Monday, March 28, 2005

More on Iowa Casinos - Part I

Last week I mentioned that ten casino projects are currently before the Iowa Racing and Gaming Commission. Promoters are seeking approval to expand gaming in interior Iowa communities. Many of these communities have missed out on the economic growth that others have enjoyed, and they are looking to casinos as a source of hope for their future. A closer look, however, suggests that the kind of casino facilities being planned in these areas are likely to involve economic cannibalism: what may be good for the casino county ends up draining resources from surrounding Iowa communities and from other casinos.

This approach seems to be confirmed by a story in the Iowa City Press-Citizen last month (February 19, 2005), which laid out the marketing plans for one of these casinos planned for Washington county Iowa. The plans call for a casino on the banks of the Iowa river, just 14 miles from neighboring Iowa City – home of the University of Iowa. The casino will feature 32 tables and 1100 slot machines, along with a 200 room hotel and planned golf course development. Their primary target market: citizens of Iowa City and neighboring Coralville. The promoters predict that 26-32 percent of the revenues for their new casinos will come from existing Iowa casinos, with a target of $68 million. They note that over 274,000 residents of the area will be over 21 years old, and thus potential customers.

The University of Iowa has more than 28,000 students. Many of these are under 21and ineligible to legally gamble. However, many are not -- particularly upperclass students and graduate and professional students. Gambling researchers have been reporting increasing incidence of gambling on campus – with potentially disastrous effects on already debt-laden students.

University of Iowa football games and sporting events may bring in people from out of town, and a casino might tap some of their spending. But as noted above, the promoters admit that a big part of their market will be Iowans. Moreover, a significant portion of their revenues will be drained from other casinos.

Some census data for Washington county and neighboring Johnson County, where Iowa City is located, provides some interesting background information:

Washington County has a 2003 population of 21,314. Between 2000 and 2003, it grew 3.1 percent, which is better than the statewide average of .6 percent. However, since 1990, it has grown at 5.4 percent, which is at the statewide average. Census data indicate that median household income in the county for 1999 was $39,103, which is close to the statewide median of $39,469. However, other indications of economic health, including the retail sales per capita of only $7451 (vs. 9362 statewide) suggest it may be struggling. Median housing values of $83,600 are also close to the statewide rate of $82,500.

Johnson County has a 2003 population of 115,548. Between 2000 and 2003, it grew 4.1 percent, and between 1990 and 2000, it grew 15.5 percent – significantly faster than the state as a whole. Median household income was at $40,060, and retail sales per capita were at $9722, which were both above the statewide and Washington County rates. Median housing values of $131,500 – nearly $50,000 above Washington County, also indicates greater prosperity there.

More on this to come in later posts.

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