Cannibals before the high court
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24 Hour Dorman
It didn’t get much attention at the time, but oral arguments in a local attorney’s lawsuit against the Iowa Racing and Gaming Commission are fascinating viewing.
I couldn’t make it to the live arguments before the Iowa Supreme Court in February, but the court posted a video last week. It takes on fresh relevance this week as regulators prepare to commission a gambling market analysis. The analysis will seek to show how much three proposed Cedar Rapids casino plans would cannibalize revenue from existing facilities. It was cannibalization that scuttled a local casino bid in 2014.
But longtime Cedar Rapids lawyer Eugene Kopecky argued before the Supreme Court last month that the commission’s cannibal obsession is an unlawful overreach.
Kopecky contends Iowa’s gambling laws, contained in Iowa Code Chapter 99F, don’t give commissioners the power to deny a license in one county simply to head off competition with a casino in another county.
“They have no authority,” Kopecky argued. Doing so, he insisted, basically nullifies Linn County’s 2013 gambling referendum.
The commission’s attorney, Assistant Attorney General David Ranscht, argued Iowa law gives commissioners broad authority to craft rules for carrying out Chapter 99F, including considering casino competition.
The justices seemed skeptical of Kopecky’s arguments. Justice Edward Mansfield suggested lawmakers may have intended competition to be one among multiple factors considered. Justice Brent Appel pointed to regulated industries of the past where government did take competition into account.
“In your view, theoretically, if 99 Iowa counties all voted to approve gambling and lined up suitable applicants, we could have 99 or more casinos?” Justice Thomas Waterman asked.
“We could have, sure,’ Kopecky said.
Justice David Wiggins pointed out that criteria used by the commission for more than a decade was reviewed and accepted by the Legislature’s Administrative Rules Review Committee.
“They might not want to cannibalize a rural casino and take jobs from a rural area and move them to a city area,” Wiggins said.
“The people decide where they’re going to have gambling, not the commission,” Kopecky argued. “And once the people make that decision, they have to act in the best interest of those people.”
But Ranscht didn’t get a pass from the court.
“What specific provision of the statute allows the commission to consider the impact on profits of existing licensees in reviewing the application of a proposed new casino?” Waterman asked.
“There’s no specific provision in 99F. But 99F, as we’ve been discussing, sets up this rule-making power,” Ranscht said.
“Now, If the Legislature really wanted to have this kind of intrusive economic regulation, wouldn’t they have said so?” Appel said.
Kopecky’s contention that votes should trump fears of competition is compelling. But I’m betting the winning legal argument will be if a Legislature that wrote the law didn’t like the commission’s rules, why didn’t lawmakers act? They didn’t. So cannibals continue to loom large over licensing.
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