Saturday, September 1, 2012
Placing bets on a casino connection
Take a moment to imagine that you are working on a new transportation service. It should be able to operate in the black by taking a straight shot between two significant population centers, but there's an opportunity to deviate away from the straight route for a few miles to make a big boost to the ridership. For a modestly higher investment, the service might have patronage 50% greater than it would otherwise. Seems like a good idea!
But what if this major traffic destination was a casino? Does that change your opinion?
This is one of the big questions facing backers of the Northern Lights Express line to the Twin Ports of Superior, Wisconsin and Duluth, Minnesota. Grand Casino Hinckley, operated by the Mille Lacs Band of Ojibwe, is a major destination along the planned route. According to a 2007 report, the casino generates the amount of intercity traffic expected from a city of 500,000 to 1 million people—about 8 million trips a year (mostly from visitors, but about 1 million come from employee trips).
By comparison, the Twin Ports metropolitan area contains about 280,000 people. A good connection to the casino would cause a station there to be to be the second-busiest on the line after Minneapolis, with more passengers than the stations in Duluth and Superior put together!
The casino is about 2½ miles away from the center of Hinckley, too far to walk comfortably (it'd take 45 minutes to an hour), so a shuttle bus for casino-bound passengers would be critical if a station was placed along the existing tracks through the town. But indirect access really limits the attraction of taking the train up to Hinckley for a night of gambling—people simply don't like the extra transfer when there's the option of a single-seat car ride instead.
The 2007 study estimated that a direct connection right to the front of the casino would boost ridership from 889,000 annually to 1,363,000 a year. Ridership projections were adjusted downward by the time of a later 2010 study which did not include a casino connection in its projections, but would likely still see numbers midway between the 2007 study's projection for 8 daily round-trips on the route versus another option that looked at 4 daily round-trips.
So from a numbers perspective, this all seems good. New track would go on fairly cheap land that isn't heavily populated, so it's a fairly cheap way of adding major benefit to the line.
But this concept brings up questions about gambling in general in Minnesota. The question of whether or not casinos should be allowed in the state has been settled, but there is a question of geography: There are 18 casinos across the state now, so would we be unfairly benefiting this one above the others which aren't so favorably located? It is worth noting that downtown Duluth is also home to the Fond-du-Luth casino, so arguably 2 out of the 18 will be connected by this line. And even the most promising alternate route for the train along the old "Skally Line" running north from Saint Paul (rather than Minneapolis) would have gone right through Hinckley as well. This popular destination is simply in the right spot (well, almost the right spot).
New patrons would be enticed to visit the casino because of this connection, perhaps as many as 200,000 a year. Most casino visitors would probably be redirected from existing car or bus trips. 200,000 is pretty huge in terms of train ridership, though that's a small fraction of the 8 million trips reportedly generated by the casino already. It's significant enough that the Mille Lacs Band should contribute something to the Northern Lights Express's construction costs. Hopefully a favorable agreement could be reached on that front.
Other questions also come to mind, such as whether casino traffic will be stable, rise, or decline. I haven't been able to find specific data on how much revenue comes from tribal gaming in Minnesota, so the general trend is unknown. We do know that revenue from pull-tabs (legal in the rest of the state) has been on the decline—an issue which was important in the Vikings stadium debate—but perhaps the casinos have been pulling in customers who've grown bored of pull-tabs over the years.
In general, I prefer to run trains through the centers of cities and towns, even if there isn't much center to be found. But in this case, the ridership and revenue to be gained makes building the train line to the casino a much safer bet. Hinckley itself only has a population of 1,800, and that simply can't compete with the massive traffic generator next door.
The alliance behind the Northern Lights Express project is currently reviewing the idea of a casino connection again. Hopefully they'll release a new report soon with updated projections and better overall detail.