Hudson Dog Track Application

2) Chairman, Leech Lake Reservation Business Committee (Vol. III, Tab 6**) 3) President, Lower Sioux Indian Community of Minnesota (Vol. III, Tab 7**) 4) Chairperson, Mille Lacs Reservation Business Committee (Vol. I, Tab 8**) S Chairperson, Oneida Tribe of Indians of Wisconsin (Vol. III, Tab 9-*

6) President, Prairie Island Indian Community of Minnesota (Vol. III, Tab 10**) 7) Chairman, Shakopee Mdewakanton Sioux Community of Minnesota (Vol. II. Tab 11)

8) President, St. Croix Chippewa Indians of Wisconsin (Vol. III, Tab 12"*) 9) Chairperson, Wisconsin Winnebago Tribe of Wisconsin (Vol. III, Tab 13**) 10) Chairman, Bad River Band of Lake Superior Chippewa Indians of Wisconsin (Vol. II. Tab 16***)

11) Chairman, Bois Forte (Nett Lake) Reservation Business Commitce (Vol. III, Tab 16***)

12) Chairman, Fond du Lac Reservation Business Committee (Vol. III, Tab 16***) 13) Chairman, Forest County Potawatomi Community of Wisconsin (Vol. III, Tab 16***)

14) Chairman, Grand Portage Reservation Business Committee (Vol. III, Tab 16***) 15) Chairman, Red Lake Band of Chippewa Indians of Minnesota (Vol. III, Tab 16***) 16) President, Stockbridge Munsee Community of Wisconsin (Vol. III, Tab 16***) 17) Chairperson, Upper Sioux Community of Minnesota (Vol. III, Tab 16′′--) 18) Chairman, White Earth Reservation Business Committee (Vol. III, Tab 16***) 19) President, The Minnesota Chippewa Tribe (Vol. III, Tab 14).

There has been no consultation with the State of Wisconsin. The Area Director is in error in the statement: "...it is not required by the Indian Gaming Regulatory Act until the Secretary makes favorable findings." (Vol. I, Findings of Fact and Conclusions, pg. 15)

On January 2, 1995, the Minneapolis Area Director was notified by the Acting Deputy Commissioner of Indians Affairs that consultation with the State must be done at the Area level prior to submission of the Findings of Fact on the transaction. As of this date, there is no indication that the Area Director has complied with this directive for this transactiv 1.

B. Consultation with City and Town

The property, currently a class III gaming facility, is located in a commercial area in the southeast corner of the City of Hudson. Thomas H. Redner, Mayor, states "...the City of Hudson has a strong vision and planning effort for the future and that this proposed Casino can apparently be accommodated with minimal overall impact, just as any other development of this size."

Hudson Dog Track Application

The City of Hudson passed Resolution 2-95 on February 6, 1995 after the Area Office had submitted its Findings Of Facts, stating "the Common Council of the City of Hudson, Wisconsin does not support casino gambling at the St Croix Meadows site". However, the City Attorney clarified the meaning of the resolution in a letter dated February 15, 1995 -stating that the resolution "does not retract, abrogate or supersede the April 18, 1994 Agreement for Government Services." No evidence of detrimental impact is provided in the resolution.

The Town of Troy states that it borders the dog track on three sides and has residential homes directly to the west and south. Dean Albert, Chairperson, responded to the consultation letter stating that the Town has never received any information on the gaming facility. He set forth several questions the Town needed answered before it could adequately assess the impact. However, responses were provided to the specific questions asked in the consultation.

Letters supporting the application were received from Donald B. Bruns, Hudson City Councilman; Carol Hansen, former member of the Hudson Common Council; Herb Giese, St. Croix County Supervisor, and John E. Schommer, Member of the School Board. They discuss the changing local political climate and the general long-term political support for the acquisition. Roger Breske, State Senator, and Barbara Linton, State Representative also wrote in support of the acquisition. Sandra Berg, a long-time Hudson businessperson, wrote in support and states that the opposition to the acquisition is receiving money from opposing Indian tribes.

C. Consultation with County

The St. Croix County Board of Supervisors submitted an Impact Assessment on the proposed gaming establishment. On March 13, 1994 a single St Croix County Board Supervisor wrOLE a letter to Wisconsin Governor Tommy Thompson that stated his opinion that the Board had not approved "any agreement involving Indian tribes concerning gambling operations or ownership in St. Croix County."

On April 15, 1994 the Chairman of the St. Croix County Board of Supervisors indicated that we cannot conclusively make any findings on whether or not the proposed gaming establishment will be detrimental to the surrounding community... Our findings assume that an Agreement for Government Services, satisfactory to all parties involved, can be agreed upon and executed to address the potential impacts of the service needs outlined in the assessment. In the absence of such an agreement it is most certain that the proposed gaming establishment would be a detriment to the community."

On April 26, 1994 a joint letter from the County Board Chairman and Mayor of the City of Hudson was sent to Governor Thompson. It says, "The City Council of Hudson unanimously approved this [Agreement for Government Services) on March 23rd by a 6 to 0 vote, and the

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Hudson Dog Track Application

County Board at a special meeting on March 29th approved the agreement on a 23 to 5

On December 3, 1992, an election was held in the City of Hudson on an Indian Gaming Referendum, -"Do you support the transfer of St. Croix Meadows to an Indian Tribe and the conduct of casino gaming at St. Croix Meadows if the Tribe is required to meet all financial commitments of Croixland Properties Limited Partnership to the City of Hudson?" With 54% of the registered electorate voting, 51.5% approved the referendum.

St. Croix County in a March 14, 1995 letter states that the "County has no position regarding the City's action regarding Resolution 2-95 by the City of Hudson (referred to above).

D. Consultation with Neighboring Tribes

Minnesota has 6 federally-recognized tribes (one tribe with six component reservations), and Wisconsin has 8 federally-recognized tribes. The three applicant tribes are not included in the Wisconsin total. The Area Director consulted with all tribes except the Menominee Tribe of Wisconsin. No reason was given for omission of this tribe in the consultation process.

Six of the Minnesota tribes did not respond to the Area Director's request for comments while five tribes responded by objecting to the proposed acquisition for gaming. Four of the Wisconsin tribes did not respond while four responded. Two object and two do not object to the proposed acquisition for gaming.

Five tribes comment that direct competition would cause loss of customers and revenues. Only one of these tribes is within 50 miles, using the most direct roads, of the Hudson facility. Two tribes comment that the approval of an off-reservation facility would have a nationwide political and economic impact on Indian gaming, speculating wide-open gaming would result. Six tribes state that Minnesota tribes have agreed there would be no offreservation casinos. One tribe, states the Hudson track is on Sioux land. One tribe comments on an adverse impact on social gructure of community from less money and fewer jobs because of competition, and a potential loss of an annual payment ($150,000) to local town that could be jeopardized by lower revenues. One tribe comments that community services costs would increase because of reduced revenues at their casino. One tribe comments that it should be permitted its fourth casino before the Hudson facility is approved by the state.

St. Croix Tribe Comments

The St. Croix Tribe asserts that the proposed acquisition is a bailout of a failing dog track. The St. Croix Tribe was approached by Galaxy Gaming and Racing with the dog track-tocasino conversion plan. The Tribe rejected the offer, which was then offered to the Tribes. While the St. Croix Tribe may believe that the project is not suitable, the Tribes and the MAO reach an opposite conclusion.

Hudson Dog Track Application

The Coopers & Lybrand impact study, commissioned by the St. Croix Tribe, projects an increase in the St. Croix Casino attendance in the survey area from 1,064,000 in 1994 to 1,225,000 in 1995, an increase of 161,000. It then projects a customer loss to a Hudson casino, 60 road miles distant, at 181,000. The net change after removing projected growth is 20,000 customers, or approximately 1% of the 1994 actual total attendance at the St. Croix casino (1.6 million).

The study projects an artendance loss of 45,000 of the $22,000 1994 total at the St. Croix Hole in the Wall Casino, Danbury, Wisconsin, 120 miles from Hudson, and 111 miles from the Minneapolis/St. Paul market. Danbury is approximately the same distance north of Minneapolis and south of Duluth, Minnesota as the Mille Lac casino in Onamia, Minnesota, and competes directly in a market quite distant from Hudson, Wisconsin, which is 25 miles east of Minneapolis. The projected loss of 9% of Hole in the Wall Casino revenue to a Hudson casino is unlikely. However, even that unrealistically high loss would fall within normal competitive and economic factors that can be expected to affect all businesses, including casinos. The St Croix completed a buy-out of its Hole in the Wall Manager in 1994, increasing the profit of the casino by as much as 67%. The market in Minnesota and Wisconsin, as projected by Smith Barney in its Global Gaming Almanac 1995, is expected to increase to $1.2 billion, with 24 million gamer visits, an amount sufficient to accommodate a casino at Hudson and profitable operations at all other Indian gaming locations.

Ho Chunk Nation Comments

The Ho Chunk Nation ("Ho-Chunk") submitted comments on the detrimental impact of the proposed casino on Ho-Chunk gaming operations in Black River Falls, Wisconsin (BRF), 116 miles from the proposed trust acquisition. The analysis was based on a customer survey that indicated a minimum loss of 12.5% of patron dollars. The survey was of 411 patrons, -21 of whom resided closer to Hudson than BRF (about 5% of the customers). Forty-two patrons lived between the casinos closer to BRF than Hudson.

Market studies from a wide variety of sources indicate that distance (in time) is the dominant factor in determining market share, especially if the facilities and service are equivalent However, those studies also indicate that even when patrons generally visit one casino, they occasionally visit other casinos. That means that customers closer to a Hudson casino will not exclusively visit Hudson. The specific residence of the 21 customers living closer to Hudson was not provided, but presumably some of them were from the Minneapolis/St. Paul area, and already have elected to visit the much more distant BRF casino rather than an existing Minneapolis area casino.

In addition, "player clubs create casino loyalty, and tend to draw customers back to a casino regardless of the distance involved. The addition of a Hudson casino is likely to impact the BRF casino revenues by less than 5%. General economic conditions affecting disposable income cause fluctuations larger than that amount. The impact of Hudson on BRF probably cannot be isolated from the "noise" Nuctuations in business caused by other casinos, competing entertainment and sports, weather, and other factors.

Hudson Dog Track Application

The Ho-Chunk gaming operations serve the central and southern population of Wisconsin, including the very popular Wisconsin Dells resort area. The extreme distance of Hudson from the primary market area of the Ho-Chunk casinos eliminates it as a major competitive factor. The customers' desire for variery in gaming will draw BRF patrons to other HoChunk casinos, Minnesota casinos, and even Michigan casinos. Hudson cannot be expected to dominate the Ho-Chunk market, or cause other than normal competitive impact on the profitability of the Ho-Chunk operations. The addition by the Ho-Chunk of two new casinos since September 1993 strongly indicates the Tribe's belief in a growing market potential. While all of the tribes objecting to the facility may consider the competitive concerns of another casino legitimate, they provide no substantial data that would prove their concerns valid. There are eight casinos within a 100-mile radius of the Minneapolis area; three casinos are within 50 miles. (Vol. I, Tab 3. pg. 29)

Comments by the Oneida Tribe of Indians of Wisconsin

In an April 17, 1995 letter, the Oneida Tribe rescinds its neutral position stated on March 1, 1994, "Speaking strictly for the Oneida Tribe, we do not perceive that there would be any serious detrimental impacts on our own gaming operation... The Oneida Tribe is simply located to (sic) far from the Hudson project to suffer any serious impact. The Tribe speculates about growing undue pressure from outside non-Indian gambling interests that could set the stage for inter-Tribal rivalry for gaming dollars. No evidence of adverse impact is provided.

KPMG Peat Marwick Comments for the Minnesora Tribes

On behalf of the Minnesota Indian Gaming Association (MIGA), Mille Lacs Band of Chippewa Indians, St. Croix Chippewa Band, and Shakopee Mdewakanton Dakota Tribe, KPMG comments on the impact of a casino at Hudson, Wisconsin.

KPMG asserts that the Minneapolis Area Office has used a "not devastating" test rather than the less rigorous "not detrimental" test in reaching its Findings of Fact approval to take the subject land in trust for the three affiliated Tribes.

In the KPMG study, the four tribes and five casinos within 50 miles of Hudson, Wisconsin had gross revenues of $450 million in 1993, and $495 million in 1994, a 10% annual growth. The Findings of Fact projects a Hudson potential market penetration of 20% for blackjack and 24% for slot machines. If that penetration revenue came only from the five casinos, it would be $114.6 million.

However, the Arthur Anderson financial projections for the Hudson casino were $80 million in gaming revenues, or 16.16% of just the five casino revenue (not total Indian gaming in Minnesota and Wisconsin). Smith Barney estimates a Minneapolis Gaming Market of $480 million, a Non-Minneapolis Gaming Market of $220 million, and a Wisconsin Market of $500 million. The Wisconsin market is concentrated in the southern and eastern population centers where the Oneida and Ho-Chunk casinos are located. Assuming that the western