By DERRICK GINGERY, Greater Fort Wayne Business Weekly
derrickg@fwbusiness.com
About 30 percent of the estimated revenue generated by a Fort Wayne casino would come from Ohio, a state that is considering adding casino gambling to racetracks and allowing it in its four largest cities.
Researchers commissioned by the city of Fort Wayne indicated casino efforts in Ohio could cut into profits generated by a casino in Fort Wayne, if built. A proposal allowing casinos in Toledo, Cincinnati, Cleveland and Columbus could go on the November ballot in Ohio, according to BloodHorse magazine.
Ohio's horse-racing tracks also are developing a proposal that would allow slot machines at their facilities, the magazine reported this month.
Visitor loyalty to a Fort Wayne casino, if built before others in Ohio, may be important because the areas from which the facilities would attract patrons would overlap.
"The timing of an opening of a gaming facility in Fort Wayne may be critical to its eventual viability," Jeff Lilly, a consultant with Third House Advocacy Group, told city leaders at a news conference March 12. "If established first, a Fort Wayne casino will be able to tap the primary gaming market that currently is not being serviced ... and will affect the business feasibility of potential competitors in neighboring states."
The city of Fort Wayne commissioned Indianapolis-based Third House and the Community Research Institute at Indiana University-Purdue University Fort Wayne to study the effects of a potential casino in Fort Wayne. CRI looked at the community and social effects, while Third House examined the financial impact.
The Third House report dealt only with gaming machines like slots and electronic blackjack. It did not include table games like craps and baccarat.
Mayor Tom Henry has asked the General Assembly to allow a citywide referendum to decide whether a casino should be allowed in Fort Wayne. One possibility is building a new facility downtown containing slot machines from Hoosier Park in Anderson. It already has an off-track betting facility in the city.
Henry's spokesman, Ozzie Mitson, said in an e-mail language for a referendum is being crafted and likely will ask residents whether gaming in general should be allowed in the city.
Henry has not taken a position on the issue.
About 70 percent of the total estimated gaming market in northeast Indiana and northwest Ohio would come from outside Allen County, according to the Third House study. Allen County residents would spend $56.1 million to $74.8 million at the casino a year during a "mature" year of operations, likely the third year after opening, according to the Third House study.
Another $54 million to $72 million a year would come from a 12-county region in northwest Ohio, almost as much as Allen County.
The primary market for attracting gamblers is within 50 miles of the casino, according to the Third House report. The closest Indiana casinos are 85 and 100 miles away, leaving the Fort Wayne market mostly untapped.
The Community Research Institute report cited a 2007 study that found the highest annual spending per person came from those living within 0 to 10 miles of a casino: $528 per year. Those living 50 to 75 miles away spent $67 a year. That figure dropped by more than half for those living 75 to 100 miles away.
The Third House report found two counties on the fringes of the Fort Wayne market are expected to generate the most revenue outside of the host county. Allen County, Ohio, which includes Lima, was estimated to produce the second-most revenue for a Fort Wayne facility at between $13.5 million and $18 million a year. Lima is about 62 miles from downtown Fort Wayne.
Kosciusko County, which includes Warsaw, would generate $9.8 million to $13 million a year. Warsaw is 44 miles from Fort Wayne.
Third House also indicated Toledo is a potential gaming competitor because it is 125 miles from Fort Wayne. A large facility at the Toledo horse-racing track would attract Ohio gamblers who otherwise would head to Fort Wayne. Lima is about 80 miles from Toledo, leaving its residents to chose between two facilities almost equidistant from each other.
Native American casinos in Michigan also were considered competitors, particularly a new facility under construction in Battle Creek, Mich. No Michigan counties were included in the potential Fort Wayne gaming market.
Lilly said Fort Wayne remains underserved by the gaming industry, which would provide an operator an advantage even during a recession.
"Such a unique situation may allow expansion in the Fort Wayne market in the face of stagnant or declining revenue in other gaming markets within Indiana," the Third House report stated.
But along with the potential boost to the local economy comes social problems tied to casinos, such as pathological gambling, domestic violence and drug and alcohol abuse. CRI Director John Stafford said his research found there is debate among experts whether gambling causes increased crime and substance abuse.
"If you're looking for a bright-light conclusion, you're not going to find it in that report," Stafford said.
CRI also reported there is evidence of a "substitution effect," in which patrons shift their spending from other entertainment venues such as restaurants and movie theaters to a casino.
Gas stations showed an overall gain in sales, according to a 2004 study of Illinois casino effects cited in the CRI report, but business in all industries located five to 10 miles from the casino lost $195 for every $1,000 increase in casino revenue. Businesses 10 to 30 miles away lost $243.
Another study cited by CRI, published in 1998, found substitution rates among casino patrons ranging from 35 percent to 83 percent of discretionary funds.
CRI also stated in the report there may not be as much discretionary spending available for a casino in addition to other existing entertainment. Per-capita personal income in several counties in northeast Indiana, northwest Ohio and southeast Michigan remained relatively unchanged before the current economic crisis.
"In many studies, the problems associated with gambling have been accepted as long as there has been a cost benefit significantly higher than the cost of the problems," CRI stated in the report.
"If one accepts the premise that the casino entertainment business can grow to meet the demand, then one has to factor in the availability of discretionary or entertainment dollars. Additionally, since this area is not a major tourist destination, the dollars have to come from the base ..." the report said, referring to the local gaming market.