A pair of studies examining the Iowa gaming market – and the impact of a proposed new Cedar Rapids casino complex on that market – are painting a mixed picture, extolling several virtues of the new casino proposal while warning of an overall downturn in Iowa casino proceeds and the revenue “cannibalization” of a new casino on existing casinos, particularly in Eastern Iowa.
The two studies, conducted by Marquette Advisors of Minneapolis and The Innovation Group of New Orleans, were commissioned by the Iowa Racing and Gaming Commission, and were submitted to the IRGC Dec. 30.
Both studies will be reviewed by IRGC commissioners at the commission’s regular meeting Jan. 23 at the Wild Rose Casino & Resort in Jefferson. At that meeting, the commission is also expected to vote on a petition seeking to block the commission’s consideration of a Linn County casino license. The petition for declaratory relief, filed Nov. 8 by the Riverboat Casino and Golf Resort and the Washington County Riverboat Foundation, claims that the wording of the 2021 Linn County ballot measure that permanently authorized gaming in Linn County was faulty under Iowa state code and that, as a result, the IRGC “lacks authority to issue a gambling games license in Linn County.”
The IRGC plans to issue its decision on a Linn County casino gaming license at its meeting Feb. 6 at Prairie Meadows in Altoona.
According to the The Marquette Advisors study, Iowa’s casino market is mature, with 19 commercial casinos and four tribal casinos already in operation. It includes profiles of each of the state’s 23 casinos and notes that Iowa is considered a “slow-growth” market in terms of population.
“With casinos spread across the state, casino gaming is a well-established industry, and most Iowans can reach one or more casinos within a relatively short drive,” the report says. “As such, individual casino markets are relatively tight.”
The study also indicates that the state’s gaming market is heavily influenced by economic conditions, such as population and income growth. It notes that Iowa’s net farm income is down nearly 50% over the past two years, and with inflation stretching consumer budgets, “many are allocating smaller amounts to leisure and entertainment spending, including casino gaming.”
According to the study, Iowa’s existing casinos are adequately serving the needs of the state’s gaming population. “From our analysis we have not identified any specific markets in Iowa which appear to be underserved in terms of their accessibility to casino gaming,” the report says. “We expect that the addition of new facilities, such as that proposed for Linn County, would precipitate local increases in gaming activity, at the same time triggering a redistribution of market share among current casino operations.”
The study says that the proposed $275 million Cedar Crossing Casino in downtown Cedar Rapids “is attractively designed and well located, such that we expect it will be successful in drawing large numbers of Iowa gamblers, especially ‘locals’ along with smaller numbers from the broader region and tourists.”
“We expect the new casino would become the dominant gaming facility with respect to the Linn County (Cedar Rapids) market and will be very competitive with respect to other nearby markets, especially Johnson County (Iowa City),” the study says.
Cedar Crossing would generate $118.1 million in gross revenue by fiscal year 2029, the study projects.
However, “The level of cannibalization will be substantial for the nearby Riverside, Isle-Waterloo and Meskwaki casinos,” the report says, and estimated to reduce revenue at nearby casinos by $68 million, primarily affecting Riverside Casino (a loss of $34 million, 26% of its adjusted gaming revenue or AGR) and Isle-Waterloo (a loss of $8.8 million, or just under 10% of its AGR).
After rebounding in the years immediately after the COVID-19 pandemic, gaming participation rates and adjusted gross revenue has been declining at Iowa casinos since 2023, the report says.
Still, gaming remains a significant revenue source for the state. If Cedar Crossing were approved and operated, casinos would contribute $346.9 million in Iowa taxes by fiscal year 2029.
The Innovation Group study also included detailed data on each existing Iowa casino.
It used a drivetime gravity model, which estimates casino patron behavior based on travel distance and competing venues. It also accounted for new and upcoming casino developments in neighboring states, including Nebraska, Illinois, and Wisconsin, which are expected to intensify competition for Iowa’s casinos.
The study reviewed two previous gaming studies assessing the impact of a proposed Cedar Rapids casino, including a 2024 study by the Convergence Strategy Group and a 2017 study by TMG Consulting, and concluded that both studies used flawed methodology, overstating a Cedar Rapids casino’s contribution to net new revenue and understating its impact on existing casinos.
According to the Innovation Group study, the Iowa gaming market was valued at $1.97 billion in the 2024 fiscal year. Assuming a new Cedar Crossing casino begins operation in fiscal year 2027, the state’s gaming revenue is projected to grow to $2.23 billion by fiscal year 2028, with increased competition from casino developments in Nebraska and Illinois
Similar to the Marquette Advisors study, it indicated that Cedar Rapids showed strong casino market potential, with a projected annual net gaming revenue (NGR) of $116.6 million if a casino were introduced.
That revenue would result in a net state revenue gain of $60 million, despite a projected $56 million cannibalization of existing casinos, according to The Innovation Group report.
Finally, the study identified increased tax revenues and regional economic benefits from both construction and ongoing operations of a new casino, with notable job creation and the spurring of economic activity in the area.
Jonathan Swain, of Peninsula Pacific Entertainment and president of the Cedar Rapids Development Group that would develop the Cedar Crossing Casino, said he was encouraged by the conclusions of the two studies.
The statewide market studies by Marquette Advisors and The Innovation Group each show that a Linn County casino will bring more than $60 million in new gaming revenue to Iowa,” Mr. Swain said in a prepared statement. “They also show that potential market impact is expected to be well below what was projected when the Iowa Racing and Gaming Commission last approved a new gaming license in 2014.
“While we look forward to further reviewing and analyzing their findings, we also stand by the data, method and results of the market study conducted by Convergence Strategy Group (CSG) in July 2024, which was part of our joint application to the IRGC. CSG used new mobile phone-based technology to gather data unavailable in 2017 or 2021, the last time studies were conducted in the state. We’re focused on the final steps of the application process and, if granted a gaming license, to finally make Cedar Crossing Casino and Entertainment Center a reality that will bring millions in new revenue and tourism dollars, provide life-changing impact to area nonprofits, and raise the bar for entertainment in Iowa.”
Attempts to reach Iowans for Common Sense for comment were unsuccessful. Iowans for Common Sense is an organization launched this fall, opposing the Cedar Rapids casino license application and seeking an moratorium on new casinos in Iowa.
