In a pair of highly anticipated decisions, on April 17 the Iowa Racing and Gaming Commission voted 4-1 against granting a gaming license to the proposed 4 million Cedar Crossing Casino in Cedar Rapids, claiming it would hurt existing casinos. The commission also denied the Argosy Sioux City riverboat casino’s challenge to renew its gaming license and set July 1 as the deadline when the boat must close. No appeal process is available.
In regard to the Cedar Rapids decision, Commission Chairman Jeff Lamberti said the panel’s goal is to provide a “stable and predictable gaming environment in Iowa. The commission has never taken the position that it’s a free market system for gaming in Iowa.” Lamberti added granting a license to Cedar Rapids would represent a “substantial change” in the way the commission has worked historically and would have had too large an impact on existing casinos, putting the state’s gaming industry at risk of destabilization. The commission has not approved a new casino license since 2010. At that time it announced a 3 to 5-year moratorium due to concerns about market saturation. Currently there are 18 commercial and three tribal casinos in Iowa.
Although more than 61 percent of voters in Linn County, which includes Cedar Rapids, supported the proposed casino in an election last year, and although each of the five commissioners said the Cedar Rapids plan was excellent, they also cited studies the panel had commissioned indicating Iowa’s gambling market was saturated. One study said the commission should focus on reinvesting in existing casinos rather than licensing any new operations.
Steve Gray, chairman of the Cedar Rapids Development Group, said, “Even though we are disappointed with today’s decision, we are so proud of the strong community support that has continued to build over the last 18 months. We truly appreciate and are thankful for your support throughout this entire process. There are a lot of great things going on in Cedar Rapids and Linn County. Let’s keep the positive momentum and continue to move forward.”
Another disappointed participant was Cedar Rapids Mayor Ron Corbett who said the IRGC encouraged community leaders to apply for a casino license. “It’s millions of dollars of work. We’ve done everything they’ve asked us to do. We had all of our I’s dotted and all of our T’s crossed,” Corbett said. And Keith Rippy, president of Linn County Gaming Association, the nonprofit partner of Cedar Crossing, said the organization would have received around $2.5 million from casino revenue to distribute to local programs. “From the standpoint of the non-profit, I’m just very disappointed. In my mind, we just lost $2.5 million we could have given back to the community,” Rippy said.
Opponents of the Cedar Rapids casino included Dan Kehl, chief executive officer of Riverside Casino and Golf Resort, located 40 miles south of Cedar Rapids. Kehl said he would have lost 30 percent of his business and would have had to lay off 250 of the resort’s 750 workers if commissioners approved the Cedar Rapids project. Kehl said he was “grateful” for the commission’s vote and “glad to get this behind us. We’re hopeful for our future and looking forward to reinvesting in our facility and our employees and maintaining our status as Iowa’s premier Midwest destination casino.” Kehl added, “The facts were on our side when it comes to the market and cannibalization. There is only so much market to go around.”
Also at the meeting, attended by 300 people, commissioners unanimously rejected Argosy Sioux City owners Penn National Gaming’s challenge to the IRGC’s decision last year denying the riverboat a one-year gaming license renewal. The commission said the boat, which employs 325 people, must shut down by July 1. The IRGC said it denied the license because Argosy’s operating agreement with its nonprofit partner, Missouri River Historical Development, expired in July 2012. Under Iowa gaming law, casino operators must partner with licensed nonprofit groups like MRHD that hold the license and receive a portion of casino revenues to distribute to local charitable and civic groups.
Argosy attorney Mark Weinhardt said MRHD “made a conscious decision to run us out of town and replace us with someone else.” MRHD now is the nonprofit partner of Sioux City Entertainment, developers of the $128.5 million Hard Rock Casino in downtown Sioux City, scheduled to open this summer. The pending Argosy closure is the result of the commission’s decision to replace it with a land-based casino. Penn National had offered two proposals but commissioners granted the license to SCE.
In a statement issued after the commission’s decision, Penn National spokesperson Karen Bailey said, “We are beyond dismayed at the IRGC’s decision today and their egregious track record through this process. This will come as a huge blow to our employees and their families. As a result we intend to request a stay of today’s decision as we continue to pursue answers in the courts over this and other related matters both with MRHD and the IRGC. We remain confident in our legal arguments and trust that the court will do the right thing, especially in light of the action taken today.”
In response, Lamberti said, “We finally made a final decision and it’s kind of time to move on in our mind, anyway. We had made an indication that we wanted to keep the facility open as close as possible to the opening date of the Hard Rock, and I think we’ve done that with our decision, and we’re really prepared to move on.” However, he added, although commissioners made their decision, they will not take the matter lightly in court.
Meanwhile, the Hard Rock Hotel & Casino Sioux City, scheduled to open this summer, has received more than 1,500 online job applications to fill 500 positions. Hard Rock General Manager Todd Moyer said besides posting a few of the positions on Facebook, the casino has not promoted job openings. Currently only nine employees are on the payroll including the general manager and directors of human resources, finance, slots, table games and security.
State and local officials said they hope most of the 300-plus employees at the Argosy riverboat casino will be hired at the Hard Rock. Although the IRGC stated the casino must close by July 1, Penn National has filed numerous regulatory and legal challenges to keep the riverboat open and to overturn the IRGC’s decision choosing SCE and MRHD.
Zach Rosenbaum, Argosy operations manager, said employees seem to be split about going to work for at Hard Rock. “Some are totally anti-Hard Rock, and some understand the reality of the situation and will be applying,” Rosenbaum said. He added Argosy workers have the option to transfer to other Penn National properties, which he intends to do.
Over at the Hard Rock, the first 116 of 850 slot machines arrived on March 31. Kelly Pace, director of slot operations, said the facility is investing more than $15 million in slots from Konami, Aristocrat, Bally, IGT and WMS. Moyer noted Hard Rock officials spent more than nine months researching machines and games. “We picked the best of the best. They’re all the latest and greatest machines that people want to play,” Moyer said.