Should ‘cannibalization’ be a key factor for state casino regulators?
Related Stories
Greg Seyfer, an attorney at Bradley & Riley in Cedar Rapids and eight-year member of the Iowa Racing & Gaming Commission, said he understands that investors in a proposed Cedar Rapids area casino have conducted their own market studies, but he recommends that the commission hire two firms to conduct separate studies like it did in 2009.
At Seyfer’s request, one of the two studies completed for the commission in 2009 came with a brief analysis of the market for a Cedar Rapids casino.
In short, the report, from GVA Marquette Advisors, found that Cedar Rapids is “a key feeder market” for several casinos — those in Riverside, Waterloo, the Meskwaki Indian Settlement, Dubuque and Clinton — and that a new casino in Cedar Rapids was “likely to create strong cannibalization from existing casinos.”
Cedar Rapids casino investors Steve Gray and Drew Skogman say their consultants found that a Cedar Rapids casino would bring in $80 million in adjusted gross receipts a year, but would take away only $18 million in business from existing casinos, with half of the amount coming from the non-state-licensed Indian casino in Tama County.
Casino cannibalization, says Seyfer, is one of 17 different criteria that the commission must consider as it weighs whether or not to grant a new gaming license.
Linn County voters will head to the polls March 5 to decide if a casino should be built in the Cedar Rapids area. If a referendum is passed, the matter would then go to the Racing & Gaming Commission, which would consider whether to issue a new gaming license for the casino.
How big a criteria should possible “cannibalization” be if state regulators consider a new license for a Cedar Rapids area casino?
-u20042.png?1366232523)
First, I object to the term “cannibalization”. It has a negative connotation that, by itself, could inject some bias.
What we are really talking about is protectionism for existing casinos. To protect an existing business from competition from new entries into the market is anti-free enterprise and even anti-American.
The role of the gaming commission should be to do what is best for the consumer – not protect existing businesses from competition.
What is “best for the consumer” would arguably be to restrict the availability of casino gambling to the greatest extent possible. Looking out for what is “best for Iowa’s gambling industry” is the true raison d’etre for the IGA: it primarily exists to protect Iowa’s piece of the action with respect to tax revenues obtained from gambling and as such, it will act to limit competition where it perceives that an overabundance of venues might threaten to reduce the profitabliity (and therefore the amount of taxes remitted to the state) of the whole. Yes, in this role it is anti-competitive and subverts the operation of the free market; but as for being anti-American: it is hardly that, since government regulatory bodies have been doing the exact same thing since the founding of the nation.
A little history on the IGA: it came into being after the lottery and various forms of casino-like gambling establishments (“riverboats”) were authorized by the Legislature (and then-Gov. Branstad) in the mid-1980s. This in turn was a reaction to the runaway success of the Tama casino which, being on an Indian reservation, was (and continues to be) out of reach of state gambling laws. The state was going through a difficult economic time back then (what has changed?) and jumped at the chance to get a piece of the gambling pie that was mostly being consumed by the off-the-books Tama facility.
I suspect that the IGA views the Tama casino as a head-on competitor for “its” casinos and would only shed crocodile tears if its policies cut into that facility’s profits. However, the existence of the casinos in Waterloo and Riverside complicate things for the IGA. It’s a tossup as to whether it will approve a CR casino; but one thing’s certain- it has no interest in the impact of such a casino on the wellbeing of the Tama operation. So, in that narrow sense, there remains a tiny bit of competition.
Cedar Rapids voted 10 or so years ago and turned down a casino, then they see how others did and now want to jump on the band wagon and steal the gamblers away from the other casinos. the racing and gaming commission if they are truly honest and truly doing the job they were appointed to do. they would jsut tell the gambling investors here. too late your ship done sailed 10 years ago when you could of did it before the others did.
you know the old saying>>>> you snooze you lose.
since when did competition become sacred? our utilities are given protected areas, banks are given areas after the Fed. and comptroller of the currency approve of an area. our health company’s have to get permission to install major new equipment. we have one eye-ware corporation supplying almost all the eye-ware in the country. we have two foreign corporations with about 90 per cent of beer sales and now we are to have only three major air lines. we have a monopoly market now so why quibble over gambling. completion is destructive and it will destroy gambling here if we let it. competition is about capitalism and not about democratic government so it can’t be anti-American
Competition is the American way! If CR wants a Casino,they should have one! The good thing if its passed, all the Iowa Casino’s will have to be more aggressive in its payouts, its ammenities, its Events (Concerts),etc. May the best Casino get the most buisness!
I believe the gaming commisson has an obligation to existing casinos, after all existing ones went through a similar licensing program. Should one canniblize another, what has been gained? Would then appear we are overbuilt with casino’s.