fedgazette

Gambling's booty extends beyond reservation to neighboring community

Redwood Falls gains from casino's jackpot

David Fettig - Editor

Published July 1, 1992  |  July 1992 issue

Consider Redwood Falls, Minnesota: Residential home values have increased by about 1 to 2 percent a month over the last two years and home sales are up within a 30-mile radius.

Apartments are full, and commercial and residential construction increased over 200 percent between 1990 and 1991.

Unemployment is virtually non-existent and all wages in the community have generally raised about $1 an hour due to competition for workers.

In just five years the population is expected to increase 80 percent, from about 5,000 to near 9,000.

"There's a definite feeling of optimism in the community," says the mayor, Gary Revier, about his town.

The 'casino in the cornfields'

Situated in southwest Minnesota, Redwood Falls suffered the hard times of the mid-'80s agricultural swoon along with many other area communities, and at first glance it appears an unlikely candidate for an economic renaissance.

But farming isn't fueling this revival. Rather, it's the clinking and ringing of slot machines, the holler of the bingo caller and the wager on the blackjack tables of Jackpot Junction, the gambling casino operated by the Lower Sioux Reservation near Morton and four miles east of Redwood Falls.

While precise revenue estimates aren't available for Jackpot Junction, the "casino in the cornfields" is one of the state's largest of 14, in an industry that generates about $900 million per year in Minnesota. Jackpot Junction, which began as a small bingo hall in 1984 and became a large 24-hour casino just last year, employs about 1,100 and has an estimated annual payroll of about $10 million. A small reservation of just 2.7 square miles and 250 Indian residents, all but 50 of the casino's employees are non-Indian.

Also, the Minnesota Planning Agency estimates that about 1,000 additional jobs have been created by Jackpot, both indirect (vendors and suppliers) and induced (services to Jackpot's employees and suppliers, including education, retail and construction).

For the Lower Sioux, a new beginning

For the tribe, the success of Jackpot Junction has meant the elimination of poverty and government assistance on the reservation. Homes have been renovated, with some receiving water and sewer service for the first time; housing for senior citizens is planned; a special fund for reservation children has been established; an education fund guarantees money for post- secondary schooling; and new tribal headquarters and community facilities-- including pool, gym and daycare--will be built, among other planned projects.

While the tribe knows that the increases in gambling revenues cannot go on forever, according to Denny Prescott, casino manager, it also does not anticipate a sharp drop-off--at least in the near future.

Like other casinos in the state, Jackpot is not resting on its laurels. The casino is currently expanding its 67,000 square-foot site by 30,000 square feet, adding 120 video slot machines to its current 700, and 10 blackjack tables to its existing 40. The additional room will enable the casino to also expand its restaurant and entertainment areas. In addition, the Lower Sioux tribe plans to construct a 300-room motel on the site by next spring (it already maintains a 96-unit RV campsite), Prescott says. The tribe also owns a 120-room motel in Redwood Falls.

Lodging facilities are important to the casino because more than 30 percent of its patrons are from out of state. Jackpot's biggest market is Chicago, where a small ad in a newspaper last year spawned a regular bus service that brings gamblers on a daily basis. Other cities, like Cleveland, Des Moines, Kansas City, Denver, Memphis and Dallas are major suppliers of visitors to Jackpot, according to Prescott. It is not uncommon for a dozen buses to be parked in a nearby lot during a weekday morning, and for as many as 40 to 60 on some weekend nights. Shuttle buses make the two-hour trip from Twin Cities hotels every day.

Also, Jackpot began an experimental relationship this spring with Sun Country Airlines, a charter carrier, to run special flights from cities around the South and Midwest. Should the experiment prove successful, Jackpot will have daily flights arriving in the Twin Cities, Prescott says. Already, the casino reserves up to 40 seats on some Northwest Airlines flights to hold for visiting gamblers.

The downside for Redwood Falls is that the upside is so fast

Prescott conducts his business from one of the booths of the casino's restaurant, allowing him to keep in touch with the facility. He is often so pressed for time that he must juggle two or more meetings simultaneously in different booths--usually from vendors selling their wares--not to mention the phone calls and interruptions from staff.

This summer Prescott is also usually back and forth between meetings with city and state officials at the nearby tribal headquarters, discussing matters of the casino's or community's growth. Among other issues, the Lower Sioux tribe and the city of Redwood Falls have been negotiating what officials believe to be a unique venture in infrastructure--a shared sewage system. State officials will rule on the sewage proposal sometime this summer. The tribe needs the sewage system to accommodate expansion for the casino, especially for the motel; the city needs it because of its rapid growth.

And that growth can be intimidating for the city, Mayor Revier says, especially when it comes to supplying infrastructure for new development. A Wal-Mart, a motel and smaller service businesses are currently under construction on Highway 71, Redwood Falls' "development strip" that leads from the town to the casino, and two additional motels are planned for the coming year.

The need for more infrastructure means the community also needs more revenue, and the city has been granted approval by the state to lift prior levy limits of 3 percent, pending approval by voters. Some of the new construction in Redwood Falls has been built with tax increment financing, Revier says, and the city has not yet received revenues on the new properties.

With few existing homes for sale and apartment houses full, Redwood Falls is also facing a housing shortage, he says, which matches a growing shortage of workers. Already, many casino employees travel as far as 50 to 70 miles to work, according to Revier, and many would be glad to move to Redwood Falls if homes or rental units were available.

The city's philosophy regarding growth is to be "proactive," not "reactive," Revier says; that is, it plans to anticipate and address needs before they become minor crises. "We need housing, we need infrastructure and we need to be responsible," he says. "Growth is good."

Gambling will occur anyway; all things in moderation, banker advises

Douglas Bultman, president and CEO of Minnesota Valley Bank in Redwood Falls, agrees: "Our city will never quite be the same." And he believes that is for the better. While he takes seriously the contention that a booming casino could mean an increase in social problems, such as crime and gambling addiction, he doesn't feel threatened by the implication. More petty crimes are to be expected when more people come to town, he says, but he insists that Redwood Falls will still remain "a real community."

As for problems associated with gambling, he says the tribe is a "big proponent of gamblers anonymous," and has been at the forefront of addressing potential problems. Besides, as he tells his Sunday school class: A certain percentage of people are going to have problems with gambling regardless of the existence of state lotteries, charitable gambling, horse and dog races, Indian casinos or some other form of betting. Their compulsion will drive them to gamble, and they will find the means to do so. The rest of the people should treat it as any other entertainment or diversion—all things in moderation, he says.

The Redwood Falls banker also says that the success of Jackpot Junction has done more to bring together the Indian and non-Indian communities in the region in the last two years than all other efforts in the past. The growing cooperation and understanding that is developing between the tribe and the city is a major benefit to Redwood Falls, he stresses.

Bultman says his bank has had no change in past due loans during the last two years, deposits and assets have increased and some of the financing projects proposed by the casino or other business interests are so big that he's had to pass them to larger lenders. Minnesota Valley Bank has been working with the tribe since it began its bingo hall in 1984, and Bultman says the bank has become a source for other financial institutions, advising them on lending opportunities in the casino industry.

Minnesota Valley Bank is located in Redwood Falls' downtown, near the Redwood River, the accompanying falls, and a zoo and nature reserve. While the downtown is removed from the relative hustle and bustle of Highway 71, downtown merchants have also felt the impact of the casino, he says, largely due to Canadian tourists. Canadians, like other visitors, may come to Jackpot Junction to gamble, but unlike most American tourists, they then go to Redwood Falls to shop.

The influx of visitors to the area, about 30,000 each week and sometimes as many as 60,000, means that Redwood Falls has to develop a new industry out of necessity—tourism. "We've never had tourists before," Bultman says. "We're not used to it."

Redwood Falls and other members of the Redwood Area Development Corp. (RADC, including towns such as Belview, Franklin, Vesta and Wabasso), have been working together to try to capitalize on a potential tourist trade, as well as to address other issues related to the economic impact of Jackpot Junction.

Pete Iverson, RADC's economic development coordinator, says RADC is considering the formation of a countywide housing authority to oversee the construction of such multiple-dwelling units as apartments and senior citizen housing.

These are heady economic times for Redwood Falls and the surrounding area, Iverson says. Because of its proximity to the casino, and because of the reservation's small size and lack of employees and services, Redwood Falls has benefited more than other non-Indian communities that border casinos. And while he admits that the area's growth has raised certain problems, Iverson says they are the kind of problems many other communities would love to have. He tells the story of a woman in Belview, population 500, 15 miles northwest of Redwood Falls, who three years ago was unable to receive a bid on a house she hoped to sell. Earlier this year, with the housing market tight and with the house back up for sale, a bidding war ensued and she received $70,000 (no word on what she expected).

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