RIVERBOAT GAMBLING:

A riverboat casino would bring nearly $150 million into the Cape Girardeau economy in its first year of operation, according to an economic impact study released Thursday.

But an opponent of riverboat gambling said the study is based on flawed assumptions.

The study was conducted by Pauline Fox, an economics professor at Southeast Missouri State University, using data provided by the The Boyd Group, a Las Vegas-based casino operator that has proposed bringing a riverboat to Cape Girardeau.

Voters June 8 will decide whether to approve gambling here.

Fox said Thursday the estimates in the study are "conservative."

"I would expect a riverboat in Cape Girardeau would draw people from a much wider region," she said. "I think it would be a situation of competing for the entertainment dollar from, say, Branson to Cape Girardeau.

"I also think the existence of a riverboat would provide a situation where others would develop other attractions that would add to the attractiveness to the community for tourism."

But Dr. Richard Martin, a Cape Girardeau physician and opponent of riverboat gambling, said any economic impact would be "on the backs" of Southeast Missourians.

Martin compiled statistics on how much money visitors to the casino would spend on the boat by extrapolating the revenue figures provided by The Boyd Group.

He said the majority of those visitors likely would be from Southeast Missouri. Visitors from outside the region would have to drive by other riverboats to come to Cape Girardeau.

The casino firm projects one million visitors annually to a Cape Girardeau riverboat. Based on Boyd Group estimates, the city's annual share of tax revenues from the boat's profits would be about $900,000.

Based on that figure, which essentially represents 2 percent of the net profit for the casino, Martin said the Boyd Group would enjoy a net profit of $45 million.

Once the state share ($9 million, or 10 percent of net profit) is paid along with the city's revenue, the riverboat's "take home" profit would total about $35 million.

"If you drain this area of $35 million every year, how do you justify that," Martin said. "How much of an economic impact does it take to offset that?

"Our budget this year is $34.4 million in the city," he added. "That's what's going out on the boat. Every year, The Boyd Group is going to take the equivalent of our city budget to Las Vegas."

But in her economic impact study, Fox who said she's taken no position on the issue said the casino's investment in Cape Girardeau would scatter throughout the city's economy.

"It is expected that four major categories of expenditures will contribute to the economic impact of actual operations," Fox wrote in the study. "These include: primary employees, secondary employees, purchase of goods and services and visitors' expenditures."

The payroll for 800 primary employees and 800 secondary workers is estimated at $28.1 million. Also, Fox assumed 75 percent of $13.6 million in operating costs, supplies and maintenance for the boat would be spent locally.

"The last category is expenditures by visitors, such as gas, food, shopping, other entertainment and motels," she said. "The Boyd Group estimates expenditures by 1 million visitors of $36 million."

But Fox said she thought that number was too conservative.

She said: "Assuming that 400,000 visitors spend $10 a day in Cape Girardeau, excluding expenditures on the riverboat itself, 400,000 spend $45, and 200,000 spend $90, the total amounts to $40 million."

By combining the categories and applying the figures to an economic impact equation, Fox estimated the first year impact on the city would be $148.6 million.

"I have used a regional economic multiplier of (two)," she said. "The economic concept behind the multiplier is that expenditures which are made in the area allow those who receive them to increase their expenditures, which in turn will allow other individuals to increase expenditures.

"The number of times a dollar spent in area turns over is referred to as the multiplier. I have chosen to use a relatively small multiplier, recognizing that some expenditures made will leave the area."

Through 1999, Fox estimated the economic impact of a riverboat casino would be $774 million to $812 million.

"It should be noted that the future effects of such an undertaking in Cape Girardeau are very difficult to project," she added.

Martin disagreed. He said it's clear to him that the promise of economic boon is based on a premise of personal loss.

Because the riverboat casino's net profits don't include pay-outs to customers a figure Boyd Group officials said would total 90 cents on every $1 the amount of money spent annually on the boat would total $130 million.

If half of the boat's customers are losers, the loss per visitor is $260. Winners on the other hand, based on Martin's calculations, would walk away with an average gain of $170.

Or would they?

The boarding fee for the boat will be $16, which must be subtracted from the winners and added to the losers. Also, Martin guessed, persons on the boat would spend an average of $15 for food and drinks.

"If you subtract that from the winners, you come up with a net of about $139," he added. "The losers on the other hand are looking at a total loss of about $291.

"In other words, half the people coming off that boat have just lost $291. Tell me how 500,000 people are going to spend anything after losing $291 on that boat."

But what about the winners? They still make out with $139, don't they?

"The sad thing is," Martin contended, "studies will show that a lot of people who are winners turn around and enter the new pool.

"In other words, instead of going shopping, they turn around and buy another ticket, go for another ride, and gamble until they lose it."

But riverboat proponents say the gamblers spending money would be from outside the city and region, so that any money diverted was destined for some other economy anyway.

Fox said it would be important for the city to draw visitors to the riverboat from outside the region. She said if local people are spending money on the boat, that's money that won't directly fuel the local economy.

"As an economist, it simply isn't rational for people to gamble," she said. "When they gamble repeatedly, they won't end up with as much money as they started with.

"But I think one point of view is that gambling is viewed by many people as a form of entertainment."