March 18, 2001

TOURISM MANAGEMENT RESEARCH: GRIFFITH UNIVERSITY GOLD COAST, AUSTRALIA GAMBLING AS A TOURISM STRATEGY FOR REGIONAL COMMUNITIES OF COLORADOs BLACK HAWK & CRIPPLE CREEK

Brian M Touray GRIFFITH UNIVERSITY

TABLE OF CONTENTS

Title. 3 Statement. 4 Acknowledgement. 5 Abstract...6 Chapter I 1.1 Introduction..7 1.2 Statement of the problem.8 1.3 Research Questions ..9 1.4 Importance of study..9 1.5 The research Design.10 1.6 Plan of study Chapter II Review of Literature.11
Interaction between Gaming/tourism and Regional Economies in General.18
(Summary of the Chapters)

.10

Chapter III Research Design.21

Chapter IV Results.27
Demographics of the Sample..27 Hotels and Restaurants: Business Activity..28 Effects on Revenues..29 Advertising and Promotion Strategies..31 Overall Assessments of Impact and Effects..33

Chapter V Discussion.37 Chapter VI Summary and Conclusions.44 References...46 Appendix...48 Questionnaire used during data collection...48 Gaming report released by the American Gaming Association..96

Statement
The work presented in this paper is entirely original, to the best of my knowledge, except where acknowledged in the text.

Acknowledgment

I thank my friends and family for supporting and praying for me in everything I aim for. Their encouragement and motivation guided me through the right direction. A special thanks to Modou Mbowe of the University of Washington, a long time friend who provided me with full support and encouragement. I also wish to acknowledge and thank the following for their time and valuable assistance: Professor Mohammed Kah of Howard University, my supervisor Mr. Mike Raybould of Griffith University, Paulo Moore of Denver Business Journal, Lois Rice of Colorado gaming Association, Tammy Sharp of Black Hawk Gaming & Development Company, Inc., and Ronnie Burt of Las Vegas Convention & Visitors Authority. Finally, I would again like to express my sincere appreciation to all the individuals listed above. It would have been very difficult without their contribution and support.

The

present

research

ABSTRACT study was

conducted

to

evaluate

and

identify the perceived impact of legal casino gambling on two Colorado communities, Cripple Creek and Black hawk, where gambling has been legal since the early 1990s. Gaming has been increasingly represented as a viable source of often needed public revenues (in the form of taxes) and as a spur to other local economic

development, capable of generating direct and indirect economic benefits, creating When it new jobs, to and facilitating tourist having a infrastructure and to or

improvements. opportunities, significantly

linked is

other as of

attractions the capacity

perceived the appeal

enhance

specific

destination

region. However, the literature also suggests that actual benefits realized from gaming are neither consistent nor unaccompanied by offsetting disadvantages. The study explored this problem via a nonprobability survey of a sample of 34 area retailers,

restaurants/bars, hotels and casinos. The research suggested that while the casinos and hotels have benefited from gaming,

restaurants and bars not affiliated with the Black Hawk and Cripple Creek casinos/hotels and local retailers have not economically

benefited to the degree anticipated. The data demonstrate that 50 percent of these subjects felt the overall impact and effect of casinos on the community was in the "Good" to "excellent" range; however, this suggests that remaining 50 percent of the sample felt this impact and effect was in the"Fair"to"Poor"range.

CHAPTER I Introduction Introduction 1.1 Any number of communities in the United States has begun to

pursue establishment of casino gaming establishments as a means of enhancing tourism, generating new tax revenues for funding a wide variety of infrastructure and service improvements, creating viable work opportunities for residents, and expanding an existing tourism industry (Felsenstein & Freeman, 1998, p. 145). Though there has been ongoing debate over the efficacy of this particular strategy for revenue generation and other benefits, gambling and tourism are increasingly perceived as complementary activities. However, there is a growing body of literature documenting negative consequences of casino gaming on local communities and the failure of many such enterprises to achieve anticipated results; voices are being raised in opposition to casino gaming by such diverse groups as religious leaders, law enforcement and other public officials, merchants' associations, and members of the

general public (Garnaas, 1999, p. 28). Further, as gaming, establishments themselves have

proliferated within regions and larger geographic areas, the mere accessibility of such establishments may be detrimental to the realization of economic goals as described above (Garnaas, 1999, p. 28). With more gaming choices, potential gamblers are less likely to travel long distances to participate; often, the more successful

gaming establishments (including those in the new "family oriented" Las Vegas) are located in close proximity to other tourist and leisure time attractions. As casinos become a more and ore

prominent feature of established tourist destinations, their appeal may well be naturally diminished; similarly, when a relatively small area finds itself home to several casinos, competition tends to diminish the revenues of each individual site. Casinos that offer fewer amenities (including restaurants, entertainment,

taverns, spas, childcare and children's activities, sports, etc.) are more likely to fail than establishments with a wide range of such entertainment options (Felsenstein & Freeman, 1998, p. 146). Nevertheless, casino gaming seems to be a permanent fixture on the American landscape; smaller towns such as Cripple Creek and Black Hawk, Colorado - which serve as the focus of the present study have become dependent upon this industry. Statement of the Problem 1.2 The problem addressed in the present study is stated as

follows: Despite the persistent perception that casino gaming has the potential to substantially augment an area's or city's tourist appeal while generating much-needed revenues for local and state governments, benefits. not all casino establishments produce anticipated

In the case of Cripple Creek and Black Hawk, Colorado,

which introduced casino gaming in the early 1990s to enhance other tourist attractions, the question of whether or not benefits have been realized is of special significance. Thus, the problem to be

explored

in

this

study

is

whether

local

business

owners

and

managers in this region perceive the presence of casinos to be positive or negative, beneficial to the level anticipated, or

having the potential to create new problems and issues for city government and residents. Research Questions 1.3 The following research questions are addressed in the present

study: 1. To what degree has the presence of casinos in the

target area positively (and negatively) affected upon local economic life? 2. What are the perceived advantages and disadvantages?

of casino gaming in an area? 3. Does the present of casino gaming in an area augment?

tourism? 4. What types of area business appear to be most directly? benefited by casino gaming? Importance of the Study 1.4 The study is significant in light of the fact that more and

more governmental units are turning to casino gaming as a source of revenues, job opportunities, funds for infrastructure development, and the enhancement of existing tourism and entertainment options Arthur Andersen Consulting (www.americangaming.org/media/impact/ indirect/html, 1999, p. 1) recently reported that in the U.S. more than 300,000 direct jobs have been created by this industry, with

an additional 400,000 indirect jobs (e.g., construction, services, local/regional manufacturing and supply enterprises) also created. The very appeal of casinos as a "quick economic fix" suggests that close examination of their effects should be undertaken to identify both the advantages and disadvantages of such businesses. Research Design 1.5 The present study consists of both qualitative and

quantitative research components. The study includes a review of relevant literature and incorporated a survey employing a survey instrument statistical designed data, by this the researcher. provides Generating a descriptive of the

survey

comparison

perceptions of casino impact from three different business sectors: retail businesses, restaurants, and hotels/casinos themselves. Surveys of this sort are useful in providing the guidance needed for more complex research efforts. Plan of the Study 1.6
(Summary of the chapters)

Chapter I serve as an introduction to the project, while Chapter II presents the results of the qualitative portion of the project (i.e., Review of Literature). and introduces Chapter the III

explicates

the

research

design

survey

instrument developed by the research along with the selected data analysis methods. Chapter IV presents results of the empirical study, while Chapter V discusses these results in light of the literature. Chapter VI provides a summary,

conclusion, and recommendations.

CHAPTER II Review of Literature Gambling and tourism are often perceived as complementary activities, though there is continuing debate as to the proper place of gambling in local and regional economic development.

Felsenstein and Freeman (1998, p. 145) have commented than on the ne hand, gambling generates local income, employment, and output, and increases the volume of economic activity occurring locally. On the other hand, it is sometimes presented as an "inferior" economic development activity that creates undesirable outputs and

externalities at the local level and that it needs to be justified in terms of higher-order economic goals such as job and income creation. activity Moreover, it can be viewed as a "second-best" economic that can only exist profitably in the presence of

"government-created) distortions such as regulative, artificial, and noncompetitive environments. Nevertheless, Felsenstein and

Freeman (1998, pp. 145 -147) have also noted that locales or regions experiencing economic difficulties have often linked

gambling to tourism in a sometimes very successful attempt to create and maintain economic turn-around; in the present study, in which the case of Cripple has Creek a and Black Hawk, Colorado is

examined, strategy.

gambling

been

reasonably

successful

tourism

Garnaas

(1999,

p.

28),

in

describing

the

Cripple

Creek

gambling and tourism strategy, has commented that results have been

10

mixed; initially, gambling buoyed Cripple Creek and nearby Victor, Colorado, but came close to killing every other kind of business. In its early years, Cripple Creek celebrated a 45 percent annual increase in casino revenues, but in 1998 that figure had tapered off to a 5.5 percent rise and seems in 1999 to be flattening even farther. Efforts to create a tourist attraction in a long-abandoned gold mine and by redeveloping Main Street as a "Wild West" retail theme mall are being considered as a strategy to supplement the casino as a tourist designation - and in recognition of the fact that with gambling casinos proliferating, a casino alone will not guarantee tourism. Stokowski (1996, pp. 40 -48) conducted an in-depth study of both Central City and Black Hawk and their gambling casinos, noting that gambling constitutes the "third boom" in their histories and it has the potential to "burst" as did the gold mining boom and the recreational/leisure time boom begun when the Central City Opera House was constructed in the 1930s and the area became a Mecca for wealthy Denverites. Stokowski to (1996, p. 5) traces the casino voters

industry's

beginnings

November

1990,

when

Colorado

approved limited stakes gambling in three economically depressed mining towns, Central City, Cripple Creek and Black Hawk. Seven casinos opened October 1, 1991, in the area, with 11 more opened by month's end and 34 were opened by the end of 1995. In the same period, gambling proceeds went from $17 million per quarter to $281 million per quarter. By 1994, Black hawk was enjoying town

11

revenues of nearly $10 million per year, with Central City taking in $6.4 million. This author argues that the economic effects of gambling as a tourism strategy are equivalent to the earlier "boom periods" brought about by gold mining and the creation of an entertainment complex: these effects are destined, she says, to be temporary, to create dependence upon a single industry, and likely to prohibit meaningful efforts to attract infrastructure investment leading to long-term or permanent sources of city revenue, jobs, and personal income. However, Carroll Bogert (1994, pp. 22 -25) reported in 1994 that Black Hawk had benefited extensively from casino revenues. For example, the town cleaned up its Superfund site with $8 million from the Bullwackers Casino, enjoyed town revenues of $8 million in 1993 (up from $165,000 in 1990), made available $10,000 in free funds to residents who wanted to restore property, expanded

government employment, and provided jobs for the locals and the influx of new residents seeking work. At the same time, government became more complex and interaction with the now-dominant casinos (and their owners) more difficult. Larsen (1995, pp. 4 -8) conducted a comparative analysis of gambling, tourism, and their effects in three states Iowa,

Mississippi, and Colorado. With respect to Colorado, he noted that gaming in the state is load based and seen as a means of reviving the target communities, which were in decline after several

previous "boom" periods. In his view, casino gambling in Colorado

12

has had several positive effects. Primarily, it has enhanced state and local revenues significantly, increased job opportunities, and facilitated a rise in tourism (particularly among in-state

travelers who have elected to visit a Colorado rather than a neighboring state's casinos). At the same time, Larsen (1995, p. 6) points out that casino gambling has also seen to opening and closing of numerous facilities; many have been open only to close because of insufficient resources, inadequate patronage, and an inadequate local service infrastructure (e.g., hotels, shopping, other tourist attractions, restaurants, transportation, and

parking). Thus, in his view, while casino gambling as of 1995 had been beneficial to Colorado in general and to specific locales in particular (such as Cripple Creek and Black Hawk, as well as Central City), it was not the panacea for economic dislocations that it seemed to promise. Au and Hobson (1997, pp. 77 -80), commenting that the limited number of legalized gambling and gaming destinations has resulted in some significant tourism flows, have also noted that geographic location and multiple site access both play a very important role in determining which casinos will succeed. They posits a symbiotic relationship between gambling and tourism, but notes that the most successful American gambling and gaming destinations (Las Vegas, Reno, and Atlantic City) have traditionally been largely dedicated to gambling alone or, at the most, only tangentially tied to other tourist destinations which they augment (or in some cases have

13

supplanted). In these cases, casinos tend to be the rationale for some 87 percent of all tourist visits. In smaller towns, or in more isolated (and newer) casino centers, the presence of absence of other tourist attractions may be a critical determinant of casino success. Brad Smith (1997, p. 7a) noted that in 1997, the total number of casinos in Colorado (and corresponding state and local revenues) was on the decline, with overall gaming profits also in decline. Simultaneously, tourism receipts and levels were also declining, though not as significantly as those generated by the casinos. Government analysts believed then that interest in gaming in

Colorado was beginning to "plateau out," leaving the state and the affected local government bodies faced with the necessity of

rethinking their tourism and revenue-generation strategies. Part of the problem that Colorado is experiencing - and which has negatively affected upon both Black Hawk and Cripple Creek - is an artifact of the virtual explosion of gambling and gaming casinos that has taken place across the United States in recent years. Felsenstein and Freeman (1998, p. 148) have commented that where tourists and other gamblers once had to travel significant

distances to find legal tables and slot machines, such amenities and facilities are often found virtually "next door" today. In Chicago, nearby Illinois, and for example, gambling and it the not permitted; along in

Elgin

Aurora,

Illinois,

strip

Lake

Michigan comprising the towns of Hammond, East Chicago, Gary, and

14

Michigan City, Indiana, gamblers have a choice of more than 9 casino boats. Individual casinos and their host cities therefore compete for a the relatively capacity limited of any revenue single and player to base -

inhibiting

operation

realize

expectations. Felsenstein and Freeman (1998, p. 149) suggest that casino gaming has, in general, the greatest potential to boost tourism when there are other tourist attractions present or closeby. As a sole tourism strategy, gaming may have limited impact and may, as significantly, have unintended economic effects. Among Freeman those "unintended p. 145) economic a effects" failure to Felsenstein create and

(1998,

include

other,

alternative sources of jobs, revenues, and income. In the local service sector, gambling seems to have a largely and even purely redistributive economic effect. Casinos located in or very near to major metropolitan areas or within established tourism destinations (i.e., well-attended national parks, leisure time resorts offering sporting facilities, or national historical sites of importance) and business travel sites may draw large numbers of day-trippers. Casinos located in smaller towns that are not so affiliated with other tourist draws must either construct facilities that augment the gaming tables and slot machines, or anticipate lower levels of visitation and correspondingly lower levels of revenue generation. Paula Moore (1999a, p. 15A) recently reported on the

experiences of Black Hawk and Cripple Creek and noted that the "big developers" are now becoming actively involved in creating the kind

15

of attractions that may well have the capacity to draw increased tourism. Established gaming concerns such as Isle of Capri Casinos, Inc., of Biloxi, Mississippi and Las Vegas-based Riviera Holdings Corporation to break ground on mega-casino/hotel/spa properties in Black Hawk. Black Hawk, far more than either Cripple Creek or Central city, seems to be the location of choice for such firms, which are seen as driving locally owned casinos out of business because they lack the resources to provide the kind of amenities that the larger operators take for granted - and gamblers expect. Moore (1999a, p. 15A) also states that part of Black Hawk's appeal is that it is located close to a major city (Denver) and on a main road (Colorado 119), not too distant from airport

facilities. Black Hawk is also the location selected by Mardi Gras Casinos (building a $60 million facility to open in December of 1999), Hyatt (with a planned $180 million facility), and Jackpot Springs (with a $60 million facility planned). All $365 million in

new casino development in Colorado is to be positioned in Black Hawk - suggesting that Black Hawk has "won the war" or at least the battle to become Colorado's major gambling destination. However, Colorado is also home to casinos owned and operated by Native Americans on their reservations and tribal lands (Moore, 1999b, p. 44) has noted that these casinos - one operated by the Ute Mountain Tribe and one by the Southern Utes - do not draw the same kind of gambler or tourist that the more glamorous Black Hawk and Cripple Creek casinos (much less those in relatively nearby Las

16

Vegas

and

Reno)

are

accustomed

to

serving.

These

gaming

establishments are focused less on the high-roller gambler than the local who wants a night out - reflecting the fact that "tourism" may take different forms. As this brief review of literature has demonstrated, the

linkages between gambling and tourism in general and in the cases of Cripple Creek and Black Hawk are multifaceted. Gambling has had both positive and negative impacts upon these towns. In the end, however, it seems likely that lacking other attractions, gambling alone will not serve as a permanent tourist draw unless a Las Vegas-type environment is created. Interaction General The gaming industry commissioned a study by Arthur Andersen, Inc. (http://www.americangaming.org/media/impact/indirect.html) Between Gaming/Tourism and Regional Economies in

that provides an overview of the general economic impact of the casino gaming industry. This study revealed that both indirect (i.e., effects arising from increased and sales and and employment, (i.e., as a

including increased

additional spending by

spending

jobs) whose

induced increase

individuals

incomes

result of the net direct or indirect activity generated by the industry) effects. These effects are said to extend to all facets of a regional economy and to occur in all parts of the country. Andersen also stated that these indirect effects are substantial with operational spending in the gaming industry providing

17

approximately 300,000 jobs and $10 billion in annual wages to all other industries. Also of significance are the 85,000 construction jobs (generating $2.5 billion per year in wages) generated by the gaming industry. Linda McCrery (1998, p. 38) reported that in Colorado, tourism is viewed by industry representatives and many public officials as critical to the regional economy. In 1993, Colorado was ranked No. 1 as a summer resort destination (before legal gaming) and then sank to 17th place in 1994. It rose again to 11th place in 1995, number 13 in 1996, and number 11 in 1997. Overnight pleasure trips were up to 20.8 million in 1998 over 19.4 million. An advertising, promotion and marketing campaign with additional, one-time funding) by the state was linked to these increases, as was the availability of gaming in selected Colorado locations. This suggests that gaming and tourism are linked; however, seasonal ebbs and flows in tourism also affect gaming in this state. However, as Larsen (1995, p. 9) states, the primary markets for Colorado casinos are in Denver, Colorado Springs, and Pueblo; given that Colorado is located in close proximity to Nevada (as well as Nebraska and Arizona where gaming is also legal), the vast majority of all gamers are in-state travelers and not tourists from the larger region. Colorado's dependence on in-state patrons for

casino revenues can be understood as significantly limiting its prospects for further expansion. Where casinos appear to be most beneficial in facilitating major bursts in tourism is those

18

settings

where

casinos

are

"stand-alone"

entertainment

venues

(e.g., Las Vegas, Atlantic City) or located in close proximity to other natural tourist attractions where they augment other tourist revenues. Seasonal issues also affect this industry; Rephann, Dalton, Stair and Isserman (1996, pp. 5 -10) have commented that casinos located in regions where climate variations otherwise influence tourism are less likely to provide stable revenues across seasons. As an economic development strategy, casino gambling therefore has limited and varied appeal and viability. In the case of Colorado, this is very much the case. Rephann, et al (1996, pp. 14 -18) have

also noted that many of the purported benefits of casino gaming as an economic development strategy are illusionary; construction jobs are a "one-time" expenditure (as are related purchases of equipment and materials), and seasonal variation in job levels also diminish expected economic returns. Given that few casinos are locally

owned, most profits tend to be gained and spent by out-of-state owners and corporations.

CHAPTER III Research Design Methodology In addition to the qualitative portion of the study, the results of which are presented in Chapter II, Review of Literature,

19

a quantitative survey of businesses in the Cripple Creek and Black Hawk, Colorado, community region was undertaken. The survey was developed by the researcher in order to obtain data from three groups of business entities operating in the area: - casinos (with and without hotels, restaurants, and taverns) themselves; - restaurants (full-service, coffee shops, and fast-food) and taverns; - retail entities of various types. It was determined, based on the review of relevant literature that these three general business typologies would be most likely to be affected by the presence of casino gaming in a community. According to Kenneth Bailey (1990, p. 4), scientific, business, psychological, social and other research designs share some basic elements, which reflect the unique characteristics of the

particular research project and certain standardized requirements. Bailey (1990, p. 4) identifies the following basic "stages" as integral to any empirical research project: 1. 2. 3. 4. 5. Choosing the research problem and stating the hypothesis. Formulating the research design. Gathering the data. Coding and analyzing the data. Interpreting the results to test the hypothesis. One cannot

Each of these stages is dependent upon the others.

analyze the data until it is collected, or collect data until

20

decisions as to the nature of that data are taken.

Research is,

says Bailey (1990, p. 4), a "system of interdependent related stages" or tasks best conceived as a circle. Any viable research

design should be capable of subsequent replication, and the data generated by subsequent experiments or methods should be consistent with the data generated by the initial project. In measuring concepts, behaviors, causes or effects, and other phenomena of any sort, one first must define the unit of analysis and then specify the characteristics of that unit to be measured (Bailey, 1990, p. 51). unit of analysis are Potentially measurable features of that referred to variously as variables,

characteristics, properties, or attributes.

A distinction is made Measurement, in

between "quantitative" and "qualitative" research.

general, is defined as the process of determining the value or level, either qualitative or quantitative, of a particular

attribute for a particular unit of analysis (Gravetter and Wallnau, 1992, p. 2). "Data," therefore, can be either numeric or

statistical or narrative (nominative or labeled).

Part of the

process of choosing the research problem and stating the hypothesis incorporates determining whether the date or information collected with be qualitative or quantitative; for the purposes of this report, it is assumed that this data or information will be

numerical or statistical in nature. In this research design, both numerical and statistical (i.e., percentages) data are presented. It is frequently said that science and, therefore,

21

scientific

research is

is

empirical.

That

is,

scientific

investigation

based

upon observing,

and statistical methods

allow researchers to describe and analyze the observations they have made (Gravetter and Wallnau, 1992, p. 2). Statistical methods are tools of science, and we might think of science and empirical research as methods for making observations and statistics as

consisting of methods of analyzing these observations. In statistical work, a researcher is usually dealing with a sample that is drawn from a population and which is, hopefully, representative of that larger group (Downie and Starry, 1987, p. 4). Two distinct These The types of statistical of used methods and have been

identified. statistics.

consist are

descriptive to

inferential organize and

former

simplify,

summarize data, while the latter consist of techniques that allow us to study samples and then generalize about the populations from which they were selected (Gravetter and Wallnau, 1995, p. 5). A

critical decision made in stating a research problem and creating a research hypothesis is whether descriptive or inferential

statistical methods will be employed in analyzing the data. There are numerous methods of collecting data that range from the very simple to the extremely complex. As noted above, the

method selected will depend, in large measure, upon the exact nature of the research problem, question, and/or hypothesis

(Becker, 1995, p. 3).

Becker (1995, pp. 9 -10) identifies several For example,

types or sets of data and the sources of that data.

22

data can be obtained from either primary or secondary sources; can represent a situation at a point in time or a flow of information over time. Primary data can be collected be a variety of

techniques and methods. surveys,

Some of these techniques are: sampling via probability and

including

nonprobability, quota, purposive,

randomization, dimension

convenience

samples, or

cluster,

stratification,

clusters (Bailey, 1990, pp. 70 -73); interviews, participant or other types of observation

(Spradley, 1990, pp. 3 -6); experiments, scientific observation of behaviors, field

studies, ethnomethodology, document study, and simulations and games (Bailey, 1990, pp. 249 -260). Each of these approaches to data collection is valid and useful, with usefulness linked in large measure to the exact research question, problem or hypothesis under examination. However, the nonprobability, convenience sample was selected for the present study, which can be characterized as exploratory in nature. Instrumentation The attached survey, labeled Appendix A, was developed by the researcher. It captures basic demographic information regarding the nature of the business responding, its years in operation, and number of employees (fulland part-time). It also seeks to

identify peak business season, revenue sources, increases/decreases in revenues, promotional and advertising activities, volume of room

23

rentals and meal service (as applicable), and perceptions of the importance of gaming, its effects on tourism and the local

community, and an overall assessment of the impact of casinos. Sample Selection and Target Population The attached survey (Appendix B), developed by the researcher, was sent via fax and e-mail to a sample of 100 businesses in the Cripple Creek and Black hawk areas of Colorado. Potential subjects

were selected non-randomly from the Yellow Pages Business listings in each of three categories: retail stores, restaurants/taverns, and hotels/casinos. 34 business entities responded. Data Analysis Once quantitative data are collected, they must be organized and condensed so they can be reported in a way that facilitates interpretation (Becker, 1995, p. 17). A basic method of organizing

and condensing original, or raw, data into an easily understood set are frequency distributions. this presentation: 1. 2. 3. Determine the number of classes; Establish the class interval or width for each class; Set the class boundaries or values that forms the Four steps are undertaken to create

beginning and end of each of the classes; 4. Count the number of values in the data set that fall

into each, class (Becker, 195, p. 17). If the frequency distribution is the most basic of all data

analysis methods, it also serves as a starting point for more

24

complex analytical steps, techniques and processes.

Some of these

steps enable the researcher to identify data that is irrelevant to the research question issues (and thus discard further it), and to identify analysis

significant

that

require

statistical

(Becker, 1995, pp. 20 -21). However, given the exploratory nature of the present study, only frequency ranges distributions and and simple were

descriptive generated.

statistics

(i.e.,

percentages)

Three groups of subjects were identified: retail outlets, restaurants/taverns, and hotels/casinos (some with restaurants

and/or taverns). The data were analyzed, as will be demonstrated below, for each of these three groups and for the sample as a whole. Appropriate tables were constructed to visually present the data. Chapter IV, Results, presents these data and provides answers to each of the three research questions.

CHAPTER IV Results Demographics of the Sample Of a total of 100 surveys sent out to potential respondents via fax and e-mail, a total of 34 were returned with a sufficient number of itemized responses for inclusion in the analysis of data. Further, not all survey items applied to all respondents. The sample was constructed as follows: Table I

25

Demographic Analysis of Respondents Business Restaurants/Bars Retail Merchants Hotels/Casinos Number 10 13 11 % 29.4 38.2 32.4

Each respondent was asked to identify whether or not they were locally owned and the number of years the business has been in existence. Table II presents these data, averaged for each group

and the entire sample in the case of years of operation. Table II Ownership and Length of Operation Business Locally Owned # Restaurants/Bars Retail Businesses Hotels/Casinos Whole Sample 9 13 6 28 % 90.0 100.0 54.4 82.4 Years in Operation Avg. 5.1 8.9 6.3 6.8 Range 3 - 12 4 - 15 3 - 10 5.1 - 8.9

With the exception of the retail merchants, virtually all respondents identifying a "Peak season" for their businesses

depicted May through September (roughly "Summer") as comprising a peak season; though the instrument and peak attempted seasons, to only gather 11 of data the

regarding

employment

levels

respondents indicated that they experienced employment increases in Summer. This data was therefore discarded. Table III depicts fulland part-time employment levels (expressed as averages) for the

26

three subject groups and the entire sample. Table III Employment Levels Business Restaurants/Bars Retail Businesses Hotels/Casinos Full-Time 3.2 3.9 93.4 Part-Time 5.2 2.1 12.5

It should be noted, however, that not all respondents identified differentials significantly, between there fullwere and part-time workers in and, as

substantial

variations

employment

levels in the Hotel/Casino category (from a low of 10 full-time workers to a high of 300 full-time workers). Hotels and Restaurants: Business Activity Only 5 of the hotels/casinos reported on room availability, revealing an average of 93.2 rooms per facility (with a range of 8 to 257 rooms). Only 3 identified occupancy rates, with a range of

70 percent to 95 percent occupancy and an average of 85 percent occupancy. None of the respondents indicated what their plans, if

any, were for room expansion. Both restaurants/bars (8) and some (8) of the hotels/casinos responded to an item on volume of meals served on weekdays and weekends. None gave adequate information to determine meal volume during peak seasons. The following Table depicts the responses to this item. Table IV

27

Meal Service Volume, Average Business Restaurants/Bars Hotels/Casinos Weekday 112.4 204.4 Weekend 117.8 492.5

These data, though incomplete, suggest that weekend meal service tends to be significantly increased in hotels and casinos, but not in other restaurants and bars in the area. Effects on Revenues Several items on the survey instrument addressed the issue of how the presence of casino gaming in the Cripple Creek and Black Hawk communities affected revenue generation. All respondents were asked to identify the distribution of revenues by categories. Table V presents these data for each group and for the entire sample. Table V Revenue Sources & Distribution, % Source Sample Bars Gaming Visitors Other Tourist Business Visitors Residents/Local Businesses 52.0 12.6 2.5 32.8 Casinos 88.9 5.9 1.6 4.3 16.9 1.5 .80 73.1 52.6 6.7 1.6 36.7 Restaurants/ Hotels/ Retail

Respondents in all three categories were asked to assess, using a percentage range, the revenue increase effects of casino gaming. The following table depicts these responses; it should be

28

noted

that

not

all

respondents

identified

revenue

increases

associated with casino gaming. Table VI Revenue Increases, % Business 5-10 #/% Restaurants/Bars Hotels/Casinos* Retail Merchants Whole Sample 1/10 -1/7.7 2/5.9 10-20 #/% 3/30 -8/61.5 11/32.4 20-30 #/% 4/40 2/18.2 -6/17.6 30-40 #/% ----40 -50+ #/% -3/27.3 -3/3.8

(*Data from hotels and casinos was incomplete; only 5 of 11 responded to this item.) Interestingly, business a number of respondents 6 reported decreases overall in

revenues.

Specifically,

respondents

(17.6

percent of the entire sample) reported a 10 to 20 percent decrease in business revenues after the introduction of casino gaming, while 1 respondent (2.9 percent) reported a 50 percent or more decrease. Only two respondents in the Hotel/Casino group - both of whom were hotels only indicated other a decline in business which after the a

introduction.

Those

business

entities,

reported

decline in revenues, included 3 from the Retailers group and 1 from the restaurant group, suggesting perhaps that not all local

businesses in communities, which introduce casino gaming benefit to the degree, expected.

29

Advertising and Promotion Strategies Two items on the survey instrument asked respondents to

describe the ways in which they promoted and advertised their services. A third item asked respondents to identify their views

on whether or not the State of Colorado was adequately promoting and advertising casino gaming as a tourist attraction. Table VII describes responses to three types of business promotion. Table VII Promotional Strategies, # and % Business Restaurants/Bars Hotels/Casinos Retail Merchants Whole Sample Respondents Discounts to Casino Patron 3/30.0 9/81.8 7/53.9 19/55.9 were asked to Ads in Gaming Publications 3/30.0 11/100.0 -14/41.2 indicate Discounts to Gaming Tours 3/30.0 7/63.6 -10/29.4 which of several

advertising media they regularly employed. Table VIII depicts this response

Table VIII Advertising Media, # and % Medium Restaurants/ Bars 2/20% 9/90% Hotels/ Casinos 7/63.6% 10/90.9% Retailers Whole Sample 9/26/5% 28/82.4%

TV/Cable Local Pubs

-9/62.9%

30

Casino Lit National Pubs Regional Pubs Hotel/Air Ads Radio

2/20% -1/10% 1/10% --

5/45.4% 3/27.3% 8/72.7% 1/9.1% 6/54.6%

------

7/20.6% 3/8.8% 8/23.5% 2/5.9% 6/17.6%

When the results for the whole sample are considered, it becomes apparent merchants that has the lack of advertising reduced effort the by local retail of

significantly

overall

level

advertising undertaken by these businesses, with the exception of ads placed in local publications. The third question in this area was designed to solicit input from respondents regarding the role of the Colorado State Tourism Bureau with respect to advertising and promoting the attractions of the Cripple Creek/Black Hawk area. Respondents were asked to state whether this public agency should do more, less, or maintain its present advertising levels. Some 41.1 percent of the entire sample indicated that this agency should do more, while 17.6 percent felt that less was needed; 35.3 percent (12 respondents) indicated that they were not sure on this issue. Ten (90.1 percent) of all hotel and casino owners/managers believe that more should be done by the State to promote the area, while only 3 or 30 percent of

restaurant/bar respondents and 1 or 7.7 percent of retailers felt that this was needed.

31

Overall Assessments of Impact and Effects Five items were included in the survey to assess the attitudes of respondents with respect to the overall impact and specific effects of casino gaming on business, tourism, and the community. hen asked to identify the most visible positive effects on the community, 11.8 percent (4) stated that increased tourism was a major benefit, while 16 or 47.1 percent stated that jobs were being generated by gaming. Three (8.8 percent) identified additional

revenues as significant benefits, while one (2.9 percent) suggested that gaming had enriched a "few" local residents. On the negative side, 11 or 32.4 percent identified increased crime as a side effect of gaming; four (11.8 percent) stated that gaming reduced the "family-centered" lifestyle of the community, and 3 respondents (8.8 percent) cited increased traffic congestion as a drawback. Respondents were asked to rate the importance of gaming to their communities using a four point scale. Table IX presents these results.

Table IX Importance of Gaming, # and % Rating Very Imp. Somewhat Imp. Not Imp. Not Sure Restaurants/ Bars 3/30% 4/40% 2/20% 1/10% Hotels/ Casinos 8/72.7% 3/27.3% -.-Retailers --6/46.2% 7/53.8% Whole Sample 11/32.4% 7/20.5% 8/23.5% 8/23.5%

32

Respondents were also asked to rate the impact of gaming on tourism in their community. Table X presents these results. Table X Impact of Gaming on Area Tourism, # and % Rating Restaurants/ Bars #/% Substantial Increase Slight Increase Small Increase Not Sure 6/60% 2/20% -1/10% 3/27.3% Hotels/ Casinos #/% 7/72.7% 1/91.% Retailers #/% -4/30.5% 5/38.5% 4/30.5% Whole Sample #/% 13/38.2% 6/17.6% 5/14.7% 8/23.5%

One item on the survey solicited opinions as to the overall impact of casino gaming as a business and revenue generation strategy. Table XI presents these results. The final item on the survey asked respondents to assess the overall effect of casino results. gaming on the community. Table XI Overall Impact of Gaming on Economic Life, # and % Rating Restaurants/ Bars #/% Excellent Good Fair -1/7.7% 7/53.9% Hotels/ Casinos #/% 8/82.7% 2/18.2% 1/9.1% Retailers #/% 3/30.0% 2/20.0% 4/40.0% Whole Sample #/% 12/35.3% 5/14.7% 12/35.4% Table XII presents these

33 Poor 5/38.5% -Table XII Overall Effect of Gaming on Community, # and % Rating Restaurants/ Bars #/% -1/7.7% 6/46.1% 6/46.1% Four specific research Hotels/ Casinos #/% 5/45.4% 2/18.2% 3/27.3% 1/9.1% questions Retailers #/% 1/10.0% 4/40.0% 4/40.0% 1/10.0% were Whole Sample #/% 6/17.6% 7/20.6% 13/38.2% 8/23.5% presented in the 1/10.0% 6/17.6%

Excellent Good Fair Poor

Introduction to this thesis. First, the study sought to determine the extent to which the presence of casino gaming in the Black Hawk and Cripple Creek, Colorado, community area has had a positive impact. Based on these respondents' opinions, it would appear that on the whole, casino gaming has been perceived as creating new jobs, improving the overall economy of the area, and exerting a generally positive impact upon the community and its residents. However, the hotels and casinos that are most directly involved in gaming are the "big winners," with local restaurants and retailers experiencing less significant an economic boost than might have been anticipated. Secondly, advantages and the study asked of respondents casino to identify More jobs the and

disadvantages

gaming.

improved revenues leading to infrastructure improvements were cited as benefits, while increased traffic and crime were cited as

34

disadvantages. Third, the study sought to determine whether or not casino gaming was linked to increased tourism. With 32.4 percent of the entire sample contending that gaming was "very important" to

tourism, an additional 38.2 percent said it was only "somewhat important;" 26.5 percent contended that gaming was "not important" to tourism. These data suggest that opinion on this issue is

fragmented and that local business managers and owners (with the exception of hotel and casino owners/managers) are uncertain as to how effective casino gaming is in drawing increased tourist

presence. Finally, the survey sought to determine what types of area businesses appear to be most directly benefited by casino gaming. Here again, the "big winners" a are the hotels that the and casinos of

themselves.

Retailers

expressed

belief

presence

gaming establishments and their patrons had not truly increased sales as hoped, while local restaurants and bars were also

ambivalent on this particular issue. Given that most hotels and casinos also have restaurants, bars and gift shops, this may be understandable.

Chapter V Discussion The issues that have been associated with casino gaming have been explored in this study with respect to both the literature and

35

the

empirical

portion

of

the

study.

Generally,

the

literature

suggests that casino gaming has become a major strategy used by communities to improve their tourist traffic and to generate needed revenues in both the public and private sectors (Felsenstein & Freeman, 1998, p. 145). Gaming and tourism are more and more commonly viewed as complementary activities; gaming is said to have direct and indirect economic effects, generating jobs that are needed to support gaming and its related services (e.g.,

restaurants, hotels, taverns, selected retail outlets) as well as other industrial sectors (supplies for such establishments,

construction, etc.). The claim is that gaming uses very similar inputs that are used by tourism, creating the same outputs, and spurring the same kinds of growth in the same economic sectors. As Felsenstein and Freeman (1998, p. 145) have commented, "gambling is simply part of the tourism package and is tied in with the higherorder economic goal of tourism promotion. tourism It is an is ancillary associated

leisure

activity

that

complements

and

quantitatively with many of the same industries as the tourism industry." However, these synergies are not always realized at the local level. Larsen (1995, p. 5) notes that in Cripple Creek and Black Hawk, tourism before gaming was introduced as "modest" at best. These old mining towns had limited appeal to out-of-state visitors; gaming was expected to increase this appeal and, as this study demonstrates, appears to have done so within certain limits. The

36

primary beneficiaries of this improvement in tourist traffic have been the hotels and casinos themselves. Part of the problem is that in Colorado, casino gamers appear to be drawn not from a national tourist population, but from among Colorado residents (Larsen,

1995, p. 5). As more casinos are built and licensed, the potential for any single casino or locale to benefit extensively is naturally diminished. Linda McCrerey (1998, p. 42) noted in mid-1998 that more than 46 percent of the respondents to a survey undertaken in Colorado believed that tourism was the state's number 1 or number 2

industry, and that when all economic data were considered, tourism emerged as legitimately the number 2 source of state revenues. Given the importance of this sector to the Colorado economy, and the fact that in 1997 Colorado businesses earned 7.1 billion from tourism, the issues addressed in this study are indeed significant. Casino gaming, in the United States and elsewhere, has been increasingly regarded as a highly effective augmentation of other tourist Chicago generate attractions to Black and Hawk amenities and (Bogert, 1992, p. 42). From to and

beyond, to

communities spur

struggling growth

new

revenue

sources,

economic

development, create jobs, and improve infrastructure are regarding casino gaming as an ideal strategy. However, as gaming

establishments proliferate, the inherent appeal of such leisure time activities may be negatively affected by excess. I a

potential gamer can merely elect to drive "down the street" in his

37

or her home community to find gaming opportunities, the appeal of a tourist destination (barring the major gaming destinations of

Atlantic City, Las Vegas, and Reno/Tahoe) that emphasizes gaming may be diminished. As a locus for tourists, Colorado has had a somewhat

fluctuating history. McCrerey (1998, p. 38) reported the following statistics: Colorado's Status as a Tourist Destination Year 1993 1994 1995 1996 1997 National (U.S.) Rank No. 1 No. 17 No. 11 No. 13 No. 11

However, despite the fact that some 20.8 million overnight pleasure trips to Colorado took place in 1998 (up from 19.4 million in 1997), numbers can be deceiving. McCrerey (1998, p. 39) stated that a major study of Colorado's tourism industry determined that of this total, the increase was mainly in regional visitors - the growing Colorado resident population, or out-of-staters visiting relatives and friends rather than vacationers fueled by

advertising. This is a critical issue (one not directly addressed by the empirical portion of the present study) and speaks to the question of whether or not the State of Colorado should do more to promote its tourist attractions, including those provided by casino

38

gaming. In this study, more than half of the respondents believed that this should be undertaken not only to promote gaming, but also to promote other tourism as well. No data were collected regarding the specific nature of the other tourist attractions in Cripple Creek and Black Hawk; these former mining towns are home to historic buildings and mining facilities, which had formerly been the primary tourist

destinations in the region. The respondents indicated that Summer (i.e., May through September) was the "peak season" for tourism, suggesting that no or few winter sports facilities are available locally. The absence of year-round attractions may be significant in deterring the development of a more expansive tourist base. The present study reported the results of an admittedly

limited survey of a small sample of three industrial or business sectors in the target area. What emerge from this study are the following general (if tentative) conclusions: 1. Casinos are generally being built with attached hotels,

restaurants, and bars/taverns and, in many cases, gift shops, sports facilities (e.g., pools, tennis courts, golf courses) and spas; this makes the casino/hotel a self-contained tourist destination in which the visitor may have little need to dine, drink, or shop elsewhere in the community. Consequently, other local businesses may realize limited revenue increases from the presence of a casino. 2. As casinos themselves proliferate in a given region,

39

competition naturally increases. Smaller casinos without desirable amenities as described above may not exert the same level of appeal that larger, more extensive gaming facilities may exude. 3. Advertising, as well as other promotional strategies,

is an essential element in the development of tourism. Use of a variety of advertising media and a number of promotional efforts (e.g., discounts to gamers, inclusion of ads in tourist publications) may be a critical element in casino and business success in a competitive environment. 4. While casinos do appear to create jobs in communities

such as Cripple Creek and Black Hawk, they are also perceived as being accompanied by such problems as increased traffic (a very real problem in smaller communities where road and street systems are not adequate to handle excessive vehicular traffic), increases in crime, and a decline in familycentered activities. 5. The respondents in Cripple Creek and Black Hawk did

indicate that since the introduction of casino gaming, they had become dependent upon this revenue source; least affected were local retailers, for whom local residents and businesses remained primary customers. 6. Overall, respondents appear to believe that the effect

in addition, affect of casino gaming on their locales falls into the "Good" to "Fair" range.

40

Some general caveats regarding these findings should be noted. First, the survey was limited to a small (34 respondents overall) sample of possible business owners and managers in the target area. Secondly, results can be said to have been skewed by the fact that casinos and hotels were significantly more likely to report being benefited by their which core were clientele least than to were local a retail positive

establishments,

likely

report

overall impression of the effects and results of gaming. No attempt was made in selecting the subjects to control for type of retail establishment; it is possible that different results may have been generated had, for example, only gift shops, boutiques, construct stores, and similar retailers been included. Secondly, the study did not survey local government officials and therefore lacks input from this important segment of the

population. The question of how casino gaming impacts upon local tax revenues - and, consequently, on infrastructure development or improvements - was therefore not directly addressed. This is, as the literature reveals, a very significant issue, given that one of the primary arguments advanced in favor of legalizing casino gaming is that the industry has the potential to spur economic development at both the local and the state level while simultaneously

increasing tourism. In regarding this latter context, on only tourism perceptions were of respondents No data

gaming's

effect

identified.

reflecting the fluctuations in local tourism before and after the

41

introduction of casino gaming were collected. These data would have been helpful in assessing overall impact and effect. Finally, the study seems to be suggestive of the idea that while casino gaming does have a generally beneficial impact upon a local community, it is not a panacea for all economic woes. Some nine or more years after these communities began to enjoy the enhanced economic activity generated by casino gaming, it appears that opinion is divided as to the ultimate effect of this industry. If the primary direct economic beneficiaries of casino gaming are the hotels and casinos themselves, then one must examine tax

revenues and government expenditures of those revenues, as well as changes in employment levels and related income fluctuations to assess this effect. This was beyond the scope of the present study.

CHAPTER VI Summary and Conclusions This brief and somewhat limited study sought answers to four research gaming questions on the and focused on of the perceived Creek to effects and of casino Hawk, these

communities the

Cripple of

Black in

Colorado,

relationship

gaming

tourism

communities. Based on the foregoing discussion of study results, it would appear overall, gaming has been beneficial to these

communities and their residents. However, it also seems clear that the present study should be expanded to provide for a more detailed explanation of these benefits.

42

Specifically,

larger

study

of

retail

merchants

and

businesses in the target community is indicated.

Such a study

would offer needed insight into which businesses are most likely to realize economic gains because of enhanced tourism and gaming

visitation. Further, it would be useful to explore such issues as: - the allocations of tax revenues and government expenditures on infrastructure improvements; a comparison of the experiences of these communities and

others in and outside of Colorado where gaming has been introduced; - an examination of shifts in attendance/use of other local tourist attractions or amenities after the introduction of casino gaming to determine where synergies exist between gaming and other tourist attractions and activities; an exploration of the relationship between job

opportunities, with reference to nature of work, salaries/ wages, seasonality of work, and other variables, and the development of casino gaming in a community area. These relationships should be explored to develop a fuller and more comprehensive picture of the specific economic effects of casino gaming on tourism and the economy of a community. Despite these limitations the present study has shed light on a matter of growing concern. Cripple Creek and Black Hawk,

Colorado, have moved aggressively to introduce gaming as a mainstay

43

of the local economy. The experiences of such communities are important sources of data on the purported viability of this

development strategy.

References Arthur Andersen, Inc. (1999). Indirect Impacts of the Casino Gaming Industry. http://www.americangaming.org/media/ impact/indirect.html. Au, N., and Hobson, J.S.P. (1997). Gambling on the internet: A threat to tourism? Journal of Travel Research, 35 (4), 77 -82. Bailey, Kenneth D. (1990). Methods of Social Research. New York: The Free Press. Becker, William E. (1995). Statistics for Business and Economics. Cincinnati, Ohio: South-Western College Publishing. Bogert, C. (1994). Fool's gold in Black Hawk? Newsweek, 123 (13), 22 -25. Downie, N.M., and Starry, A.R. (1987). Descriptive and Inferential Statistics. New York: Harper and Row. Felsenstein, D., and Freeman, D. (1998). Simulating the impacts of gambling in a tourist location. Journal of Travel Research, 37 (2), 145 - 156. Garnaas, S. (1999). A tale of two cities. ColoradoBiz, 26 (6),

44

28 -32. Gravetter, F.J., and Wallnau, L.B. (1992). Statistics for the Behavioral Sciences. Company. Larsen, M.D. (1995). Gaming industry development: A comparison St. Paul, MN.: West Publishing

of three states. Economic Development Review, 13 (4), 4 -9. McCrerey, L. (1998). Down- and out there. Colorado Business, 25 (7), 38 -42. Moore, P. (1999a). Big developers taking charge in Black Hawk. Denver Business Journal, 50 (38), 15A. Moore, P. (1999b). Indian casinos far cry from glitzy counterparts. Denver Business Journal, 50 (44), 4A - 6A. Rephann, T., Dalton, M., Stair, A., and Isserman, A. (1996), Casino Gambling as an Economic Development Strategy. Research paper 9607. Morgantown: Regional Research Institute, West Virginia University. Smith, B. (1997). State share of gambling profits drops by $1M. Denver Business Journal, 49 (7), 7A. Spradley, James P. (1990). Participant Observation. New York: Holt, Rinehart and Winston, 1990. Stokowski, P.A. (1996). Riches and Regrets: Betting on Gambling in Two Colorado Mountain Towns. Niwot, CO.: University of

Colorado Press.

Brian M Touray

45 MSc. Tourism Management Griffith University, Australia