Bluffs gambling revenue dips

Things haven't been coming up aces for Council Bluffs casinos lately.

Ameristar Casino was one of the state's biggest losers in terms of gambling revenue, and Horseshoe was knocked out of its spot as the top revenue-earning casino, according to 2009 fiscal year figures released by the Iowa Racing and Gaming Commission last week.

The Iowa casinos came close to holding their own with an average overall income dip of just 0.2 percent. But all three Council Bluffs casinos — which depend heavily on Nebraska gamblers — saw adjusted gross revenue drop more than it has since casinos first opened in the Bluffs 13 years ago.

Adjusted gross revenue is the difference between money wagered and money won at the casinos. In other words, casino revenue is the money lost by gamblers.

Ameristar's adjusted gross revenue dropped almost $12 million, or 6.6 percent, from the 2008 fiscal year. Both Harrah's and Horseshoe casinos saw revenue fall by more than 3 percent for the 2009 fiscal year, which ended June 30.

“I think it's a reflection of the economy,” said Wes Ehrecke, president of the Iowa Gaming Association. “Throughout the country and throughout Iowa, people are just experiencing tightening of their belts.”

This was the second consecutive year — and only the second time ever — that revenue at Council Bluffs casinos decreased from one year to the next. Before last year, gross revenue had consistently grown each year since the casinos opened.

While nine Iowa casinos suffered revenue declines in fiscal 2009, income increased at eight casinos. Prairie Meadows Racetrack and Casino near Des Moines took over the spot of top revenue earner.

The drop in revenue at Bluffs casinos is on par with what is being seen nationally in most gambling markets, said William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. Most casinos have seen a revenue dip of between 4 and 8 percent, he said.

Destination gambling sites, such as Las Vegas and Atlantic City, have had much more dramatic drops, often seeing double-digit declines for several months at a time, Eadington said.

“Their business is much more fly in than drive in,” said Eadington. With fewer companies sponsoring conferences in those cities and budget-stretched families postponing vacations, casinos in those areas have suffered, he said.

The drop in revenue at Council Bluffs casinos could be attributed to more than just a flagging economy, said Jack Ketterer, director of the Iowa Racing and Gaming Commission.

The two casinos showing the largest increases in revenue — Diamond Jo in Dubuque and Wild Rose in Clinton — recently made major changes, switching from dated riverboat facilities to new land-based operations. At the Council Bluffs casinos, no physical improvements have been made since the former Bluffs Run underwent a massive renovation and reopened as Horseshoe in 2006, Ketterer said.

Ameristar put a $100 million expansion on hold in May 2008, citing shaky credit markets. Ameristar representatives did not respond to several messages requesting comment.

Melissa Hardersen, spokeswoman for Harrah's and Horseshoe, attributed the decline to the economic conditions, but said the company is “optimistic about the future.”

The future may be rough for regional casinos like those in Council Bluffs, said Creighton University economist Ernie Goss. The economic recession has affected how much people spend, how far they will travel to gamble, and whether they gamble at all, he said. But an increasing number of casinos will eat away at annual revenue increases of individual casinos, even when the economy rebounds.

“The more casinos you have, they're beginning to cannibalize,” said Goss. “The competition for the casino dollar is just going to be increased.”

Past studies have shown the majority of gamblers at Council Bluffs casinos come from the Omaha area, with the rest coming from other parts of Nebraska and Iowa.

Goss pointed to a 2008 election in Missouri that increased limits on betting in that state, decreasing the likelihood that Missouri residents would travel to a casino in a neighboring state, such as Iowa.

In recent years, the Iowa Racing and Gaming Commission has discouraged applications for new casino licenses. But recent studies ordered by the commission indicated that the Des Moines area could support a second casino. Next week, the group will discuss the studies and vote on whether they should be receptive to applications for new licenses.

Whether Iowa can support more casinos remains to be seen, but compared to other states with commercial gambling, it's not doing too poorly, said Holly Thomsen of the American Gaming Association.

The 12 states tracked by the organization haven't submitted their June 2009 numbers yet, so Thomsen compared revenue from July 2007 through May 2008 to revenue from July 2008 through May 2009.

Of those 12 states, Iowa came in fourth, behind only Pennsylvania, Indiana, and Missouri. Casinos are fairly new to both Pennsylvania and Indiana, which generally means big revenue gains, and Missouri raised its betting limits in 2008.

The revenue decline at Council Bluffs casinos has had little effect on the Iowa West Foundation, which funds its grants using both investment earnings and money from the Iowa West Racing Association, which sponsors the casinos' licenses.

The foundation gets about $8 million annually in license fees from the Bluffs casino operations, said Jerry Mathiasen, Iowa West senior vice president. “Currently, we're on track for the same amount.”

Iowa casinos can hope to be dealt a better hand next year, but there's no guarantee.

“We'll probably see a decline in the coming year as well,” said Ketterer.

Contact the writer:

444-1310, elizabeth.ahlin@owh.com

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