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New Casino Could Be A Gamble For Small Businesses

Conceptual drawing of casino.Image provided by Warren County Economic Development

Conceptual drawing of casino.
Image provided by Warren County Economic Development

Warren County and Wild Rose Entertainment announced in February plans to build a casino north of Norwalk citing the many advantages it would bring to the county.

However, a casino, like the one proposed, provides not only positive benefits but also negative drawbacks for small businesses.

Eighty percent of Warren County’s working age population commutes out of the county everyday for work. As a result, these commuters spend a lot their money outside of the county. Jason White, executive director of Warren County Economic Development Corporation says the casino would bring back that lost revenue.

“It’s a $100 million project that has restaurants; it has a bowling center; it has a hotel; it has a casino; it has a convention center for entertainers and shows,” White said. “So we are able to do something on a consistent basis that drives traffic into Warren County. As a result of that increased in flow of people, means more people spend more dollars here rather than leave the county and spend dollars somewhere else.”

At the same time, more entertainment options could make the casino more of a threat to small businesses.

“It probably would make (the casino) more of a competitor because it’s not just about gambling,” Jim Palmieri, professor of economics at Simpson College, said. “Having the bowling alley and all of that, it increases the appeal across a larger market. If it’s just a casino, it’s only adults without children, which really limits who is going to come.”

Another benefit the casino provides is the revenue it would generate for the county.

“If it’s a $100 million facility, we know that 4.5 percent of those total dollars will be allocated to cities, non-profits and schools on a per capita or per pupil basis,” White said. “So you’ll have $1.5 million that will go to non-Norwalk cities, because Norwalk has its own benefits for having the project there so they’re not counted. So $1.5 million will be distributed to cities. $1.5 million will be distributed to non-profit organizations that compete competitively for grants. And $1.5 million will be distributed to schools.”Table Info

The money distributed to cities can be used any way those cities see fit. If a city wants to use its portion of the revenue for street repairs, it could reduce the amount of property taxes needed for street repair.

“In Iowa, businesses pay the lion’s share of property taxes out of the homeowners and ag; businesses pay that,” White said. “So it opens up the opportunity that there may be commercial property tax relief extended to businesses, which will improve their overhead and bottom line.”

The extra revenue the casino creates for the county depends on whether a big enough of a demand for the casino exists.

“The big question becomes, I think, can the area support another casino?” Palmieri said. “We’ve already got Prairie Meadows in Altoona. We have the casino in Osceola. Can another casino in between those two really survive? I really don’t know. I don’t know if there is a demand for it. “

GVA Marquette Advisors International Hospitality and Gaming Consultants conducted two market studies in 2009 for the Iowa Racing and Gaming Commission and found a demand for another casino did exist in Central Iowa.

According to Palmieri, casinos also generate a lot of car traffic. Palmieri says this could be a benefit for local businesses if its location was close to those businesses.

“People drive to (casinos) to the extent that when they come or when the go, they look around and say, ‘Oh, look there’s a store. Maybe we’ll stop in there’,” Palmieri said. “To that extent, I could see it helping, but if there’s nothing else around it, and it’s just a casino, then that impact is probably less. It’s just going to be there for itself and not have an impact otherwise.”

Finally, the casino would create 400 to 600 jobs with its construction and in the entertainment complex. More local jobs would mean more money to be spent at local businesses. These jobs would also be a special benefit to local contractors in Warren County.

“We also projected that 95 percent of the contractors that would be used to build the project will be from Warren County,” White said. “There will be a lot of contractors that build a $100 million facility.”

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About Hanna Russmann

I am a graduate of Simpson College with a degree in Multimedia Journalism.

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