Originally Posted Online: Jan. 23, 2013, 10:10 pm
Last Updated: Jan. 24, 2013, 9:35 am
Casino consultant favors interstate location
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By Stephen Elliott, email@example.com
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Photo: Todd Mizener|
Ken Mimmack, President and CEO of Ingenus Management, of Brainerd, Minn., delivers his company's proposal for a land based casino in Davenport in front of one of the casino's design drawings during a public meeting at the River Music Experience in downtown Davenport on January 7, 2013.
Davenport's casino consultant sees more revenue and expansion potential with an interstate casino.
Gary Buettner, former chief financial officer for Jumer's Casino Rock Island, reviewed three casino proposals with Davenport City Council members Wednesday night. Davenport officials, who plan to buy Rhythm City Casino from Isle of Capri for $46 million, hiredMr. Buettner in December to help them select a developer of a city-owned, land-based casino.
The location of the casino has been a major question.
Davenport officials are considering proposals by Ingenus Management/Consulting, of Brainerd, Minn., and Restoration St. Louis, of St. Louis, Mo. A third proposal, by Atrium Holding Co., of Alpharetta, Ga., did not make the final consideration, Mr. Buettner said Wednesday.
Mr. Buettner said the Ingenus proposal to build a casino at the intersection of Interstates 80 and 280 has the greatest revenue potential for the city, as well as a greater ability for expansion.Ingenus also proposed building a smaller casino downtown; combined, the two casinos would cost $105 million.
Mr. Buettner said the $155 million downtown proposal by Restoration St. Louis would not make as much revenue as the interstate casino proposed by Ingenus.
"A highway location offers a much better opportunity for growth," Mr. Buettner said. "You have the opportunity to have a casino on the most desirable highway available to most -- I-80. The traffic that goes by that prospective property is so attractive to a casino industry."
Mr. Buettner said there is about $215 million in gross gaming revenue annually among the three Quad-Cities' casinos: Jumer's in Rock Island, Rhythm City and Isle of Capri in Bettendorf.Jumer's has become the top money maker since moving off the river in downtown Rock Island in 2008 to its site on I-280 and Illinois 92.
Mr. Buettner anticipates the Quad-Cities market gaming revenue would increase to $235 million with an interstate location in Davenport.
"That growth is substantially higher than I anticipate downtown ($6 to $10 million)," Mr. Buettner said.
He also estimated gross gaming revenue for Ingenus would be around $91 million annually, with net revenues of $11 million, compared to $67.23 million annually for Restoration St. Louis, with net revenues of $10.5 million.
Net revenues will depend on how the projects are financed, he noted.
Ald. Bill Edmond, 2nd Ward, said he supports the Ingenus plan for an interstate casino.
"We could crunch numbers for another six months," he said. "All we do is wear the ink off this paper.
"It's pretty obvious there's two numbers here -- $91 million and $67 million.What more do you need? I think it's time this council direct our negotiating committee to sit down and start negotiating with Ingenus to come up with a development agreement."
Ald. Mike Matson, 8th Ward, also supports the Ingenus proposal because it provides more revenue options for the city.
"The interstate would provide us more money to take care of the debt and do other things that we want to do for the community," Ald. Matson said.
"Cash is king," said Ald. Jeff Justin, 6th Ward, who also seemed to lean towards an interstate casino.
Mr. Buettner said Restoration St. Louis is proposing a private financing package that includes an equity position for the city. Ingenus proposes a landlord/management position, with the city as the tenant operating the casino and paying Ingenus as a landlord.
City officials have said they could be looking at $46 million to $51 million in general obligation bond debt, plus another $30 million in casino equipment investment.
Mayor Bill Gluba said he wants to study Mr. Buettner's numbers, noting he has helped the city immensely in putting apples to apples. However, hequestioned Mr. Buettner's estimate of 75 percent of the Rhythm City customers driving to an interstate casino in Davenport.
"I want to feel a little more comfortable with that 75 percent going out to a facility on Interstate 80," Mayor Gluba said. "We've already got a lot of people, senior citizens, who love to go to that downtown facility.
"You could have two developers; you could have the same one," he said. "At this point, we'll see what happens."