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Does Iowa need more casinos?

by: desmoinesdem

Thu Feb 21, 2013 at 19:15:00 PM CST


Eighteen casinos currently operate in Iowa, but if backers have their way, that number will grow in the near future. Early voting is under way for the March 5 Linn County referendum on a proposed casino in Cedar Rapids.

Meanwhile, this week some people rolled out plans for a new casino in Norwalk (Warren County), just south of the Des Moines metro area. Links and details are after the jump.

Any comments related to expanding casino gambling are welcome in this thread. I tend to agree with Richard Florida, an expert on urban development who made the case against casinos in the Cedar Rapids Gazette not long ago. Florida commented this week that casinos are a good litmus test, showing which self-styled "city builders" are actually "city destroyers."

desmoinesdem :: Does Iowa need more casinos?
In 2010, the Iowa Racing and Gaming Commission approved a new casino for Lyon County, which was expected to draw primarily an out-of-state clientele. However, commissioners rejected applications for new casinos in Fort Dodge, Ottumwa and Tama County, on the grounds that they would primarily draw business away from Iowa's 17 (at that time) existing casinos.

I haven't followed the Cedar Rapids casino campaign closely, because I had assumed that it would be difficult to obtain a license even in the event of a yes vote. But Governor Terry Branstad has appointed some new racing and gaming commissioners, and one of the key backers of the Cedar Rapids project is Doug Gross, a former chief of staff and longtime associate of Branstad's.

As Todd Dorman discussed here, the casino issue cuts across party lines in Linn County.

On the Vote Yes Linn County side, there's lead investor Steve Gray, who, back in October, hosted a fundraiser for Gov. Terry Branstad, attended by Wisconsin Gov. Scott Walker. Vote Yes's spokeswoman is Marcia Rogers, who, in January 2007, hosted an event for then-Democratic presidential hopeful Hillary Clinton. Rogers' son, Ben Rogers, is a Democrat serving on the Linn County Board of Supervisors, which supports the casino effort, along with the City Council.

Vote Yes is also getting advice from veteran Republican strategists Doug Gross and Richard Schwarm. Gross is a former Branstad chief of staff and GOP gubernatorial nominee. Schwarm was Branstad's Lake Mills law partner and a former state GOP chairman.

Gray, corporate executive, friend of Branstad, host to Walker, heaped praise Tuesday on labor unions who helped gather thousands of signatures needed to put gambling on the ballot. See? Interesting. [...]

This week, a news release sent by the Just Say No Casino coalition came from Sam Roecker, who was spokesman for the Iowa Democratic Party during [Governor Chet] Culver's unsuccessful 2010 re-election run. Vote No says expanded gambling is not an economic boost. Roecker is working for LinkStrategies, probably the top Democratic consulting firm in Iowa. Its founder, Jeff Link, has led or advised numerous campaigns, including Barack Obama's 2008 run. LinkStrategies posted an impressive list of 2012 election winners.

Ten years ago, a casino referendum in Linn County failed by a narrow margin. The new proposal has lots of powerful supporters, including Cedar Rapids Mayor Ron Corbett. Vote Yes Linn County is on Facebook here. Click here to view a map of where the casino might be built. Casino backers say hundreds of jobs would be created, and Linn County residents will no longer have to drive an hour to get to a casino.

The Just Say No Casino campaign is on Facebook here and on the web here. They claim "Steve Gray cut a sweetheart deal" that will enrich him at the expense of Cedar Rapids taxpayers. Linn County Supervisor Brent Oleson admits that he has communicated with Gray and Doug Gross via personal e-mails, which he has deleted (making them unavailable for open records requests).

The Riverside casino is bankrolling much of the advertising for the "Just Say No" campaign. Another major donor to the "no casino" campaign is Dan Kehl, a Republican heavyweight who owns the Isle casino in Waterloo.

Casino backers say it's hypocritical for people who run casinos in other towns to warn that casinos are "not real economic development" and a waste of taxpayer dollars in Linn County. Whether or not Dan Kehl's a hypocrite doesn't tell us anything about whether a casino would be good economic development for Cedar Rapids.

KCRG fact-checked some of the ads for and against the casino here.

I am skeptical that the economic benefits of social casinos outweigh the harm done to other local businesses or the social costs to the community. From Richard Florida's guest editorial in the Cedar Rapids Gazette last December:

For politicians, casino money is a powerful allure. Casinos offer a potent triple whammy of big groundbreakings - new jobs in construction, hospitality and gaming tables - and substantial new sources of public revenue other than raising taxes on people.

NO MAGIC BULLET

While politicians and casino magnates seek to sell gambling complexes to the public as magic economic bullets, virtually every independent economic development expert disagrees - and they have the studies to back it up.

More than a decade ago, the bipartisan National Gambling Impact Study Commission's concluded that while the introduction of gambling to highly depressed areas may create an economic boost, it has the negative consequence of placing the lure of gambling proximate to individuals with few financial resources.

When gambling is added in more prosperous places, the benefits to other, more deserving places are diminished because of the new competition. And as competition for the gambling dollar intensifies, gambling spreads, bringing with it more and more of the social ills that led us to restrict gambling in the first place.

SOCIAL COSTS

In his 2004 book, "Gambling in America: Costs and Benefits," Baylor University economist Earl Grinols totaled the added costs that cities must pay in increased crime, bankruptcies, lost productivity and diminished social capital once they introduce casinos to their economic mix. He found that casino gambling generates roughly $166 in such costs for every $54 of economic benefit. Based on this, he estimates that the costs of problem and pathological gambling are comparable to the value of the lost output of an additional recession in the economy every four years. [...]

The typical customer of an urban casino is neither a tourist nor a deep-pocketed whale, but a local of modest means. He or she spends $25 or $30 a visit and many of them return three or more times a week.

That's money people can't spend on goods and services at other local businesses.

Here in central Iowa, backers revealed some details about their Warren County casino at a February 20 press conference:

The proposed location for the casino is between the Southwest Connector and Highway 28. Norwalk city leaders say one of the main draws is that it would be right off Highway 5.

While the casino is the centerpiece, the project would also include a 150 room hotel, an entertainment center and a bowling center, all that comes with an estimated price tag between $100 and 125 million.

Norwalk's mayor says it would create more than 600 new jobs as well as an additional 250 just for construction.

Currently Warren County leaders say the area is 80 percent residential and only 20 percent commercial, and they think that needs to change.

I can't see why the Iowa Racing and Gaming Commission would approve a license for a casino in Norwalk. Obviously almost all the business generated would come at the expense of Prairie Meadows in Altoona (on the eastern edge of the Des Moines metro area) or from the Lakeside Casino in Osceola (about a 25-minute drive south of the metro).

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