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Isle study says C.R. casino will hurt its Waterloo operation

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WATERLOO | The latest market study shows a proposed casino in Cedar Rapids would reduce revenue at The Isle Casino in Waterloo by nearly 11 percent.

That study, commissioned by the Isle itself, matches three of four previous market studies.

The Cedar Rapids Development Group is proposing a $150 million casino and entertainment complex in downtown Cedar Rapids.

Las Vegas-based Gaming Market Advisors estimates a Cedar Rapids casino would reduce gaming revenue at the Isle by $9.3 million -- about 10.8 percent of the casino's adjusted gross revenue.

The study found similar results to three other studies -- two by the state, one by the casino in Riverside just south Iowa City -- that examined the effect a casino in Cedar Rapids would have on neighboring gaming facilities.

"We've got five studies," said Bari Richter, vice president and general manager of the Isle Casino. "Four of them look alike."

Marquette Advisors of Minneapolis and Union Gaming Analytics of Las Vegas were hired by the Iowa Racing and Gaming Commission to examine the effect a Cedar Rapids casino would have on other gaming operations.

The Union Gaming Analytics forecast was almost the same as GMA's, showing about a $9.3 million drop -- about 11 percent of the casino's revenue. The Marquette study predicts a $10 million revenue drop.

A January study by New Orleans-based Innovation Group, commissioned by Riverside Casino & Golf Resort, estimated a Cedar Rapids casino would cut revenue in Waterloo by about $11 million annually.

However, a study commissioned by the Cedar Rapids group done by TMG Consulting of New Orleans showed a much smaller effect on revenue at the Isle, estimating a 4.7 percent drop, or $4 million per year.

The studies also predict a more severe effect on the Riverside Casino and Golf Resort in Riverside, ranging from a 27.4 percent revenue drop estimated by Marquette to a 42.1 percent drop predicted by the Union Gaming report.

The five-member IRGC board is scheduled to decide at its April 17 meeting in Council Bluffs whether to issue a gaming license to the Cedar Rapids casino project.

The studies commissioned by IRGC bolstered Cedar Rapids casino opponents, including members of the Black Hawk County Gaming Association. They called the Cedar Rapids Development-commissioned TMG study an "outlier" among mounting evidence a Cedar Rapids casino would cannibalize revenue from neighboring gaming operations, though the Cedar Rapids group stands by its study.

"This shows the entire market is saturated," said Tim Hurley, former Waterloo mayor and chairman of the Black Hawk County association.

BHCGA board members and Isle casino management said their concern is how much weight the IRGC gives to cannibalization of existing markets when making its decision. Prior IRGC decisions looked heavily at the effect a new casino would have on neighboring operations, Richter said.

"If they vote 'yes' to this, they are then taking cannibalization off the table?" said Jill Alexander, spokeswoman for the Isle Capri Casinos Inc.

Hurley agreed a yes vote would go against IRGC precedent and open the door for gaming operations anywhere in the state. The fact that the proposal has gotten this far indicates the commission might be willing to make that change, said Don Hoth, BHCGA board member and former chairman.

"They should have said no a long time ago," Hoth said.

The BHCGA holds the gaming license to the Isle Casino Hotel Waterloo and receives 5.75 percent of the casino’s gross receipts to disburse in grants to nonprofit and public projects.

A dip in casino revenue would mean less grant money, perhaps up to $1 million less per year, association members say. The group has distributed about $30 million in grants over the Waterloo casino's five-plus years of existence.

In response to the IRGC studies, Cedar Rapids Development Group Chairman Steve Gray issued a statement standing by the TGM report.

"Surrounding market impact has been predicted in every study for the past 10 years and in most cases never occurred," Gray said.

Cedar Rapids casino proponents also have noted the city of Dubuque has had two gaming facilities operating in close proximity for decades. Those facilities evolved side-by-side -- one as an excursion riverboat and the other initially a greyhound racing facility without a casino, Hoth said.

Gray has also noted the Cedar Rapids casino's proposed west-side downtown location would benefit Cedar Rapids and Linn County the most and impact neighbors the least.

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