State's Five-Year Share of New Casino Could Reach $1 Billion, Says Analysis
WHITE EARTH, Minn., March 13, 2012 /PRNewswire/ -- Minnesota would receive between $726 million and nearly $1 billion in new revenue from a Twin Cities casino during its first five years of operation. The projections are based on comprehensive economic and market analyses of MinnesotaWins, a proposal by White Earth Nation to build a metro-area casino with net revenues split equally between the tribe and the state of Minnesota.
A market feasibility study conducted for White Earth concluded that the success of a metro-area casino does not depend on a significant expansion of gambling. Instead, the region's population growth would accommodate both a new casino and the existing tribal casinos.
The economic projections are based on data compiled by leading investment banks and evaluated by Red-Horse Financial Group, Inc., a nationally-recognized financial consultant to tribal casinos. First-year net revenues to the state are estimated at $140 million and would grow to $220 million in the fifth year for a total five-year pay-out of $968 million.
White Earth Nation, which would be responsible for securing financing for all development costs, would receive a pay-out equal to the state's share. Even a more conservative financial projection – one in which debt payments were accelerated – shows a five-year pay-out of $1.452 billion split equally between Minnesota and the tribe, or $726 million for each partner. Revenue to the state would continue – and likely grow, according to the analysis – as long as the casino operated.
"All the money from a White Earth-state casino would stay in Minnesota," said Erma J. Vizenor, chair of the White Earth tribe. "The tribe's share would be invested in housing, education, health care and economic opportunities, benefiting not just the tribe but all of northwestern Minnesota. The state could use its share for a Vikings stadium, to pay back schools, for economic development or for any purpose – and all of it with no new taxes."
Valerie Red-Horse, president of Red-Horse Financial Group, said the economic and financial projections are extremely reliable and credible because they are based on actual current gaming market sector data provided by leading bulge bracket Wall Street investment banks, not wishful thinking. "The economic analysis is based on proposals submitted by investment banks to finance the casino," she said. "These are firms that have recently led and successfully closed similar financings in the market. In other words, they have a huge financial stake in the data being correct."
Red-Horse compiled the financial analysis using the average of business proposals received from three of the largest investment banking firms, current leaders in the gaming sector. "The data were consistent across the three analyses with only minor variations," said Red-Horse.
Although the White Earth proposal is not site-specific, the revenue and cost analyses were based on developing a casino at the former Twin Cities Army Ammunition Plant in Arden Hills. The White Earth proposal could be adapted to other sites, including Block E in downtown Minneapolis. The metro casino could be located in a community different from a new Vikings stadium.
Construction of a casino and hospitality facilities would cost about $585 million. The proposal also budgets funds for land acquisition and road and highway improvements, bringing the total development costs to $700 million. White Earth would issue bonds for the development costs.
According to Ramsey County, land at the most likely location for the development within the Arden Hills site has no pollution issues. In fact, the site could accommodate residential construction with no remediation, a much higher standard than the casino would require.
The economic projections are complemented by a market feasibility study conducted by another nationally-recognized firm, Gaming Market Advisors (GMA). Consultants from GMA conducted a thorough market study, including on-site visits to all the area casinos and racetracks, and compiled economic data on the potential for the Twin Cities market to absorb a new facility.
"Due to the number of casinos already operating in the region, GMA did not aggressively grow the market," according to the market study. "Most of the projected growth in the market over the next five years will result from the projected growth in income and population. In total, GMA estimates that the local market will generate just over $1.6 billion of gaming revenue which will accrue to all of the casinos in the region."
GMA estimates that area casinos generated $1.3 billion in revenue in 2011, leaving a substantial market share for existing casinos even if a White Earth facility opens in 2015.
The White Earth proposal is consistent with the intent and spirit of tribal gaming, said Vizenor. "There is ample precedent for casino partnerships between tribes and public governments. Our neighbors in Wisconsin and Michigan are among the many states that receive revenue from tribal gaming and, in some cases, are partners in off-reservation casinos similar to what White Earth is proposing," she said.
White Earth currently operates a casino, Shooting Star, on its northwestern Minnesota reservation. However, the location of the casino – far from major population centers – limits the casino's size, earning the reservation less than $10 million in most years.
"We have used the Shooting Star revenue to invest in decent housing, health care, schools and economic opportunities for our tribe," said Vizenor. "We are making progress, but the need is so great." White Earth's reservation assets including Shooting Star will not be pledged as part of the new gaming facility's security.
White Earth is the state's largest and poorest tribe.
About White Earth
The White Earth Tribe, which calls itself Anishinaabe, meaning "the original people," is Minnesota's largest tribe accounting for almost 40 percent of Minnesota's native population. It is also the state's economically poorest tribe. The White Earth Reservation in northwestern Minnesota was created by the Treaty of 1867.
SOURCE White Earth Tribe
A market feasibility study conducted for White Earth concluded that the success of a metro-area casino does not depend on a significant expansion of gambling. Instead, the region's population growth would accommodate both a new casino and the existing tribal casinos.
The economic projections are based on data compiled by leading investment banks and evaluated by Red-Horse Financial Group, Inc., a nationally-recognized financial consultant to tribal casinos. First-year net revenues to the state are estimated at $140 million and would grow to $220 million in the fifth year for a total five-year pay-out of $968 million.
White Earth Nation, which would be responsible for securing financing for all development costs, would receive a pay-out equal to the state's share. Even a more conservative financial projection – one in which debt payments were accelerated – shows a five-year pay-out of $1.452 billion split equally between Minnesota and the tribe, or $726 million for each partner. Revenue to the state would continue – and likely grow, according to the analysis – as long as the casino operated.
"All the money from a White Earth-state casino would stay in Minnesota," said Erma J. Vizenor, chair of the White Earth tribe. "The tribe's share would be invested in housing, education, health care and economic opportunities, benefiting not just the tribe but all of northwestern Minnesota. The state could use its share for a Vikings stadium, to pay back schools, for economic development or for any purpose – and all of it with no new taxes."
Valerie Red-Horse, president of Red-Horse Financial Group, said the economic and financial projections are extremely reliable and credible because they are based on actual current gaming market sector data provided by leading bulge bracket Wall Street investment banks, not wishful thinking. "The economic analysis is based on proposals submitted by investment banks to finance the casino," she said. "These are firms that have recently led and successfully closed similar financings in the market. In other words, they have a huge financial stake in the data being correct."
Red-Horse compiled the financial analysis using the average of business proposals received from three of the largest investment banking firms, current leaders in the gaming sector. "The data were consistent across the three analyses with only minor variations," said Red-Horse.
Although the White Earth proposal is not site-specific, the revenue and cost analyses were based on developing a casino at the former Twin Cities Army Ammunition Plant in Arden Hills. The White Earth proposal could be adapted to other sites, including Block E in downtown Minneapolis. The metro casino could be located in a community different from a new Vikings stadium.
Construction of a casino and hospitality facilities would cost about $585 million. The proposal also budgets funds for land acquisition and road and highway improvements, bringing the total development costs to $700 million. White Earth would issue bonds for the development costs.
According to Ramsey County, land at the most likely location for the development within the Arden Hills site has no pollution issues. In fact, the site could accommodate residential construction with no remediation, a much higher standard than the casino would require.
The economic projections are complemented by a market feasibility study conducted by another nationally-recognized firm, Gaming Market Advisors (GMA). Consultants from GMA conducted a thorough market study, including on-site visits to all the area casinos and racetracks, and compiled economic data on the potential for the Twin Cities market to absorb a new facility.
"Due to the number of casinos already operating in the region, GMA did not aggressively grow the market," according to the market study. "Most of the projected growth in the market over the next five years will result from the projected growth in income and population. In total, GMA estimates that the local market will generate just over $1.6 billion of gaming revenue which will accrue to all of the casinos in the region."
GMA estimates that area casinos generated $1.3 billion in revenue in 2011, leaving a substantial market share for existing casinos even if a White Earth facility opens in 2015.
The White Earth proposal is consistent with the intent and spirit of tribal gaming, said Vizenor. "There is ample precedent for casino partnerships between tribes and public governments. Our neighbors in Wisconsin and Michigan are among the many states that receive revenue from tribal gaming and, in some cases, are partners in off-reservation casinos similar to what White Earth is proposing," she said.
White Earth currently operates a casino, Shooting Star, on its northwestern Minnesota reservation. However, the location of the casino – far from major population centers – limits the casino's size, earning the reservation less than $10 million in most years.
"We have used the Shooting Star revenue to invest in decent housing, health care, schools and economic opportunities for our tribe," said Vizenor. "We are making progress, but the need is so great." White Earth's reservation assets including Shooting Star will not be pledged as part of the new gaming facility's security.
White Earth is the state's largest and poorest tribe.
About White Earth
The White Earth Tribe, which calls itself Anishinaabe, meaning "the original people," is Minnesota's largest tribe accounting for almost 40 percent of Minnesota's native population. It is also the state's economically poorest tribe. The White Earth Reservation in northwestern Minnesota was created by the Treaty of 1867.
SOURCE White Earth Tribe
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