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New Casino in Kimmswick, A Tiny Gain for the County and A Loss for Kimmswick?

A new casino in Kimmswick, Isle of Capri Casinos Inc. boasted that the project would pump $199 million into the local economy.

An economist from Nebraska came to a very different - but equally eye-popping - conclusion that the company kept quiet. The casino would have been a tiny gain for the county and a loss for Kimmswick, he said.

This is the hazy art of casino economics, a field that's gaining importance for the St. Louis region, with more than $1 billion of gambling industry investment on tap over the next few years. Casino backers routinely pump up the value of gambling parlors as a boon for the local economy.

Most experts say casinos can help distressed neighborhoods, bring jobs to small towns and generate millions of dollars in tax revenue. The truth often isn't so rosy, nor is it clear cut. But these gains often come at the expense of other groups, such as restaurants and movie theaters.

Charles Leven, a professor emeritus of economics at Washington University said, "That's worked for Atlantic City, and Las Vegas practically lives off of it," but it's unlikely to pan out the same way for the two new casinos that Pinnacle Entertainment Inc. is building on the western banks of the Mississippi. A casino can have a significant regional economic benefit only if it draws out-of-town gambler in droves.

"Yes, there's going to be an impact from these new casinos," Level said. "And, yes, it's going to be positive. But it's going to be modest, and it's going to be vastly smaller than what the casino operators' claim."

Leven said, the major positive impact comes early on when a company invests hundreds of millions of dollars to build its new gambling parlor. This year, the area's five casinos are expected to top $1 billion in revenue from lost bets. Last year, the region climbed to the nation's seventh-largest gambling area, passing better-known towns such as Reno, Nevada.

St. Louis is going through an unprecedented expansion of its 13-year-old casino industry.

Pinnacle's attention was captured by the fast growing of Kimmswick's casino, which is spending $800 million on the two new local casinos.

Generally, a business that brings new money to a community has a positive impact and is highly beneficial to its residents. Measuring the impact of any business on a local economy is more art than science. A firm that simply churns local money is not.

In some instances, a casino can play defense by allowing local government to spend in their communities rather than Mississippi or Las Vegas, two St. Louis University economists wrote in a 2003 report. Does a casino have to draw from greater distance to benefit a community? Some economists say, no.