Posted on: January 8, 2025, 09:03h.
Last updated on: January 8, 2025, 09:03h.
Two studies probing the economic impact of allowing a casino in Cedar Rapids concluded that Iowa’s commercial gaming industry has likely already reached its saturation point.
Last summer, the Iowa Racing and Gaming Commission (IRGC) ordered two market studies regarding a casino in the state’s second most populated city. The Cedar Rapids City Council and Mayor Tiffany O’Donnell are seeking a state-issued gaming license to allow a group of local businesspeople operating as the Cedar Rapids Development Group to finance a casino resort on 25 acres of city-owned land just west of the Cedar River.
The IRGC commissioned Marquette Advisors of Minneapolis and The Innovation Group of New Orleans. The consulting firms were tasked with projecting how much money a Cedar Rapids casino would generate each year and how the state’s other casinos might be impacted.
The results weren’t in favor of the pitch called Cedar Crossing Casino.
Damning Findings
Marquette and Innovation respectively estimated that a casino in Cedar Rapids would generate gross gaming revenue (GGR) of about $118 million and $116.5 million in its first full year in operation.
However, Marquette projected that about 60% of that gaming win, or $68 million, would come from cannibalization of play elsewhere inside the state. The Innovation study was slightly more favorable to the Cedar Crossing team, with an estimated $55.7 million of the GGR coming at the expense of existing casinos in Iowa.
Both studies cited concerns about commercial casinos opening in eastern Nebraska and in Illinois and a tribal resort in Wisconsin. The new gaming offerings are expected to lead to reduced “capture” of Iowans who gamble.
The capture by Iowa commercial casinos of the defined gravity model revenue is estimated to decline to 59% after Nebraska is fully developed combined with the full impact of the permanent Hard Rock Rockford and the opening of Ho-Chunk Beloit. Council Bluffs is projected to be hit the hardest, while the northeast is projected to be the hardest hit by the Rockford and Beloit developments,” The Innovation Group wrote.
Before the neighboring competition, Iowa’s commercial casinos were estimated to have captured 72% of the available demographic.
Marquette had slightly different numbers but agreed that Iowa’s casino industry is mature and rather saturated.
“With casinos spread across the state, casino gaming is a well-established industry and most Iowans can reach one or more casinos within a relatively short drive. As such, individual casino markets are relatively tight. A review of casino player statistics indicates that 63% of Iowa adjusted gross revenue comes from customers originating from within a 45-minute drive,” Marquette reported.
Riverside Most Impacted
Both studies found that the Riverside Casino & Golf Resort would be most damaged by a gaming property in Cedar Rapids. Marquette estimated that Riverside GGR would decline almost 30%. Innovation doesn’t think it will be that severe, but still projected a 12% loss for Riverside.
The IRGC is expected to vote on whether to expand the state gaming industry with a 20th casino when it meets on Feb. 6.
