Pennsylvania casino report released

15 November 2006

PARADISE TOWNSHIP, Pennsylvania – (PRESS RELEASE) -- A comprehensive economic impact study released today shows that the proposed Mount Airy Resort & Casino will generate $953 million in state and local tax revenues and produce a $1.47 billion statewide economic impact that will benefit Monroe County and the Commonwealth of Pennsylvania. The project will also create 8,247 jobs in the state, including 6,324 total construction jobs and an annual average of 1,923 jobs during its first five years of operations.

The report was prepared by Fairmount Capital Advisors, Inc., a Philadelphia-based financial advisory and consulting firm that studied the impact of the planned resort through the first two phases of construction and first five years of operations.

According to the report, Mount Airy will boost tourism and economic growth throughout the region by virtue of its location along the Route 611 corridor and its efforts to ensure that its retail, dining, entertainment, and lodging facilities complement and enhance established businesses in the Pocono Mountains. The report contrasts this with the possible loss of revenue for established Pocono businesses should a self-contained casino with a competing business makeup be constructed outside the existing business corridor.

"This report confirms my belief that for gaming to benefit the entire Pocono region, it must be designed to complement, not compete with, the existing attractions and businesses in the area," said Louis A. DeNaples, the northeastern Pennsylvania businessman who owns Mount Airy and is seeking a gaming license for the site. "I see gaming as a way to restore a major tourism center while benefiting the economy of the entire Poconos. I looked at a lot of potential gaming sites throughout the Commonwealth - from Pittsburgh to Philadelphia and everywhere in between -- but I chose Mount Airy because of the positive impact it would have on the Poconos, local businesses, and area residents."

Fairmount Capital Advisors found that through the two phases of construction and its first five years of operations, Mount Airy would generate $1.47 billion in indirect and direct economic impacts in the Commonwealth of Pennsylvania. Citing the $702.8 million economic impact on Monroe County, the report notes that Mount Airy's design to integrate with existing businesses and its location in a main business district will create a synergy that would not be possible if the developer had adopted an "all things to all people" approach or if the resort were located outside the existing business corridor.

The report also noted that because Louis DeNaples is a resident of the region, it likely will see a greater economic benefit than if casino ownership were outside the region. With the owner being a local resident, dollars brought into the region from tourists would be more likely to stay in the Poconos as opposed to being transferred out to other areas, such as New York or New Jersey. According to the report, "the greater the extent to which regional businesses are locally owned, the more likely it is that dollars taken in to the region will remain within the region rather than be transferred out, as would be the case when ownership and control are wholly or partially outside the region."

The report projects a total employment impact of 8,247 direct and indirect jobs, a figure that includes 6,324 total construction jobs during the first two phases of development and an annual average of 1,923 jobs during Mount Airy's first five years of operations. Of that amount, 4,412 of the jobs created will be in Monroe County, including 3,289 jobs during Phase 1 and Phase 2 of construction and an annual average of 1,123 jobs during the first five years of operations. Direct employment at the casino will be 995 permanent jobs in the first year of operation rising to 1,492 jobs in the fourth year of operations.

The report found that the project will generate $953 million in tax revenues through construction and the first five years of operation through income, sales, gaming and other taxes. Of that amount, local tax revenues are projected at $105.1 million, including $81.1 million in gaming taxes, $3.9 million in earned income taxes, $3.2 million in hotel excise taxes, and $17 million in real estate taxes - 82 percent or $13.96 million of which will go to the Pocono Mountain School District.

Phase 1 construction, a $348.1 million investment that DeNaples began in July 2006, will include a 200-room hotel, restaurants, entertainment venues, retail shopping, and a casino with up to 3,000 slot machines. Phase 2 will see an expanded casino to accommodate a total of 5,000 slot machines, an additional 200 luxury hotel rooms, and additional conference, entertainment and parking facilities. The plan also provides nearly 550 acres of permanently preserved green space that includes biking and walking trails. Mount Airy is expected to open in the Fall of 2007 after the first phase of construction is completed.

The Fairmount Capital Advisors report noted that besides the two-phase construction of the Mount Airy Resort & Casino, the Mount Airy Master Plan calls for an additional $819.1 million in development that will include retail, recreation, accommodation, and residential features, bringing the total development investment in the site to $1.23 billion. As a result, the construction investment for the entire Master Plan is projected to have an economic impact of $911.8 million in Monroe County and $2.098 billion in the Commonwealth. These figures represent the economic impact occurring solely from this development investment and do not take into account the larger impact that ongoing operations will have on the region and the state. The total employment resulting from the full buildout of the Mount Airy Master Plan will be nearly 21,000 full-time equivalent jobs in Monroe County, with earnings of $666.8 million; and nearly 39,000 full-time equivalent jobs in the Commonwealth, with associated earnings of $1.29 billion.

The resort will be run by a world-class team of gaming industry executives led by Paul Henderson, the former President and Chief Operating Officer of Caesars Atlantic City, the Atlantic City Hilton, and Trump Marina Hotel and Casino. The operations team has worked at more than 50 casinos and gaming companies worldwide, and has an extensive background in the development, design, opening, and operation of gaming facilities.

Mount Airy commissioned the economic impact study to provide the Pennsylvania Gaming Control Board with a more complete and exhaustive analysis of the economic, employment, and tax impacts of the planned resort and casino. As is the typical practice in the industry, construction jobs now include both on-site and off-site jobs, such as the fabrication of materials. Prior construction employment estimates were based on a conservative number that assessed job numbers for on-site employees only. As is common practice for the industry, construction jobs are also expressed in person years - more commonly known as man-years.

Fairmount Capital Advisors is an independent financial advisory and consulting firm established in 1987 to assist governmental, public, and private organizations with capital planning, transaction management services, and economic and financial consulting services. Fairmount Capital Advisors also performed an economic impact analysis for Trump Street, another potential gaming site in Pennsylvania located in Philadelphia, and within the past year completed economic impact studies for two major research and health care providers in the Philadelphia region that are planning large, multi-year development and expansion projects.