CEDAR RAPIDS, Iowa - Two national consulting firms that specialize in the analysis of gambling markets conclude similarly that the proposed Cedar Rapids casino will take a significant amount of business from existing casinos, especially its would-be nearest competitor, Riverside Casino and Golf Resort.
The firms conducted market studies independent of one another on contract with the Iowa Racing and Gaming Commission to help the commission decide if it will grant the proposed Cedar Crossing casino in Cedar Rapids a state gaming license.
The five-member commission has said it is interested in two key questions: Will a Cedar Rapids increase gaming revenue in the state? And will it do it without cannibalizing too much business from existing casinos?
Marquette Advisors, with an office in Minneapolis, concluded that a Cedar Rapids casino would generate approximately $81 million in adjusted gross revenue by 2017, $59 million of which will come from the "cannibalization" of revenue from existing casinos. Of that, $25 million would come from the Riverside casino, or 27 percent of the projected revenue for it in 2017.
Union Gaming Group of Las Vegas, Nev., said the proposed Linn County casino would bring in $82 million in revenue in 2016, but $66.8 million would be cannibalized from existing Iowa casinos. Of that, $37.3 million would come from the Riverside casino, which will represent about 42.1 percent of his 2013 business.
Jeff Lamberti, chairman of the Iowa Racing & Gaming Commission, on Tuesday said both market studies reach similar conclusions about the saturation of casino gambling in Iowa and the damage that will be done to existing casinos with the opening of a Cedar Rapids casino.
"As you look at them on the face of it, it does appear that both studies conclude that there's not a lot of extra market out there, and there is a pretty significant cannibalization," Lamberti said.
Even so, he did not say it was time for the Cedar Rapids project to throw in the towel.
"As I've told people, the challenging thing for the commission is there is no magic guideline in the (state) code or in rules about how much cannibalization is too much," he said. "It becomes one of the elements we consider, certainly an important element, but each commissioner has to decide for themselves what the impact of that factor is."
The Riverside venue opened in August 2006 south of Cedar Rapids and the one in Waterloo in June 2007 north of Cedar Rapids after voters in Linn County rejected casino gaming decisively in November 2003.
In the fall of 2012, a Cedar Rapids casino investor group led by Steve Gray announced that they wanted to open a casino in Cedar Rapids, an idea which Linn County voters approved in March 2013.
The Gray-led group has spent the last year, applying to the state commission for a state gaming license and designing and prepared to build the $150-million-plus casino with parking ramp along the Cedar River across from downtown Cedar Rapids.
In January, the Cedar Rapids investors made the formal presentation of the Cedar Rapids project to the commission.
Gray's consultant has estimated that a Cedar Rapids casino would take 9 percent of the Riverside casino's business, while Dan Kehl, chief executive officer at the Riverside casino, said he would lose 39 percent of local customers to a Cedar Rapids casino and 31 percent of the Riverside casino's total business.