Catfish Bend Casino received permission from state regulators today to shut down its struggling Fort Madison gambling boat, putting about 180 people out of work in southeast Iowa.
The action by the Iowa Racing and Gaming Commission doesn’t affect Catfish Bend’s new USD 50 million casino and hotel complex in Burlington, which will remain open seven days a week.
“The boat just can’t compete at this point and it wasn’t generating enough revenue to survive,” said Gary Hoyer, chief executive of Great River Entertainment Inc., the parent of Catfish Bend.
He told state regulators, who met in Johnston, that the 180 people losing their jobs have been with Catfish Bend less than six months, and they will be eligible for rehire when positions become available. The Fort Madison casino shutdown will be effective Nov. 15.
Catfish Bend had operated successfully in southeast Iowa since November 1994, spending summer months docked on the Mississippi River in Fort Madison and winter months tied up in Burlington. The situation changed in June when the company opened a new land-based complex on U.S. Highway 61 in Burlington, offering a larger casino with 180 hotel rooms, four restaurants, plus a convention center, spa, bowling center and water park.
The plans also called for constructing a land-based casino in Fort Madison, eventually selling the existing gambling boat. But the combined Burlington/Fort Madison gambling operation quickly failed to reach revenue projections based on market research. While patronage and gambling revenue were higher with casinos in two cities, expenses significantly increased, Hoyer said.
In October, Catfish Bend had 89,237 admissions in the two cities with gross gambling revenue of USD 3.3 million, state records show. For the same month a year earlier, Catfish Bend had 43,722 admissions with gross casino revenue of USD 2.3 million.
Another factor is that Catfish Bend spent more than it had planned on the new Burlington complex, “so we ended up with more debt than we wanted,” Hoyer added.
Hoyer said the layoffs will affect newer employees in both cities, and Fort Madison workers who are retained will be transferred to Burlington.
He said Catfish Bend still plans someday to build a new land-based casino complex in Fort Madison or elsewhere in Lee County, although he didn’t offer a timetable.
Jack Ketterer, the state commission’s administrator, asked Hoyer to return in March to provide an update of Catfish Bend’s financial status and operational strategy.
“Obviously we have a great facility there in Burlington with a new hotel and all the attractions. I think it is a great regional attraction,” Ketterer said.
Larry Smith, president of the Southeast Iowa Regional Riverboat Commission, a non-profit group which jointly holds the gambling license for Burlington and Fort Madison, sent a letter to state regulators asking them to closely examine Catfish Bend’s request today. While his organization has approved the casino shutdown in Fort Madison, he questioned the skills of Catfish Bend’s management.
“I am confused by how a professionally conducted market study could miss the revenue projections by so much, and disappointed that ownership/management chose to place their entire faith in that study,” Smith said. He said he was also disappointed by how much the Burlington casino’s construction project exceeded its budget.
Hoyer said competition for gambling dollars in southeast Iowa is much tougher than when the market study was conducted. The Riverside Casino and Golf Resort, which opened last year south of Iowa City, is much larger and grander than when it was proposed in 2005. In addition, the Isle of Capri in Bettendorf and Rhythm City Casino in Davenport have improved their facilities, he said. There is also competition from Terrible’s Casinos in Osceola and La Grange, Mo., he said.
Catfish Bend now has a “fantastic facility” in Burlington, “but as construction was concluding there were costs that were unanticipated, “ resulting in additional debt for the company, Hoyer said.