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Study: Ottumwa casino would hurt existing operations

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May 13, 2009

The following is an excerpt from a study of new casino development in the state of Iowa. The study was conducted at the request of the Iowa Racing and Gaming Commission.

"In the case of Wapello County, we do not believe that a large scale resort would be viable considering its location and competition from major casinos within a relatively short distance. Therefore, two alternatives were analyzed, including one with a "mid-size" casino and hotel operation with approximately 1,000 gaming positions, 60 to 80 hotel rooms, small conference and events facilities and a full range of dining options. The cost of this type of facility is estimated at approximately $80,000,000. A smaller stand alone casino was also analyzed, having roughly 500 to 600 gaming positions, no on-site lodging, and a reduced mix of food and beverage options. The cost of this facility is assumed to be about $45,000,000.

"The map below shows a 60- and 90-minute drive time surrounding Wapello County according to Microsoft MapPoint software calculations. We believe that a new mid-size casino hotel operation here would attract the majority of its customers from the Ottumwa, IA area (Wapello County), which has a resident base of approximately 38,000 residents, and others residing within about a onehour drive in southeastern Iowa. Occasional visits would originate from larger population centers falling about 1-1/2 to 2 hours from Wapello County, such as Des Moines, Burlington, and Iowa City.
However, these visits would be infrequent considering there are gaming options already located within those markets.

"In recalibrating our 2013 gaming model to include a mid-size casino hotel in Wapello County, we have adjusted gaming participation rates modestly by
1 to 2 visits per year per adult for those residing within about 60 miles of the property, varying by county. Market share adjustments were also made to reflect the Wapello County casino's impact upon other Iowa casinos. Here again we allocated regional gaming visits to Wapello and other facilities based upon locational factors and our personal inspection of Iowa's casinos. From our calculations and analysis, we estimate that a mid-size casino hotel in Wapello County would capture gaming revenue of approximately $54,000,000, with annual admissions of about 870,000 patrons. Such a casino would have a dilutive impact upon gaming revenues at Iowa's existing casinos. In fact, we estimate that approximately 70% of the revenues at a new Wapello County casino would come in the form of business presently being captured by other casinos in the region, most notably Terribles-Lakeside, Prairie Meadows, Riverside, Catfish Bend, as well as Meskwaki.

"A smaller stand-alone casino with approximately 500 to 600 gaming positions was also considered. Here also we have adjusted gaming participation rates upward slightly within approximately a 30 to 60 minute drive time. The size of the facility and lack of on-site hotel rooms will limit this casino's draw area to a smaller range. We project that such a casino would capture gaming revenues of approximately $32,000,000, with about 570,000 admissions. As well, while such a casino would have an impact upon existing Iowa facilities, that impact would be less severe since the Wapello casino's draw area would be more confined as compared to a casino hotel operation. Still, we estimate that more than 85% of the projected $32,000,000 in revenue will come directly out of other existing Iowa casinos, with very little "new" gaming demand created as a result of this development."

The full report is found at: Study.pdf

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