EXECUTIVE SUMMARY:
Sleeping Giant Casino Market Assessment
Sleeping Giant Group, LLC, a Routt County-based privately-held partnership, recently engaged The Innovation Group, a Littleton-based provider of consulting services for the gaming industry, to perform a gaming market assessment for a potential casino to be sited in Hayden, Colorado. The following is a summary of its report.
The Bottom Line
Total first year revenue for the proposed casino is estimated at $56.7 million, assuming full-year operations beginning in 2014. This estimate is based on 554,222 gamer visits and an average win per visit of $102. The study estimated that the local market component would account for about 30.4% of the total, with the remaining coming from tourists visiting nearby communities. Overnight tourists, according to the study, would be a major driver of gaming revenue, accounting for about 55.7% of the total.
Background
The development site for the casino and related venues is just off Highway 40 near Hayden, Colorado and in close proximity to the Yampa Valley airport. The Study forecasts top-line gaming revenue based on an optimal machine count recommendation with the objective of maximizing the profitability potential of the project. Various food and beverage venues and a full-service mid-range hotel will support the gaming facility, with the possibility of other commercial-related developments such as additional restaurants and entertainment venues.
The study identified four potential sources of incremental gaming revenue based on the proposed location and building program, including the local market, overnight gamer, regional tourist, and traffic intercept segment. It utilized a unique forecasting model for each potential source of gaming revenue. For the purpose of forecasting the local market component, The Innovation Group employed a drive-time gravity model. Gravity models are commonly used in location studies for commercial and residential developments and public facilities. The competitive analysis of the report focuses on Central City/Black Hawk, while tourism research mainly pertains to Steamboat Springs.
Assumptions
- The facility will offer Class III slot machines and table games, the volume of which will be commensurate with demand;
- The quality and scope of the facility will be consistent with our recommendation;
- The development will feature a 120-room mid range hotel;
- An experienced casino management team and/or a management company will operate the facility;
- The casino will implement an aggressive marketing program targeting high worth gamers in the local market and tourists;
- The gaming facility will open in early 2014;
- No new competition, that has not been accounted for in the Study, will open during the timeframe of the report;
- While the current economic climate has been taken into account with regards to the assessment, the study assumed that the regional economy will continue to rebound, marked by notably lower unemployment rates.
Airport Stats
The Yampa Valley Airport is the primary regional airport, servicing both Steamboat Springs and Craig. During the winter season, the airport features direct flights from Denver, Salt Lake City, Atlanta, Chicago, Houston, Dallas, Minneapolis/St. Paul and New York. The airlines servicing these cities are American Airlines, Continental, Delta/Northwest and United. According to the Steamboat Springs Chamber of Commerce, 70% of winter visitors come via these flights. The passenger count at Yampa Valley was 247,000 in 2009 with a peak of 280,000 passengers in 2007.
Gaming Revenue Forecast (2014-2018)
The Innovation Group forecasted gaming revenue for the five-year timeframe of the report (2014–2018). They assumed that 2014 would reflect a ramp-up period as local market residents and tourists become familiar with the new facility and as the casino operation establishes its player database. They further assumed a conservative annual growth rate of 2.5% to 3.5% from 2016 through 2018, resulting in gaming revenue of $61.6 million by 2018.
The report recommends a facility initially with 740 gaming positions (650 slots and 18 tables). At this level, the casino could operate efficiently, and would have sufficient capacity during peak times and the ability accommodate future growth without adding capacity.
