ALTOONA, IOWA (January 13, 2022) — The Iowa Racing and Gaming Commission heard presentations today from Spectrum Gaming and Innovation Group about the state of the Iowa Gaming Market and projections for the next few years.
Both Spectrum and Innovation warned of significant revenue declines due to added competition from Omaha, Nebraska; Rockford, Illinois; and Beloit, Wisconsin. Iowa gaming-revenue will drop from $183 million annually according to the Spectrum Gaming Group Study to $256 million (or 15.7% of Iowa’s Gross Gaming Revenue) according to the Innovation Group Study. Dan Kehl, CEO of Elite Casino Resorts said, “As an industry, we need to find ways to bolster our border casinos to maintain market share which supports our charitable partners and employees in the face of cannibalization.”
Spectrum reports that the Iowa, “Market is well served — no underserved areas. Most of the state is within a sixty-minute drive of a casino“ [Spectrum Gaming Group, Executive Summary, p 37].
The Innovation Group added that Iowa is currently generating $1.6 billion in revenue from the market total (determined by the defined gravity model) of $1.9 billion [Innovation Group Study, p 34]. That means that Iowa currently is capturing more than 80% of all the gaming-revenue possible in the state and border communities.
Since 2014, the commission has authorized six independent studies of the impact of a new casino license in Cedar Rapids on the existing license-holders.
All six studies have found that a majority of the revenue generated in Cedar Rapids will come from existing license holders. In the current studies, The Innovation Group finds that $61 million will come from existing casinos while generating only $51 million in new revenue [Innovation Group Study, p 41]. Spectrum Gaming Group also found $51 million in new revenue and $163 million in overlapping revenue with existing casinos.
“It’s like déjà vu vu all over again,” said CEO Kehl. “The commission has studied this issue diligently. But the fact is, a Cedar Rapids casino comes primarily at the expense of Riverside, Waterloo, and Meskwaki. We’ve invested heavily in our properties to make them attractive to our guests.”
Spectrum Gaming Group identified two “Elements of Success for Iowa Casino Industry” [Spectrum Gaming Group, Executive Summary, p 43]:
- Reasoned additions to industry allowing properties to thrive; and
- Encouraged investment in non-gaming amenities to broaden market-appeal.
“We believe Spectrum is absolutely correct: the commission has allowed properties to thrive by only making reasoned additions and they have expected and encouraged operators like us to invest in our properties,” said CEO Kehl.
Based on Spectrum’s analysis, “It appears that Cedar Rapids is well served by casinos in Waterloo and Riverside, both within an hour of Cedar Rapids. Adding a casino to Cedar Rapids holds the prospect of cannibalizing these two properties significantly,” [Spectrum Gaming Group, p 158].
