Cedar Rapids Mayor Tiffany O’Donnell asks Iowa governor not to sign new casino 2-year moratorium

CEDAR RAPIDS — After state lawmakers Monday swiftly proposed and passed a two-year moratorium blocking new casino licenses in Iowa — halting Cedar Rapids’ third try for a gambling facility — city officials are making a last-ditch plea to Gov. Kim Reynolds to veto the measure.

The request may go unheeded, though, as Elite Casino Resorts Chief Executive Officer Dan Kehl — a staunch opponent of a Cedar Rapids casino — through a political action committee in 2021 donated thousands of dollars to Republican leadership, including to Reynolds, in 2021.

Cedar Rapids Mayor Tiffany O’Donnell said Tuesday she communicated with the governor, asking her not to sign the bill, House File 2497, a law on gaming and regulations that includes an amendment calling for the ban. The moratorium was a new topic that came up in what appears to be the final days of the 2022 legislative session, and is awaiting a signature from Reynolds before taking effect June 1.

“Whether you are for or against the casino, this is not good practice,” O’Donnell said.

O’Donnell took issue with the speed at which lawmakers passed the moratorium and kept Linn County area lawmakers and lobbyists in the dark. Lobbyists for the city and Linn County Board of Supervisors registered against the bill at 12:29 p.m. Monday, after it had already passed in the state Senate.

“It feels like dirty politics,” O’Donnell said. “ … I’m disappointed that a city like Cedar Rapids that follows the rules could be blindsided by something like this, and I’ve let our legislators know that.”

“It feels like dirty politics,” O’Donnell said. “ … I’m disappointed that a city like Cedar Rapids that follows the rules could be blindsided by something like this, and I’ve let our legislators know that.”

Alex Murphy, Reynolds’ spokesperson, declined to comment on the bill, but wrote in an email that “the governor works with her team to do a full review of any/all bills that make their way to her desk. She has 30 days post-session to sign any bills.”

City officials must figure out next steps with investors who are part of the Cedar Rapids Development Group, a subsidiary of Peninsula Pacific Entertainment that has a deal guaranteeing the city’s exclusive support in the license application process until 2029.

But after Linn County voters last November again passed a gaming referendum, allowing communities to seek a license in perpetuity from state regulators, O’Donnell said the city still plans to pursue development of a casino in the future.

“We are committed to following through with the referendum from voters to get a casino,” O’Donnell said. “I look at this as a bump in the road, but we are not stopping.”

Kehl and opponents have argued a Cedar Rapids casino would “cannibalize” the gaming properties in Riverside and Waterloo particularly, oversaturating the market and resulting in job losses, diminished amenities and less nonprofit spending.

Kehl’s company operates the casinos in Riverside and Davenport. Elite also is expanding in Nebraska and Illinois — neighboring states where studies show gaming expansions could threaten industry revenue in Iowa.

Cedar Rapids casino backers argued the state should not shield Kehl’s business as it grows across state lines. Their pitch was that the state, which currently has 19 state-licensed casinos — and 23 total — would need to consider expanding gaming in Iowa to fend off competition from neighboring states.

It looks as if Kehl’s influence could have played a role in lobbying Republican leadership to intervene in his favor to stop Cedar Rapids from tying to secure a license from the Iowa Racing and Gaming Commission.

Iowa Ethics and Campaign Disclosure Board records show Elite PAC, which is registered under Kehl’s name, throughout 2021 contributed $15,000 each to House Speaker Pat Grassley and Senate Majority Leader Jack Whitver, $5,000 to Rep. Bobby Kaufmann of Wilton and $5,000 to Sen. Roby Smith of Davenport, who ran the amendment for the moratorium. All voted for the bill.

Elite PAC also contributed $5,000 to Reynolds’ re-election campaign and $2,500 to the Republican Party of Iowa, among others.

Some of the campaign contributions were made in January 2021, around the time local gaming interests and municipal officials began conversations about when to put the Linn County gaming referendum on the ballot for reauthorization. Other contributions were made in December 2021, after the referendum’s passage.

A spokesperson for Kehl did not respond to a request for comment.

Not identifying Kehl in remarks she made Monday, O’Donnell had said, “I have to wonder that there are those who also saw things going our way and decided to step in at the eleventh hour to eliminate even the potential of us applying for a license.”

The hurried passage of the moratorium, with little notice, puts a spotlight on the relationship between the city and state.

Cedar Rapids has numerous requests out to the state as the city seeks a share of $100 million each through the Reinvestment District program to support downtown transformation and from the federal American Rescue Plan Act-funded Destination Iowa program, to which city officials are pitching a Greenway Recreation and Revitalization project along the Cedar River in Czech Village and New Bohemia.

Though the city’s ask for the casino moratorium not to be enacted may go unanswered, O’Donnell said she wants “to ensure we continue to have a good relationship with the governor’s office and our legislators.”

“We have to treat all our needs in Cedar Rapids separately,” O’Donnell said. “The casino was obviously a big piece of our economic development, but it doesn’t stop the work that we’re doing to continue to grow jobs and business. We will work with the state as partners in any way we can to reach our goals.”

Erin Murphy of The Gazette Des Moines Bureau contributed.

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