Judge questions ballot wording that led to Cedar Rapids casino license

A judge said Wednesday he won’t put a temporary hold on a state license for a Cedar Rapids casino, but said Linn County ballot language to allow gambling in the county may have “caused confusion in the mind of the voters” and said the Riverside Casino & Golf Resort has “shown a reasonable likelihood of success” in its quest to challenge the “defective” referendum that opened the door to the potential competition.

After more than a decade of trying to persuade regulators, backers of a Cedar Rapids casino finally won approval Feb. 6 after the Iowa Racing and Gaming Commission voted 4-1 to approve a license for the Linn County Gaming Association.

Its proposed $275 million facility, Cedar Crossing Casino & Entertainment Center, would include 700 slot machines, 22 game tables, restaurants, bars, an entertainment venue with a 1,500-person capacity, an arts and cultural center and a STEM lab for children. It would be built in northwest Cedar Rapids, near downtown.

A challenge filed by Riverside Casino & Golf Resort — a casino in Washington County projected to lose millions once a Cedar Rapids casino becomes operational — asserts the gaming commission did not have the authority to issue the license, and further failed to consider the negative economic impact it would cause.

Riverside, in its petition, said up to 200 employees could be laid off if the business suffers when a nearby casino opens. It also asserted nonprofit organizations that receive thousands from the casino each year would lose significant contributions.

Riverside asked the court to issue a stay on the Linn County license.

Eighth Judicial District Judge Michael Schilling, in his ruling Wednesday, said he didn’t consider any of the briefs or arguments filed that addressed the merits of the case.

Those arguments instead will be considered at a hearing set for early April.

He said Riverside established its claim that a license for a Linn County gambling facility would likely result in a “multimillion loss of revenue” for its casino. However, the judge found, Riverside didn’t “preliminarily establish” the gaming commission failed to consider the negative impacts — rather, commissioners evaluated market studies and predicted economic impact to Riverside when it granted the license to Linn County.

Schilling said he didn’t find that Riverside would suffer “irreparable injury” if the requested temporary stay was denied.

But Riverside did “preliminarily” establish a reasonable likelihood of success on the merits of its claim that the ballot submitted to Linn County voters in November 2021 was defective.

The 2021 ballot was the second time Linn County voters approved legalized gambling to occur in the county. A 2013 approval was set to expire, and the 2021 vote was meant to extend it indefinitely to allow a new casino application to regulators.

But that 2021 question, Public Measure G, asked Linn County voters whether legalized gambling “may continue” in the county. At that time, though, the gaming commission hadn’t issued a license for gambling in Linn County — so how, Riverside asked in its petition, could it continue?

Additionally, according to the ruling, the ballot submitted to voters was designed differently than what was ordered by the Linn County Board of Supervisors. The judge said he was concerned that the ballot design presented to voters didn’t represent the “will of the elected” county officials.

The judge also questioned whether the ballot language properly described the gambling that would be allowed if voters approved the referendum. The ballot described it as “gambling games with no wager or loss limits.” But, according to the ruling, that is “a subset of the gambling games allowed by Iowa law.”

“Arguably, the Linn County voters approved only gambling games with no wager or loss limits, not a broader spectrum of gambling games,” Schilling said in the ruling. “If an inconsistency exists between what the voters approved and the license the (commission) issues, the question arises whether the license reflects the will of the voting public.”

Schilling said these doubts caused him to preliminarily conclude Riverside has shown a reasonable likelihood of success on the merits of its petition.

At the time it granted the Cedar Rapids license Feb. 6, gaming commission Chair Daryl Olsen said that after consulting with commission legal counsel and a representative from the Iowa Attorney General’s Office, “a majority of the commissioners are satisfied that we have the authority to move forward and make this decision.”

The court, in weighing whether to issue a stay, also considered public interest.

The judge said the public has an interest in ensuring gambling licenses are issued only to those entities that meet the requirements of Iowa law. The public has a “strong interest in ensuring the integrity of the Racing and Gaming Commission process” and that decisions made by the commission are “legally correct.”

However, the court concluded the public interest factor doesn’t weigh heavily for or against either party in the dispute.

Comments: (319) 398-8318; trish.mehaffey@thegazette.com