Executive Summary

Canterbury Park in Shakopee, Minnesota is proposing the addition of electronic gaming devices, to be operated by the State Lottery, for their property, in addition to a hotel/conference center and an equestrian center. Canterbury Park is currently the only non-tribal gaming establishment in Minnesota, though the gaming product is different from that which is found at the tribal casinos. Canterbury currently operates a card room with player-pooled games and poker, in addition to live racing and simulcast race wagering, whereas the tribal casinos operate electronic gaming devices and live blackjack.

The Innovation Group was engaged to perform a market analysis in order to estimate the annual gaming revenues that Canterbury Park could expect from the installation of video lottery terminals (VLTs), and the fiscal benefits that would result at the local and state level.

Nearly 2 million people live within 25 miles of Shakopee, of which 1.5 million are adults. Over 4 million people live within 100 miles of Shakopee. As a result, the Twin Cities area is a substantial gaming market. From a competitive standpoint, there are several casinos that already are in operation in the market, with the most proximate and largest facility being the Mystic Lake casino resort in Prior Lake, approximately 4 miles from Canterbury Park.

With the proposed addition of 2,000 VLTs at Canterbury Park, it is estimated that the market revenue potential from the greater Twin Cities area, extending 100 miles from Canterbury, would be $683 million, from a total of 13.9 million casino patron visits annually. Based on the relative location, size and amenities of casinos that attract patrons from this market area, it is estimated that Canterbury Park could generate approximately $165 million in gaming win from the local patron base, from 3.35 annual gamer visits.

The expansion plans also include a 250-room conference hotel and equestrian center, which could attract gaming patrons from well outside of the local market area. Additionally, Canterbury Park provides live racing and an entertainment venue that attracts visitors from a broad area. As a result, some additional gaming patronage should be generated from these amenities that are not considered in the local market patronage and revenue estimates provided above. It is estimated that an incremental $9.3 million from 158 thousand gamer visits would be generated from these areas.

In total, it is estimated that Canterbury Park could generate $174 million in VLT gaming win in its first full year of operation, increasing to $191 million by the fifth year of operation. The average win per position in this facility would be comparable to that which is currently attained in similar racino markets such as Iowa, West Virginia and Louisiana.

The current proposal calls for the State to receive 40% of VLT win, which would translate to between $69.6 and $76.5 million per year, or $140 to $150 million per biennium. A purse enhancement equal to 7.25% of the VLT win would result in a more than 100% increase in purses offered, which would have a significant impact on the racing industry in the state, and in turn would have a broad impact on the agriculture industry in the state.

From an economic impact perspective, the budget for construction and design of the facility expansion is $90 million, which will have an immediate impact on the local economy. It is estimated that this will require approximately 710 man-years of employment, with the project taking approximately 2 years to complete. Once the new casino is operational, it is estimated that by combining the indirect impacts with the direct impacts of casino operations, the positive impact on employment and tax revenues could be summarized as follows:

- Nearly 1,400 new jobs, with 815 jobs at the racino for gaming, food and beverage operations and an additional 578 jobs as a result of the spending enabled by the racino spending;

-At least $150 million in new revenue each biennium for the state, including:

· State gaming taxes
· State sales taxes
· State personal and corporate taxes

-Approximately $4 million per biennium in new local taxes, including:

· Local gaming taxes
· Local property taxes

These figures are estimates – the actual benefit to the state and local governments will depend on the conditions placed on the proposal upon passage by the Legislature. These figures are also conservative from an economic impact perspective, as they do not consider the following, each of which would have significant impacts of their own. We did not quantify the following items:

-Tax or employment benefits from the hotel and conference center

-Tax or employment benefits from the equestrian center

-Impact on Minnesota’s horse and agriculture industry from a $12 to $14 million increase in the purses for live racing at Canterbury Park

-Indirect spending attributable to the operation of each of these amenities and their employees’ spending patterns, and the taxes that would result

-Impact of new spending enabled by the State as a result of the $150 million generated in new revenues. For example, if these funds were used for infrastructure investment, the ripple effect attributable to Canterbury would be substantially greater than considered in this report.