Cha-ching!
Study: Casinos Add $325M to EUP Economy
By Karen Gould

From 1995 through 2005, Kewadin Casinos have made a positive impression on the economy of the Eastern Upper Peninsula (EUP), a recent study revealed. In 2005, gaming revenues at all five casinos in the chain totaled $115.1 million, and according to the study, the money translates into a total annual economic impact to the region of about $325.4 million.

"The Kewadin Casinos," the report summarizes, "have clearly had a very significant beneficial impact on the E.U.P."

The positive impact of the casinos offset other negative economic factors, as unemployment dropped in the eastern U.P., population increased, home prices rose, and the crime rate fell during the period studied, according to the 42-page report commissioned by the Sault Ste. Marie Tribe of Chippewa Indians through a firm called Michigan Consultants. The report does not include the Greektown Casino in Detroit. The tribe owns the casino chain.

The study did not explore gambling addiction or other social issues.

"It might be argued," states the report, "that the preponderance of other economic impacts on the region, namely the loss of jobs in manufacturing, mining, and agriculture, would have created net losses in population and employment. The casinos thus were crucial in counterbalancing the negative economic influences."

Michigan Consultants reports it found no evidence that the gaming facilities have hurt the region. Results of the research were presented in Sault Ste. Marie Friday, November 2, by Jacob Miklojcik, president of the Lansing firm, which has worked with about 50 other casino organizations in analyzing gaming markets.

The study, which measured the tangible and intangible effects of each of the five casinos the tribe owns in St. Ignace, Sault Ste. Marie, Hessel, Christmas, and Manistique, was commissioned as part of the 20th anniversary of the casinos.

Tangible impacts include jobs, grants to local governments, charitable contributions, employment through capital expenditures, spending with contractors and vendors, and off-site spending by casino visitors.

"We weren't looking for anything specific," said Michelle Bouschor, public relations director for the tribe. "Our 20th anniversary is a significant milestone to reach and we wanted to get some benchmarking done."

Findings of the report, she said, will provide a measuring point in future years.

The study also outlines the casino's importance to the local community and the tourism industry. On average, 2.2 million people visit the casinos each year, and of those, 83% came from outside the Upper Peninsula and spend on average $45 each on gaming. Based on tracking by Kewadin's Northern Rewards Program, 63% of visitors come from the Lower Peninsula, 17% from the Upper Peninsula, 8% from Canada, and 12% from other areas.

"This strongly represents that the Kewadin facilities represent a major tourism lure in the area," said Mr. Miklojick.

While in the area, most tourists visit E.U.P. casinos, according to 2005 findings from May through October.

According to the study, those visitors spend about $20 million each year in the region at locations other than the casinos. Off-site spending includes gas, food, lodging, and recreational activities.

"This is viewed as a very prudent figure" states the report, "because the estimate does not include expenditures during multiple day stays in the E.U.P. if a casino is not visited, even though the presence of the casino may have influenced the choice of the E.U.P. destination."

The tribe is the largest employer in the eastern U.P. Casino employment also impacts the local economy, with employees spending income on housing, medical services, and goods and services.

"You'd like to measure the nontangibles," said Mrs. Bouschor, "but you can't. It's just being a part of the community."

Intangibles include wages spent by employees, grants given to local governments, hiring local contractors and vendors, and charitable contributions.

The tribe reported that last year for June and July, 1,325 people were on the casino's payroll, and 75% of the workers reside in the Upper Peninsula. While the number of jobs fluctuates each month, for that period, the number of positions at each casino included Sault Ste. Marie with 651 positions, St. Ignace with 371, Hessel with 42, Manistique with 148, and Christmas with 113. Typically, jobs are year around and include benefits.

Gross wages for 2006 at all five gaming properties was more than $30.8 million.

In 1985, the first Kewadin Casino opened in Sault Ste. Marie after a capital investment of $700,000. From 2001 to 2005, the tribe invested more than $97 million in upgrades and renovations at casino facilities, which supported additional non-casino jobs, including construction employment.

Also contributing to the region are tribal grants of 2% of slot machine revenues, awarded to local units of government. Since 1994, according to the report, the tribe has distributed $24 million through the program, with priorities in fire protection, education, law enforcement, health services, and recreation.

The tribe provides direct contributions to communities of more the $100,000 annually, sponsoring activities including sports teams, scholarship programs, and auto shows.

According to the report, net revenues earned at the casinos are mostly spent in the region, either through tribal programs or casino operations.

This year's revenue figures provided by the tribe show the casino chain now overcoming a slump in the gaming economy earlier in the year.

At Kewadin Shores Casino in St. Ignace for 2007 through October, revenue was up 26.6%, or $954,211, over last year. The tribe attributes the financial upswing in St. Ignace by reducing costs and moving gaming operations into the main floor of the casino building in late August.

Net revenue at all five Kewadin Casinos showed a slump in the gaming economy earlier this year. Until October, gaming revenue was down approximately $2.8 million. The net income loss, tribal leaders say, has been trimmed to less than $76,000.