Once again, the Iowa Racing and Gaming Commission is putting the show ahead of the dough.
The show in this case are the commission’s meetings in July and September. That’s where backers of three Cedar Rapids casino projects will make formal presentations to the commission and the commission comes to Cedar Rapids for a site visit and hearing.
The dough comes in October, when two independent market studies are released, detailing how much revenue proposed casinos would cannibalize from existing casinos.
The dough means everything. The show may be meaningless. I know the commission has its procedures and precedents, but those October reports should be the beginning of this process, not its penultimate chapter. Why waste time and treasure lobbying the commission when, in the end, we all know those market studies are the whole enchilada?
A summer of guessing before the cold reality of October likely leads to No Way November. Not a great process.
Why so bearish? Well, for one thing, the commission is bringing back Minneapolis-based Marquette Advisors to do one of its two gaming market studies. It’s Marquette’s third Iowa analysis since 2009.
In 2009, Marquette found a gambling market “not saturated” but approaching “maximum penetration.” An exception, according to Marquette, was in far northwest Iowa in the Sioux Falls market. The commission subsequently approved a casino in nearby Lyon County.
Marquette argued casinos in Fort Dodge, Ottumwa and Tama would get massive shares of their revenue from cannibalization. The commission rejected all three applications. In the case of Fort Dodge, it found even a small casino, 500 gaming positions, would draw 80 percent of its revenue from existing casinos.
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In 2014, Marquette again found a nearly saturated Iowa market, where the proposed Cedar Crossing Casino in Cedar Rapids would get more than 70 percent of its revenue through cannibalization. Marquette insisted a new casino in Greene County would get most of its revenue by grabbing business from other casinos.
One of the biggest victims of Greene County cannibals was to be Wild Rose Emmetsburg. But Wild Rose also was seeking the Greene County license, so the commission granted it.
Wild Rose now is applying for a Cedar Rapids license, and its application points out Marquette overshot the mark on Greene County cannibalization. Compared to actual 12-month revenues, Marquette’s $6 million cannibalization estimate for Prairie Meadows in Altoona turned out to be 40 percent too high. Its estimate for revenue grabbed from Emmetsburg missed by 50 percent.
I doubt Marquette’s assessment of Iowa gambling market will change much. And the same commission is hiring them, again. Yep, bearish.
The wild card is analyst No. 2, Atlantic City-based White Sand Gaming, which will be looking at Iowa’s market for the first time. The firm made news recently with a study that found room for two new casinos in Maine, drawing criticism from those who say the state is saturated.
So the summer show will be interesting. But, remember, it’s all about the fall.
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