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After a couple of years of rolling snake eyes, Iowa's casinos are hoping to get back on a winning streak.
Their revenues have been flat or, in some cases, in decline. Competitors have been proliferating in nearby states, including Kansas and Missouri.
Gov. Terry Branstad calls it a “mature industry” and wants to dramatically increase casino taxes, something a recent poll showed more than half of Iowans support.
Add to that an economy that while not in the depths of 2009, remains tepid as customers carefully watch their disposable income.
“The outlook for Iowa casinos is much less robust than it has been simply because they are facing competition,” said Ernie Goss, economist at Creighton University and co-author of a book on casino gambling.
Still, the news hasn't been all bad.
Council Bluffs' three casinos — Ameristar, Horseshoe and Harrah's — continue to lure gamblers and their money across the Missouri River.
In May, a $120 million casino is expected to open in Lyon County, in far northwest Iowa, with the hope of drawing people from the Sioux Falls, S.D., metropolitan area.
The bottom line: Gambling remains a popular pastime and economically lucrative business.
“We certainly have not been recession-proof,” said Wes Ehrecke, president and CEO of the Iowa Gaming Association. “People tighten their belts. There have been some layoffs (in the overall economy). Consumer confidence in the economy lagged in the past few years.”
Profits for fiscal year 2010, which ran from July 1, 2009, to June 30, 2010, were down overall about 3 percent from the previous year, according to state gambling commission reports.
“Everybody's entertainment budget was affected,” said Christie Scott, spokeswoman for Ameristar.
But Jack Ketterer, administrator of the Iowa Racing and Gaming Commission, said overall casino revenues have rebounded some. They are up about 1 percent so far in fiscal year 2011 over 2010.
“From that standpoint, there has been some slight improvement,” Ketterer said.
With the economy slowly improving, gambling leaders describe themselves as cautiously optimistic.
“We're hopeful that it will remain flat if not a slight improvement for the next year or so,” Ehrecke said.
The collective profits of the three Council Bluffs casinos — Iowa's largest casino market — were down less than 1 percent, or about $500,000, for the first three months of 2011, compared with the same period in 2010, according to Racing and Gaming Commission figures.
To help keep customers coming in the door, Ameristar in Council Bluffs has asked guests what they liked the most, said spokeswoman Scott.
It found that customers wanted to play the newest and best machines. The casino moved them near its entrance.
“This way, when the guests come into the casino, all of the newest and hottest games they have heard of are right up front, so they don't have to go looking for the games that they want,” she said.
But there is one thing scarier to Iowa casino operators than the economy: Branstad's proposal to fund a reduction in overall corporate tax rates by boosting casino taxes from the current levels of 22 and 24 percent of gambling profits to 36 percent.
Branstad has estimated that the $190 million more such an increase could bring would cover most of his proposed $200 million cut in corporate income taxes.
Casino operators and their supporters say a tax hike could ruin their businesses and force the closings of several casinos. Business leaders in Council Bluffs have predicted that the tax would not force the city's casinos to close but would substantially harm their operations.
Several legislators from both parties have said they don't see Branstad prevailing.
Sen. Mike Gronstal, D-Council Bluffs, said the city's casinos would collectively bear about one-third of the governor's proposal.
“That's a pretty outrageous impact on one community in the state of Iowa,” said Gronstal, the Senate Democratic leader. “I think it has little likelihood the Legislature will give it serious consideration.”
A measure based on Branstad's proposal, House Study Bill 223, was assigned to a House Ways and Means subcommittee. A member of that panel, Rep. Greg Forristall, R-Macedonia, said the bill is going nowhere.
“We have enough things to do without spinning our wheels on something,” he said late last week.
Amid that debate, a new northwest Iowa casino is betting its future on the Sioux Falls metropolitan area and the Interstate 90 and 29 corridors.
The Grand Falls Casino Resort is scheduled to open, sooner than expected, a few days before Memorial Day weekend near Larchwood.
Grand Falls will include amenities such as a spa and, beginning in 2013, a golf course.
“We should hopefully pick up a number of folks traveling on vacation,” said Sharon Haselhoff, the casino's general manager. “With all the amenities we offer it will be kind of that resort destination and a great place for a getaway.”
Haselhoff expects most of the casino's business to come from the Sioux Falls area and travelers on the nearby Interstates.
“I don't envision folks from Council Bluffs and Omaha to drive the 300 miles to our resort when they have three (casinos) down there,” she said. “But if they are going on vacation, that's when I see that traffic coming up this way.”
More threatened by the new casino is Argosy Casino in Sioux City.
“We do expect an impact,” said Kees Eder, Argosy's general manager. “And the impact at this moment is estimated at somewhere around 7 percent of our revenues.”
But while the economy is rebounding and a new casino is opening, it's probably too soon to say that the good times are about to roll again. An increasingly common refrain these days is that there are too many casinos — in Iowa and elsewhere.
“Iowa at one time had a much more of a monopolistic position (in the Midwest) and they have given that up over the years, as most states have,” said Creighton University's Goss. “The easy money has been made.”
In 2010, the last time the Iowa Racing and Gaming Commission considered licenses, it granted only one —for Grand Falls.
Among reasons the three other applications were rejected was they would cut into the business of the 17 other Iowa casinos. The Sioux Falls market — except for Argosy, 85 miles or so to the south — was largely untapped, the commission said.
All casinos face a more competitive environment in the near future, Goss said.
“Iowa, in my judgment, has overbuilt casinos, and the Lyon County one will definitely cannibalize some from the other casinos (in Iowa),” he said.
Iowa's casinos don't have just other Iowa casinos to worry about. The Lyon County casino could push South Dakota to build a casino in Sioux Falls, although that would require a change to the state's Constitution, which currently allows casino gambling only in Deadwood, in western South Dakota.
“But that will take some time,” Goss said. “They can't build it next year in Sioux Falls. It will be a number of years before Sioux Falls has a casino.”
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