Cornfields and Dreamfields

The New Bridge

The New Bridge

 

States of the States in Casinoland: Cornfields  and  Dreamfields

Summary:  An overview of casino spread in the United States                                             (1) Looks at locations and fiscal markers of “cornfield casinos” in Iowa, a thinly-populated state that  has  eighteen commercial casinos and two Indian ones.                                       (2) Discusses likely rationales for two sites proposed for new casinos in Iowa.                (3) A table using  figures from  the American Gaming Association web site  compares  year-2012 fiscal data for commercial casinos or racetrack electronic gaming devices  among all  twenty-three states that have either or both.  States can be ranked on  characteristics such as “win per capita” or taxes paid to government.  

Talking with someone from a very small city in NY (pop 900)   proposed as casino site,  I  remarked  naively that it must be unique in the country in being a truly rural community into which a commercial casino might come. I had thought all commercial casinos are in suburbs,  exurbs or fair-sized towns when  not in big cities.  Iowa then came to mind as predominantly rural but with commercial casinos.

A look at that state surprised me.  Iowa has fifteen commercial casinos classed  as “riverboats,”  three tracks with electronic gambling devices (EGDs)  and two Indian casinos.   It is hard to understand how the state could support so many; yet it is  considering two more.    This count led me  to compare Iowa to other states as to number, size and locations of casinos.  Two questions arose:  (1) were  impacts on small rural communities  assessed  in any way by  independent studies?  (2) how  did landlocked rural casinos fare financially compared to ones at riverside  or more urban settings?

Question 1 is a rapid dead end. No.  Question 2 opened a window on the United States as casinoland that this essay props wide.

To imagine from  the Iowa experience what a very small rural community in upstate NY might expect from a casino’s arrival,   I picked  four  similar locales in Iowa that now have casinos and one (Jefferson, in Green County) for which a casino is proposed.  Click here for a map.    Four locales were chosen by developers.  One, in Tama (Tama County),  is Indian-operated and was thus not free to roam.  Because it is a small “city” like the other four  and evidently  a test case for new competition while Iowa plans  more  casinos,  I included Tama.

Emmetsburg, pop 3900,  is home since 2006 to the Wild Rose Casino (550 slots,  17 table games, or TGs).   The casino is right in town on (literally)  Main Street,  US Rte 18,  which crosses the state.  Emmetsburg is the County Seat of Palo Alto County,  with a population  density of 16.5/sq mile it ranks 84th out of 99 in the state (Iowa pop. density is about 54/sq mi).  The town’s web site shows merited civic pride in history.    A report by a consulting group  in 2009 commented that there are no communities of much size nearby,  though Highway 18 eases travel.  The report stated that win/admission ratio (“win” means “gaming revenue”  of course)  and gaming revenue in first two full years were below most other markets in Iowa.  This is still true through FY 2013.

Northwood, pop 1989,  hosts  the Diamond Jo Worth casino  with 1000 slots and 32 TGs.  The casino is right off  I-35,  ( 9 mi west of the center of town)  about 25 mi south of  I-90 as it traverses southern Minnesota.   Click here for  Christmas Greetings from the casino in  2009.   Worth County ,  with population  density of 18.9 / sq mi,  ranks 76th in the state.   The  report by a consulting group in 2009 remarked that  the casino’s nearness to I-35 brought Mason City  into its reach at the time.  In its first two years the casino had an   “win”/admission ratio  and adjusted gross gambling revenues that outdid the state average.

Larchwood (pop.  866) is the city in Iowa most remote from  the capital, Des Moines.  Lyon County ranks 75th in state in pop density,  at 19.7.  In the northwest corner of Iowa,  Larchwood  saw in 2011 the rapid   opening of the Grand Falls casino,  which cost $120 million and offers   900 slots.  Tables games are now up to thirty-seven. This casino was obviously sited to capture Sioux Falls, South Dakota,  the largest city in that state.  A website blurb says it’s just eight minutes from Sioux Falls.  Actually eight miles from the extreme eastern side,  it is  more like 15 mi and 25 minutes from the center of the city.  The manager of the Grand Falls casino   told a reporter that she expected  an annual revenue of $70 million,  with 80%  to come from out-of-staters.

South Dakota  on the AGA listing ( see table below ) has thirty-five (35) “casinos”  but total “gaming” revenue is only $107M with revenue to state only $ 16.6M.  [Note well: these data may be wrong, but are copied correctly from the web site.]  I did not research the  state  in detail but would guess that many  of the “casinos” are like Borrowed Buck’s Roadhouse, the only “casino” in Sioux Falls that shows on a commercial website map  It has ten (10)  VLTs, pool tables and foosball.  South Dakota had decided,  upon legalizing casinos,  to put all its  real commercial casinos in one town,  Deadwood, almost 400 miles from Sioux Falls.   Since 1989 S. D. has had video lottery.  In FY 2013 an average of 9133 machines operated in the state in an average of 1426 establishments.  The nearest real casino to S.F. is an Indian one at Flandreau, 44 miles away.   A casino in nearer-by Larchwood was supposed to appeal to people in Sioux Falls who want live table games and lots of slots.

In Larchwood  gaming revenue has not reached the anticipated 70 M .   At 59 M for 2012 it was in the red $ 4.8 million.  Adjusted gross revenue in 2013 was $58 million, and the “win”/capita $46 in FY 2013, below the state average.  It may be that Sioux Falls gamblers find the convenient VLTs in town surpass the call of the casino.

These three active commercial casinos can be compared in the table to the fifteen “riverboat” casinos in Iowa, which includes them.  Data are for FY 2013   Some figures are rounded-off.

TABLE 1.  Fiscal statistics for Iowa casinos. source  Iowa Racing and Gaming Commission

Category admiss. adj gross rev median  AGR avg  AGR “win” per avg “win” tax to IA
millions $ millions $ millions $ millions  capita $ per cap $ $ millions
15 riverboat casinos 15.7 991   58 66      63 189
3 tracks with racinos 6 453   75.5 93
18 commercial casinos 21.7 1444    66.5 282
Wild Rose Emmetsbg 0.53 32     60 6
Diamond Jo Worth 1.3 89      67 17.4
Grand Falls 1.3 58      46 11.2

 

The range of “adjusted gross revenue” in the state for 2013 was $30 M to $168 M.  The Grand Falls casino in Larchwood trails  the other two and the state averages.  It has so far not exerted the pull on Sioux Falls that its builders expected.

Tama (pop.2877) is the site of the Meskwaki Bingo Casino, with 1300 slots.  Tama is on US 30, the Historic Lincoln Highway.  The closest sizable city is Cedar Rapids, about 35 miles off.   Tama County has a population density of 24.6/sq mi.   Unlike the other three casinos, this one is operated by an Indian entity, the Sac and Fox Tribe, which began it in 1993.  As of 2003 it was said in a newspaper to have $3 million/wk in gaming revenue,  which would presumably mean $150 million/year.   I could not find more recent or authenticated figures.

The Meskwaki Casino is threatened by  competition  from a proposed new casino in Cedar Rapids whose developer has made  clear he aims to horn in on its market .  A booster  of the proposed Cedar Rapids  casino was sniffy about “cornfield casinos”  surrounded by “acres of asphalt.”  The title of this essay uses this term side by side with “dreamfields,”  borrowed from Grinols and Omorow’s seminal article about casino economics [citation at end].  I believe the authors meant to invoke sardonically the image of  the  baseball park carved from a cornfield depicted in the film Field of Dreams with the mantra “If  you build it they will come.”

The location being considered for a new casino is the city of Jefferson, pop. 4345, the county seat of Greene County (pop 9336).  Greene County has a population density of 16.4/sq. mi. Jefferson is on the historic Lincoln Highway (US 30) about 100 miles west of Tama.  This proposed location will have been chosen to compete with the Meskwaki Casino in Tama for a big share in the Des Moines – West Des Moines Metropolitan Statistical area, five counties with 590,000 residents.  Des Moines has slots at the racetrack, but in late 2013   residents seeking the full casino experience  must travel 50 miles south on I-35 to Osceola or 70 miles northeast to Tama.   Jefferson is  73 miles (all on Interstate highways) from Des Moines.

To compete for Des Moine residents with the casino to the south at Osceola, any location north of the city that is less than  50 miles off  by good roads would be suitable.  There is plenty of open space.  Why then Jefferson, twenty miles more distant?  Strictly by location, a casino there would be much more likely to pull customers from  the Indian casino at Tama than from the non-Indian one in Osceola.  The threat of  competition from both east and west does not bode well for the Meskwaki casino.

The population  densities of all five of these IA counties are similar to  those of  Essex County and Lewis County in NYS.  Seneca County in NY is relatively crowded at 106.87  per sq mi.

Considering Iowa’s pace in dotting the sparsely-populated state with casinos  prompted a visit to the American Gaming Association web site for   information on  how IA compares to other states.   For a state of 3 million people Iowa  has a lot of casinos, but Mississippi, with about the same population, has half again as many.  NV, also with fewer than three million residents, has the most casinos/capita in the country,   at least one for every ten thousand residents.  That’s about ten times higher than IA or MS.  Most Nevada  “casinos” I infer  are relatively small.  I think AGA will call any agglomeration of EGDs not owned by Indians a casino.

The table below is made from the data on the AGA web site (shown below is 2012) for all states that have commercial casinos or racinos.  Indian casinos are not counted; thus,   CA is not on the list, nor is CT.   Other notes on the data before reading :

1)      No distinction between racino and casino.  Some states (e.g. Delaware, New York) only had racinos as of compilation time.

2)      The number of casinos now has gone up in several states since the data were compiled.  IL has moved to allow electronic gaming machines outside casinos.  Losses by gamblers to these extra-casino video lottery terminals now far exceed those inside “casinos.”  Clusters of these electronic gaming machines  may soon be counted as “casinos”   I think this happens in NV and SD,  to name two states with high ratios of “casinos” to population.

3)      Big casinos that had not completed a year as of 2012 may not be included.  The IL line counts ten.  The Rivers, in Des Plaines, does not show on a map or list of nine casinos in Illinois at another web site.  With the biggest GGR in the state,  its omission or inclusion in the AGA data set would make a big difference.  I think it is included.  The MD line says three, but probably omits the most recent entrant, Maryland Live in Anne Arundel County.   It  has by far the biggest gross gaming revenue  in the state and is on track to break $400 M for  CY 2013.

4)      This is only casinos or racinos. Other forms of Lottery are not counted.  OR, for example, has a big lottery with VLTs not limited to  at tracks.  It is not in the table.  Oddly, NY’s racinos,   technically part of Lottery,  are counted.    Parimutuel is omitted.  Betting on sports is only legal in NV.  Figures in sports betting in NV are available but are not classed as “gaming revenue.”

Notes on the table itself with one polemical aside about GGR.

GGR =  Gross gaming revenue  ( AKA adjusted gaming revenue AKA adjusted gross proceeds )  This  what the casino keeps after paying out winnings.  It’s the   total  hold  from all positions over  time = total of  net losses by gamblers = win for the casino.  In the ultimate newspeak, one glossary says that GGR is the “amount earned.”  I would like to replace the term GGR and all its  equivalents such as  adjusted gaming revenue with “net losses of gamblers.”  One problem with this description  is  that it does not convey that much of what  gamblers lose does not really belong to them.  The better term would be “net losses via gambling  by all persons  the gamblers can drain or withhold money from.”  Then we could speak of revenue to government as a proportion of “net losses via gambling  by all persons  the gamblers can drain or withhold money from.”  Nominations are now open for reworking this long phrase into one that has a catchy acronym.

GTR  Gaming tax revenue  [I propose that this be renamed “government rake.”]

Col B is number of “casinos”

Col D is gross gaming revenue  (“net losses via gambling  by  all persons  the gamblers can drain money from “) in $ millions.

E is “gaming tax revenue” in millions.

F  visitor volume, not given by most of the states.

G = ratio of GTR to GGR, a measure  of overall  tax rate.  No two states tax exactly alike.

Col H:  For states that gave visitor volume,   col H (D/F) is average “hold”  per visitor (also called sometimes “win,”   the amount retained by casino after visitor has gone away.  It should  be  denoted “loss,” as it is that to the casino gambler.   The casinos and the gambling promoters write the language.  ) .   Refer also to note on GGR above.

Column I (capital eye)   is average revenue to government (all levels, mostly state) per visitor for states that report visit volume.

Col J is average GGR (“net losses via gambling  by  all persons  the gamblers can drain money from “) per “casino.”

States  have very different profiles in their rankings  along each column.  Column B (number of casinos) ranges from 2 in Rhode Island to 265 in Nevada.  The NV Gaming Control Board web site shows for the twelve months 10/31/12 -11/1/13 three hundred thirty-eight  “locations,” not just 265.  54% of the revenue (loss by gamblers), however, came from only 6.8% of the locations, viz. twenty-three casinos on the Las Vegas Strip each with annual revenue > $72 million.  99.4 % of the revenue (loss by gamblers) came from 74% of the locations. The other 26% had average revenue of  $680,000/ yr.

PA leads the country in col E (revenue to government from casinos)  and  is a distant second to Nevada in col D (gross gaming revenue  or in my terms “net losses via gambling  by  all persons  the gamblers can drain money from “).

There is a huge range in col G ( revenue to government as proportion of GGR), from 8% to 58%.   NJ must be kicking itself for having set such a low tax rate long ago, but in 1978 it wanted to compete with that in NV.   MD  much later took  a different road with the highest tax rate on full casinos. MD  must think they can attract casinos even with a rate that would deter many by offering access to a big  population,  not so much from  MD itself but from surrounding states and cities (particularly Baltimore and Washington with their suburbs and exurbs).  RI has even higher return to government though from [I think] racinos.

Column H is the average “win” for management ( = loss by gamblers)  per visit   I don’t know what defines a visit.  Is it one day or less or can it be more?  Snapshot says that 53% of casino gamblers “budget” under $100 for a day of gambling and 90% budget under $300 for a visit (does not make clear if a visit is a day or can be more).  This link has other good info on casino users.    Of the states on the table that provided visitor volume, IA does the least in col H;  this is not a good economic omen.  NV does the most.  This could be because it has, unlike any of the other states, a true destination resort city (Las Vegas)  not reachable by a short drive or ride.  I imagine many visitors stay a couple of days if in fact a “visit” can be more than one day.  I don’t know the answer.

Illinois and Indiana collect for government the most revenue per  visit (col I)  New Jersey reaps   less than a quarter as much per visit.  This follows from that state’s decision pre-1978 not to add much to  NV’s  low tax rate.

Column J ( revenue at the average “casino” in that state)  shows a  very skewed distribution with a long left tail.  The median is $115 million; an average is $142M.   Michigan  is first  at  $473 million/casino from its three, all in Detroit.     South Dakota at $3 million sees the lowest GGR per casino (if this can be credited). *  CO is second lowest.  I think this is because all its casinos are in three “historic” towns where “mom and pop” casinos were encouraged to create a frontier atmosphere.  Probably most of the GGR in Colorado comes through a few big newer casinos.  The median is likely well below $19 M.

[*]  The figures for SD on the AGA site conflict with a  newspaper  article  reporting on 2011 stated that revenue that year from “commercial gaming” was $315 M and from “tribal gaming” another $108 million.  The figures on the table do comport with a recent monthly report by the South Dakota Gaming Commission. South Dakota is confusing in another way.  Deadwood, with twenty casinos, says  it is the only place in the state where traditional commercial casino gambling is allowed.   What are the other  fifteen “casinos”  then?  Perhaps they have VLTs run by the state Lottery but  got listed by the AGA as “casinos.”  We can safely conclude, however,  that Sioux Falls does not now have a full-scale in-state casino either tribal or commercial near enough to it to spare the city the attentions of an Iowa casino in another round of race to the bottom.

TABLE 2  Selected statistics for commercial “casinos” by state.  source  AGA website

A

B

C

D

E

F

G

H

I

J

State

num.

first

GGR

GTR

vis. vol.

E/D

D/F

E/F

D/B

open

$M

$M

millions

$

$

$M

CO

41

1991

766

104

n/a

0.14

19

DE

3

1995

527

217

n/a

0.41

176

FL

6

2006

428

162

n/a

0.38

71

IA

18

1991

1470

334

      22.6

0.23

65

15

82

IL

10

1991

1640

574

       16.2

0.35

101

35

164

IN

13

1995

2600

807

         24

0.31

108

34

200

KS

3

2009

341

92

         n/a

0.27

114

LA

18

1993

2400

579

        31.6

0.24

76

18

133

ME

2

2005

99

43

        n/a

0.43

50

MD

3

2010

378

218

       n/a

0.58

126

MI

3

1999

1420

320

       n/a

0.23

473

MO

13

1994

1770

471

      24.6

0.27

72

19

136

MS

30

1992

2250

272

      24.8

0.12

91

11

75

NJ

12

1978

3050

255

      27.7

0.08

110

9

254

NM

5

1999

241

62

      n/a

0.26

48

NY

9

2004

1800

822

       n/a

0.45

200

NV

265

1931

10860

869

     52.3

0.08

208

17

41

OH

4

2012

450

138

      n/a

0.31

113

OK

2

2005

113

20

      n/a

0.18

57

PA

11

2007

3160

1,487

      n/a

0.47

287

RI

2

1992

528

329

     n/a

0.62

264

SD

35

1989

107

17

      n/a

0.16

3

WV

5

1994

949

402

      n/a

0.42

190

Conclusion: The twenty-three states  that allow commercial racinos or casinos vary  in the care and feeding they provide.  A central tenet  is  that the “casino,” if sizable,   appears  placed either to attract gamblers from out of state or to dissuade  in-state ones from venturing out of state.  “Out of state” may be a code word for “Indian.”

Iowa, a thinly-populated state with no  conurbations to target,  took a path different from neighboring states in not confining its (now) eighteen commercial casinos to riverbanks, on which about half sit.  The other half   are dotted  around  the state,   not  just in  cities of  more than 10, 000 population  ( of which there are fewer than forty );   some are  in  very small country towns.   These sites are not blind pin-stabs; they each have a marketing rationale.  Some pan out better than others.

I had hoped to find evidence that “cornfield casinos”  are not well-liked by regional residents, that they hurt a small crossroads community even more than an inner city or strapped riverbank town.  Nothing relevant came to light in a superficial search.  I had hoped to find proof that a casino in a tiny community cannot hold its own in a profit-driven marketplace. That depends, no surprise,  on location.

reference :  Grinols Earl L and J. D. Omorow.  “Development or Dreamfield Delusions?  Assessing Casino Gambling’s Costs and Benefits.”  Journal of Law and Commerce vol 16 1996-97 pp 49-87

The photo image is from Flickr Creative Commons

This piece reflects the opinions of the writer, Stephen Q. Shafer MD, MA, MPH, not necessarily those of any or all members of Coalition Against Gambling in New York.  Permission is hereby granted to quote at any length as long as the permalink is cited.

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