Nebraska's casinos appear to put a dent in Iowa casino revenue
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The launch of state-sanctioned casino gambling in Nebraska appears to be taking a bite out of revenue at two big Council Bluffs casinos, according to the state of Iowa.
Revenue is down this year at Ameristar and Horseshoe casinos, two of Iowa’s top-grossing casinos, state records show.
The American Gaming Association noted this dip in a report on third-quarter revenue published last week.
“In the Midwest,” the AGA said, “traditional revenue at two of Iowa’s three top-grossing casinos in the Council Bluffs market continued to trail last year following the launch of slot gaming in eastern Nebraska in late 2022.”
The revenue dip should please gambling advocates in Nebraska, who for years argued the state should have its own casinos and stop the leakage of gambling dollars to Iowa.
“We’ve been saying this all the time,” said Lynne McNally, chief executive officer of the Nebraska Horsemen’s Benevolent and Protective Association. “The majority of revenue spent in those casinos in Council Bluffs comes from Nebraska residents. It comes directly out of Nebraska’s pocket, and therefore the tax revenue is being accumulated in Iowa. That’s what we’ve been trying to prevent.”
In November 2020, Nebraska voters approved ballot Initiatives 429, 430 and 431 to allow for casino-style gambling at licensed horse tracks.
The horsemen’s group represents the horse owners and trainers who race in Nebraska. The group teamed with Ho-Chunk Inc., the development arm of the Winnebago Tribe of Nebraska, to get the gambling initiatives on the ballot and campaigned for their passage.
Iowans anticipated this day was coming, said Brian Ohorilko, administrator of the Iowa Racing and Gaming Commission.
“The Council Bluffs market is down, and I think most people do believe that is attributed to the new facilities opening in Nebraska,” Ohorilko said.
The combined total adjusted gaming revenue for Ameristar, Harrah’s and Horseshoe for fiscal year 2023 — the period from July 2022 through June 2023 — was $460 million, according to the Iowa commission.
That was down from $473.2 million for fiscal year 2022, a decline of $13.2 million or about 3%.
More recently, gaming revenue at the three Council Bluffs casinos for the first four months of fiscal year 2024 — July through October of 2023 — is down $10.9 million compared to the same period in 2022.
Records indicate that revenue dipped over those four months for Ameristar, down $2.1 million, and Horseshoe, down $9.2 million. Harrah’s was up $400,000 during those four months.
Nebraska’s casinos are still ramping up their operations.
WarHorse in Lincoln opened in September 2022 as Nebraska’s first state-sanctioned casino. The second to open was Grand Island Casino and Resort in December 2022, a temporary facility with a permanent one planned. Harrah’s Columbus opened as a temporary facility in June of this year, and also plans a permanent casino.
In the first 10 months of 2023, the three Nebraska casinos had a combined gross gaming revenue of about $72.1 million, according to the Nebraska Racing and Gaming Commission.
The casino likely to have the greatest impact on Council Bluffs has yet to be built.
WarHorse Omaha is under construction at Horsemen’s Park, 63rd and Q Streets in Omaha.
When built out, it will be a casino, racing and entertainment complex — an investment of about $250 million. The project includes renovating the existing Horsemen’s Park complex and adding nearly 67,000 square feet in new construction and expansion. The casino is expected to open next fall.
For now, it offers simulcast horse racing and sports betting in a temporary facility but no casino games.
Although it will take several years to know the full impact of Nebraska’s casinos, one study obtained by the Iowa Racing and Gaming Commission predicted that new Nebraska casinos could have a substantial impact.
The Spectrum Gaming Group study in 2021 predicted that once the Nebraska casinos ramp up to full operations, the Council Bluffs casinos could lose $183.9 million in adjusted gross receipts to Nebraska.
If true, that would cut the Iowa casinos’ gross receipts nearly in half, the study said.
Several bettors at WarHorse Lincoln who spoke to The World-Herald Friday said the Nebraska casinos are convenient. Some bettors appreciate that gambling dollars are staying in Nebraska.
But they said bettors are bargain shoppers who will go where they can have a good experience, and that means having a reasonable chance of winning and the opportunity for rewards, comps and freebies.
Norman Moyer, 70, of Friend, Nebraska, said he would prefer to come to a casino in Nebraska because some of the revenue is supposed to go toward tax relief.
“I haven’t seen any change yet, but, you know, it’s just started,” he said.
Mitch Snyder of Lincoln said he occasionally has gone over to casinos in Council Bluffs.
WarHorse Lincoln is “definitely a lot more convenient,” Snyder said.
Dana Beiermann of Lincoln said she plays only slots.
Beiermann said she occasionally crosses the river to play, typically on special occasions such as birthdays for friends.
On future special occasions, she and her friends will probably try out the new Nebraska casinos, she said.
“See what different games they have, and just the different opportunities and experiences, now that we have more that are close,” she said.
WarHorse Lincoln is convenient for her, she said.
She said the tax implications are a consideration for some bettors when choosing where to gamble. For most people, however, she believes convenience, costs, payouts and the overall experience are higher priorities.
Ohorilko, the Iowa administrator, said the operators of the Iowa casinos will have to continue to provide a good experience for gamblers.
“Clearly from an Iowa perspective, the expectation from the commission is for those facilities to put their best foot forward and compete in those markets,” he said.
That would include capital reinvestment, customer service and “doing all of the things that are expected to be a good steward of that gambling license,” he said.
“We did see some significant investment in the Harrah’s facility there in Council Bluffs,” he said. “And I would expect that we’ll see the other Iowa facilities in that market continue to do things to refresh their properties and make it the best operation they can to give them the best opportunity to compete and succeed in that market.”
