Report: Block E Casino Could Face Many Obstacles

Skeptics of the plan to place a casino at the downtown Minneapolis development say that attracting people could be difficult-and the casino would likely face a tough fight from the state's Native American tribes.

Numerous proponents have rallied behind a just-unveiled plan for a casino at downtown Minneapolis' long-struggling Block E development-but equally vocal critics say it's too soon to call the plan a safe bet.

Star Tribune columnist Eric Wieffering recently spoke with several skeptics and outlined four major obstacles that the plan could face:

¥ Gambler fatigue: Although there are more sanctioned gambling establishments than ever, national gaming revenues have been flat or down for the past few years-and that includes both commercial casinos and Indian-owned casinos, the article pointed out. Some analysts say the industry will recover when the economy does, but the largest gambling companies are focusing on less saturated international markets.

¥ Full house: Block E casino backers last week said that the planned casino-dubbed “Minnesota Live”-would attract 5.6 million visitors each year and fill 84,000 hotel rooms, thus boosting downtown Minneapolis' hotel occupancy by 5 percent. But most casinos aren't destination attractions, and 75 percent of casino visitors come from the areas immediately surrounding them, according to the article. “Why would you drive or fly past several casinos to get to a different one in Minneapolis?” Keith Whyte, executive director of the National Council on Problem Gambling in Washington, D.C., told the Star Tribune.

¥ Tribal response: Minnesota's Indian tribes have had a tax-free casino monopoly for almost 20 years. Together, they operate 18 casinos that generate an estimated $1.5 billion each year-and allowing non-Native American casinos would require a change in state law (which lawmakers are now considering). James McComb, a local real estate consultant who's worked on casino projects across the United States, told the Star Tribune that the traffic projections for Minnesota Live don't factor in the ways in which the state's tribes will fight to protect their livelihoods. The owners of Mystic Lake Casino-Minnesota's largest by total games-have reportedly already indicated that they might begin serving alcohol if legislators allow expanded commercial gaming. The tribes could respond in other ways as well, possibly with higher payouts on slot machines at their casinos. It's a war that might be difficult for Minneapolis to fight, McComb contends.

¥ State ownership: Block E owner Alatus, LLC, claims that the casino development would generate between $100 million and $150 million in gaming tax revenue for the state for the 2012-2013 budget cycle, and $250 million for each biennium to follow. If maximizing tax revenue is the key goal, then the casino should be privately owned and operated, the article contends. That would also prevent the state from competing with Minnesota tribes.

To read the full Star Tribune article about the possible obstacles, click here.