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Economic analysis ranks Cape Girardeau as top casino applicant

This article first appeared in the St. Louis Beacon, Nov. 26, 2010 - Of the three applicants for Missouri's last remaining casino license, Cape Girardeau generated the highest net new casino revenue and gaming taxes, new employment and overall gross domestic product for the state, according to an economic analysis released by the state Friday.

The study said that the Cape Girardeau facility would take the least amount of business away from the 12 casinos now in operation in Missouri.

The state's Department of Economic Development conducted the study, which looked at three scenarios: what it called worst, average and best case, to determine how outcomes would differ given a range of effects on how a new casino would add to the state's revenue or would simply cannibalize customers now gambling at existing casinos.

In all three scenarios, the study said, Isle of Capri in Cape Girardeau came in first. The Casino Celebration proposal near the Chain of Rocks bridge in north St. Louis placed second in all three situations, while Paragon Gaming, in the Kansas City suburb of Sugar Creek, came in third.

The Missouri Gaming Commission is set to meet Wednesday in Jefferson City. At the meeting, it could designate which of the three applicants would get the license -- in legal terms, selecting a candidate for priority investigation. Depending on further action, the license itself would not actually be granted until the casino is completed and ready to open.

Commission Chairman James Mathewson has also said that it is possible the license -- which became available when the President casino in downtown St. Louis closed its doors earlier this year -- may not be granted at all. Missouri is limited to 13 casino licenses under a proposition passed by voters in 2008.

A fourth applicant, for a casino in north St. Louis County near the confluence of the Mississippi and Missouri rivers, dropped out of consideration because it said it could not get the financial commitments it needed in time to meet the commission's schedule.

By the numbers, the report said that the Cape Girardeau casino would bring in $76.2 million a year in new adjusted gross receipts, averaged over seven years -- two for construction and five for operations. The figures include $20.7 million for new gaming and administrative taxes for a total of $55 million in new state GDP. The total of new jobs, including direct and indirect employment, was 726.

For St. Louis, the figures were $56.8 million new adjusted gross receipts, $15.7 million in new taxes, $45.2 million in new GDP and 476 new jobs. For Sugar Creek, the numbers were $21.7 million new adjusted gross receipts, $5.8 million new taxes and $20.2 million new GDP, plus 280 new jobs.

The study noted that although the St. Louis proposal has investment and employment figures that are higher than those in Cape Girardeau and Sugar Creek, "given the proposed location, [it] is not substantial enough to overcome the negative cannibalization effects it would have on existing Missouri casinos. It would, however, have less displacement than Paragon as Illinois casinos bear a good share of the sales impact."

For the Sugar Creek application, the study noted that a casino set to open at the Kansas Speedway in 2012 would "compete strongly for gaming revenue throughout the Kansas City Metro."

Evaluating the St. Louis market, the study said that a smoking ban in Illinois casinos, plus the opening of Lumiere Place and River City casinos in recent years, have dramatically increased Missouri's share of the gambling revenue.

In terms of adjusted gross receipts, the study said:

"The total St. Louis area market AGR has increased at a rate of 2.6 percent per year over the last three years. However, this growth has been lopsided as all increases have been on the Missouri side, which averaged 7 percent a year. Illinois casinos have experienced a loss of AGR at the rate of 9.4 percent per year over the same time period.

"In 2008 St. Louis overtook Kansas City as the No. 1 casino revenue producer in the state. In terms of admissions over the past three years, Missouri casinos have increased by an annual rate of 11.5 percent while Illinois admissions declined by 1.8 percent per year."

As far as the size of the market and the distribution of casinos in the St. Louis area, the study said:

"In the St. Louis area, the casinos are more spread out than in Kansas City but still have a large amount of overlap. The proposed Casino Celebration would have an overlapping 30-mile radius with all other casinos. The new casino's location would be about a 20-minute drive from Alton Belle and Lumiere Place, the nearest facilities. Ameristar and Harrah's would be about 30 minutes away."

The economic analysis is one of several factors that the commission takes into account when deciding who should get a casino license. Others include support from the government of the jurisdiction where the facility will be included; the applicant's financial suitability; the quality and scope of the development; the extent of public support or opposition; and the applicant's experience in managing a gaming operation.

The research, conducted for the state by the Missouri Economic Research and Information Center, reviewed existing data as well as information from existing casinos and the three applicants.

Dale Singer began his career in professional journalism in 1969 by talking his way into a summer vacation replacement job at the now-defunct United Press International bureau in St. Louis; he later joined UPI full-time in 1972. Eight years later, he moved to the Post-Dispatch, where for the next 28-plus years he was a business reporter and editor, a Metro reporter specializing in education, assistant editor of the Editorial Page for 10 years and finally news editor of the newspaper's website. In September of 2008, he joined the staff of the Beacon, where he reported primarily on education. In addition to practicing journalism, Dale has been an adjunct professor at University College at Washington U. He and his wife live in west St. Louis County with their spoiled Bichon, Teddy. They have two adult daughters, who have followed them into the word business as a communications manager and a website editor, and three grandchildren. Dale reported for St. Louis Public Radio from 2013 to 2016.

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