Cedar Rapids casino internal market studies predict level of cannibalization

CEDAR RAPIDS — Three competing applications for a Linn County gambling license predict no existing casino in Iowa would lose more than 13 percent of its revenue if a new Cedar Rapids casino were built.

A high level of revenue cannibalization was a driving factor when the Iowa Racing and Gaming Commission voted 4-1 in 2014 to reject an urban Cedar Rapids casino plan called Cedar Crossing.

Independent studies ordered at the time by the commission predicted that 73 to 81 percent of the Cedar Rapids casino's revenue would come through cannibalization of others, including 27 to 42 percent from Riverside Casino & Golf Resort in Washington County.

On Tuesday, the commission released applications for Cedar Crossing Central connected to the DoubleTree Hotel and U.S. Cellular Center; Cedar Crossing on the River on the west bank of the Cedar River and very similar to its 2014 plan; and Wild Rose Cedar Rapids across the street from the DoubleTree.

The applications provided internal market studies, which forecast cannibalization of revenue from casinos in the surrounding markets, including Riverside, Davenport and Waterloo, at a much lower level than the 2014 studies.

The highest level of revenue cannibalization on an existing casino — 13 percent — was forecast for Waterloo.

The $40 million Wild Rose Cedar Rapids gave three casino scenarios, including 500 slot machines and 10 table games, 600 slot machines and 15 table games and 700 slot machines and 20 table games, according to its 388-page application.

A Wells Gaming Research market study predicts, based on the different scenarios, a decline in revenue of 7 to 9.1 percent in Riverside, 3.9 to 5.1 percent in Waterloo, 2.9 to 3.7 percent at Rhythm City Casino and Resort in Davenport, 2.6 to 3.4 percent at Isle Casino Hotel in Bettendorf and 1.9 to 2.4 at Jumer's Casino and Hotel in Davenport. Overall cannibalization is predicted at 18.3 to 23.7 percent.

The $105 million Cedar Crossing Central, according to its 151 page application, would have 550 slot machines and 15 table games. A TMG Consulting market study included in the application predicts a decline in revenue of 4.7 percent in Riverside, 2.3 percent in Waterloo, 3.6 percent in Tama and 1.4 percent in Dubuque, and 12 percent overall cannibalization.

The $165 million Cedar Crossing on the River, which is being pitched by the same group as Cedar Crossing Central, would have 840 slot machines and 30 table games, according to the application. TMG Consulting's market study predicts a decline in revenue of 7.8 percent in Riverside, 13 percent in Waterloo, 5.4 percent in Tama, and 2.1 percent in Dubuque, and overall cannibalization of 28.3 percent.

Also Tuesday, the Cedar Rapids City Council approved a 10-year extension for a memorandum of understanding through 2029 between the city and the Cedar Rapids Development Group, which is proposing the two Cedar Crossing concepts. The city gets $75,000 a year as part of the agreement, and in exchange the city exclusively agrees to support the development group's efforts for a casino. The city is not supporting the Wild Rose application.

The Cedar Rapids Development Group spearheaded the successful and costly 2013 voter referendum to legalize gaming in Linn County.

There was limited comment at Tuesday's meeting about the casino plans, but council member Scott Overland in response to feedback he's received noted the city has no control over whether a license gets granted. That rests with the state gaming commission, which could decide in November.

Council member Kris Gulick noted the agreement with the Cedar Rapids Development Group does not prevent the city from developing the property at First Avenue and First Street SW where the Cedar Crossing on the River is proposed, if a casino license is not granted.

What's included:

Cedar Crossing 1.0: The 181-page document details the $165 million Cedar Crossing on the River concept with 840 slot machines and 30 table games along First Avenue W and First Street SW on 8 acres of vacant, city-owned land. This concept is nearly identical to what was rejected in 2014.

Cannibalization: TMG Consulting market study predicts a decline in revenue of 7.8 percent in Riverside, 13 percent in Waterloo, 5.4 percent in Tama, and 2.1 percent in Dubuque.

Cedar Crossing 2.0: The 151-page document details the $105 million Cedar Crossing Central concept with 550 slot machines and 15 table games in the block between First Avenue E, A Avenue NE and Fifth Street NE, replacing the Five Seasons Parking Ramp and constructing a skydeck above the railroad tracks to the DoubleTree Hotel and U.S. Cellular Center.

Cannibalization: TMG Consulting's market study predicts a decline in revenue of 4.7 percent in Riverside, 2.3 percent in Waterloo, 3.6 percent in Tama and 1.4 percent in Dubuque.

Wild Rose Cedar Rapids: The 388-page document details three scenarios for the $40 million Wild Rose Cedar Rapids casino including 500, 600 and 700 slot machines and 10, 15, and 20 table games, on the second floor of a new four-story mixed-use structure with a skywalk along First Avenue E and the Fourth Street SE rail corridor.

Cannibalization: Wells Gaming Research's market study predicts a decline in revenue of 7 to 9.1 percent in Riverside, 3.9 to 5.1 percent in Waterloo, 2.9 to 3.7 percent at Rhythm City Casino and Resort in Davenport, 2.6 to 3.4 percent at Isle Casino Hotel in Bettendorf and 1.9 to 2.4 at Jumer's Casino and Hotel in Davenport.

Check back for more information.

l Comments: (319) 339-3177; brian.morelli@thegazette.com

CASINO PROPOSALS (PDF)

Cedar Crossing 1.0

Cedar Crossing 1.0 casino license application (PDF) Cedar Crossing 1.0 casino license application (Text)

Cedar Crossing 2.0

Cedar Crossing 2.0 casino license application (PDF) Cedar Crossing 2.0 casino license application (Text)

Wild Rose

Wild Rose casino license application (PDF) Wild Rose casino license application (Text)