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Gambling in Iowa - From Davenport to Council Bluffs

posted on August 21, 2008 at 2:21 PM

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Every year the Iowan economy enjoys the flow of more than 1.4 billion dollars worth of gambling revenue. The state collects more than 275 million dollars in taxes each year from gaming.

That money finances all sorts of activities that benefit Iowans. It also influences public policy that governs the structure and conduct of the industry.

In the 25 years since it was first legalized to accommodate dog and horse racing, gambling has grown from a modest recreation to a full blown Iowa institution. Racing, actually didn’t work out so well, but once the riverboats docked, the first not far from where will sit, gaming in Iowa surged.

Fanfare welcomed the President to Davenport on April 1, 1991. Bands, balloons and brass blared the arrival of Iowa's first riverboat casino. At the time, gaming was seen as a way to stimulate the economy by tapping the region’s riverboat history.

Ehrecke: "Let’s rewind the tape back to 1989, when we were coming off the heels of a farm crisis. Certainly some of the communities were very hard hit with manufacturing and the downturn of jobs and the like. And really the legislative leaders at the time said: ‘Let’s find something that would be a catalyst for economic development, create good jobs, generate tourism dollars.’"

But what was touted as a tool of tourism, the ripples from riverboats became a succession of waves, each expanding Iowa’s gambling industry geographically, financially, and politically.

The first wave of gambling came in the spring of 1991 to Dubuque, Bettendorf, Davenport, Burlington, Clinton and Sioux City.

Indian casinos, not under state regulations began operating in Sloan, Onawa, and Tama in 1992.

In 1994 revenues soared when limits on wagers and losses were lifted. Gambling was no longer a penny- ante recreation comparable to bingo, it was serious business.

Revenue for fiscal year 1994 topped 50 million dollars. After the limits were removed, revenue exploded 400% to 250 million dollars and doubled the next year as new facilities came online. But the activity was still confined to the big rivers bordering the state.

The second wave of gambling came in these areas: Marquette, Council Bluffs, Altoona, Dubuque and Clarke County. And struggling racing operations were allowed to have casino gaming in Dubuque, Des Moines and Council Bluffs.

In the late 90's the number of licenses held steady, but casinos expanded their size.

Then in 2004 came the next wave of growth. Casinos were allowed to be more on land, and less on water as originally conceived. Gaming facilities in Emmetsburg, Worth County, Waterloo and Riverside and were operational by 2006.

Since table limits were lifted and the second round of expansion, Iowa’s casino industry has grown 4600%. Industry advocates insist the boom has benefited the state.

Wes Ehrecke: “I think if you look now – fast forward sixteen years later, I think we’ve exceeded those expectations in an extraordinary way. But again, the kind of expectations are that it has to be a catalyst for economic development. It generates tourism dollars. It’s putting it beyond just a gaming facility. Now, with the hotels and convention centers, great restaurants, spas, salons, bowling alleys, golf courses, you can’t just put one of those in every corner and I don’t think we should. It’s really going to benefit not only those communities, but the outlying areas, because of the charitable contributions that are going on throughout the entire state."

Skeptics argue that the gambling revenue has been siphoned from local communities into the coffers of the state’s general fund and the pockets of out of state owners. About two-thirds of the revenues go to out-of state owners of the casinos.

Proponents counter that the bulk of the money is coming from out-of-state players.

Ehrecke: “I think that certainly to be competitive – And we like to think of ourselves as Iowa’s largest tourist attraction collectively, with over 22.5 million visitors per year. And over 65 percent – or up to 65 percent of the people are coming from out of state. You have to continually upgrade your facility.”

The location of some of the larger facilities buttresses that claim. In the fiscal year that ended June 30th, Horseshoe Casino and Bluffs Run Greyhound Park in Council Bluffs brought in 198 million dollars in adjusted gross revenue, the highest of any gaming facility in the state. Prairie Meadows in Metro-Des Moines was second with 192 million. The next highest two casinos were both in Council Bluffs.

Two properties, owned by an Iowa group, were at the bottom of the state's casino ledger. Wild Rose in Emmetsburg brought in 27 million dollars in FY2008. The next lowest total is in Clinton, but that revenue could rise with its move to a land casino in the last six months.

This week, the Iowa Racing and Gaming commission named four finalists to conduct a feasibility study of more gaming. After the report is made the commission could decide to open up new licenses. Jack Ketterer is Administrator of the Iowa Racing and Gaming Commission. His comments on this program in February (2008) suggested the industry in Iowa may be reaching its maturity.

Jack Ketterer: "Well, I think we’re starting to see some evidence of saturation now. We’ve licensed an additional four casinos out of ten applications two years ago, and we’re seeing that although the revenues in total are continuing to rise, the same store, if you will, facilities have started to show some flattening out or even a slight decrease."

Tags: boats budgets Davenport economy gambling Iowa money tourism

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