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Economic Impact of a Casino in Wyandotte County, Kansas

In: Business and Management

Submitted By ladydi58703
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Economic Impact of a Casino in Wyandotte County, Kansas It is estimated that more than a quarter of the U.S. adult population, 56 million people, visit casinos annually. Making over 371 million trips to casinos, Americans spend $30 billion each year in these facilities. Casinos also employ over 360,000 people and contribute more than $5.2 billion annually in direct gaming taxes to state and local governments. Casinos are favored by politicians for several reasons; gaming taxation being one of the main reasons. Casino revenue is taxed at a much higher rate than other types of businesses. However, the economic impact of casinos is dependent on the location and surrounding population base. Casino spending displaces spending that would occur elsewhere in the local economy.
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The purpose of this study is to evaluate the cost and benefits of the impact of a destination casino resort in Wyandotte County, Kansas. There are several proposals in the mix for building this facility near the Kansas Speedway, Cabela’s, and the Legends Shopping Center. In an article in the KansasCityKansan.com on Wednesday, March 19, 2008, it was reported that one of the groups who has a proposal for the casino, Sands Kansas, LLC, is hosting a job fair long before they have received final approval from the Kansas Lottery Commission. This group is proving that they are serious about their proposal and are going to great lengths to engage women and minorities. We will evaluate the local and regional effects to the economy by bringing this resort casino to the area. The economic impact of this project will include construction and operation of the facility and the taxation of the facility after it is fully operational. The Kansas City market is a competed market with little unsatisfied demand for casinos. However, a casino in Wyandotte County, Kansas would have a competitive advantage over the Missouri riverboats if it were not subject to loss limits. Missouri currently is the only jurisdiction in the world with a $500 loss limit, leaving many of its customers unhappy. There are over 1.5 million people within a fifty-mile radius of this proposed destination resort casino location and over 1.9 million within a one-hundred mile radius.
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Overall, cost estimates look to influence the local economy in the short term, but the long-term benefits appear to greatly outpace these costs. Early estimates put the cost of a destination resort casino at over $225 million. Wyandotte County is actually requesting a destination resort that costs over $300 million for consideration in the bidding process. This requirement ensures the construction of a top-notch facility in the up and coming Village West area. Another major cost is the construction itself. The addition of two hundred fifty jobs adds to the overall price of the project. New job creation happens each time spending approaches $75,000 spent on construction and supplies. Earmarked funds exceed $9.1 million for construction payroll and additional jobs around the jobsites. This does not include the actual costs for any gaming equipment inside the casino. Actual costs of gaming equipment and labor is another factor in the process. Purchasing the gaming equipment adds approximately ninety million dollars to the costs. Payroll itself requires around ten million dollars for the first operating year. These costs seem excessive, but the overall cost to benefit ratio is very high for this type of project.
Kansas State Minimum Requirements
|Land | |6,750,000 |
| | | |
|Construction | | |
|Casino |51,750,000 | |
|Hotel / Restaurants |39,375,000 | |
|Site Improvements / Parking Lots |37,125,000 | |
| | |128,250,000 |
| | | |
|Machinery & Equipment | | |
|Furniture, Fixtures, & Equipment |18,000,000 | |
|Gaming Equipment & Signage |72,000,000 | |
| | |90,000,000 |
| | | |
| |TOTAL |225,000,000 |

The benefits of the project look great for the near future. Job creation is one of the biggest benefits we found in the project. There are twenty-two hundred permanent jobs estimated as part of the project. These jobs provide better wages and higher paying jobs than most surrounding businesses. The casino also provides career development and a good mix of opportunities within the casino. During the construction phase, the project will create of hundreds of construction and miscellaneous jobs outside the casino walls. A second major incentive to the community is the distribution of funds overall. The amounts come from the revenues of the casino, and break down into contribution to many sectors of the community. Twenty-two percent of the revenues stay with the state. Three percent goes to the local municipality, and two percent goes to an addiction fund setup for problem gamblers. On top of these, the casino will purchase up to $15 million of goods and services from local businesses for every one $100 million in revenue. This contributes to tax revenues for county and state, and leads to lower income taxes and personal property taxes. The major influence on revenues is the location of the casino. As can be seen in the graph below, people closer to the casino spend more on a yearly basis. As the distance increases, the actual money spent in the casino decreases. The casino uses promotions and offers to draw in more customers from other regions. Tourism also adds to the overall success of the casino.
|Revenue Projections for a Destination Resort in Kansas City |
|Distance Range |Adult Population |Distance, Income, and |Total Revenues ($M) |Spending per Person |
| | |Competitive Factors | | |
|0-10 |164,796 |82.9% |$100.8 |$608.4 |
|10-25 |840,648 |30.3% |188.8 |224.6 |
|25-50 |507,359 |10.5% |39.6 |78.1 |
|50-75 |190,240 |1.7% |2.1 |10.9 |
|75-100 |263,642 |0.0% |0.0 |0.0 |
|Out of Market | |4.0% |13.2 | |
|TOTAL |1,966,685 | |$343.9 | |
|Spending Base: $740.36 |

The biggest impact is the economic development that will accompany the casino. The Wyandotte County area is a well-developed area, but the casino brings with it unique opportunities for development. The tourism the casino draws ads to the overall value of the area, and affects the other areas around the casino. New hotels and other attractions spring up around casinos. The following model depicts the current supply and demand of casino goers and their spending at the Kansas City area casinos.
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With the addition of a destination resort casino in Kansas, the demand curve will shift rightward from D1 to D2 creating a new equilibrium point at E2 as shown below.
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