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Date: March 25, 2003

The Methodology, Facts and Conclusions Are Just Plain Wrong.

Anderson Economic Group Study on Gun Lake Casino Impact

The Anderson Economic Group (AEG) Study on Gun Lake Casino Impact takes so many conflicting positions within AEG's own documents, the flaws take many pages to summarize. The AEG documents are more political than analytic, with questionable intention. A few items are noted:

The AEG Study had a conclusion before having a study and its talk about high standards and "refraining to take a position" is questionable. The study had an incorrect foundation for a model, with evident errors, and thus all the conclusions are incorrect. If you cannot correctly detail the present, you cannot predict the future.

Grand Rapids is glad to accept $60 million in state funds for its convention center, and claim that really helps everyone. Yet a casino, which pays millions in taxes, and generates thousands of jobs, is somehow not helpful to the economy.

The Anderson Economic Group has never before authored a gaming study. In contrast, the Tribe's consultants, Michigan Consultants have been involved with casino markets in Michigan and other states. The Detroit News editorial page termed the firm's numbers "definitive" for the casino market in southeast Michigan.

The Gun Lake Tribe is saying that the jobs and public revenues should be in Allegan, Barry and neighboring counties - not Indiana, Mt. Pleasant, Manistee, etc. The casino host regions have done great, and will likely continue to do just fine, and look after their interests very well. It is incredible that the Grand Rapids Chamber is so concerned about the welfare of other regions and states.

The AEG Study does not mention the increases in unemployment in the region. On one page the study claims the Tribe's estimates of revenue and job figures are too high, but then also claims that the casino will create enormous growth.

The Gun Lake casino has agreed to pay millions to local government to support proper police, fire, and other public safety programs. The Gun Lake casino will help fund mental health programs that involve problem gaming. Problem gamblers exist whether or not there is a casino in Allegan. These gamblers have an option of gambling at the 20 casinos now operating in Michigan, and also have options of gambling at the state lottery outlets, horse tracks, casinos in other states, the internet, and illegal betting.

The AEG Study does not mention that the Soaring Eagle pays nothing to the state of Michigan, and that the Indiana riverboat tax money goes to Indiana. By contrast, the Gun Lake casino will be paying millions to the State of Michigan.

The AEG Study criticizes entertainment spending as having no value; it then talks about Grand Rapids cultural and entertainment attractions. It is also a slap in the face of the tourism and recreation industry in western Michigan. These people certainly feel their industry has value. Hundreds of millions in potential gaming spending and off-site spending from casino visitors passes through Kalamazoo without stopping.

The AEG study ignores off-site spending by casino customers and subcontracts by the casino with area vendors.

The Grand Rapids Chamber is so concerned that some money will be shifted from other casinos. The Tribe wants to retain and attract the spending in this area. Why the Grand Rapids Chamber is more concerned with other areas is odd. Why counties and people need the permission of the Grand Rapids Chamber to look out for themselves is unclear. Did the chamber worry about the impacts on other counties when they received $60 million from the state for the convention center?

The AEG Study assumes that very few people in Kent County currently frequent a casino. The study claims that the spending at the Gun Lake casino by County residents is money that is now spent in Kent County and that Kent County is only a tertiary market for all existing casinos. Mt. Pleasant, the other northern casinos, and casinos in other venues have many Kent County customers. According to the study, Kent residents spend only $32.1 million at casinos currently - a convenient fable. It actually is over $50 million, and may be significantly more. The specific figures in the AEG report are $32.1 million, 495,239 visits, and 164,429 "gamblers" 21+ years. The average number of visits per gambler is 3.0. is also underestimated. It is at least 6.0, and probably higher. On one page, the AEG study claims that the Tribe's revenue estimates are too low, while on another that the Tribe will take over $90 million from Kent County. This is Enron-type accounting.

The only correlation with crime rates is the level of unemployment, and the Gun Lake Casino adds over 4,300 badly needed jobs to the region. It is well accepted that Michigan data reveals that counties that host casinos do not have greater rates of crime than those that do not.

The AEG "state loss" figures are fictional. These figures are selectively based on profit factors not only for casinos but all industries, missing the dynamics of tourism. MSU recently published a study that Michigan has a net deficit when it comes to tourism spending - more leaves the State than comes in.

The Kalamazoo region is not competing in the gaming field. Casinos have been the fastest growing segment in a key economic sector (entertainment, tourism, and recreation) but at present Kalamazoo does not capture any of that spending. Currently, the closest casino to Kalamazoo is the Blue Chip casino in Michigan City, Indiana (about 90 miles from the City of Kalamazoo); Blue Chip bankrolls the opposition to the Gun Lake Casino, and is also a member of the Grand Rapids Chamber. The Soaring Eagle Casino in Mt. Pleasant is approximately 140 miles away, and the Detroit casinos approximately 135 miles away.

The magnitude of existing gaming at Michigan casinos is largely a matter of public record. The figures that the AEG study use are simply wrong, and conflict with what is known to already be happening. Underestimating existing expenditures is a self-evident failure of the AEG "model". AEG uses inappropriate out-of-state examples. The total casino revenue figures from the target area of the AEG Study (which represents almost a third of the state) are wrongfully estimated at $263 million. A few quick figures:

Casino Type / Location	Annual Gaming $
Native American casinos in Michigan	about $1.0 billion
Soaring Eagle in Mt. Pleasant	about 430 million
Little River in Manistee	about $95 million
Two Little Traverse in TC area (combined)	about $100 million
Detroit (3)	about 1.1 billion
Windsor	about $400 million
Blue Chip (Mi. City, Indiana)	about $210 million

These casinos are also investing and expanding. Gaming revenues in Michigan casinos already exceed $2.1 billion annually. Some comes from out of state, but this is balanced by expenditures by Michigan residents at casinos in other states and Canada.

Attribution: Jacob L. Miklojcik; President, Michigan Consultants