Cedar Rapids casino backers say Greene County casino proposal help makes case

"We do not believe there are any underserved counties in Iowa”

Rick Smith
Published: March 6 2014 | 4:00 pm - Updated: 1 April 2014 | 9:14 am in

ALTOONA ó Backers of the proposed Cedar Crossing Casino in Cedar Rapids on Thursday discovered how much they like a second new casino proposal for Iowa, the one proposed for a site on Highway 30 in Greene County west of Boone.

Contingents from both Cedar Rapids and Greene County were on hand at the Iowa Racing and Gaming Commissionís monthly meeting in Altoona on Thursday to listen as two national market-analysis firms hired by the commission reported that Iowa has a sufficient number of casinos and should not provide licenses for either the proposed Cedar Rapids or Greene County casino.

The studies by Marquette Advisors of Minneapolis and Union Gaming Analytics of Las Vegas, Nev., were made public last week, and in both, the firms concluded the proposed Cedar Rapids casino and a smaller Greene County casino would get a majority of their revenue from the customers at other Iowa casinos. Both reports highlighted the "cannibalism" factor.

The five-member commission had few questions for the firmsí representatives on Thursday, and none that shed light on what the commission members might actually be thinking about new casino licenses.

Then came an hourlong presentation with lengthy video about the Greene County project from casino supporters there and from the developer of their proposed casino, Wild Rose Entertainment of West Des Moines.

Afterward, Steve Gray, the Cedar Rapids businessman who is heading up the investor group for the proposed Cedar Rapids casino, and Cedar Rapids Mayor Ron Corbett, gave the Greene County group high marks.

Gray said Tom Timmons, president and chief operating officer for Wild Rose, succeeded in particular by calling into question the two gaming market studiesí predictions about cannibalization when Timmons pointed to a similar study for the Racing and Gaming Commission back in 2010. That study said the stateís newest casino, Grand Falls Casino Resort in northwest Iowa, would cannibalize some of Wild Rose Casino & Resortís business in Emmetsburg.

It didnít, Timmons told the commission. The Emmetsburgís business is up 7 to 8 percent, he said.

A Wild Rose casino in Greene County would make it the companyís third in Iowa. It also owns the casino in Clinton.

"It was interesting to hear Mr. Timmons and that in his many, many years of doing this, what has always been predicted about the level of cannibalization just hasnít occurred," Gray said. " ... We share the same perspective that these studies dramatically overstate cannibalization."

Gray said Timmons and the Greene County casino backers also made a strong case of how a new casino development spurs growth in the community and in overall gaming revenue in Iowa, and Gray said the Cedar Crossing Casino in Cedar Rapids also will do that.

"A rising tide lifts all boats," Gray said.

The issue of casino cannibalization isnít the same for Greene County and Cedar Rapids because no one neighboring casino will be impacted by the Greene County casino as much as the two market studies for the commission say the Cedar Rapids casino will impact its nearest would-be competitor, Riverside Casino and Golf Resort south of Iowa City.

Wild Roseís Timmons, in fact, dismissed the new studies that suggest that his companyís Emmetsburg casino would take a hit from a Greene County casino in Jefferson, Iowa.

"Weíre not going to open a casino (in Greene County) thatís going to hurt us (in Emmetsburg)," he said.

In 2010, the Iowa Racing and Gaming Commission turned down a casino license in the same vicinity for a Fort Dodge casino with another developer after the commission said it would harm the Emmetsburg venue.

Interestingly, Cedar Crossing Casinoís Steve Gray early on in his investigation of a casino in Cedar Rapids asked Dan Kehl, chief executive officer of the Riverside casino, to become part of the investor group in Cedar Rapids with an eye to the proximity of Kehlís casino in Riverside. Kehl declined, and Kehl has been fighting the Cedar Rapids plan ever since.

At Thursdayís commission meeting, Kehl and his associates secured the first row seats directly in front of the commission table, seats that the Cedar Rapids group led by Gray and Corbett had occupied in the last few commission meetings.

"Thereís a reason I was in the front row, because Iím the guy thatís got the most to lose out of this deal, and I just want to make sure Iím hearing the presenters correctly," Kehl said.

He said the two market studies for the state commission align with the study his own consultant previously had undertaken about cannibalization.

"Obviously, the studies say donít put any more casinos in Iowa, and I believe the commission will follow that advice," Kehl said. "ÖFor Cedar Crossing Casino to make it, Riverside casino would have to fail. Thatís what the studies said."

Cedar Rapidsí Corbett said the two market studies for the commission have two pieces of good news for a Cedar Rapids casino. He said they show that a Cedar Rapids casino will succeed and that it will bring in more casino revenue for the state even with some cannibalization. One study puts new revenue from a Cedar Rapids casino at $32 million a year, the second at $26.5 million.

"That means more money for the legislature and the governor to appropriate for education, health services and all the other issues that they deal with," Corbett said. "So from a greater good standpoint, the state of Iowa benefits."

The Thursday commission meeting went on for nearly four hours, and the Cedar Rapids contingent had to wait until the end to make a comment to the commission during a public comment period.

Doug Gross, a Des Moines attorney and strategist for the Cedar Rapids investor group, told the commission that the Cedar Rapids investors were "astounded and confounded" by the conclusions of the two market studies.

Gross said both studies based their conclusions on customer residential data of only the 60 percent of casino customers who regularly use casinos and have special casino player cards. Nonetheless, both market firms called the data "perfect data" in their presentations, Gross said.

He said that was like tracking airline passengers who use frequent flier miles to make conclusions about airline use.

"Take a good hard look at those studies," Gross said. "Donít let them be the end all."

He noted that impact on other casinos is only one of 16 or so criteria that the commission uses to decide on new casino licenses.

Clark Rieke, an unsuccessful Cedar Rapids City Council candidate in 2013, told the commission that it should consider what was best for the Riverside-Cedar Rapids regional economy and not worry so much about cannibalization. Rieke estimated that the state loses $8 million to $12 million a year in potential gaming revenue that goes to fuel because Cedar Rapids and Linn County gamblers must drive 30 miles or more to gamble.

After the commission meeting, Cedar Crossingís Gray said the Marquette Advisors had emphasized that Iowa has an "adequate" number of gaming facilities across the state.

Gray said adequate isnít "optimal."

"I think once the commissioners review the studies and look at our studies and think about all the other benefits that we can bring that they may conclude that the optimal landscape does include a casino in Cedar Rapids," Gray said.

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