The Iowa Racing and Gaming Commission recently heard reports from Minneapolis-based Marquette Advisors and Atlantic City-based WhiteSand Advisors regarding the potential market for a Cedar Rapids casino. Three proposals are under consideration: the million Wild Rose Cedar Rapids, with 600-700 slots and 15-20 table games; the 5 million Cedar Crossing Central attached to the DoubleTree Hotel, with 550 slots and 15 table games; and the 5 million Cedar Crossing on the River, with 840 slots and 30 table games. The five-member commission will announce November 15 which proposal—if any—will be granted a casino license.
In 2014 commissioners rejected 4-1 an application identical to Cedar Crossing on the River, citing market studies projecting it would seriously cannibalize other casinos, especially Riverside Casino & Golf Resort. Wild Rose Jefferson ultimately was approved.
In 2014, Marquette concluded Cedar Crossing would generate $81 million in adjusted gross revenue by 2017, including $59 million or 73 percent cannibalized from other casinos. The new report, however, indicates Cedar Crossing on the River would generate $47 million in new gambling revenue by 2022, with the other 45 percent of revenue coming from existing casinos.
Cedar Crossing Central and Wild Rose Cedar Rapids would generate $25 and $23 million, respectively, and cannibalize 56 percent each from other casinos, the Marquette study said.
Marquette Vice President Brent Wittenberg said the results had changed because earlier analyses underestimated the rate of local participation. He said, “The drawing power of Iowa casinos is increasingly local” which reduces the impact of cannibalization. “We anticipate this to be a much more localized customer base even compared to where we were three years ago. This is really the trend in Iowa today. We expect far fewer customers from 45 minutes and beyond,” Wittenberg said.
WhiteSand Vice President Jim Nickerson said his company’s report found the three proposals overstated annual revenue projections by 13-42 percent. He said none of the three would generate more than $6.8 million in new gambling revenue for the state, and each would cannibalize at least 89 percent from surrounding casinos. “People say they will come more times and spend more money at casinos, but there’s a fixed budget people are going to spend on entertainment. We don’t see that expanding,” he said.
Nickerson added the casino proposals do not include a hotel, which would help keep people in town longer. Also, he said with 19 casinos in the state, the novelty of casinos has worn off in Iowa.
Iowa has 19 casinos, which covers much of the state. The novelty has worn off, he said.
Wild Rose Entertainment President and Chief Operating Officer Tom Timmons disagreed. He said, “Somebody tell me where that has happened anywhere. You could build a casino across the street from another casino and you wouldn’t have 90 percent cannibalization.”
He noted the impact of Rhythm City in Davenport on Wild Rose Clinton was less than predicted, and so was the impact of Wild Rose Jefferson on Prairie Meadows in Altoona. Timmons added casino revenue may dip when a new facility opens but the numbers bounce back.
Commissioner Jeff Lamberti stated the WhiteSand study was “wildly different” from previous studies, but cautioned, “We’ve never seen this in Iowa, so the question will be whether this is new evidence.” Commissioner
Dolores Mertz, who cast the lone vote in favor of a Cedar Rapids casino in 2014, said, “The second largest city in the state deserves something.” She said she’s likely to support one of the two smaller casino plans.
