Union Gaming Analytics and Marquette Advisors of Minneapolis—both hired by the Iowa Racing and Gaming Commission to conduct independent studies of Iowa’s gambling markets—recently came to the same conclusion: that new casinos proposed in Cedar Rapids and Jefferson would cannibalize the market share of existing Iowa casinos.
Las Vegas-based Union Gaming Analytics reported, “It’s our opinion that the expansion of regional gaming, whether by commercial or Native American providers, is growing at an increasing and unsustainable pace. We draw a parallel in the growth in regional gaming over the prior five to 10 years as similar to the proliferation and building of shopping malls during the 1970s.”
Marquette Advisors of Minneapolis reported, “The draw area surrounding casinos has become smaller. As new facilities have been developed, each facility has become more localized in terms of its customer base.” Therefore, the report said, a “major investment in new casino facilities in Iowa at this time is not advised.”
On April 17, the IRGC will announce its decision on the proposed Cedar Rapids casino on June 12 it will announce its Jefferson casino decision.
Union Analytics estimated Cedar Crossing Casino, a $165 million project of Cedar Rapids Development Group, would generate base gaming revenue of $82.3 million annually—but that $66.8 million would come from surrounding casinos’ market share. The report said Riverside Casino & Golf Resort, located 12 miles south of Iowa City, would be hit the hardest, losing $37.3 million, or 42.1 percent of its 2013 gaming revenues. Marquette Advisors estimated Cedar Crossing Casino would generate $81 million annually in gambling revenues, with $59 million from cannibalization of surrounding casinos. The report said Riverside casino’s estimated 2017 gambling revenue would plunge from $91 million to $66 million if the Cedar Rapids license is approved. Cedar Crossing would have 840 slot machines, 30 table games and at least three restaurants.
Dan Kehl, chief executive officer of Riverside Casino, said, “The market is saturated and there is no room for growth without significant damage to existing license holders. We are sure that the commission will review these studies carefully and hope they will reject the Cedar Rapids application” But Steve Grey, chairman of the Cedar Rapids Development Group, responded, “Our proposed investment in Cedar Rapids would yield more revenue for the state and local communities and would not threaten the financial viability of any neighboring casinos. Surrounding market impact has been predicted in every study for the past ten years and in most cases never occurred. We continue to believe our project will be beneficial to the state and the second largest city in Iowa.”
Regarding the Jefferson casino proposal, Union Analytics said Wild Rose Entertainment’s $40 million casino complex would generate $33.2 million annually in gambling revenue, with $31.1 million coming from other Iowa casinos. Prairie Meadows Racetrack and Casino at Altoona would lose $13.1 million annually, or 7 percent of its revenue, while the Wild Rose Casino at Emmetsburg would lose $3.6 million or 11.3 percent annually.
Marquette Advisors estimated a Jefferson casino would generate about $28 million annually in gambling revenue, with about $22 million from cannibalization, including $6 million from Prairie Meadows, $4.5 million from Meskwaki casino, $3.2 million from the Emmetsburg casino and $8.3 million from several other casinos. The proposed Jefferson Casino will have 525 gaming machines, 14 table games and a 60-70-room hotel.
Tom Timmons, president and chief operating officer of West Des Moines-based Wild Rose Entertainment, said, “The good news for Greene County is that the findings indicate that a new license awarded for a Jefferson-based casino would have only a negligible to small effect on the operations of any existing casino.”
Greene County Supervisor Guy Richardson said he remains hopeful state regulators will issue a casino license for the Jefferson casino. He said the casino would be a boon for the local economy, generating about 250 full-time jobs, while not having a major impact on surrounding casinos. “I see that as a positive,” he said.
The last time the Iowa Racing and Gaming Commission considered awarding new casino licenses was in 2010. The commission approved plans for the Grand Falls Casino in northwest Iowa’s Lyon County but rejected casino license requests for projects in Tama, Ottumwa and Fort Dodge.
Also in Iowa, on Wednesday, March 5 the IRGC will hear Argosy Sioux City’s case appealing the IRGC’s August 15 denial of the riverboat’s application for a one-year license renewal. An administrative law judge earlier turned down Argosy owner Penn National Gaming’s request to postpone the hearing.
At issue is whether the casino can stay open without an agreement with a licensed nonprofit partner. Iowa gaming law requires operators in counties that approve casino gambling to sign operating agreements with nonprofit groups and share a portion of casino revenues with them. The IRGC denied Argosy’s license renewal application because its agreement with Missouri Riverboat Historic District expired in July 2012. But the IGRC allowed the Argosy to stay open to allow the riverboat’s 300-plus employees to keep their jobs, and also to continue to generate casino revenues for the city and state. However, the IRGC said it will close the Argosy when the Hard Rock Hotel & Casino Sioux City, now under construction downtown, opens in late summer.
Administrative Law Judge Christie Scase agreed with the Iowa Attorney General’s office, representing the IRGC that the contested case hearing should go forward as scheduled. Scase wrote, “At best, the outcome of the MRHD litigation is marginally relevant to the issue to be heard in this contested case. Indefinite delay of the hearing to await the outcome of other litigation does not serve the interest of judicial economy or the regulatory function of the commission.” The other litigation refers to Argosy’s December 24 motion to stay the IRGC hearing over the boat’s license renewal until Argosy’s September 2012 breach f contract lawsuit against MRHC is completed.
Penn is pursuing several regulatory and legal actions to keep the Argosy open and to overturn the IRGC’s April 18 vote awarding the licensed for a land-based casino to Hard Rock developer Sioux City Entertainment and its nonprofit partner, MRHD, which switched allegiance from Argosy to SCE. The Hard Rock group beat out three other applicants, including Penn, which presented two Hollywood casino options.
Argosy officials have told the IRGC Greater Siouxland Improvement Association will be its new nonprofit partner. The group applied for a joint gaming license with the Argosy in December. IRGC administrator Brian Ohorilko has not announced a date when the commission will consider the application.
Meanwhile at the state capital, the House State Government Committee and a Senate state government subcommittee approved similar legislation to phase out dog racing at Iowa’s two tracks in Council Bluffs and Dubuque and also to end casino subsidies that have kept the sport afloat. Under the bills, Mystique Casino in Dubuque and the Horseshoe Council Bluffs casino would be allowed to end dog racing after a 14-day notice.
The casinos would be required to create funds to offset financial losses for greyhound racers, breeders and other groups. Mystique Casino would have to pay $15 million and Horseshoe Council Bluffs would pay $55 million over six years.
Mystique Casino lobbyist William Wimmer said he does not see dog racing making a comeback at the casino. “We’re on a downward path at our casino, and that’s not going to change,” he said.
And in Onawa, the Nebraska-based Omaha Tribe recently held a ribbon-cutting ceremony at its new $12 million Blackbird Bend Casino. Constructed next to the former Casino Omaha, which was forced to shut down in 2011 due to historic Missouri River flooding, the new facility was built six feet higher than the old one. The casino reopened early last year in the former restaurant of the old casino building. Total employment now is 200.
Blackbird Bend Chief Executive Officer Kurt Schmidt said now the tribe plans to add amenities such as a bingo hall in the old casino as early as April or May, as well as a hotel, bowling alley, marina and 18-hole golf course in the next few years. “We have mid-range and long-term plans that will develop Blackbird Bend into a true destination resort that will attract visitors from all over the Midwest,” Schmidt said.
