Construction may continue on the 8.5 million Hard Rock Hotel & Casino Sioux City as Polk County, Iowa District Court Judge Eliza Ovrom recently lifted a suspension of Hard Rock’s gaming license and the state Supreme Court gave Ovrom permission to vacate the earlier ruling. The 8.5 million project is expected to open in late summer.
On December 10, a different Polk County District Judge, Robert Hanson, suspended Hard Rock’s license. That stay would have remained in place until a final verdict was issued in the case of the Argosy Sioux City riverboat, owned by Penn National Gaming, against the Iowa Racing and Gaming Commission, which had awarded the gaming license to Hard Rock developers SCE Partners and its nonprofit partner, Missouri River Historical Development. The IRGC and SCE Partners appealed, and on December 21 Supreme Court Justice Brent Appel granted an emergency stay of Hanson’s ruling.
On January 8, the Supreme Court instructed Ovrom, assigned to the case through a routine rotation schedule, to determine whether the district court had the authority or jurisdiction to grant a stay, while SCE was not a party to the case. In her recent ruling, Ovrom said SCE is an “indispensable party” and has the right to be heard. She wrote, “The effect on SCE’s gaming license from a temporary stay is significant, if not drastic. It would very likely lose its financing. It would lose millions of dollars already spent. The project would likely come to a halt.”
Earlier, Bill Warner, president of SCE, said the company already had spent nearly $50 million and had approved dozens of contracts for renovation and new construction at the historic Battery Building at Third and Water streets. Warner said even a temporary license suspension would result in a default in $66 million with Credit Suisse.
Ovrom also noted the city of Sioux City has issued $22 million in tax-increment financing bonds for the project, which will generate millions of dollars in revenue for local governments and create hundreds of new jobs.
In its lawsuit in district court, Argosy claimed the IRGC ignored its own rules and violated state laws and the company’s constitutional rights when it granted the license to the Hard Rock in April. Penn National had presented two proposals for a Hollywood Casino. The company asked the court to suspend the Hard Rock license until a final ruling in that lawsuit.
Ovrom acknowledged Argosy would “suffer extreme financial loss” if the IRGC shuts down the boat as expected; Argosy could lose its entire $100 million investment in Sioux City, and the boat’s 320 employees also would lose their jobs. But Ovrom wrote a stay was not warranted because Argosy is “not likely to succeed on the merits” of its legal claims against the IRGC.
She noted the IRGC “did not follow the exact procedure” under state law to convert a license from riverboat to land-based gambling, but “the result was the same as if it had.” Ovrom added the gaming commission has “broad discretion to regulate gambling and to set the requirements for licensure” in the state.
In response to SCE and the IRGC’s appeal of Hanson’s stay, Argosy attorneys argued SCE knew the risks of starting construction while the license was in litigation. Ovrom said those arguments were irrelevant.
Penn National officials declined to say if the company would appeal to the Iowa Supreme Court. On its Hollywood Casino Sioux City Facebook page, Penn National posted, “We are disappointed with the judge’s decision but remain confident in our legal position and we do look forward to bringing the merits of this case to trial.”
Following the ruling, Warner said, “We appreciate the opportunity to present the full facts in this matter before the court. We thank the court for the thorough and fair assessment of our position, and for allowing us to proceed in accordance with the award granted by the Iowa Racing and Gaming Commission in April.”
As part of the Supreme Court order, Ovrom also expedited Argosy’s judicial review case. Final arguments will be heard September 26, with reply briefs due by Oct. 6. Hanson originally had scheduled final arguments for December 22.
Also in Iowa, the House State Government Committee and a Senate state government subcommittee recently considered bills that would end greyhound racing at the state’s two tracks and also end casino subsidies for the sport. Currently Mystique Casino in Dubuque and the Horseshoe Council Bluffs casino are required by law to offer dog races in order to keep their casino licenses, but casino officials said their operations are losing a combined total of about $14 million annually by subsidizing the dog racing tracks. Between 1986 and 2012, combined betting on greyhound races in Dubuque and Council Bluffs has dropped by 97 percent, from $186 million to $5.9 million.
Under the proposed bills, Mystique and Horseshoe would be allowed to end dog racing after a 14-day notice. In addition, over a period of six years, Mystique would pay $15 million and Horseshoe would pay $55 million to establish an Iowa greyhound pari-mutuel racing retirement fund that would be administered by the Iowa Racing and Gaming Commission. The money would be distributed to greyhound owners, breeders, kennel operators and others involved in Iowa greyhound racing, and to no-kill animal adoption agencies. In addition, casino officials said ending the subsidies would allow them to distribute more money to charitable organizations and improve operations. The Council Bluffs track site is considered a prime parcel for development.
Jim Carney, a lobbyist for Caesar’s Entertainment, operator of Horseshoe Casino and the Council Bluffs track, said, “This is unprecedented in the United States, to our knowledge. Twenty-nine tracks have closed in this country, and nowhere have they done a bailout like this. We are hoping that when the dog industry learns about this that they are going to have an increased interest in getting this matter resolved.”
Mystique Casino lobbyist William Wimmer said he cannot picture any scenario in which dog racing could make a comeback. “We’re on a downward path at our casino, and that’s not going to change,” he said. But Iowa Greyhound Association lobbyist Don Avenson said although the proposed measure would end greyhound racing, “We seriously hope there will be bipartisan discussion of what the terms of this ‘divorce’ will be.” Jerry Crawford, the association’s attorney, added, “I hope every Iowa-bred horse owner rises up to support live greyhound racing in Iowa. Iowa dogs win major stakes races throughout the country and have become some of the best in the nation. If dogs of that quality can be eliminated, Iowa horses won’t be far behind.”
Iowa is one of only seven states that still legally operate greyhound tracks. The sport has been outlawed in 38 states.
