A little more than a week ago, it was announced that the state’s 10th casino license would go to a group planning to build a casino in Des Plaines.  Elgin’s mayor and officials throughout Kane County expressed concern that a Des Plaines casino would cut into revenue from Elgin’s Grand Victoria Casino and Aurora’s Hollywood Casino.  I identified this as a geographic problem that I could analyze.  My master’s thesis included a calculation of trade areas for NASCAR race tracks, and I thought I could apply my coursework and research to the Des Plaines casino issue.

I should disclose that I am vehemently anti-gambling.  I feel that widespread gambling options can destroy families’ finances and can attract unsavory elements to a town.  The state has become overly dependent on gambling tax revenues as well.  However, I will put aside my prejudices and carry out an objective analysis because a new casino would have an impact on the city where I live.

There are two parts to my analysis.  First, I created trade area maps for Chicago-area casinos based on current market conditions.  I then created trade area maps for these casinos accounting for the presence of a Des Plaines casino.  I used Huff’s probabilistic method to create the trade areas.

In the formula above, the variable Sj is the attractiveness of a particular casino.  In this case, I used the number of gambling machines and tables to measure attractiveness.  The variable dij is equal to the distance between location i and casino j.  The variable β is distance friction, which I chose to equal 2.  In physics, when determining the force of attraction between two objects, the distance between them is squared.

The Huff model produces percentages that equal the probability of a person in location i visiting location j.  For my analysis, each location i was the centroid of a census block and each location j was a casino.  I calculated the probability of adults 21 and older in each of the 230,000+ census blocks below (light blue areas) visiting each casino (green dots).  The casino dot size is indicative of its attractiveness.  Bet you didn’t know there were so many casinos around the state.

Below is a map of the visit probabilities for the Grand Victoria Casino in Elgin.  You can see that the area of higher probabilities does shrink a little bit with the introduction of the proposed Des Plaines casino.  I should note that I averaged the number of machines and tables at Illinois casinos to help determine the attractiveness of a Des Plaines casino.  I assigned the Des Plaines casino an attractiveness of 1100 machines and tables, which is close to the average number of machines and tables you will find at an Illinois casino.

The Hollywood Casino in Aurora would also be affected by the construction of a Des Plaines casino.  You can see the effect on its trade area below.

Lastly, the Des Plaines casino would also have a large impact on the Horseshoe Casino in Hammond.

The last map I will present is of the trade area for the Des Plaines casino itself.  The area around the Des Plaines casino currently has a probability of 15% of visiting the Grand Victoria, 17% of visiting Horseshoe, 13% of visiting AmeriStar in East Chicago, and 10% of visiting Hollywood.  The map below shows that the Des Plaines casino would eventually serve eastern DuPage County, northern Cook County, and southern Lake County.

So now we have all these maps showing how the Des Plaines casino will take a bite out of the trade areas of the Grand Victoria, Hollywood, and Horseshoe casinos.  How about some numbers?

I ran some queries to see how many potential visitors (persons >21 years old, Census 2000) each casino has currently.  I queried out census blocks that had a >20% probability of visiting each of the Chicago-area casinos and summed the number of potential visitors.  Below are the totals for each casino.

Grand Victoria	1212570
Hollywood	611914
Empress	144501
Harrah’s Joliet	367748
Horseshoe	2830541
Potawatomi	81743
Ameristar	956396

I then figured out how many potential visitors were in each casino’s >20% probability trade area after the opening of a Des Plaines casino.

Grand Victoria	799244
Hollywood	494362
Empress	138187
Harrah’s Joliet	330287
Horseshoe	1722344
Potawatomi	42969
Ameristar	436414
DP proposal	2487788

The new Des Plaines has a large potential market, larger than any other casino in the area.  Comparing the tables, the Grand Victoria would lose 400,000 potential visitors and the Hollywood about 118,000 visitors from their >20% trade areas.  The Horseshoe Casino would have 1,108,197 fewer potential visitors in its >20% trade area.

I did one more query to see which census blocks “flip-flopped.”  In other words, which blocks had a greater than 20% probability of going to an existing casino, then had a greater than 20% probability of going to Des Plaines.  These “flip-flop” blocks would be definite losses of potential visitors for the area’s casinos.  These areas went from being highly likely to visit an existing casino to being highly likely to visit a new Des Plaines casino.

Grand Victoria	556252
Hollywood	55012
Empress	0
Harrah’s Joliet	0
Horseshoe	1393744
Potawatomi	0
Ameristar	0

According to the table above, over a half-million people would switch from being potential Grand Victoria visitors to being potential Des Plaines visitors.  As for the zeros, that simply means that someone who was >20% likely to go to the Empress was less than 20% likely to go to Des Plaines.  This final table shows which casinos will lose if the Des Plaines casino is built, and by how much they will lose.

Now I will acknowledge that I made a lot of assumptions.  I assumed that the only way to measure attractiveness was the number of machines and tables.  I also assumed consumers were rational and would automatically patronize the casino that had the best combination of attractiveness and proximity.  Another thing I did not account for was the newness of a Des Plaines casino, which could garner it additional customers.  Lastly, I ascertained how many people over 21 yrs old lived in each trade area, but did not ascertain how many of those people were gamblers.

In the end, my rough analysis shows that Elgin’s Grand Victoria Casino would suffer a large loss of visitors should a casino in Des Plaines open in the future.