After opening a new land-based casino in the Elmore Avenue corridor nearly a year ago, Rhythm City Casino Resort is holding on to its early momentum, increasing gaming revenue by 44 percent over the previous year.
“We’re fast approaching our one-year anniversary, which is, lo and behold, coming around the corner on June 16,” General Manager Mo Hyder said. “We’re going to be celebrating a lot of successes, and it’s going to be a lot of fun.”
Through the end of April, Rhythm City brought in more than $51 million in gaming revenue. Total revenue for fiscal year 2016 was around $43 million.
With about twice the number of table games, the casino has nearly doubled its table revenue from previous years. But slot machines are the largest revenue producer, accounting for more than $47 million so far this fiscal year, which ends June 30.
A new property with more amenities and more games accomplished Rhythm City's mission of attracting new customers.
More than 1 million people have gambled so far this fiscal year, which is an increase of 250,000 over all of the previous 12 months. One big contributor to the jump, Hyder said, is Rhythm City's interstate location.
The casino’s market analysis correctly predicted the new locale would serve the local gaming demand, but it also would serve as a regional attraction and capture the interest and attention of those merely driving through.
Hyder, who said he reads all of the casino’s comment cards, referred to recent input from a North Carolina couple, traveling along Interstate 80. Beyond being effusive in their praise of casino service, the pair indicated they did not know about the casino until passing through.
For Hyder, the experience is evidence the casino is accomplishing another goal: Expanding its market well outside the Quad-Cities.
“All of that is reflected in the numbers, and not only are we able to meet a lot of the entertainment demands of our local constituents, but also folks up and down the interstate,” he said. “That’s really exciting for us, because we are seeing a lot of new faces, and people are pulling off the interstate to come in and stay here."
While Rhythm City is winning big in its debut on land, its mandate to share is translating into wins for others, too.
Higher gaming revenues mean greater gaming taxes, which benefits the state, counties and cities where casinos are located.
According to a 2015 Iowa legislative report, for example, 46 percent of the $310 million state's share of gaming revenue generated throughout all of Iowa went to higher education.
The Rebuild Iowa Infrastructure Fund, which gets 80 percent of its funding from gaming taxes, has allocated more than a quarter-billion dollars to infrastructure improvements at state universities over the past four years.
Most gaming revenue is distributed throughout the state, but a portion is shared locally. The Regional Development Authority, or RDA, which is a nonprofit that holds the Rhythm City Casino’s gaming license, collects a percentage of the casino's gaming receipts and distributes them throughout the community in twice-a-year grants.
Before Rhythm City moved to the Elmore corridor, RDA grants plateaued between $850,000 and $930,000 each cycle from fall 2013 to spring 2016.
But the June 16 migration to land delivered a sudden influx of cash, dramatically driving up the amount of grant money available.
The RDA’s fall 2016 grant cycle distributed more than $1.5 million to 57 nonprofit groups. The recent spring grants awarded $1.2 million to the same number of recipients.
As the lone source of RDA grant funding, Director Frank Clark said, Rhythm City’s success is paramount, especially because the RDA typically receives requests for double the amount of funds available.
“That’s why we stand up and cheer the Rhythm City for even greater success and growing this industry and this casino’s results,” Clark said. “It only helps to provide more and more funding to the community.”
Although the grant amounts may seem small to some, their effect can be great. During award presentations, recipients are invited to talk about their programs, and River Music Experience CEO Deb Powers took advantage of the opportunity during last month's awards.
“Three years ago, RME came out in public and said we are way over our heads in debt, and we’re in trouble,” Powers said. “You all responded. We sell more concert tickets and are serving more kids.”
One of the programs Powers highlighted is a class created for Davenport’s alternative high school, Mid-City, which introduces students to music as a potential career pathway.
“These are kids that are at-risk and fall between the cracks of the high school,” Powers said. “These are the kids of the future that we believe in.”
The same message was echoed throughout the grant-award program as several dozen recipients spoke of the effect gaming revenues have on their agencies.
New year, new expectations
While gaming revenue had plateaued in the state over the past few years, the same cannot be said of the Quad-Cities when comparing this year to last.
Rhythm City has had a large part in regional gaming success, but the Isle Casino Hotel Bettendorf is having a strong year, too.
Isle’s gaming revenues have increased 11 percent to more than $65 million in the first 10 months of the fiscal year.
Although Jumer’s Casino and Hotel in Rock Island has seen revenue decline by 5 percent, the three Quad-City casinos have seen a combined increase of close to 12 percent.
With the Quad-Cities pulling in more customers from outside, Hyder said Rhythm City remains bullish on its prospects for the next fiscal year, because the gaming pie might be larger than originally expected.
“Folks are coming (from) as far as Chicago, and we’re seeing people making it out here and spending their weekends,” Hyder said. “It fits into the overall model we envisioned, and in terms of momentum, we’re excited by the current pace, and we’re trying to capitalize on that by looking for ways to encourage more traffic through additional services and amenities.”
While Rhythm City has grown its customer base from markets more than 50 miles away, a potential threat exists on the same horizon.
In Cedar Rapids, three casino proposals are being considered by the Iowa Racing and Gaming Commission. They include the $40 million Wild Rose Cedar Rapids, the $105 million Cedar Crossing Central and the $165 million Cedar Crossing on the River.
“I think in terms of competition, it’s always a little unsettling,” Hyder said. “I think the gaming market in the state of Iowa is highly regulated. Legislatively, the leadership has acknowledged and been supportive of us.”
Hyder was less certain of how increased gaming prospects in Illinois will affect Rhythm City. In March, Illinois received a proposal to expand gaming by six casinos.
Under the proposal, which was approved by the Illinois Senate, new locations would include Chicago, Lake County, Rockford, Danville and Williamson County in southern Illinois.
For Hyder, another looming question out of Illinois is the ongoing impact of increased video-gaming terminals in bars and restaurants.
“It’s a different story in Illinois, because, for some of us that have been looking and hearing about this for some time, the issue of adding new gaming positions is not new,” Hyder said. “When you think about that, it’s had an impact on the facilities on the eastern side because of the proliferation of (video gaming terminals).”
Since the introduction of the terminals more than four years ago, Illinois has exceeded Nevada in its number of machines.
From July 2016 through April 2017, video-gaming terminals generated $990 million, which resulted in a quarter-billion dollars in taxes to the state and $50 million to municipalities.
In Rock Island County, the games have generated close to $12.5 million in income and $600,000 in local taxes in the current fiscal year.
While video-gaming terminals provide another avenue of entertainment for consumers, Hyder said it's hard to say whether they draw business away, because the "convenience" of them doesn't necessarily translate to Rhythm City customers.
“The fact remains that despite it, we continue to position ourselves through our resort in a manner that provides good service, amenities and entertainment the region demands,” Hyder said.