Steve Gray and Dan Kehl and the casino investors each represents continue to duel as they have for the last year over the prospect of a Cedar Rapids casino.
Kehl, chief executive officer of the Riverside Casino and Golf Resort, has now delivered to the Iowa Racing & Gaming Commission an updated market analysis of Iowa’s casino industry that concludes that the Cedar Rapids casino proposed by the Gray-led investor group will harm the Riverside Casino while bringing in relatively little in new gaming revenue to the state.
The study commissioned by the Riverside Casino has been updated since the Racing & Gaming Commission’s Jan. 9 meeting, at which Gray and his group, Cedar Rapids Development Group LLC, presented their own market analysis to the commission to show that a Cedar Rapids casino would impact existing casinos in Eastern Iowa, but not harm them.
On Monday, Kehl said his casino’s updated analysis emphasizes for the commission that the Riverside study uses actual customer data from the Riverside Casino and not hypothetical data as in the Cedar Rapids market report.
The new Riverside analysis also concludes that the Cedar Rapids group’s market analysis underestimates how many people living within 30 minutes of Cedar Rapids will use a Cedar Rapids casino as a way to show that it will not harm existing casinos. The Cedar Rapids group’s report also has reduced its previous estimate for what a Cedar Rapids casino will take in as it makes the case that it will not cause other casinos harm, the Riverside analysis states.
"Obviously, Cedar Rapids’ study is radically different from our internal reports, so I thought it was important for the commission to look at our study, too," Kehl said on Monday. "… I think the Cedar Rapids study was written for a specific purpose to minimize the impact it (a Cedar Rapids casino) will have on existing casinos."
Steve Gray, chairman of the Cedar Rapids Development Group, on Monday dismissed the Riverside market study, calling it "outdated and flawed" and saying it was not based on the actual project being proposed for Cedar Rapids.
"We stand by our market analysis for the region because it is current, reflects our unique proposal and has been conducted by an analyst with a proven record in the Iowa market," Gray said. "There is more than enough room in the Eastern Iowa market for Cedar Rapids to have an urban casino."
Both the Cedar Rapids and Riverside market studies were conducted by casino consulting firms from New Orleans.
The Riverside study, which was conducted by The Innovation Group, concludes that a Cedar Rapids casino will generate $95.3 million in gaming revenue, but only $23 million of that will amount to new gaming revenue for the state of Iowa. The rest, $62 million, will be "cannibalized" from existing casinos in Iowa, with the largest victim being the Riverside Casino and Golf Resort, the study concludes.
The study for the Riverside Casino estimates that a Cedar Rapids casino would take 31 percent of Riverside’s total business and 39 percent of that generated by local patrons.
Most of the Riverside study was completed in February 2013.
TMG Consulting of New Orleans conducted the study for the Cedar Rapids investor group, and its July 2013 report concluded that a Cedar Rapids casino would take business from other casinos, but not enough to harm them.
TMG concluded that Cedar Crossing will take 9 percent of the current business away from the Riverside Casino and Golf Resort, less than 5 percent from Isle Casino Hotel Waterloo, under 2 percent from the Dubuque casino market and 7 percent from Meskwaki Bingo Casino Hotel, a non-state-licensed facility on the Meskwaki Indian Settlement west of Tama.
On Monday, Kehl said neither his study nor Gray’s study will matter much compared to the two independent market studies that the Iowa Racing & Gaming Commission have commissioned for itself.
The results of the commission’s own studies will be presented at its meeting on March 6 at Prairie Meadows Racetrack and Casino in Altoona, Iowa.
Brian Ohorilko, administrator for the five-member state commission, on Monday said the studies commissioned by the Cedar Rapids investors and the Riverside Casino will be considered by the commission.
"It is up to each individual commission member how they might view any market assessment outside of the two IRGC-commissioned studies," Ohorilko said.
The commission will visit Cedar Rapids and proposed site for the Cedar Crossing casino on April 3, and will make its decision on a state gaming license for a Cedar Rapids casino on April 17 at a meeting in Council Bluffs.
Riverside’s Kehl said the casino business in Iowa was down 3 percent in the calendar year 2013, with the Riverside revenue down 1 percent and revenue at the Isle Casino Hotel Waterloo, which also is worried about losing business to a Cedar Rapids casino, flat.
"My opinion is that it (a Cedar Rapids casino) is going to be draconian to us," said Kehl.Kehl also has ownership interest in Iowa’s newest casino, the Grand Falls Casino Resort in far northwest Iowa, and he and an investor group will take over ownership of the Rhythm City Casino in Davenport on Feb. 3 as they prepare to build a new Davenport casino on Interstate 80 and to close the Rhythm City Casino next to the Mississippi River.