When Massachusetts convinces itself of the accuracy of the overstated projections, it denies reality --
Iowa’s 18 state-regulated casinos employed 9,236 workers
Casinos pay out mixed results in jobs, development
Experts question venues' role in spurring communities' growth
May 5, 2013
Written by
Emily Schettler and Daniel P. Finney
Supporters of proposed casinos frequently cite job creation and attraction of new businesses as reasons to support new gambling venues.
Yet a Des Moines Register review of Iowa’s casinos shows many of them have been slow to stimulate the opening of new businesses nearby and in some cases have created fewer jobs than projected.
That’s not to say casinos are drags on the economy. Iowa’s 18 state-licensed casinos in 2012 generated more than $405 million in tax dollars and admission fees for the federal government, the state and local communities, according to the Iowa Gaming Association. The venues also provided $86.8 million in charitable contributions and donations.
Some of Iowa’s casinos have seen
flat or declining revenues in recent years. From 2009 to 2011, the industry as a whole saw its economic impact in the state decrease before growing again in 2012 to more than $1 billion, according to an Iowa Gaming Association study.
“It’s a tougher go for casinos today than it was 10 years ago, and it was a tougher go 10 years ago than it was 20 years ago,” said Ernie Goss, a professor of economics at Creighton University in Omaha who studies gambling and casinos.
Proposals for casinos in Linn and Warren counties have renewed questions about whether the state can support more gambling.
Jeff Lamberti, chairman of the Iowa Racing and Gaming Commission, which authorizes new gambling licenses, has said the impact on other casinos within a region will be key to whether new applications are approved.
In March, voters in Linn County approved a measure to allow gambling with 61 percent support. The vote was prompted by a group of investors who want to build a casino in downtown Cedar Rapids.
Now, state regulators will issue a market study to determine what impact another casino could have on others in the region.
Warren County voters will decide Tuesday whether to allow gambling in that county. A group of local civic and business leaders has proposed building a $145 million casino, hotel, events center and bowling alley in northwest Norwalk near Iowa Highways 5 and 28. Wild Rose Entertainment would operate the casino.
Some casinos short of job projections
Casino backers in Linn and Warren counties point to an expected influx of jobs.
Iowa’s 18 state-regulated casinos employed 9,236 workers and provided more than $285.7 million in salaries and benefits in 2012, according to information from the Iowa Racing and Gaming Commission and the Iowa Gaming Association.
Backers of the Warren County proposal say the venue would provide 600 permanent jobs and 250 construction jobs.
Those behind the Linn County proposal say it would create
362 permanent jobs with an average compensation package of $42,000 per year. In addition, 137 construction jobs would be created, plus 134 new jobs at existing local businesses.
Wild Rose spokeswoman Jamie Buelt said the job-creation projection for the Warren County casino is a conservative estimate based on the company’s experience and a 2009 market study conducted by the state.
Wild Rose operates two other Iowa casinos. Its Clinton casino and resort, which opened in 1991, has 279 workers, according to Iowa Racing and Gaming Commission data. The other is a newer casino, which opened in 2006 in Emmetsburg.
When Wild Rose applied for the Emmetsburg license, it projected 250 jobs. It’s done slightly better than that. Today, the casino has 265 workers, 234 of whom are full time.
Another casino that opened in 2006, the Diamond Jo Worth Casino in Northwood, also has exceeded its job projections.
But three other casinos that opened in 2006 or later — Grand Falls Casino Resort in Larchwood, the Isle Casino Hotel in Waterloo, and Riverside Casino and Golf Resort in Riverside —
don’t employ the number of people originally projected in applications for licenses.
That’s not surprising, given the subsequent downturn in the economy, said Michael Hicks, a Ball State University economist who studies casinos and gambling.
“Optimism among investors and entrepreneurs is a common trait,” Hicks said. “It takes a long time to build a casino, and the rest of the competitive environment is not at a standstill.”
The Grand Falls Casino, for instance, projected 739 jobs when it applied for a license in 2010; today it has 520.
Joe Massa, Riverside’s chief operating officer, said changes in technology and other efficiencies over time have led to the lower number.
“That’s pretty understandable,” he said. “You have a learning curve for your employees, and as you’re in business longer, the efficiency of your operation improves. You end up needing less people to do the job.”
The casino is the largest employer in Riverside, a city of about 1,000 people about 15 miles south of Iowa City. It’s the second-largest employer in Washington County, Massa said.
Tom Timmons, Wild Rose’s vice president of operations, said casino employees contribute significantly to the local economy, particularly in small towns like Emmetsburg.
“We’re the largest employer by leaps and bounds,” he said. “All those employees obviously buy meals there, gas there. They stop at convenience stores, restaurants and grocery stores.”
However, critics say, casino employees have less spending ability than employees in other industries.
A 2007 survey of the American Gaming Association showed that 56 percent of the casino employees surveyed in eight states, including Iowa, had an annual household income of $50,000 or less.
Do casinos attract other businesses?
In Norwalk, where residential property accounts for 80 percent of the tax base, gambling proponents argue a casino could help even out the burden between homes and businesses and spur further commercial development.
“What Norwalk is looking for is an anchor that would start the process of filling in that commercial development,” Timmons said. “Everything starts to spring out from that.”
However, Hicks and others who study gambling said that although casinos might attract some new businesses, such as restaurants and retail stores, they also can lead to the closure of existing businesses.
“I don’t think there’s any evidence that there’s big net growth in new businesses around those areas,” he said. “In net terms, casinos are not the panacea that their biggest boosters claim them to be.”
Whether a casino can draw other businesses and help those around it depends entirely on the size and scope of the gambling establishment and its ability to attract visitors from outside the area, Goss said.
“If it’s a good development, it could stimulate overall business.”
He pointed to three casinos in Council Bluffs and Prairie Meadows in Altoona as examples of those that have been successful.
Melissa Horton, executive director of the Altoona Area Chamber of Commerce, said the city saw a “surge of development” after the casino opened in 1995, including new Walmart, Target and Menards stores.
However, she said, it’s less likely the casino plays a role in attracting businesses in other industries, such as the $1 billion Facebook data center announced last month.
Mike Whalen, CEO of the Heart of America Group, a Moline, Ill.-development company, is working to develop his own property in Altoona. He said the casino’s presence would not influence a “go or no-go decision.”
“We have a whole laundry list of factors that cause us to make a decision. It’s not catalytic, but it’s certainly a nice ‘and,’ ” he said.
Davenport city officials say they have not seen any growth as a result of the Isle of Capri opening the Rhythm City riverboat casino in 1991.
“In all those years, there has been zero land-based development,” said Craig Malin, Davenport city administrator.
The Isle of Capri once owned the Black Hawk Hotel, a famous Iowa landmark built in 1931 known as the place where actor Cary Grant died. The hotel went out of business under the casino’s management.
Now the city wants to buy the casino and build its own site on land. Officials believe a land-based casino would be more advantageous to the community than a riverboat.
In Riverside, Massa said the casino’s 2006 opening spurred the development of a new gas station, University of Iowa health clinic and condominiums.
That city’s commercial valuation shot up from about $4.7 million in 2004 to $71 million in 2011, according to the Iowa Department of Management. The casino accounts for $62 million of the new valuation, according to the Washington County assessor.
In December 2010, Kelly Wood of Washington, Ia., moved her Scandinavian Interiors furniture store from Coralville to Riverside between U.S. Highway 218 and the casino.
“Obviously the casino is going to pull a lot of people off the interstate, and if the casino is successful, hopefully we can draw on that,” Wood said.
She said other development in the area is not what she’d hoped.
“My business is on Commercial Lane, and we’ve hoped for some commercial activity, but so far me and the hospital are the only ones taking the plunge.”
http://www.desmoinesregister.com/article/20130505/NEWS/305050081/1094/SPORTS0206/?odyssey=nav%7Chead
Patch Poll: With 21 Casinos in Iowa, Should We Add Another?
Investment groups are pitching casino projects all over Iowa. Warren County voters will consider a Norwalk casino on Tuesday. Linn County voters already said "yes" to a casino.
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