Studies advise against casinos
JEFFERSON – Consultants hired by the Iowa Racing and Gaming Commission say a new casino proposed for Jefferson would get most of its money by siphoning revenue from existing casinos.
The commission will meet on June 12 to vote on whether or not to grant a license for the proposed casino, which would be located near the junction of U.S. Highway 30 and Iowa Highway 4.
The IRGC ordered studies to help determine if there are any areas that are “underserved” in terms of casinos and if there is a need for new casinos.
Both Marquette Advisers, of Minneapolis, and Union Gaming Analytics, of Las Vegas, said there is no underserved area in Iowa.
“We recommend that the state of Iowa refrain from issuing additional casino licenses at this time and re-evaluate at a later date,” the Union Gaming report said.
Marquette reported the proposed Jefferson casino would make about $28 million annually; $22 million – or 79 percent – would come from revenue lost by existing Iowa casinos.
“New developments are likely to derive revenues by and large through the cannibalization of existing operators,” the Marquette report states. “We find that the Iowa casino supply is approaching maximum penetration within the existing market.”
The people of Jefferson voted in August 2013 to go ahead with the application.
Supporters of the proposed Jefferson casino claim the studies don’t mean the facility shouldn’t be built.
“I question some of the figures they’re coming up with,” said Greene County Supervisor Guy Richardson, who has been a proponent. “I’m not a professional in doing those kinds of studies, so I don’t know finer points of that, but I can’t imagine the casino in Jefferson would have the amount of negative impact they’re indicating it would have.”
The amount of revenue coming from other casinos doesn’t look so bad when you consider the details, said Norm Fandel, chairman of the Grow Greene County Gaming Corporation, the potential casino’s sponsoring organization. He is also president of the Greene County Development Corp.
“The hardest hit was Prairie Meadows. That’s a $200-million facility being impacted by $15 million,” Fandel said, referring to the studies. “And when you’re looking at being 75 miles away, I don’t know we would have a big impact on Prairie Meadows.”
The Union Gaming report said the Jefferson casino would draw either $15 million or $10 million from Prairie Meadows, depending on which methodology is used, or about 5 to 7.5 percent of the larger casino’s revenue.
The Marquette report said the amount was $6 million, or about 3 percent.
These numbers shouldn’t be a problem, said Tom Timmons, president and chief operating officer of Wild Rose Entertainment. Wild Rose, which owns casinos in Emmetsburg and Clinton, wants to open a casino in Jefferson.
The last casino license granted in Iowa was in Lyon County in 2010, Timmons said.
Four other license requests, including one from Fort Dodge, were denied that year. Marquette prepared a report at that time as well.
“The Marquette advisers, the same company, said if that license was given to Lyon County it would affect Emmetsburg 7 percent,” Timmons said. “The commission voted unanimously for that. Seven percent didn’t seem to bother them.
“My point is, if 7 percent wasn’t an issue in 2010, why would 3 percent be an issue to Prairie Meadows or to the commission on behalf of Prairie Meadows?”
The Emmetsburg casino would lose about $3 to $5 million of its revenue, or 10 to 15 percent, to the new Jefferson casino, according to the Union Gaming study.
The Marquette study set the number at 10 percent.
Timmons said this was higher than in Wild Rose’s projections, but that some overlap was expected.
“If we plan for that and make some business adjustments, that’s us. We’re willing to take that risk,” he said.
Emmetsburg Mayor Myrna Heddinger said the Jefferson casino would be bad for her town.
“I just hope the gaming commission holds true and there aren’t any more casinos allowed, especially in our area,” Heddinger said. “We have a very good thing going in this casino. It’s a very positive thing for our community and for Palo Alto County. I would hate to see anything take away from that.”
Renee Jedlicka is vice president of the Palo Alto County Gaming Development Corporation board, which holds the license for Wild Rose Casino, and receives 6 percent of the its revenue.
When the Lyon County casino opened, Jedlicka said they expected drops in Wild Rose’s revenue. Instead, revenue stayed about the same.
Because of this, the board doesn’t necessarily see the casino market as saturated.
“I think, had we seen different results from Lyon County, we probably would have felt that way. I would say we are uncertain at this point,” Jedlicka said. “Our board is very cautious about this situation.”
Fandel said the gaming commission should consider all the other Jefferson development plans along with the casino.
“We’re building more than just a casino,” Fandel said. “We’re building the event center, along with the hotel. We’re in an isolated area. We’re hoping we will become an attraction destination for activities.”
“I feel there will be an adequate revenue stream in the Greene County area,” he added. “If you look into it, any of the casinos that were built, after the first one was built, had some impact. We’re really looking at our impact being minimal on the rest of the casinos.”
Richardson said he is still optimistic about the casino being built and listed some benefits the facility would bring to the area.
“We’re looking at a minimum 250 full-time jobs that a casino would create. We think that would certainly generate other growth in the area, as far as job growth,” Richardson said. “You’ve got the increased tax base it brings. There’s a lot of economic impact that happens here in the area. That goes way beyond the gaming revenues.
“I’m hopeful the commission will take all that into account also. We still look at it as a very big positive for the area. I would like to think they will too.”
The studies reached a similar conclusion for a proposed casino in Cedar Rapids. A decision on whether to issue a license for the Cedar Rapids project will be made the IRGC April 17.