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Casino Developers Court Cities

The latest market for gaming isn’t in the suburbs anymore; it’s downtown, where developers are retrofitting existing buildings and changing the casino as we know it.

BY: | November 2012



Name

Tod Newcombe

Tod Newcombe -- Senior Editor. With more than 20 years of experience covering state and local government, Tod previously was the editor of Public CIO, e.Republic’s award-winning publication for information technology executives in the public sector.

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If you’re a city mayor, and a developer comes to you with a proposal to attract 15,000 money-spending visitors every day, you would give the idea some serious consideration, right? That’s the type of pitch a growing number of urban mayors are hearing from casino developers eying the latest market for gaming: downtowns.

For years, developers have put casinos and slot parlors primarily in suburban and exurban locations, where they are close to highways, there’s plenty of room to build large, single-floor gaming rooms, and there’s lots of inexpensive parking. But recently, some casino developers have begun moving locations closer to cities and their downtowns.

Unlike traditional casinos, these urban versions are different in several ways. They tend to be built in existing buildings rather than as stand-alone structures. They are porous, meaning the casino has many exits that allow customers to leave, walk the streets, shop and then return for more gambling. Developers even intentionally under-develop the space so as to encourage other businesses to set up shop nearby and share the wealth.

Detroit’s Greektown and Pittsburgh’s Rivers casinos both have some of these new features. Last May, Cleveland’s Horseshoe Casino opened downtown in what was once the landmark Higbee’s department store (best known for its starring role in the 1983 holiday film, A Christmas Story), bringing modern gaming and a $350 million investment to Cleveland’s urban core. In the first month of operation, nearly a half million people headed to the Horseshoe; annual attendance is forecast to reach 5 million.

Urban casinos are different because they can bring excitement and amenities to cities, according to Andrew Klebanow, the principal at Gaming Market Advisors. “The thinking now is that casinos can do more than just bring jobs and new taxes, they can actually help communities,” he says.

But urban casinos are not a slam dunk. They tend to be more expensive to build: Blame the high cost of parking and security, says Klebanow. Putting a casino on multiple floors of a reused building means more workers are needed, which raises operational costs. And then there’s the issue of placing gambling so close to low-income neighborhoods -- a major point of contention for casino opponents.

Still, the challenges and drawbacks have not stopped casino developers and cities from actively courting one another. Baltimore, Chicago, Cincinnati, Columbus, Milwaukee and a host of other cities have expressed interest or have plans under way to place casinos in downtown locations. For cash-strapped and job-starved cities, it’s game on.


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