COUNCIL BLUFFS — In the 1980s, riverboat casinos were championed as a Midwestern alternative to Vegas casino glitz, serving up Mark Twain-style nostalgia along with blackjack and slots.
But today, the number of boats is declining as casino operators take advantage of a 2007 Iowa law that allows them to move their operations completely ashore. It's also a trend occurring elsewhere as other states have relaxed their laws.
The latest to announce plans to move off the water is Harrah's Council Bluffs, which anticipates selling or scrapping its riverboat next summer and moving into remodeled space. That riverboat began operations in 1996 as Harveys; it was acquired by Harrah's in 2001. In the next few years, the Sioux City area also will lose its riverboat but gain a land-based casino.
As of now, there are seven excursion-boat casinos in Iowa, three each on the Missouri and the Mississippi Rivers, and one on a small lake near Osceola, Iowa, south of Des Moines. In 2004, there were 10. Their numbers are expected to dwindle further in the coming years.
The reasons are many:
» Land-based casinos offer more room to grow and more flexibility.
» Numerous expenses come with operating a boat — including maintenance, special inspections and maritime insurance. Bo Guidry, general manager of Harrah's, estimates the expenses associated with the Bluffs riverboat cost the company $2.5 million annually.
» Customers tend not to care whether their favorite slot machine is over water. Sometimes, they aren't even aware when they leave the part of the casino that's on land and step onto the riverboat. “No one goes to Ameristar because it is a riverboat casino,” said Ernie Goss, a Creighton University economist who has studied casinos.
» Riverboats are at the mercy of Mother Nature. Operators must deal both with flooding, like in 2011, or droughts, like in 2012.
“The real question would be why would you have a riverboat casino if you are allowed to do a land-based casino?” said Goss, co-author of a book on casino gambling. “Riverboats just can't compete with non-riverboats.”
The first casinos arrived in Iowa after 1989, when the state legalized low-stakes riverboat gambling. South Dakota also authorized casino gambling that year, and Colorado, Illinois and Mississippi followed suit in 1990.
Requiring casinos to be on bodies of water was seen as a way to limit their growth. It meant someone in Des Moines could tell themselves, “they are not going to be coming here,” Goss said.
But, in 1993, three riverboats on the Mississippi pulled up anchor and moved away from Iowa, with at least one of them citing competition from casinos in other states with more liberal betting limits. The next year, Iowa lawmakers removed loss limits.
In 2004, Iowa went further, eliminating a requirement that the boats actually leave their moorings and cruise occasionally — the last Mississippi River state to do so. Then in 2007, it abolished the requirement that riverboat operators place gambling floors over water.
Increasing competition among states drove the changes. “If you didn't have all these competing states, you'd be fine,” Goss said.
Riverboat numbers have been decreasing elsewhere in the United States. Only one of Missouri's 13 casinos is a functional riverboat. In Illinois, there are three functional riverboats, down from 10 in the mid-1990s.
And, in the state of Mississippi, only two riverboat casinos remain in operation, down from eight in the early 1990s. “We just don't really have them much any more,” said Larry Gregory, executive director of the Mississippi Casino Operators Association.
For those deciding to move onto land, the evidence suggests it's a good bet.
In eastern Iowa, three one-time riverboat casinos — in Clinton, Burlington and Dubuque — have converted to land-based operations since 2007. The commission issued all three land-based licenses on April 1, 2008.
Each saw increases in adjusted gross revenue of 29 percent or more after the casinos ditched their boats on the Mississippi River.
“There definitely was a shot in the arm,” said Brian Ohorilko, administrator of the Iowa Racing and Gaming Commission. “(For) any facility that has made the decision to go from a riverboat to land, immediately we've seen a pretty substantial increase.”
And more boats could soon be torpedoed.
A riverboat on the Mississippi at Davenport could change to a land-based casino, as part of an ownership change.
And about 95 miles north of Omaha, plans are in the works to replace the Argosy Casino riverboat in Sioux City. Earlier this year, the Iowa Racing and Gaming Commission put Woodbury County's license up for bid. The commission accepted only land-based proposals because it wanted a casino with more amenities than a riverboat could offer.
Harrah's will put its new land-based casino in its current convention center space. Its parent corporation, Caesars Entertainment, manages the Mid-America Center for the City of Council Bluffs, so convention center business will move to that facility.
Ameristar in Council Bluffs looked at moving ashore in 2007 but canceled its plans when the economy tanked, and focused instead on improving existing facilities. It has no plans to abandon its riverboat, said Ameristar spokeswoman Christie Scott.
Even so, the ability to expand land-based casinos likely means more and more operations will move away from a riverboat model.
"Will there be riverboat casinos in another 10 years?” asked Goss. “There will be, maybe, some. But that's for the novelty of it.”
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