ECONOMIC ANALYSIS OF CASINO APPLICANTS IN MISSOURI
MARTIN ROMITTI, PH.D.DIRECTOR OF ECONOMIC & PUBLIC POLICY RESEARCH
UMASS DONAHUE INSTITUTE
Missouri Existing Casinos
• In November 1992 a referendum to allow riverboat gambling was approved by 64% of Missouri voters.
• Missouri riverboat gaming casinos must be located within 1,000 feet of the main channel of the Missouri and Mississippi rivers. • Proposition A in 2008 repealed the law that prevents gamblers from losing no more than $500 in two hours and placed a cap on the number of casino licenses in Missouri at 13.
OverviewMissouri Gaming
Commission Issue:
Last License along Big Rivers
Conflicting Market Research
Community Interest Many Goals
Answer the “Economic” Question: Objective Analysis Research Talent and Tools
Existing and Proposed Casinos Sized by Total Gaming Positions
Study Process Background Data Collection and Research
Existing and New Applicant Questionnaires Customer Data by Zip Code Analysis of Newer Casinos and 2008 Illinois Smoking Ban
Develop and Test Gravity Model Set up Gravity Model in GIS Use Collected Data from Casinos to Fine Tune Model Develop Worst, Average, and Best Case Scenarios
Conduct Economic Impact Analysis Apples-to-Apples Comparisons Test Scenarios Relative Impact to Community
Background Data Collection and Research
$0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
$160,000,000
$180,000,000
LUMIERE and SMOKEBAN
RIVER CITY
Missouri Casinos Adjusted Gross Receipts (AGR)3-Month Moving Average
ALL MISSOURI CASINOS
OUT STATE CASINOS
KANSAS CITY CASINOS
ST. LOUIS CASINOS
LOSS LIMIT REPEAL
Current Casino Environment and Trends
Speedway Casino Opens in 2012 Estimated 2012 AGR Impacts:
Kansas Speedway AGR: $175M Net New Total Market AGR: $57M (33%) Missouri Loss 2012 AGR: $118M (-
16%)
Kansas City Speedway Casino Impacts
$607
$725
$580
$600
$620
$640
$660
$680
$700
$720
$740
2009 2010 2011 2012
Kansas City Projected AGRIn Millions
Market with Kansas Speedway Casino
Kansas Speedway Casino Zip Code AGR Probability Estimates
Develop and Test Gravity Model Use Collected Data from Casinos to Fine
Tune Model Geographic Market Areas (30-Mi. Urban, 60-
Mi. Rural) Adjust Distance Exponent for Customer
AttractionKansas City
St. Louis Southeast MO
Develop and Test Gravity Model Develop Worst, Average, and Best Case
Scenarios Consider Alternatives
Worst Case: Gravity model only Average Case: Middle point between Worst/Best Cases Best Case: In urban scenarios reduce gravity model
cannibalization by 3% for each casino given St. Louis example. In rural scenario no displacement given distance to nearest existing casino of over 80 miles.
How Do Different Scenarios Alter the Results (if clear winner in ALL scenarios then stronger case)
Casino ApplicantsWorst Case
Average Case
Best Case
IOC-Cape Girardeau 89% 94% 100%Paragon-Sugar Creek 13% 21% 29%Casino Celebration-STL City 34% 45% 56%
Percent Net New Casino AGR Estimates for Each Scenario
Casino Celebration
Isle ofCapri
Paragon Gaming
St. LouisCity
Cape Girardeau
SugarCreek
Investment $132 M $125 M $107 M
Gaming Positions 1,636 1,168 1,480
Casino AGR $126.1 M $80.9 M $103.4 M
Casino Jobs 565 516 573
Net New Casino AGR
$56.8 M $76.2 M $21.7 M
New Gaming & Admin. Taxes
$15.7 M $20.7 M $5.8 M
New TotalJobs
476 726 280
New State GDP $45.2 M $55.0 M $20.2 MAp
plic
ant F
igur
es*
Rese
arch
Fin
ding
s**
** Findings for average scenario includes net new figures reflecting cannibalization of existing casinos. Net new AGR, gaming taxes, employment, and GDP are annual averages for seven years (two construction and five operation years). Total employment includes direct and indirect jobs calculated in the economic model.
* Information reported by applicants. All dollar figures in millions. AGR is annual average over five years.
Conduct Economic Impact Analysis Research Findings
Final Findings different than Applicant Figures
All Scenarios point to IOC – Cape Girardeau for Economic and Gaming Revenue Impact
In December 2010, the MGC unanimously selected IOC – Cape Girardeau in public meeting.
Community ContextEMPLOYMENT Paragon-Sugar Creek has
largest direct employment but when displacement considered it would be much smaller. IOC – Cape Girardeau, with the smallest direct employment, would have the largest percentage impact to labor pool.
WAGES Higher wages in KC and St. Louis
Metro. IOC - Cape Girardeau wages closer to the Metro’s average than the other applicants.
GROSS REGIONAL PRODUCT IOC - Cape Girardeau and
Casino Celebration have similar GRP. Impact to local economy larger in Cape Girardeau than other Metro locations.
Casino Employment
2009 MSA Unemp. Rate
Casino Emp. as % of MSA
Unemp.IOC-Cape Girardeau 516 7.9% 13.74%Paragon-Sugar Creek 573 8.6% 0.64%Casino Celebration-STL City 565 9.9% 0.40%
Casino Applicants
Employment Context
Casino Avg. Wage
MSA Avg. Wage
% of MSA Avg. Wage
IOC-Cape Girardeau $28,191 $29,763 95%Paragon-Sugar Creek $35,191 $41,783 84%Casino Celebration-STL City $34,690 $42,578 81%
Wage Context
Casino Applicants
Added GRP (Avg.) MSA GRP % of GRP
IOC-Cape Girardeau $47.6 M 3 Billion 1.60%Paragon-Sugar Creek $19.7 M 101 Billion 0.02%Casino Celebration-STL City $44.9 M 128 Billion 0.03%
GRP Context
Casino Applicants
ECONOMIC ANALYSIS OF CASINO APPLICANTS IN MISSOURIPREPARED BY UMASS DONAHUE INSTITUTE