Six firms make pitch to land Cedar Rapids casino market study
Results to help Iowa Racing and Gaming Commission make licensing decision
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ALTOONA — Iowa gambling regulators must decide if they want a fresh perspective about prospects for gambling in Linn County or to re-up with two market research firms that released reports in 2014 that proved devastating to hopes for a Cedar Rapids casino.
Union Gaming of Las Vegas and Marquette Advisors of Minneapolis, which both found three years ago that a casino in Cedar Rapids would result in heavy cannibalization of revenue from surrounding casinos, are among six firms that touted credentials before the Iowa Racing and Gaming Commission on Tuesday during a meeting at Prairie Meadows Racetrack and Casino in Altoona.
“Certainly, there’s arguments to be made for a fresh perspective, but there’s also something to be said for people who are already familiar with the market,” said Jeff Lamberti, a commissioner from Ankeny and a former state lawmaker. “I can see it both ways.”
The panel is expected to hire at least one vendor — although it is likely to be multiple vendors — to conduct gambling market studies assessing the economic impact of three different casino proposals for downtown Cedar Rapids: the $40 million Wild Rose Cedar Rapids, $105 million Cedar Crossing Central and the $165 million Cedar Crossing on the River. The latter is virtually identical to a proposal the commission rejected by a 4-1 vote in April 2014.
The five member commission plans to announce the marketing study contract at its meeting on April 13 in Council Bluffs. The study is due by Oct. 1 and the commission may make a decision in November on whether to grant a license that would allow a casino in Cedar Rapids. The commission spent $150,000 combined for the 2014 Union and Marquette studies. The commission is paying for the 2017 study or studies out of its regulatory fees, which total $6.2 million a year.
Lamberti said he wants to see how close to the mark Union Gaming and Marquette came with their 2014 study projections of market impact from Cedar Crossing and Wild Rose Jefferson, which also was studied. That casino was approved in June 2014 and opened in 2015.
Union Gaming predicted $33.2 million in annual gambling revenue and Marquette predicted $28 million in revenue for Wild Rose Jefferson. In its first full year, Wild Rose generated $28.5 million.
One can also see how close they were on cannibalization.
Marquette predicted Wild Rose Jefferson would cannibalize $3.2 million a year from Wild Rose Emmetsburg and $6 million from Prairie Meadows. Union predicted Wild Rose Jefferson would cannibalize $3.6 million of its revenue from customers who would otherwise support Wild Rose Emmetsburg and $13.2 million from Prairie Meadows.
In reality, Wild Rose Emmetsburg saw a decline of $1.3 million in annual revenue from $30.2 million in 2015 to $28.9 million in 2016, and Prairie Meadows saw an increase from $182.6 million to $187 million.
White Sand Gaming, of Atlantic City, N.J.; Annex Analytics, of Cedar Rapids; Strategic Economic Group, of West Des Moines; and Spectrum Gaming Group, of Linwood, N.J., along with Union Gaming and Marquette all delivered short presentations at Tuesday’s Racing & Gaming Commission meeting.
The applicants offered diversity in their backgrounds. For example, firms like Union Gaming and White Sand — with offices in hot spots such as Las Vegas, London, Macau and Hong Kong — are gambling industry mainstays. Others, such as Annex, specialize in data analytics rather than gambling.
“I might lean toward one that has more insight on the gaming industry,” said Kristine Kramer, a commission member from New Hampton, adding she needs to review all the application packets before making a decision.
She said she’d like to see two, possibly three, studies ordered.
Commissioners asked few questions, and the ones they did ask tended to be for clarification.
The commissioners said they are pleased by the quantity and quality of the applicants. Board chairman Richard Arnold, of Russell, said the cannibalization figures provided in the market studies will again be integral to the casino license decision.
“I just want to learn what this impact will be on the communities,” he said.
Also at the meeting, Dan Franz, general manager of Riverside Casino & Golf Resort, which the 2014 studies suggested would be most impacted by a Cedar Rapids casino, said officials are planning a multimillion dollar renovation of the casino either later this year or next year. He said more specifics will be disclosed at an upcoming commission meeting.
“You have to do upgrades regardless of competition,” Franz told The Gazette, when asked if the investment was due to new casinos in the Quad Cities and the potential for a Cedar Rapids casino.
He noted they undertook a $1 million renovation of hotel rooms five years ago.
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