Analysis: Cape Girardeau casino would be best for state revenue

A market analysis prepared for a casino company operating in two Missouri cities found that Cape Girardeau is the location with the best chance of producing new revenue for the state without taking business away from other operators.

Ameristar Casinos Inc., which operates in St. Charles, Mo., and Kansas City, said in a news release that the analysis shows a casino in Cape Girardeau has the potential to generate $87 million in gross revenue, which would make it the biggest grossing casino outside the state's two major metropolitan areas. Ameristar also operates casinos in Nevada, Nebraska, Iowa, Indiana, Mississippi and Colorado.

The analysis was done by the Ameristar financial staff, said Troy Stremming, senior vice president of governmental relations and public affairs. It compared the effect on state revenue and other casino operations of potentially locating a new gambling boat in Cape Girardeau, Sugar Creek, Mo., or near Chain of Rocks north of St. Louis.

While the report identifies $87 million in gross revenues for the Cape Girardeau casino, the smallest figure of three casino locations studied, most of the money spent at either Sugar Creek or at Chain of Rocks would come at the expense of existing casinos.

Only a small portion -- $10 million -- of the Cape Girardeau revenue would come from another casino, and the report identifies Harrah's in Metropolis, Ill., as the loser.

The report indicates that Cape Girardeau could support a casino with 1,000 gaming positions, which means slot machines or seats at table games.

The study uses assumptions and models that are standard in the industry, Stremming said. As other casino operators prepare studies as well, the results should be similar, he said.

"We are using things that are pretty objective when you do one of these studies," Stremming said.

Cape Girardeau is in competition with Sugar Creek, Chain of Rocks and Louisiana, Mo., among others, to obtain the gambling license that will be surrendered by Pinnacle Entertainment when it closes the President Casino in St. Louis. The Missouri Gaming Commission will meet Wednesday in Jefferson City to discuss deadlines for making applications.

Missouri law allows only 13 casinos to operate in the state. Most are in Kansas City or St. Louis, but casinos also operate in St. Joseph, Mo., LaGrange, Mo., Boonville, Mo., and Caruthersville, Mo. The commission wants casinos seeking the license to conduct economic impact studies and submit them by July 15.

The commission's chairman, former state senator Jim Mathewson of Sedalia, has said he wants to provide a full opportunity for casino companies to compete for the license but has said generating revenue for the state as quickly as possible will be a major consideration. The commission has indicated it would like to choose an applicant by the end of the year.

On June 3, the Cape Girardeau City Council will hold a special work session to listen to casino developers explain why they should be chosen as the city's partner in the development. City manager Scott Meyer could not be reached for comment on the Ameristar report.

The study reports that a Cape Girardeau casino could generate $18.3 million in taxes on casino revenue, all of which would go to a state fund supporting education. The casino would generate another $5.3 million in admission taxes, which are split between the state and the city.

A Chain of Rocks casino with 2,000 gaming positions would generate $150 million in gross revenue, but 65 percent would come from existing casinos in the St. Louis area, the study reported. That would translate into $10.9 million in new casino revenue taxes and $3.2 million in new admission tax receipts, according to the study.

And a Sugar Creek casino with 2,000 gaming positions would generate $125 million in gross revenue, but 75 percent would come from existing casinos in the Kansas City market, the study reported. That means the state would gain $6.5 million in new gambling revenue taxes and $1.9 million in new admission tax revenue, according to the report.

Ameristar has not indicated it is interested in obtaining the available license, Stremming noted. With revenue an important issue for the commission, the report should help Cape Girardeau's argument for locating the casino here.

"The key factor is you are not pulling away existing revenue from operating casinos," Stremming said.

rkeller@semissourian.com

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