Monday, April 04, 2005

More Iowa Casinos- Part II

In my previous post, I highlighted ten proposals for new casino sites in Iowa. Today I want to mention the proposals for Emmetsburg, Iowa, which is considering two proposals. One is a 71 room hotel and casino on a 12-acre manmade lake just outside of town. The total numbers I have seen vary, but it is supposed to cost around $20 million, create 250 jobs, and bring in $30 million annually in gaming revenues. A second proposal at Five Island Lake, a larger natural lake, involves a 48 room hotel and a floating casino. It would cost around $30 million, create 300 jobs, and is expected to return $35 million in gaming revenues.

Emmetsburg is a community of roughly 4000 residents in the Northwest Iowa county of Palo Alto. The county population is 10,147 (based on 2000 census data). Like many other rural counties, its population actually declined 4.9 percent from 1990-2000, whereas statewide population grew by 5.4 percent over this period. Median household income in the county lags significantly behind the rest of the state: $32,409 vs. 39,469 (1999). Housing values are significantly lower: $53,500 vs. $82,500 (2000). Moreover, per capita retail sales was only $4876, which is also lower than the statewide rates. In short, many of the dollars spent by residents of Palo Alto County find their way to other counties. Interestingly, the employment rates and poverty rates of the county are comparable to the rest of the state – 2000 employment rates were at 98% in the county vs. 97.4% statewide, and about 10.6 percent of its 1999 population was in poverty, compared with 9.1% statewide. More information about the county can be found here:

A selling point for both casino proposals is that a casino here will tap a large, “unserved” market for casino gambling. Thus, unlike other proposals (such as the Washington County proposal discussed in a previous post), the potential patronage here will not be drained from other existing casinos, but will instead come from new gamblers. Tourism hopes here are linked to the nearby Iowa Great Lakes area, where visitors (many with familes) seek to enjoy the natural beauty of the clear, deep waters. I am personally aware of many Omaha residents, for example, who travel to Lake Okoboji. However, most of them drive up highway 71, and I’m not sure that they would be that amenable to drive east to Emmetsburg to gamble, particularly when they could do that back home in Council Bluffs! However, some tourists might come from neighboring Minnesota, and perhaps even from South Dakota, though they all have access to some casinos in their regions as well.

Given these demographics, one has to believe that a significant portion of the gaming dollars that will be funneled through a new casino here will come from local residents. Iowa Lakes Community College is also nearby, potentially providing some student visitors. Problem gambling behaviors are going to be manifested, exacting some hidden costs from the community. How much remains to be seen, but these costs will not be zero. From this perspective, an “unserved” market is not such a bad thing.

Though spending money at the casinos may keep some dollars in the county, instead of going to retail establishments outside the county, some of those dollars may well come from local retailers as well. Moreover, query how much of those losses (or casino winnings) will end up being reinvested in the county, as opposed to distributed to the gambling promoters or taken away in state taxes.

I see that Palo Alto County also has a new ethanol plant coming online soon. For my money, this is a much better choice for economic development.


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