New Dollars No Sure Bet

October 5, 2007
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The Four Winds Casino Resort had an immediate impact when it opened in New Buffalo this summer. The massive development brought 2,400 new jobs to the area. Labor statistics suggest that the tribal project has the potential to reinvent the lakeshore community as a pre-eminent resort locale. In the next five years, 30 percent of all employees in Berrien, Cass and Van Buren counties will be employed by the hospitality industry.

Can the Gun Lake Casino have the same impact on West Michigan? The region’s foremost economist has doubts.

“When the Wayland casino gets up and running, it will be an addition to an already crowded field,” said George Erickcek, senior regional analyst for the W.E. Upjohn Institute for Employment Research in Kalamazoo. “What that means is that there is less of an opportunity to bring in new dollars from outside the area.”

Had the casino not been delayed for the better part of a decade, Erickcek reasoned, its potential for regional economic impact would have been far greater. When it does open in Bradley next year or the year after, it will do so behind the Four Winds and the FireKeepers Casino in Emmett Township near Battle Creek. Neither the Gun Lake or FireKeepers casinos is in a league with the Four Winds, which rivals Las Vegas facilities.

It would be a reasonable assumption that Four Winds will draw from West Michigan, while Gun Lake will not draw from Southwest Michigan, which also faces competition from the Blue Chip Casino in Michigan City.

There does not appear to be a competitive difference between Gun Lake and FireKeepers. The two casinos will likely split the Kalamazoo market, which is equidistant between Bradley and Emmet Township. Gun Lake will battle the Four Winds for customers in western Allegan County and the southern part of Ottawa County. It will battle the Little River Casino Resort in Muskegon and the Soaring Eagle Casino Resort in Mount Pleasant for customers in Newaygo, Montcalm and Ionia counties.

“Because of its late entry, it’s possible that it may not have the power to bring in new dollars. There are too many alternatives,” Erickcek said. “So when I look at the economic impact, it seems likely that it will draw more local dollars and not dollars from outside the Greater Grand Rapids area.”

That means, according to Erickcek, the money spent at the casino is more likely to be money that would have been spent at a restaurant or movie theater in metro Grand Rapids or a competing Grand Rapids destination community such as Grand Haven. In this scenario, the casino is comparable to a big box store opening in a saturated market. There would no spin-off jobs, and the net economic impact would be zero.

“The bottom line is whether it can attract new dollars into the region,” Erickcek said. “If it’s existing money, it will be a displacement effect and there will be a decrease in the number of people going to restaurants or movies or what have you. If it can draw new money, the opposite will be true.”

Either way, the jobs directly created by the casino should be sustainable, provided there are no additional entries to the market.

“The challenge is that I don’t think it’s a growth industry,” Erickcek said. “It loses its uniqueness the more there are. You see that happening in Las Vegas. Las Vegas knows you can gamble in your hometown or a few hours away now, so it’s had to reinvent itself as an adult playground.”    

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