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By Josh Lehner
Oregon Office of Economic Analysis Blog [6]
The Columbian is reporting [7] that the Cowlitz Tribe now has a reservation in La Center, Wash. after a decade-long legal battle. I do not know enough about the legal process, taking land in trust, potential challenges and the like to comment on the specifics of it. However, from a state revenue perspective the impact on Oregon video lottery sales is likely to be similar to the previously proposed Wood Village, Ore. casino. Of course the Wood Village proposals were voted down decidedly by Oregonians (68% No in 2010, 72% No in 2012) but Oregonians do not get to vote on the La Center casino, obviously. Three points for now.
First, the Portland market is one of the largest untapped gambling markets in the U.S. in terms of casinos. The nearest casino is Spirit Mountain, about an hour and fifteen minutes from downtown Portland, while the Indian Head Casino near Madras is about two hours away. Given the various proposals over the years, there is a clear desire on behalf of casino owners and operators to get as close as possible to Portland to gain a lion’s share of the gaming dollars. Of course that does not mean Portland is devoid of gaming today. The State see significant video lottery sales in the region, in addition to the various (illegal) card rooms and so-called gray machines.
Two, how will a casino just on the northern edge of the country’s 24th largest metropolitan area impact video lottery sales? At this time, it’s hard to say. Proponents of the Wood Village casino estimated the impact would be a loss of 6 or 7 percent (if memory serves, no documentation), which is smaller than the opponents estimate of about 17 percent. While La Center may be a bit further away geographically from Oregonians, the share of video lottery sales within an hour’s drive time of the site is nearly identical to the Wood Village site. The data is a little old (FY2011) and I am using zip code averages here, but the patterns today are very similar, of course.
[8]Finally, the gaming industry is intensely competitive. Be it new machines, online gaming, illegal operations or brand new casinos nearby, existing facilities are constantly under attack from other venues and opportunities for customer’s discretionary spending. Beyond the general trends in sales across the country, there is one item that really stood out in our office’s report on the gaming industry [9]. While a brand new casino can do well for a year or three, sales do slow and even decline. At least in part due to more competition and also the novelty factor of something being new going away. Our report highlighted Pennsylvania where even brand new casinos in big metropolitan areas like Philadelphia and Pittsburgh have seen this pattern. Expectations would be for similar trends in sales for a new casino in the Portland MSA.
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This will certainly be a big topic of discussion in our upcoming forecast meetings with Lottery and our advisory groups. Should the La Center casino be built, it will certainly have an impact on our forecast. How big and the exact timing of the impact are still TBD.