Cedar Rapids casino would cannibalise business
Iowa’s existing facilites would get cannibalised by any of the three potential new Cedar Rapids casinos, a study says.
US.- Back in 2014, the Iowa Racing and Gaming Commission (IRGC) rejected a gaming license proposal for Cedar Rapids due to potential cannibalisation. Last Thursday, a study was revealed and warns about all three proposals for a new casino in the city as they would cannibalise on the other venues in the area.
There are three bids to get a gaming license: two from CRDG, the group that already tried to get one in 2014. The other comes from Wild Rose Entertainment and projects a boutique casino, a smaller venue that would, nonetheless, cannibalise between 45 and 56 per cent of the annual revenue from other Iowa facilities, as well as any of the others.
The report states that “of the US$85 million in annual revenue projected for the larger Cedar Crossing facility, we estimate that about 55 percent (US$47 million) would be ‘new’ revenue resulting from an increase in gaming activity, with the remaining 45 per cent, or US$38 million coming through the cannibalisation of business from other casinos. The cannibalisation impact for the smaller casino proposals is estimated to range from approximately US$29 to US$32 million, or about 56 per cent of facility revenues.”
IRGC member and former chair Jeff Lamberti already advanced in February that the body would deny any request that was expected to cut into another casino’s profits by a percentage in the mid-teens. “If the impact on the adjusted gross receipts of the facility was under 10% they generally got a license,” he said and added: “If it was above the mid teens and certainly 20, 25, 30 they were denied.”
