The new Hard Rock Hotel and Casino opened August 1 in downtown Sioux City, Iowa, replacing the Argosy Sioux City riverboat casino that closed on July 30. At the grand opening celebration, instead of the traditional ribbon cutting, Sioux City Mayor Bob Scott, Missouri River Historic Development President Mark Monson, Warner Hospitality Chief Executive Officer Bill Warner and Hard Rock Hotel & Casino Sioux City’s General Manager Todd Moyer simultaneously smashed Fender guitars.
“We didn’t build a casino. We built an entertainment center,” Moyer said. The property employs 500 people and features a casino floor with 839 slots, 25 table games, three bars, four restaurants and indoor and outdoor concert venues. The hotel, incorporated into the historic 1906 Battery Building , offers 54 loft-style rooms including 12 suites. Like all other Hard Rock properties, the Hard Rock Sioux City displays an impressive collection of rock-and-roll memorabilia.
In May, the IRGC approved a license for a smaller casino in Jefferson in Greene County, an area where commissioners said a new casino could open without harming others. It will be the 19th state-regulated casino when it opens in 2015. Native American tribes operate three more. In addition, Isle of Capri Casinos is selling its riverboat casino in Davenport to a developer who is planning a $110 million land-based casino. Once wording is clarified in amendments to the agreement between the Riverboat Development Authority, Scott Casino LLC and the city of Davenport, construction will start on that property which is expected to open in the first half of 2016.
In April, the IRGC rejected a proposed $174 million casino in Cedar Rapids, explaining it would take too much revenue from existing casinos.
Reviewing the status of the Iowa casino market, Creighton University economist and casino expert Ernie Goss said cannibalization is a reality. “What’s going on in Iowa is what is going on nationwide. The idea that casinos are a cash cow, those days are over,” Goss said.
The IRGC recently came to the same conclusion. As a result, Commission Chairman Jeff Lamberti announced the commission will not consider any new casino-license applications during the remainder of his current term, which will expire April 30, 2017. He said, “As far as I’m concerned for the remainder of my term on the commission, which is approximately three years, I really have very little desire to consider any new license applications within that period of time. I want to be very clear. I am encouraging no one to submit an application. And as I sit here today, I simply don’t see a set of circumstances that is likely to change my mind particularly with these new facilities coming on board within the next few years.”
The five IRGC members cited various studies conducted earlier this year on behalf of the commission indicating Iowa’s casino gaming market is saturated or very close to it.
At the same time, Lamberti suggested supporters of a casino in Cedar Rapids take their case to the state legislature. A “unique set of circumstances” could change commissioners’ position, he said. “Obviously if the legislature and the governor decide to make any changes, we will, as a commission, take that into account,” Lamberti stated. He noted the commission historically has looked at how any new casino in Iowa might harm existing ones. “And the numbers just don’t work for a Cedar Rapids casino in that analysis under the current way we do things. And if that is going to change, it’s going to have to come from the legislature,” Lamberti said.
He added increased competition from video gaming machines in Illinois bars and restaurants and increased gaming options in Nebraska also could lead the commission to reconsider the no-gaming-licenses stance. “I don’t know that that would necessarily change my thinking about new applications for the next three years, but that is simply an example of some things that might convince me to take another look,” Lamberti said.
Cedar Rapids Mayor Ron Corbett took Lamberti’s comments as a sign. The IRGC’s new position “opens the door for us to approach the legislature. We can’t stand around like stooges and do nothing. I’ll look at this as a signal to put together a legislative package, one that will address not just Cedar Rapids’ situation but some of the inequities we’ve seen on how gaming revenue is distributed to Iowa’s nongaming counties,” Corbett said.
He added, “This legislative approach may be a long shot, to use a gambling term. But it might be worth the effort. We might get a better hearing out of a legislative body that has more concerns than actual casino industry regulation.”
Corbett said he believes the Iowa casino market is stagnant, not saturated, and a Cedar Rapids casino—the first in the state to be smoke-free—would give the city and its downtown area a boost and help rejuvenate the state’s gaming industry. “We’ll volunteer. We’ll be the guinea pig,” Corbett said.
In addition to attracting non-smokers to Cedar Rapids’ casino, Corbett proposes to double to $21.8 million annually the amount of state casino tax revenue that goes back to the 84 of 99 Iowa counties that do not host casinos, and to their nonprofit organizations. The proposal eliminates the $22 million annual tax that casinos are required to pay on free-play promotions. Corbett said the tax savings would encourage casinos to offer more promotions which would increase business, with half the tax break going to the nonprofit organizations in casino host counties. In addition, following a license for the Cedar Rapids casino and possibly one more, Corbett’s proposal would establish a 10-year moratorium on new casino licenses. “It doesn’t have to pass 100 to nothing in the House and 50 to nothing in the Senate. I just need 51 and 26,” he said.
However, House Speaker state Rep. Kraig Paulsen said he did not believe “the likelihood is great” that the Iowa legislature would take up gambling reform. He added lawmakers would not want to “get in the middle of passing out individual licenses” for casinos. That has been the job of the gaming commission, Paulsen said, “but I encouraged him to pursue it because maybe I’m wrong.”
State Senator Rob Hogg, however, said the Iowa legislature may have a “pretty good appetite” to address gaming next year because of the drop in state gaming revenue. He added it’s possible lawmakers might conclude “we need a little more legislative oversight” after watching the state commission award a license to Greene County two months after turning down Cedar Rapids.
Hogg also noted the smoke-free casino concept “addresses the cannibalization argument in a significant way.” Iowa’s casinos have said they would lose business if smoking was banned, but a smoke-free venue “presumably won’t take away” from casinos that don’t provide a smoke free area, Hogg said. Corbett said the market studies indicating Cedar Rapids would cannibalize too much business from Riverside Casino and others are “basically irrelevant” because they assumed the Cedar Rapids casino would allow smoking. “They’re not apples and apples. None of the studies’ numbers are right,” Corbett said.
Wes Ehrecke, president and chief executive officer of the Iowa Gaming Association, said he has discussed Corbett’s plan with him, but said association members feel the IRGC should be the sole decision-makers regarding casino licenses. He said the commission has a history of conducting thorough analyses of casino license applications. “It would be an uncharted precedence to usurp their regulatory authority,”
Ehrecke said, plus, he noted the commission’s authority is designed to make decisions without legislative involvement.
