allows casinos in Massachusetts but none have yet opened

1.3 Casinos There are two general categories of casinos in operation in the United States: commercial casinos and tribal casinos. Commercial casinos are further categorized as follows: Land-based casinos Riverboat or dockside casinos Racetrack casinos or racinos According to the American Gaming Association, 979 casinos were in operation in the U.S. at year-end 2012, distributed as follows: Tribal casinos: 466 Land-based and riverboat casinos: 464 Racinos: 49 Revenue for commercial casinos (i.e., land-based, riverboat, and racino casinos) was $37.3 billion in 2012. Tribal gaming revenues was $27.4 billion in FY2011 (most recent data available). 1.4 Lotteries Lotteries are played in 43 states and the District of Columbia. States without lotteries are Alabama, Alaska, Hawaii, Mississippi, Nevada, Utah, and Wyoming. Total lottery sales were $67.75 billion in 2012, a 7.6% increase over 2011. Lotteries retained approximately $27 billion in 2012, $18 billion of which was profit turned over to state governments for education and other purposes. 1.5 Parimutuel Wagering Parimutuel wagering is legal in 41 states. The following is a summary of activities by sporting event: There is live horse racing in 36 states, with a total of 96 horse racetracks (excluding small tracks at county fairs). Greyhound racing is sanctioned in 15 states; there are currently 20 tracks in seven states with live greyhound racing. Jai-alai is currently played only in Florida, where there are six active jai-alai frontons. Total wagers (or the handle) on thoroughbred races totaled $10.9 billion in 2012. For greyhound races and jai-alai, total wagers were approximately $500 million and $30 million, respectively. Total parimutuel wagering revenue, or the handle less the amount

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paid as winnings, was approximately $2.6 billion in 2012. Annual gross gaming revenues for horse racing parimutuel facilities are approximately $2.5 billion. Gross revenues for greyhound racing parimutuel facilities are approximately $100 million. Revenues are about $10 million for jai-alai. 1.6 Sports Wagering Only the states of Nevada and Delaware allow casino sports books. In 2011, 183 active licensed sports books were in operation in Nevada. Patrons wagered $2.9 billion on sports events; gross gaming revenue was $141 million. In May 2010, Delaware began allowing parlay bets (i.e. combination bets on three or more games) on NFL games. The Wall Street Journal estimates approximately 120 million people in the U.S. wager an estimated $100 billion annually on various sports events. Other estimates place sports betting as high as $300 billion. 1.7 Online Gambling There is no reporting of the amount wagered online from the United States. Estimates are that Americans bet over $100 billion on all types of online gaming in 2012, including $30 billion on Internet poker alone. Host sites retained an estim ated $4 billion to $5 billion. In December 2011, the U.S. Justice Department reversed its long-held opposition to many forms of Internet gambling, ruling that the 1961 Wire Act applies only to interstate sport wagering, not online gaming. The ruling removed a big legal obstacle for states that want to sanction online gambling. Delaware became the first state to approve legislation allowing for full-service betting sites to operate within its boundaries when the Delaware Gaming Competitiveness Act was signed into law in June 2012. As of June 2013, the state had not yet launched online gambling allowed by the law. In February 2013, Assembly Bill 114 (AB114) was enacted in Nevada, allowing the state to regulate poker websites. The first legal online poker site in the U.S. launched in May 2013. The New Jersey Internet Gaming Act (NJIGA) was signed into law in February 2013. As of June 2013, legislation enabling online gaming was being considered in California, Massachusetts, New York, and Pennsylvania.

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