Regulators undecided on fate of Cedar Rapids casinos heading into Thursday vote

Five-member commission votes Thursday whether city gets a license

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CEDAR RAPIDS — Heading into a vote Thursday, state regulators remain undecided about granting a gambling license for a Cedar Rapids downtown casino.

“I’ve talked to a couple of them, and I would say there are not sufficient votes either way,” said Jeff Lamberti, an Iowa Racing and Gaming Commission member from Ankeny. “It’s not fun and not an easy decision.”

Commission Chairman Richard Arnold, of Russell, said he’s still deciding. “No, I haven’t made up my mind yet — still listening to people’s comments and studying the reports,” he said.

The five-member, governor-appointed commission plans to decide the fate of the three Cedar Rapids applications when it meets at 8:30 a.m. Thursday at the Diamond Jo Casino in Dubuque. A decision may come about 9:30 a.m.

On the table are the $40 million Wild Rose Cedar Rapids proposed for next to the Skogman Building on First Avenue SE, and two choices from the Cedar Rapids Development Group-Peninsula Pacific: the $105 million Cedar Crossing Central attached to the DoubleTree Hotel on First Avenue NE and the $165 million Cedar Crossing on the River proposed for land at First Avenue and First Street SW.

Prairie Meadows, a horse track and casino in Altoona, has taken the position that a “boutique” casino “violates the regulations — it would be a $40 million project with no amenities and no debt service,” according to September meeting minutes from its board of directors. Chief executive Gary Palmer made the comments.

The Wild Rose proposal for a “boutique” casino intentionally excluded restaurants and entertainment to minimize pull from existing casinos and to avoid competing with other downtown businesses. Both Cedar Crossing options have restaurants and Cedar Crossing on the River has an entertainment venue.

The license criteria includes “the number of types of developments and amenities” in addition to the gambling floor. Commission administrator Brian Ohorilko said while that should be considered, it is not required and no laws or regulation define what constitutes a “boutique” casino.

The commission making the license decision consists of the same members who voted 4-1 in 2014 to reject an application identical to Cedar Crossing on the River. At the time, commissioners cited a heavy financial impact on the Riverside Casino & Golf Resort, 45 minutes or so south.

The projections are less now, but still could mean a 20 percent or more hit to Riverside’s annual revenue. Commissioners have said it would be unusual to grant a license if the revenue impact projections top the low teens.

While a key question for commissioners is the financial impact on existing casinos, other factors are at play — such as a potential new market in the state and community impact, Lamberti said.

“We have some duty to maximize revenue; we have a duty to look at what is best is for the state,” Lamberti said.

Commissioners have received dozens of letters over the last year attempting to sway them on the decision. Some urge commissioners to reject all applications because of negative impact on other casinos and communities. Others oppose a license for social and ethical reasons against gambling. Others support each of the different applications.

Only Commissioner Dolores Mertz of Algona has let her feelings be known. The retired state lawmaker, who was the lone supporter in 2014, said once again she will support a casino license but hasn’t made her mind up between the two smaller proposals.

Board members have said they remain insulated from outside political pressures. Gov. Kim Reynolds — who faces a GOP primary challenge in 2018 from outgoing Cedar Rapids Mayor Ron Corbett — has said she will not take a position.

Still, political influence has been a theme almost since the projects were unveiled.

The Wild Rose team is made up of close allies to Reynolds and her predecessor, Terry Branstad.

Supporters of Cedar Crossing were quick to criticize Wild Rose President Gary Kirke for providing his private jet to fly the newly sworn-in Reynolds on a barnstorming tour of the state in May. Key players in the Wild Rose project — Kirke, Michael Richards, a Wild Rose vice president, and Wild Rose consultants Chuck Larson and Jeff Boeyink — also hosted a fundraiser for Reynolds’ gubernatorial campaign in June.

Officials noted no laws were violated, and Reynolds has not made any appointments to the gaming commission.

Kirke had donated $135,746 to Branstad since 2009 and $25,125 to Reynolds since 2012. Steve Gray, a lead investor in Cedar Crossing, donated $24,200 to Branstad in 2012 and 2013 and none to Reynolds, disclosure records show.

Local politics have been abuzz as well.

Cedar Crossing investor John Smith, chairman of CRST International, alluded in an August letter to various members of the community to the “fix” being in for Wild Rose, but said he did not believe that was the case.

The Cedar Rapids City Council and the Linn County Board of Supervisors each passed resolutions supporting either of the Cedar Crossing proposals while opposing the Wild Rose plan.

Cedar Rapids has a memorandum of understanding to work exclusively with Cedar Crossing on any casino project in the city until 2029. Linn County had a similar memorandum that expired in October.

l Comments: (319) 339-3177; brian.morelli@thegazette.com

 

Five who decide

Members of the appointed Iowa Racing and Gaming Commission set to decide Thursday on a casino license for Cedar Rapids:

-- Richard Arnold, a farmer and former Republican state representative from Russell.

-- Carl Heinrich, former president of Iowa Western Community College, a Republican from Council Bluffs.

-- Kristine Kramer, owner of K & W Motors Ltd. of New Hampton, a Democrat.

-- Jeff Lamberti, a lawyer and owner of the Iowa Barnstormers arena football team, a former Republican state senator and congressional candidate from Ankeny.

-- Dolores Mertz, a former Democratic state representative from Algona.

Forecasted new and cannibalized revenues for proposed C.R. casinos

Source: White Sands Gaming data. Chart by John McGlothlen / The Gazette

Map by John McGlothlen / The Gazette

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