Court Keeps Stay For Iowa Gaming License

The Iowa Supreme Court told the Polk County District Court to review its decision suspending the gaming license for the Hard Rock Sioux City. That means the December 19 emergency stay granted by Justice Brent Appel will remain in place, allowing construction to continue on the $128.5 million casino.

A three-judge panel of the Iowa Supreme Court recently gave the Polk County District Court until February 15 to review its decision that temporarily suspended the state gaming license for the Hard Rock Hotel & Casino Sioux City. The ruling means Justice Brent Appel’s December 19 emergency stay will remain in place and casino construction can continue.

The decision represents a partial victory for Hard Rock developer SCE Partners LLC and the Iowa Racing and Gaming Commission, which issued the license on April 18. SCE and the IRGC had appealed Polk County District Court Judge Robert Hanson’s December 10 ruling that stayed the Hard Rock license until a lawsuit filed by Argosy Sioux City owner Penn National Gaming, seeking to overturn the IRGC decision, was settled. Hanson’s stay would have delayed the opening of the $128.5 million Hard Rock by six months or longer past its anticipated late-summer completion.

Bill Warner, president of Sioux City Entertainment, said, “We are grateful to the Iowa Supreme Court for their continued review of this matter. We will proceed in accordance to the order as this matter returns to the district court.”

Penn Vice President of Public Affairs Karen Bailey said while the company respects the Supreme Court decision, it will “continue to pursue our rights in accordance with its instructions.” Bailey said if the Hard Rock license were not stayed, Penn would “lose its entire business” in Sioux City, including more than 300 casino jobs and an investment worth more than $150 million.” In issuing the stay, Hanson said the “substantial possibility” exists that Penn would ultimately succeed on the merits of its judicial review case.

Meanwhile, the IRGC unanimously approved the licensing arrangement between SCE Partners LLC and HRHH IP LLC, an affiliate of real estate management firm Brookfield Asset Management, which holds the rights to license Hard Rock casinos and hotels west of the Mississippi River.

According to the 20-year licensing deal, dated Nov. 11, 2013, SCE Partners will pay a graduated licensing fee, starting at 2 percent for the first $75 million in annual gross casino revenues, or a minimum of $1.5 million, for the rights to use the iconic Hard Rock brand name. The fee would increase to 4 percent for revenues of $75-$90 million and 6 percent for $90-$110 million. SCE Partners estimate the Sioux City casino will generate $90.9 million in gross revenues in the first year, for a Hard Rock licensing fee of $2.1 million.

The licensing agreement also includes two renewals of five years each, which could be invoked by either party. It also provides guidelines for the use of guitars, costumes and other rock-and-roll memorabilia that will be displayed throughout the property, and charges SCE Partners an amount equal to 10 percent of the appraised value of the memorabilia per year for use of the items.

And in Dubuque, the chamber of commerce and the city government have asked the Iowa legislature to allow the city-owned Mystique Casino to offer slot machines and table games without having to offer dog racing at Dubuque Greyhound Park. Last year the Dubuque Racing Association spent $4.5 million to subsidize greyhound racing. Over the past three decades, the group has shifted more than $55 million from charitable organizations and the city’s capital projects fund.

Iowa Senate President Pam Jochum said she supports the chamber’s position. However, state Rep. Pat Murphy of Dubuque said he opposes ending dog racing because workers would lose their jobs and greyhound breeders would lose money.

Bluffs Run in Council Bluffs, Iowa’s only other greyhound track, also is required to offer dog racing to permit slots and table games at the  Horseshoe Casino. Racing at both of the state’s dog tracks attracted large crowds of gamblers when they opened in the mid-1980s. But since casino gambling began in Iowa in the early 1990s, racetrack betting has dropped dramatically.