Cedar Rapids gets a casino, if it can keep it

That low rumbling you might have heard around 9:30 Thursday morning was a seismic change in the way the Iowa Racing and Gaming Commission grants casino licenses.

Or maybe it was Iowa’s casino cartel, stomping in disgust after its no good, very bad week.

The commission’s 4-1 vote in favor of licensing a $275 million casino in Cedar Rapids was surprising, given the commission’s stance for decades as a cannibalization fighter. It voted in favor of a big project with a hearty appetite for revenue from its competitors.

A tradition is broken

Over the years, commissioners encouraged license-seekers to make big investments in destination-style gambling parlors. Toss in a hotel, maybe some golf. Pile on the amenities.

Iowa didn’t want a bunch of small, seedy gambling joints like you see in other states. They wanted Iowans to lose their money in big, classy casinos. You may smell of smoke, but you had a wonderful time eating, drinking and being fleeced.

In exchange for those large investments, the Racing and Gaming Commission protected existing casinos from undue competition. If your new casino plan would significantly siphon off bucks from existing facilities, it would not get a state license.

So, Iowa’s 19 casinos became a cartel determined to keep the whole pie for themselves while depending on the commission to run off interlopers.

Cedar Rapids casino backers saw this old paradigm up close in 2014 and 2017. For those commissions, revenue cannibalization was the deciding issue.

Different commission has different priorities

Then came Thursday.

A commission that had never heard a Cedar Rapids pitch declared new statewide gambling revenues and the taxes Cedar Crossing would generate was the major issue. The Cedar Crossing Casino would, according to market studies, bring around $60 million in new revenue. That lessens the sting of bucks being lost to new casinos in Nebraska.

“Cannibalization,” didn’t get much mention. Instead, the commission talked about “revenue shifts” which happen when a new business opens. Competition, as far as this commission is concerned, is a good thing. Providing 8% of Cedar Crossing’s revenues for nonprofits giving didn’t hurt.

“Net gain alone is enough to warrant a license,” said Commissioner Julie Andres, a Republican from Okoboji.

Those were the arguments local casino investors and Peninsula Pacific Entertainment, which will run the joint, made over and over through the process. Cedar Crossing would be a boon to the whole state. And it worked.

A triumph for casino backers

I watched it online this time. In the past, maybe my presence was a jinx.

“How about them apples?” Cedar Rapids Mayor Tiffany O’Donnell said as she greeted a group of reporters. “Honestly, it’s been a cataclysmic day for Cedar Rapids and Linn County.”

Cataclysmic may not have been the word she wanted, given that it’s generally used to describe earthquakes, hurricanes, meteor strikes, etc. Later, she revised her remarks and called it “transformative,” according to The Gazette’s Tom Barton.

In 2014, casino supporters had hangdog faces and hushed conversations. On Thursday it was all smiles, hugs and backslaps. Was that a whoop I heard?

Lawsuit still looms

But don’t forget about the lawsuit. It might be cataclysmic.

Riverside Casino & Golf Resort, which studies say could see $30 million in a revenue shift northward, contends faulty ballot language for Linn County’s 2021 gambling referendum renders the vote invalid. And with no vote, the commission has no authority to grant the county its license.

The commission declined to decide the dispute. So now it will head to District Court.

I couldn’t help imagining Thursday that Cedar Crossing is like the Death Star in Star Wars. It was considered invincible.

And the lawsuit is like the tiny exhaust port where Luke Skywalker deposited a couple of torpedoes and blew the whole thing up.

We’ve analyzed their attack, and there is a danger.

Commissioner Alan Ostergren, the lone no vote, believes Riverside is right and the commission lacked authority to issue a license. Ostergren is a lawyer known for pursuing very similar technical, letter-of-the-law legal actions on behalf of Republicans.

For example, he sued Cedar Rapids over its use of “racial quotas” to select members of the police Citizen Review Board. A judge blocked the city’s policy and Cedar Rapids settled. Ostergren also helped Donald Trump’s campaign take legal action against county auditors.

Ostergren knows stuff. He could be right about the casino vote. And Cedar Crossing’s license could disappear.

Bad week for the cartel

Meanwhile, Iowa’s casino cartel had one of its worst weeks ever. Existing casino operators couldn’t convince the Iowa Senate to pass a five-year license moratorium, hoping to cut Cedar Rapids off at the pass. Then came Thursday’s vote.

This was Cedar Crossing’s last chance. Its supporters gambled and got a license. If the effort had failed, it’s likely Cedar Rapids would never have a casino. Their dreams would not have survived a third strike from the commission.

I’ve joked I’m not addicted to gambling, but I am addicted to writing about gambling. But even for me, this 12-year casino chase had grown tedious. It looked like the same old drill. Apply for a license. Studies show it would devour existing casino revenues. Racing and Gaming Commission says sorry, no dice.

But Thursday, the commission said yes to dice, cards, 700 slots and the Zach Johnson Clubhouse, a steakhouse. It may be my only reason for hitting the casino.

There were those who said it couldn’t be done. I said it couldn’t be done. I was wrong, so far.

The giddy winners gathered Friday morning to break ground for the project.

“We just shot a Caitlin Clark logo three friends, nothing but net,” said Cedar Rapids Mayor Tiffany O’Donnell said at the groundbreaking.

Impressive. But the play is under review.

Keep that dirt handy. If the lawsuit succeeds, you may be ordered to put it back.

(319) 398-8262; todd.dorman@thegazette.com