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Analyst: Iowa casinos are increasingly local attractions

EMMETSBURG — Casinos in Iowa increasingly are local attractions and not destinations, bolstering the potential of how much new money a downtown Cedar Rapids casino could generate for the state, a market consultant told state gambling regulators meeting here Thursday.

Brent Wittenberg, vice president for Minneapolis-based Marquette Advisors, told the Iowa Racing and Gaming Commission that participation rates have peaked with the exception of local markets where new casino development or expansion has occurred.

“The drawing power of Iowa casinos is increasingly local,” he said.

The five-member commission is tasked with deciding whether Cedar Rapids gets a casino license and — if so — which of three proposals it accepts. That decision is expected Nov. 15.

Thursday, the regulators heard from Marquette and WhiteSand Gaming of Atlantic City, which both studied the potential market impact of the three options:

• The $40 million Wild Rose Cedar Rapids next to the Skogman Building on First Avenue Southeast with 15 to 20 table games and 600 to 700 slot machines;

• The $105 million Cedar Crossing Central attached to the DoubleTree Hotel on First Avenue Northeast with 15 table games and 550 slot machines;

• The $165 million Cedar Crossing on the River on vacant land at First Avenue and First Street Southwest with 30 table games and 840 slot machines.

The commission in 2014 rejected an application virtually identical to Cedar Crossing on the River by a 4-1 vote, citing market study predictions of taking away too much share from other casinos, notably the Riverside Casino & Golf Resort.

Commissioners probed why Marquette’s projections changed so much since 2014, when it also studied the market impact for Cedar Crossing and Wild Rose Jefferson, which was ultimately approved.

In 2014, Marquette concluded a Cedar Crossing would generate $81 million in adjusted gross revenue by 2017, including $59 million or 73 percent from cannibalizing business from others.

By comparison, the new report predicts Cedar Crossing on the River would generate $47 million in new gambling revenue by 2022, while the other 45 percent of its revenue would come from existing casinos.

The two smaller proposals — Cedar Crossing Central and Wild Rose Cedar Rapids — would generate $25 and $23 million, respectively, and cannibalize 56 percent each from other casinos.

Wittenberg explained the difference by saying contemporary data analysis helps show they underestimated the rate of local participation.

Linn County residents visit casinos 3.5 times per person per year, while residents in communities already with casinos — including Dubuque (12 times a year), Waterloo (7.5 times per year), Davenport/Bettendorf (7.5 times per year) and Council Bluffs/Omaha (5.9 times per year) — gamble more frequently.

Marquette upped its prediction to a “reasonable” six times per year per Linn County resident, and reduced the effect of cannibalization, which changed the outlook, Wittenberg said.

“We anticipate this to be a much more localized customer base even compared to where we were three years ago,” he said. “This is really the trend in Iowa today. We expect far fewer customers from 45 minutes and beyond.”

WhiteSand, on the other hand, had a dour outlook for the potential for drawing new customers. Its report found the three proposals overstated annual revenue projections by 13 to 42 percent; none would generate more than $6.8 million in new gambling revenue for the state, it found, and each would cannibalize at least 89 percent from surrounding casinos.

Jim Nickerson, WhiteSand vice president, pointed to recent case studies of new casinos built in Kansas and upstate New York where revenue predictions were overstated in some cases by twice as much as what has come to fruition.

The greater discretionary income in urban areas is offset by more entertainment options, and people are less likely to fight traffic to attend the casino, he said.

Meanwhile, the casino proposals don’t include a hotel, which would help keep people in town longer, he said.

Iowa has 19 casinos, which covers much of the state. The novelty has worn off, he said.

“People say they will come more times and spend more money, but there’s a fixed budget people are going to spend on entertainment,” he said. “We don’t see that expanding.”

The would-be casino developers were critical of the WhiteSand study.

“Somebody tell me where that has happened anywhere,” said Tom Timmons, chief operating officer and president of Wild Rose Entertainment. “You could build a casino across the street (from another casino) and you wouldn’t have 90 percent cannibalization.”

Timmons pointed to the impact of other recent casinos, including Rhythm City in Davenport and its impact on nearby Wild Rose Clinton being less than predicted. Wild Rose Jefferson similarly has had less impact than expected on other casinos, including Prairie Meadows in Altoona.

A new casino can cause a dip for surrounding casinos, but the data shows those numbers bounce back, he said.

Jonathan Swain, an official with the Cedar Crossing proposals, noted the gap between the two studies, and credited Marquette as having experience in the Iowa market while WhiteSand does not. The tone of questions from commissioners were pretty positive, he said.

“We’ve been talking about this as an opportunity rather than a threat,” he said. “Cedar Rapids has one of the lowest participation rates of anywhere in the state and it’s the second largest market.”

Jeff Lamberti, a commissioner from Ankeny, posed the most questions during the meeting. He considered the WhiteSand study “wildly different” from previous studies and “significantly pessimistic.”

“We’ve never seen this in Iowa, so the question will be whether this is new evidence,” he said.

Richard Arnold, commission chairman from Russell, said the Marquette study is “more in the ballpark” of how he sees the market, but said he doesn’t know how he will vote in November.

Dolores Mertz, a commissioner from Algona, told the consultants she believe the agricultural economy plays a big factor in the ups and downs of casinos, and questioned whether that was considered.

“When farmers have money, they spend money,” she said. “When they don’t, they don’t.”

The market studies are not particularly an important factor as she considers a license, she said. She was the lone vote in favor of a Cedar Rapids casino in 2014, and appears to be in favor again.

“The second largest city in the state deserves something,” Mertz said, adding she thinks it will come down to the two smaller casino plans.

Online Editor / file photo 

Sara and Justin Koester of Cedar Falls talk with their daughter Olivia, 3, during a ladder truck demonstration at a recent Mason City Fire Department Open House.  

Mason City Fire Department open house is Sunday
 John Skipper

The annual Mason City Fire Department Open House, a fun and educational experience for kids and adults, will be from 1 to 4 p.m. Sunday at the Fire Department headquarters.

Those attending will get the chance to meet firefighters, get a close-up look at fire trucks, fire hoses and other equipment and see some demonstrations.

The open house is the culmination of National Fire Prevention Week Oct. 8-14 in which Fire Department personnel visited schools, gave tours and educated the public about fire prevention. The theme for the week was "Every Second Counts: Know 2 Ways Out."

US closes trucking firm tied to smuggling case
APNewsBreak: US closes trucking firm tied to smuggling case

IOWA CITY (AP) | Federal safety regulators have shut down a troubled Iowa trucking company that owned the semitrailer involved in a human trafficking case in which 10 immigrants died in Texas.

Pyle Transportation was placed under an "out-of-service order" Monday by the Federal Motor Carrier Safety Administration after a review found the company's safety rating was so unsatisfactory that it was unfit to remain in business, agency spokesman Duane DeBruyne confirmed to The Associated Press.

Dozens of immigrants were found packed inside a Pyle-branded semitrailer in July in the parking lot of a San Antonio Walmart. Eight people were found dead inside, and two more died after being hospitalized. The driver, James "Bear" Bradley Jr., 60, of Clearwater, Florida; and Pedro Silva-Segura, 47, of Laredo, Texas, are charged with several offenses, including conspiring to transport and harbor immigrants who are illegally in the U.S. for financial gain.

Pyle Transportation owner Brian Pyle has denied knowledge of the alleged smuggling conspiracy. He has said that he sold the trailer and hired Bradley, who had worked previously for the firm, as a contractor to drive it to Brownsville, Texas, to deliver it to the buyer.

Bradley denied knowing anyone was inside the trailer, saying he heard their pleas only after he stopped to urinate. But at least 39 people were packed inside, most of them Mexicans who had crossed the United States' southern border. The trailer's cooling system was broken, and occupants say they fought to breathe and tried in vain to get the trailer to stop as it headed north in 100-degree heat.

While the company has not been directly implicated in the case, it drew unwanted attention to Pyle's history of safety violations and failure to pay taxes and wages owed to some drivers. Several former employees said they were pressured to drive too many hours without rest, to falsify their logs to conceal those violations and to transport overweight loads on unrealistic deadlines.

Federal regulators launched a compliance review into Pyle, which had been operating with a "conditional" safety rating due to prior violations, after the human trafficking case.

Information released this week shows the company was cited for knowingly allowing an employee to drive with a disqualified commercial driver's license and permitting a driver to make a false report regarding his duty status. It's unclear whether those violations were tied to Bradley, whose commercial driving privileges had been disqualified by Florida for failing to file updated medical information.

DeBruyne, the FMCSA spokesman, said he couldn't comment on specific findings. He said the out-of-service order went into effect after a 60-day notice period, and the company has appeal rights through the agency.

A woman who answered the phone at the company's office in Schaller, a small town in northwest Iowa, declined comment. Pyle Transportation traces its history there to 1950 through three generations. The company employed 18 drivers who logged an estimated 830,000 miles in 2013, the latest for which figures were available, often hauling meat and produce to and from Texas.

Even as the company faced scrutiny following the immigrants' deaths, federal data show that enforcement officers conducting inspections on Pyle trucks continued to find safety violations, from Utah to Missouri.

In August and September, drivers were found to have been working beyond the number of allowed hours, failing to log their hours, carrying overweight loads and driving with tires and brakes that weren't properly maintained. A driver was cited after an August crash in Texas that required his truck to be towed but left no one injured.

It's not the first time the family has faced an order to stop operating. A predecessor company, Pyle Truck Lines, was put out of service in 2002 for failing to pay a fine. The company and its then-owner Michael Pyle had pleaded guilty the prior year to federal charges for falsifying records. Michael Pyle's children took control of the business a few years later when Pyle Transportation formed.

Online Editor / ARIAN SCHUESSLER, The Globe Gazette 

Diamond Jo Casino in Northwood.

Hancock County names four candidates for attorney vacancy
 Ashley Stewart  / 

GARNER | The Hancock County Board of Supervisors is one step closer to hiring the county’s new attorney.

On Wednesday, the supervisors named Todd Chelf, Scott Miller, Jonathan Murphy and Blake Norman as finalists for the attorney position after reviewing nine “really good” applications received by Oct. 6. The candidates will be interviewed Monday, Oct. 16, and Tuesday, Oct. 17.

“We don’t want to drag our feet on this because David is leaving Nov. 1,” said Sis Greiman, Hancock County Board chairwoman.

In September, Hancock County Attorney David Solheim submitted his letter of resignation, effective Nov. 1, to the Hancock County Board stating he and his wife were returning to Nebraska to be closer to family.

“Serving as county attorney was the best job I’ve ever had — and may ever have again,” he wrote. “I was fortunate to work with outstanding members of law enforcement and a group of competent and dedicated public officials and employees. I learned something new from them every day.”

Solheim was appointed as Hancock County attorney in 2013 after serving as the deputy county attorney in Washington County, Nebraska.

On Sept. 18, the supervisors unanimously voted to appoint the county’s next attorney instead of holding a special election. Whoever is selected as the county attorney will have the opportunity, if they wish to remain in the position, to run in the November 2018 election.

Greiman said Solheim and the Winnebago County attorney have offered to assist the county throughout its transition.