The Socio-Economic Impact Analysis as a Tool for Casino Development
Casino development is a long and complex process. After a suitable site is identified and is found to be in compliance with state compacts and feden1l regulations, a decision is made by tribal leadership to explore the feasibility of the project. Atthis point the tribe may engage the services of an architectural firm to develop an architectural program. Concurrently, a feasibility study is conducted primarily for the developer, in this case the tribe, and lenders who will finance the project in order to determine whether the project is financially feasible.
The feasibility study measures market demand and market supply. It determines the appropriate size and gaming capacity for the project and forecasts the project’s expected market share. Once this is determined, the feasibility study forecasts future revenue streams and expenses in order to determine the project’s cash flow and the project’s ability to meet debt service. If the project is deemed feasible, more detailed financial statements are prepared including balance sheets and pro forma income statements. The initial concept and capacity assumptions are then placed under greater scrutiny as is the project’s positioning and mix of amenities. The architectural programming is further refined to match the project’s size and positioning.
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