Recently both Marquette Advisors of Minneapolis and White Sand Gaming of Atlantic City, New Jersey submitted reports regarding the impact of three proposals for a casino in Cedar Rapids, Iowa. Both reports stated Riverside Casino & Golf Resort would lose at least 20.5 percent of its million-plus annual revenue if any of the Cedar Rapids casinos were built.
Marquette said, “We expect that a new casino in Cedar Rapids will prompt an increase in local casino gaming participation rates, such that a new casino here will be successful in attracting new gaming dollars from the local population. Such a development will result in redistribution of market share among existing casinos in Iowa.”
Marquette predicted the 2014 Cedar Crossing proposal, which has been rebranded as Cedar Crossing on the River, would generate $47 million in new gambling revenue for the state but would cannibalize 45 percent of its revenue from existing Iowa casinos; it predicted 73 percent cannibalization in 2014. The report said Cedar Crossing Central would generate $25 million and Wild Rose Cedar Rapids would generate $23 million. Each would cannibalize 56 percent each from surrounding casinos.
White Sand said all three proposals significantly overstated annual revenue projections by 13 to 42 percent; none 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.
The Iowa Racing and Gaming Commission cited high cannibalization figures combined with a stagnant market when it rejected a license for Cedar Crossing by a 4-1 vote in 2014. “At this time, we see nothing that changes this conclusion and resulting decision,” the White Sands report stated.
Commissioner Jeff Lamberti said the commission historically has supported casino applications with cannibalization rates in the low teens or lower for any existing casino. Cannibalization over 20 percent traditionally has not been supported.
The IRGC heard presentations for the three proposals last week. It will decided on a casino license in November. The proposals include the $40 million Wild Rose Cedar Rapids, and two options from the Cedar Rapids Development Group-Peninsula Pacific partnership: the $105 million Cedar Crossing Central attached to the DoubleTree Hotel and the $165 million Cedar Crossing on the River.
Wild Rose said in a statement, “Recent history shows that the studies have not been accurate predictors of what happens in reality when a new gaming facility is opened.” It was referring to inflated cannibalization predictions for Wild Rose Jefferson, which opened in 2015.
The White Sand study said:
— Cedar Crossing on the River would generate $6.2 million in new gambling revenue for the state, but would cannibalize $53 million or 89 percent from other casinos, including 32 percent cannibalization at Riverside.
— Cedar Crossing Central would generate $2.8 million in new gambling revenue for the state, but would cannibalize $36 million or 92 percent, with 22 percent at Riverside.
— Wild Rose Cedar Rapids would generate $3.5-$5.1 million in new gambling revenue for the state, but cannibalize $42.5-$49.1 million, or 90-92 percent, with 25-27 percent cannibalization at Riverside.
The Marquette study said:
— Cedar Crossing on the River would generate $47 million in new gambling revenue for the state, but cannibalize $38 million or 45 percent, with 25 percent at Riverside.
— Cedar Crossing Central would generate $25 million in new gambling revenue for the state, but cannibalize $32 million or 56 percent, with 23 percent at Riverside.
— Wild Rose Cedar Rapids would generate $23 million in new gambling revenue for the state, but cannibalize $29 million or 56 percent, with 20.5 percent at Riverside.
