Gambling proceeds

By The Gazette Editorial Board

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Tuesday's Linn County referendum asks voters: “Gambling games at a casino to be developed in Linn County are approved.” In other words, do you want to allow regulated gambling in this county - something that was rejected a decade ago.

The referendum also will reflect voters' opinion about one group's casino proposal because it's the only one that has the formal blessing of elected Cedar Rapids city and county officials. Beyond the plan, it's about the level of public confidence in what Steve Gray and project co-leader Drew Skogman say they'll do.

As the campaigns of Vote Yes Linn County vs. Just Say No Casino entered the final week, the battle for voters had become a gambling industry turf battle: nearby casinos operators, bankrolling the No Group, to protect their interests while the Cedar Rapids gambling developers fight for a first-time foothold in this county. All amid rhetoric that has become increasingly personal and destructive to community understanding - especially much of what's been hurled by the opponents.

Whether or not you approve of gambling, this state long has allowed it within a highly regulated environment, designed to keep it fiscally accountable and generate local and state tax revenue as well as money for local charities, community projects and schools. Only in Iowa does a non-profit board hold the gaming license and oversee the operation.

THE BENEFITS

Linn County would reap more of that tax revenue and charitable bounty if developers get approval from voters and then a license from the Iowa Racing and Gaming Commission. That's attractive. We also see other benefits in the developers' plan, which would place the casino on the Cedar River's west side, near the downtown:

l Flood-damaged property goes back on the tax rolls.

l Sorely needed development is built on the near west side, which could spur more such commercial activity.

l A major additional entertainment option that helps builds on the momentum of the downtown's growing array of restaurants and bars, live theater options and year-round market, with the new hotel-convention center complex on the horizon. Though a casino isn't vital to our downtown area's would add to downtown's destination value and increasing overall customer traffic.

l Several hundred new permanent jobs with benefits that could help put some jobless people back to work.

l More work for construction companies and employees, with a stated commitment to using local firms and “green” methods.

l The investors/owners are virtually all local with other community investments and commitments.

That's a considerable list. It's enough, combined with the strength of the local investor group and the plan's viability, to convince us to endorse the proposal.

THE OBJECTIONS

The Just Say No Casino group has hammered repeatedly on several themes: The casino isn't real economic development, Cedar Rapids doesn't need a casino because there are multiple gaming options within an hour's drive, the Yes group is a bunch of greedy rich people, more gambling options leads to more crime and addiction problems, taxpayers are at risk - while also trying to raise doubts about the casino group's intentions and casting Gray as untrustworthy.

Let's look a little closer at the objections.

There are no definitive independent studies we've seen about the overall economic impact of gambling on Iowa cities with gaming. We say Iowa because other states don't regulate gambling like we do. State law requires, for example, a portion of the profits go to local non-profits. And the empirical evidence, for Iowa casinos, suggests a net gain overall - at least, you'd be hard-pressed to find a casino community anywhere in Iowa that wouldn't testify to positive effects on local government budgets and civic improvements.

Yes, there are several casinos nearby. A Cedar Rapids option undoubtedly would take away some revenue from those operations. One University of Iowa researcher, John Gallo, wrote in The Jan. 5 Gazette that a casino certainly would create jobs and new revenue for Cedar Rapids and Linn County. He also found that it likely would add little to the state's net gambling tax revenue - unless the population and number of people gambling increases significantly. But also consider that the Linn County-Johnson County Corridor region is one of the state's few population growth areas and a casino here may have the potential to boost those state coffers down the road if residential growth continues.

It's an unfair, smallish tactic to paint developers as the “greedy rich.” Investors in any business of course want to make a profit. Nothing wrong with that. And many in this group are employers and major contributors to philanthropic causes in our community.

ADDICTION CONCERNS

Addiction problems and impacts on families clearly are serious side effects of gaming activity gone awry. They cannot be ignored. About 2 percent of people gambling at Iowa casinos develop serious troubles related to gambling, and another casino logically could add to the problem. As a state virtually saturated with gambling options, Iowa must be sure to maintain adequate education and treatment resources. Asking the gaming industry to kick in more funding as needed is fair.

Still, does the acknowledged downside of gambling addiction for some folks mean the other 98 percent of Iowans must be denied the option to have gambling as a local recreational/entertainment activity?

As for crime, the No group points to a decades-old national study that concludes crime related to gambling increases about 8 percent several years after a casino opens. Yet, again, there's little or no good data showing that's the case for Iowa.

The attacks on Gray by the No group and other critics seem bent on tarnishing his credibility, often by referencing his history as an executive with McLeodUSA, the Cedar Rapids-based company that soared before falling into bankruptcy when the nation's telecommunications industry bubble burst in the early 2000s. A sad chapter for many who suffered losses.

But since then, Gray has helped create new companies and jobs (including ImOn Communications, a company in which The Gazette Company is an investor). And dozens of accomplished local people involved in a variety of businesses have lined up behind him to invest and support the casino proposal.

The No group also wants voters to believe that City Hall has already cut the casino group a “sweetheart deal” of giving away the land for the site. No documentation was cited. And besides, the city-owned land, by state and federal law, must be open to bidders before sold. Their fears ring hollow.

CAVEATS

While we support the casino proposal as it stands, our support includes some expectations.

First, the developers should stand by their pledge not to ask for property tax increment financing or tax abatement assistance. We don't think this project warrants such public subsidy.

We also want the developers and Linn County Gambling Association, which would hold the casino license, to be willing to renegotiate their agreement regarding the amount of money going to local non-profits. They settled at 3 percent of profits for 10 years as reasonable, based on the business plan projections. But if profits run higher than forecast before that decade ends, the percentage should be increased accordingly - because funneling proceeds into community-building programs and projects is a major justification for allowing gambling in Iowa.

Remember, too, that Tuesday's election does not equal a referendum on Cedar Rapids City Council members. That opportunity comes in November.

Instead, we urge voters countywide to focus on whether this county should have gambling. And if a majority is OK with it, then we think the casino plan on the table has considerable merit for the state gaming commission to weigh in its licensing decision.

If voters say no, then let's as regional community figure out what other projects might continue and enhance our post-flood renaissance.

l Comments: editorial@sourcemedia.net or (319) 398-8262