Are Expectations Too High for the New Casino in Columbus, OH?

Casino gambling and new casino construction has been a significant economic topic across the US as a source of tax revenue for cities for the better part of two decades now. A large number of journal articles and studies have been written on the positive and negative effects casinos bring to an area, ranging from job creation and economic expansion to increased crime and gambling addiction. In 2009, voters in Ohio approved the construction of four casinos in the state including a location in Columbus, Ohio.
After a subsequent vote, arguments and lawsuits, the casino was moved from the Arena District just north of downtown to the western side of town, near the I-270 (beltway around Columbus) and Broad St. (major east-west road) intersection. This area has experienced long term economic stagnation and decline for at least a decade, and includes the departure of the manufacturing Delphi plant (which was subsequently demolished and cleaned up to make way for the casino). The new casino building site is on roughly 123 acres and expected to open in late 2012.

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In our research, we attempt to understand how the casino will affect the surrounding area. A new casino has direct economic benefits, including providing for numerous construction jobs related to the onsite two hundred million dollar investment. Once the casino opens, it creates permanent jobs, the number depending on the size of the casino and long term business performance. There are also indirect benefits that result from jobs created by increased use of vendor services, and by employees spending their paychecks on a variety of goods and services.
Indirect benefits should result in improvements to residential housing, via increased demand for either new housing units, or upgrades to existing housing via renovation of an owned house or moving to a nicer apartment. Also, new retail and office jobs should result in new retail centers and office buildings. In sum, these changes might be expected to have a transformative land use impact on the land surrounding the casino site.
While there are direct and indirect economic benefits to the Columbus metropolitan area that will result from the completed Hollywood Casino, there are two reasons to temper how much neighborhood change might occur over subsequent years. The first is related to consumer preferences and the path of least resistance, and the second is observation of the results of casino projects around the country. In an attempt to predict future development patterns, we can refer to Tobler’s law (Tobler, 1970) and Zipf’s law (1949).
Tobler’s law states that “everything is related to everything else, but near things are more related than distant things”. There is a distance decay effect away from an employment cluster such as a casino. How steep a distance decay effect varies by transportation time, and cars traveling 30 to 60 miles per hour will lessen this effect dramatically compared with walking. Additionally, while one might expect less of something to occur the further distance from a center, one can’t easily predict where these events will occur.
Zipf’s law of least effort is more commonly referred to as the ‘path of least resistance’, meaning that given a set of choices, one will tend to choose the one requiring the least effort. For example, given the choice of two identical houses but located in places where one house is priced higher, consumers will tend to choose the lower price house. Additionally, given the choice of building a new office building on a vacant site zoned for office, versus getting approval to change a residential zoning to office and demolish several houses to make way for an office building, a real estate developer will tend to choose the vacant site.

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These two laws can have the following effects. First, new office and retail development resulting from a casino creating indirect jobs, will tend to follow along easy to build on lots zoned for these land uses, and this pattern many times is different than what is adjacent to a casino site. Second, employees commute to housing based on housing costs which tend to be lower in outlying areas, or have preferential locations relative to amenities including schools, and the average Ohioan commutes about 20 minutes or ten miles from where they work. Combined, these effects tend to spread out indirect economic benefit across a metropolitan or multi-county economic area, which in turn lessens the amount of indirect benefit one might expect to see adjacent to a new employment center like a casino.
In the last twenty to thirty years, casinos’ have sprung up in isolated areas as well as in suburban areas, with varying degrees of clustering. One easy way to understand the development around a casino site is to look at the Google satellite imagery, analyzing residential, industrial and commercial growth patterns. While casino developments such as those found in Las Vegas has resulted in large scale urban development and landscape transformation, this is due to the large number of large casinos built in one area (the Las Vegas strip).
Most other places, such as Laughlin, Nevada, Blackhawk, Colorado, Thunder Valley in the Sacramento, California area, a Casino on the Indiana side of Louisville, Kentucky, and Foxwoods Casino in Connecticut have been on a smaller scale, with one casino, several casinos, or a number of small casinos. These places can be observed to have limited adjacent land use change. This can be attributed to a number of factors, including: steep topography, climates that have water scarcity, government zoning restrictions, and a lack of desire of employees to live adjacent to their place of work. As one can see from the image examples, many Casinos do not exhibit intensive development in their immediate surroundings, but rather scatter it miles away.
The Hollywood Casino is located in West Columbus, as can be seen in a location map. From the casino, we draw a radius of five miles, as a study area that in rough terms represents about a ten minute commute for employees working at the site. This study area has a total of 69,025 land parcels. Major land uses of parcels include 63,099 residential land use parcels, 3,004 commercial land use parcels, and 1,194 industrial parcels. The study area does include some remnant farmland in the western and southwestern corners, but is mostly a heavily developed mix of industrial, residential and commercial land uses.
The following map shoes these land uses:

Indirect jobs can be estimated from what is known as a multiplier effects. These effects can sometimes be exaggerated by promotional economic development agencies, but a study done in 2009 by the University of Cincinnati School of Business (University of Cincinnati, 2009) looks, upon our review, to be carefully produced and we use their numbers to consider landscape change.
The University of Cincinnati study indicated that Penn National Gaming, Inc.’s Hollywood Casino, located on West Broad Street in Columbus, Ohio, will result in 1,900 permanent on site jobs and 1,606 indirect jobs, for a total of 3,506 jobs and an estimated multiplier effect of 1.84. In other words, 1,900 jobs will be created on the 123 acre Casino site. This site will contain the Casino building, the parking lots around it, landscaping, and most likely some vacant land for future expansion. This site is a land use conversion from a former General Motors parts producer that was known as the Delphi plant when it closed in 2007. The plant, which at one time employed 1,205 workers (NY Times,1992) was demolished, the site has been prepped for new development, and construction is proceeding at a good pace, along with road improvements on West Broad Street and Georgesville Road.

With regard to expenct residential land use change, we make the assumption that the workers at the new casino exhibit similar commuter patterns to typical Ohio residents. Therefore, the average worker will commute about 23 minutes to work, at an average speed of 30 miles per hour (which includes traffic stops and other slowdowns in speed), or about 11 miles from the casino. Table 1 shows Ohio commuting information (US Census, 2010):

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Given the number of direct and indirect jobs, were all of these employees to use part of their incomes to improve residential housing, this could only impact a small part of the study area as only about fifteen percent of these employees would be expected to live within these boundaries. Or a fraction of one percent of the housing stock would be affected. One might drive down a residential street and see someone putting a second floor onto their house, which is good for that residence, but most of the residential landscape would be unaffected.
One must also consider the indirect jobs created by the casino. These jobs will be located relative to the road system, and available zoned land parcels, and on average will be down the road from the casino site. While some indirect jobs, such as vendor services, or a law practice, could very well be many miles away, we can make a simplifying assumption that all indirect jobs will locate in the commercial land parcels in our five mile radius study area. From this, we would at most expect 1,606 indirect jobs among the 3,004 commercial parcels.
However, since workers at these sites, have similar commuting preferences as the casino workers, this has the effect of further stretching out the residential distribution of workers related to the casino project. We can visualizes this by drawing four more circles to the north, east, west, and south, each with its center 5 miles from the casino site. Each of these circles now represents a 5 mile radius for jobs indirectly created by the casino’s opening.

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Even if we assume that we know that all direct jobs will occur within a certain study area, where these jobs develop within this area is very difficult to predict. If we estimate that 1,600 indirect jobs results in 80 new establishments that each employ roughly 20 people, then this would predict that only 80 of the 3,004 commercial parcels would redevelop, or at most only three percent of the parcels would see a new building. This impact would be noticeable as one drives down the road, but most of the retail and office landscape will appear as it did pre-casino.
The implications of this logic can be applied to Westland Mall. This site is directly west of the casino site and currently stands nearly vacant. This site alone could potentially absorb 100% of the projected indirect jobs, albeit unlikely, as there will be competition for these jobs which will tend to distribute them across space in a variety of different business types. This makes it difficult for the Casino indirect economic benefits alone to rationalize a reconstructed Westland Mall.
In conclusion, we recommend that expectation regarding neighborhood change resulting from the new Hollywood Casino may be modest. Using standard multipliers and basic concepts in geography, we believe that commuting and employment patterns will act to limit landscape change in the near vicinity of the casino. While the casino will have positive economic benefits for the Columbus region, we think that additional investment from other sources to fund construction on adjacent sites will be necessary to have a noticeable positive neighborhood land use effect on the western Columbus area.