Nebraska casino projects in Omaha and Lincoln will cut into Iowa’s largest market eventually. Two state-mandated gambling studies suggest the Iowa casino industry will remain strong in the meantime.
The studies also examined the impact if Iowa added a 20th state-operated casino in Cedar Rapids.
Brief background on the Iowa casino industry studies
The Iowa Racing and Gaming Commission (IRGC) orders at least one socio-economic study every eight years. The requirement allows lawmakers to monitor the impact of gambling in areas that have a casino.
Essentially, the state wants to know if the tax revenue and jobs generated by the Iowa gambling industry are worth the possible social costs of betting.
The IRGC commissioned reports from:
Both studies suggest casino revenue shouldn’t see “a negative impact from casinos outside of the state until 2023, or even 2024,” according to IRGC administrator Brian Ohorilko.
Nebraska and the Iowa casino industry
Council Bluffs is Iowa’s 10th largest city. But, it’s the state’s largest casino market because Omaha is just across the Missouri River. For now, Nebraska only has state lottery offerings, keno parlors and on-site horseracing bets at six racetracks.
That will change soon. Voters opted-in on gambling with a constitutional amendment in 2020. It’s up to the Nebraska Legislature and Gov. Pete Ricketts to set rules at the six racetracks authorized to add casinos.
Lincoln and Omaha have “racino” projects of at least $220 million underway.
“Studies did express some opinions as to what the potential impact would be from the Nebraska market,” Ohorilko said. “One of the studies (Innovation) projected a 38% decline in the Council Bluffs market. The other study (Spectrum) was actually a bit higher at 45.5% in that market.”
Council Bluffs casino operators disagree with the projections. They told Ohorilko strong players club databases, amenities and capital improvements “may mitigate some of the loss.”
“But they also are quick to point out that the Lincoln market is a big market. A lot of that is going to be difficult to maintain, simply because there would be at least two casinos that a customer would have to drive by to get before they would get to Council Bluffs. So I think everyone anticipates some impact. It’s still kind of a big question mark.”
A racino in South Sioux City, NE, will impact Hard Rock Casino’s betting traffic in Sioux City as well.
“They also projected some impact in Sioux City, but that range varied quite a bit. One of the studies indicated an 18% impact and the other one was almost 42%.”
Other border challenges
The IRGC-commissioned studies also looked at the Iowa casino industry on the eastern side of the state.
Illinois has given Hard Rock Casino plans a green light in Rockford, which is in the north-central part of the state. The city is about two hours away from the Dubuque casino market and three hours away from the Marquette casino market.
About 30 minutes north of Rockford — and just over the Wisconsin border — a Ho-Chunk Nation casino, hotel, convention center and indoor water park are going up in Beloit.
“There could be up to a 15% decline in the markets that contain the two Dubuque casinos and Casino Queen in Marquette, Iowa,” Ohorilko said.
Iowa could counter the out-of-state bids with an expansion effort of its own. Linn County voters — and developers — want the state to consider Iowa’s second-largest city as a market.
Will Iowa add a Cedar Rapids casino?
The IRGC will eventually have to decide whether growing the Iowa pie takes too much of a bite out of casino business nearby.
The Innovation Group study addressed a bid to construct a casino venue in Cedar Rapids. A city development coalition and Peninsula Pacific Entertainment (P2E) plan to request a gambling license from the IRGC.
Some casino operators think the Cedar Rapids proposal is a little too close for comfort. Riverside Casino and Golf Resort — south of Iowa City — is about 40 miles away. The Isle Casino Hotel of Waterloo is about 55 miles away. Ohorilko said:
“The Innovation Group study indicated that there would be $69 million gain in incremental revenue out of what they call the east central region, which is the region that would contain Waterloo and Riverside.”
But, Ohorilko notes the study also projects:
- A combined 21% decline at the casinos in Riverside and Waterloo.
- Another 5% decline at the two Dubuque casinos and Marquette.
“I’ve been trying to qualify a lot of this both with the Nebraska projections and then with the Linn County projections. The scope of the project was really looking at socio-economic behavior. We did ask them to take a look at these markets.”
The IRGC would likely conduct a true market study one Linn County developers include plan details in a licensing application. That process could start in March or April.