Call it the Battle of New Orleans II, but much further north.
Two New Orleans-based consulting groups have very different takes on how a Cedar Rapids casino would affect nearby casino operations. It’s another round in the old cannibalization guessing game.
In one corner is TMG Consulting, hired by Cedar Rapids casino investors and operating from Canal Street. In its study, submitted as part of Cedar Rapids’ casino license application, the new Cedar Crossing casino would result in a 9 percent revenue drop at the Riverside Casino and Golf Resort. The Isle Casino in Waterloo would take a 4.7 percent hit and the Meskwaki Bingo & Casino in Tama would see a 6.8 percent drop.
In the other corner is an analysis done by the Innovation Group, based in the French Quarter. Riverside CEO Dan Kehl commissioned the study as part of his effort to build a new casino in Davenport. It was first reported in the Quad-City Times Monday morning.
The Innovation Group estimates that Riverside revenues would plunge 43.5 percent, while Waterloo would take a 42.9 percent hit. Clinton’s Wild Rose casino would lose 13.6 percent of its business, according to the Innovations Group. TMG modestly contends that existing casinos would lose about half of the revenues that currently pull from the Cedar Rapids primary market. Innovations group, on the other hand, predicts casinoaggedon.
UPDATE — I finally got a look at Innovation Group’s numbers. Here’s a better explanation of what their study actually shows:
Innovation Group’s “gravity model” study focuses on the region that would be served by Kehl’s new Davenport operation, which includes 80 percent of Riverside’s market and about 30 percent of Waterloo’s market. If Cedar Crossing opens, Innovation Group estimates that Riverside revenues would plunge by $33.8 million, or 43.5 percent, of its business in that market area. Waterloo would take a $10.8 million hit in that portion of its market. Dubuque take a $9.6 million hit.
Innovation Group concludes that Cedar Crossing would grab $61.3 million from five casinos included in the Davenport market analysis. Cedar Rapids developers expect to take in $75 million total in the first year of operation, so such a large cannibalization number from this market seems suspect.
Its gloomy numbers dwarf even Keh’s own Cedar Rapids doomsday scenario, in which he argued Riverside would take a 30 percent kick in its revenues. That’s why Kehl, with help from the Isle in Waterloo, sank $1.5 million into the failed campaign to defeat Linn County’s gambling referendum back in March. Kehl even offered to build a water park in Cedar Rapids if voters turned down gambling.
So the high rollers have put out their markers. Of course, the only market studies that really matter will be the ones commissioned by the Iowa Racing and Gaming Commission at its Oct. 10 meeting. One, or perhaps two, independent firms, will conduct a statewide assessment of Iowa’s gambling market, and whether there’s still room for expansion.
I don’t know that Kehl’s study will make much of a ripple in the big scheme of things. But after a few heady weeks around here marked by pretty artistic renderings and lofty pronouncements about the certainty of a Cedar Rapids license, this is a sobering reminder that the deal isn’t quite done. Opposition is out there.
The real cannibalization figure likely is somewhere in between these dueling studies. The big question remains whether it will be a number the commission can accept.