CASINO APPLICANTS IN MISSOURI Martin Romitti phD Director of economic amp 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 ID: 146889
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ECONOMIC ANALYSIS OF
CASINO APPLICANTS IN MISSOURI
Martin Romitti,
ph.D.
Director of economic & Public Policy Research
Umass
Donahue institute
Slide2
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Proposition A in 2008 repealed the law that prevents gamblers from losing no more than $500 in two hours and placed a cap on the number of casino licenses in Missouri at 13.Slide3
Overview
Missouri Gaming Commission
Issue:
Last License along Big RiversConflicting Market ResearchCommunity InterestMany GoalsAnswer the “Economic” Question:
Objective Analysis
Research Talent and Tools
Existing and Proposed Casinos
Sized by Total Gaming PositionsSlide4
Study Process
Background Data Collection and Research
Existing and New Applicant QuestionnairesCustomer Data by Zip Code
Analysis of Newer Casinos and 2008 Illinois Smoking BanDevelop and Test Gravity ModelSet up Gravity Model in GISUse Collected Data from Casinos to Fine Tune ModelDevelop Worst, Average, and Best Case Scenarios
Conduct Economic Impact Analysis
Apples-to-Apples Comparisons
Test Scenarios
Relative Impact to CommunitySlide5Slide6Slide7
Background Data Collection and Research
Current Casino Environment and TrendsSlide8
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
Kansas Speedway Casino
Zip Code AGR Probability EstimatesSlide9
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 Attraction
Kansas City
St. Louis
Southeast MOSlide10
Develop and Test Gravity Model
Develop Worst, Average, and Best Case Scenarios
Consider AlternativesWorst Case:
Gravity model onlyAverage Case: Middle point between Worst/Best CasesBest 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)Slide11Slide12
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.Slide13
Community Context
EMPLOYMENT
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 PRODUCTIOC - Cape Girardeau
and Casino Celebration have similar GRP. Impact to local economy larger in Cape Girardeau than other Metro locations.Slide14
ECONOMIC ANALYSIS OF CASINO APPLICANTS IN MISSOURI
Prepared by
UMass Donahue Institute