Push for Northwest Iowa Casino Advances
South Dakota worries about money drain amid license application
Four Iowa communities, including one on the doorstep of Sioux Falls, are placing bets with state gambling regulators that new casinos will create jobs and provide a much-needed economic boost.
But some of northwest Iowa’s gains could come at the expense of Sioux Falls and eastern South Dakota.
AnKehl Management, which proposes a $100 million golf and resort complex on the Iowa-South Dakota state line in Lyon County near Larchwood, Iowa, filed the first application for a casino license Monday. That was Iowa’s deadline for accepting license requests.
Casino license applications also were filed Monday by developers proposing casinos in Ottumwa, Fort Dodge and Tama County. Each is supported by a nonprofit community partner.
Dan Kehl, the CEO of Kehl Management, wheeled a cart with boxes of license application documents into the offices of the Iowa Racing and Gaming Commission in Des Moines.
“We feel pretty confident,” Kehl said.
Barring any surprises between now and next spring, when state regulators will decide on awarding casino licenses, he said he’s confident his highly rated project should obtain a license. Studies have shown the casino would drain little money from existing casinos.
Potential to pull money from South Dakota
The casino’s effect on Sioux Falls and South Dakota, however, might be much greater. A report commissioned earlier this year by the Flandreau Santee Sioux Tribe said South Dakota residents will spend $55 million a year on gaming and other activities if the casino and resort is built, and the state will lose $18 million a year in video lottery revenues.
The report also found South Dakota residents would generate $13.5 million a year in gaming-related taxes for Iowa, and resident South Dakotans employed by the operation would pay $800,000 to $1.1 million a year in Iowa income taxes.
Commission Administrator Jack Ketterer said a lengthy process of evaluation will be conducted before the five-member state panel makes any licensing decisions. But he noted that commission members have said that two key factors in their decisions will involve commitments for financing and potential negative effects on existing Iowa casinos. Several commissioners have made it clear they don’t want to grant new casino licenses in places where they could force existing gambling operations out of business.
Two state-paid studies by consultants have said that Iowa’s casino industry is nearing saturation. Both studies have said the Lyon County project would have the best chance for success, drawing heavily from the Sioux Falls metro area.
One of the studies, by the Innovation Group of Littleton, Colo., said the Lyon County project would have the least effect on other Iowa casinos. The Lyon County casino would generate $79 million annually, with $6.5 million from the cannibalization of other Iowa casinos.
Decision expected in spring
Each applicant must provide documentation by Jan. 7 that they have obtained financing for their project, which won’t be easy in tight credit markets.
Ketterer said each applicant is required to submit $55,000 in fees to cover the costs of processing the applications and for criminal background investigations of key people involved with the proposed gambling operations.
The applicants will make public presentations about the benefits of their projects at a commission meeting in March, and state regulators will visit the proposed casinos sites in early April. The commission is expected to decide on awarding new licenses in late April or early May, Ketterer said.
Iowa now has 17 state-regulated casinos and two tribal casinos. The state-regulated casinos generated gross gambling revenue last year of about $1.4 billion, although most have seen recent drops in revenue because of the economic recession.
Source: ArgusLeader.com
