Iowa gambling authorities assess cannibalization risks

According to KCRG, Iowa’s five-member Racing and Gaming Commission was hearing a summary of both impact studies from the two companies that created them.

The Marquette Advisors study showed all three casinos would cannibalize between 45%-56% of their annual revenue from other Iowa facilities. Riverside Casino & Resort losing the most revenue, between $18 million to $22 million, which equates to about 20% of its yearly income.

“Of the $85.0 million in annual revenue projected for the larger Cedar Crossing facility, we estimate that about 55% ($47 million) would be “new” revenue resulting from an increase in gaming activity, with the remaining 45%, or $38 million coming through the cannibalization of business from other casinos,” the report said.

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The cannibalization impact for the smaller casino proposals is estimated to range from approximately $29 to $32 million, or about 56% of facility revenues

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The other study from WhiteSand Gaming, a group the commission is using for the first time, showed even higher percentages of projected cannibalization, 89%-92% of revenue being pulled from nearby casinos. Riverside's facility again feeling the biggest impact, a loss of between $19 million to $27 million.

"Hardest hit would be Riverside, with over 20% of their current revenue at risk to a new operation in Cedar Rapids," said the WhiteSand study.

"Waterloo would be affected as well, losing between 5 to 9% of revenue. We spread the effect of the revenue loss in the Dubuque market between the two properties located there with a combined revenue loss of between 3 and 6%."