Push for Cedar Rapids casino continues as voter support cools

CEDAR RAPIDS — The door is permanently open for any community in Linn County to seek a state license to operate a gaming facility after voters again approved a countywide referendum — but as the measure was passed by a slimmer margin this time around, a Cedar Rapids casino is no sure bet.

Of the 44,311 votes on the measure in the Nov. 2 election, the referendum passed with nearly 55 percent support, which fell from 2013, when 61 percent of 60,479 voters gave gaming interests the go-ahead to ask for a casino license.

The county needed to pass the referendum on this second-consecutive attempt so communities could apply in perpetuity for a license from the Iowa Racing and Gaming Commission, the five-member regulatory panel. The matter will never come before voters again here.

Still, a potential casino proposal faces a tall hurdle once it advances to the commission. Cedar Rapids has twice been denied a license, in 2014 and 2017, as regulators feared a gaming facility would “cannibalize” the market with casinos already in Waterloo and Riverside, both within an hour’s drive from Cedar Rapids.

Will the diminished support dissuade the likely developers from putting forth a casino proposal? “Not at all,” said Jonathan Swain, president of Peninsula Pacific Entertainment. He is one the investors who make up the Cedar Rapids Development Group, which has an agreement with the city through October 2029 guaranteeing it the city’s exclusive support during the application.

Swain said lower turnout and a muted message compared with the 2013 vote, which drew organized opposition and was the only thing on the ballot, unlike this election, may have contributed to the referendum’s narrower passage. The Cedar Rapids mayoral race likely drove voters to the polls in the city, but there was perhaps less to run up the margins elsewhere around Linn County.

“I think once that project is seen by the Racing and Gaming Commission, hopefully they see that it is something that is supported highly by the citizens, and I’m optimistic that they will give it a fair judgment and take a look at our proposal,” Swain said. “ … I think the excitement is going to continue to build as we unveil the project.”

How the vote came in

In 2013, all but one of 44 precincts in Cedar Rapids supported the gaming referendum. This time, 10 of Cedar Rapids’ 37 precincts voted against the referendum. (Some precincts in the county were combined in this election.)

In Cedar Rapids, the referendum received the highest rate of support on the west side of the Cedar River. Precinct 20, which covers much of the area between Ellis Road NW and E Avenue NW extending to Edgewood Road NW, supported the measure by 83.3 percent with 10 voters in favor and two rejecting it.

The referendum saw the second-highest margins of support from Precinct 42, which encompasses the area around The Eastern Iowa Airport and runs somewhat north of Highway 30. Voters passed it by 67.6 percent with 259 in favor and 124 rejecting the measure. That was a slight increase from the precinct’s 2013 level of support, when voters approved it by 65.2 percent.

Meanwhile, voters on the east side of the river seemed more lukewarm on the possibility of a casino.

Several precincts surrounding the downtown area narrowly rejected it, though Precinct 34 supported it by 56 percent. At this precinct, which encompasses the immediate downtown area as well as much of Kingston and Czech Villages, 177 voters supported it while 139 rejected it. The measure saw 69.3 support there in 2013.

All of Marion’s 14 precincts voted for the referendum in 2013, but this time four of the city’s 12 precincts voted against it.

While all Hiawatha precincts maintained support for the measure each time the referendum has come before voters, it passed by lower percentages this year than in 2013. Robins supported the referendum with 55 percent of its vote in 2013, but support dipped to 48 percent in the Nov. 2 election.

Commission consideration

Iowa Racing and Gaming Commission Administrator Brian Ohorilko said the panel looks in part at the level of community support when deciding to issue casino licenses.

Ohorilko said each commissioner may weigh certain criteria more than others, including the applicant’s suitability, location, background of a developer or others involved in a project and confidence that those involved will comply with regulations.

“When an application finally comes in, the commission historically initiates the public process with a number of steps, and one of them is actually visiting the community and a site and hearing from the public,” he said. “That part is typically a major consideration when weighing community support.”

Ohorilko said the fact a license wasn’t issued in the past doesn’t directly factor in when the commission makes a decision.

“It’s always possible that the considerations that were made in the past would still be in place now,” he said. “But as time changes, factors can change, too. If an application for a license were to come, the commission would take their time and have a thorough analysis separate from anything done in the past.”

A statewide socioeconomic study showing Iowa’s current economic situation and how gaming customers are behaving may also influence whether the commission awards a license for a Linn County gaming facility. Ohorilko said results from that study should come this year.

Russ Mitchell, managing editor at PlayIA.com, an Iowa gaming news website, said the study showcases the health of Iowa’s wagering industry including: bankruptcies, divorce rates and crime as well as economic health in the casino communities.

“The study will help commission members decide whether the region can support casinos in both Riverside and Cedar Rapids,” Mitchell said. “Geography has been a hang-up with past commission memberships.”

Linn County casino backers see an opportunity to successfully get a license in the future, though, as all past members who denied previous Cedar Rapids applications have cycled off the commission, whose members are appointed by the governor.

They remain hopeful about the potential for a brick-and-mortar casino in Iowa’s second-largest city, pointing to expansions of gaming in the bordering states of Nebraska and Illinois as reason the Iowa commission would now support a casino in Cedar Rapids as a way to keep more revenue in the state.

Next steps

Developers’ next steps will focus on choosing a location for a potential casino, working with consultants, architects and a contractor, and waiting for the socioeconomic impact and market study results before compiling a proposal in 2022, Swain said.

Asked whether developers may select a location based on where the referendum passed with more support, Swain said, “The key is to make sure we're in Cedar Rapids. That's been something we have said from the beginning, that we want to be in Cedar Rapids, and our goal is to provide as much synergy for downtown Cedar Rapids as we possibly can.” He added that working with city leadership also is a priority.

The remaining mayoral candidates who are headed to a Nov. 30 runoff election said the community should have a say in how a casino proposal advances.

Before Nov. 2, TrueNorth employee Amara Andrews’ stance on the referendum was that it was up to voters and then to the Racing and Gaming Commission to decide on awarding a casino license.

“The voters have responded favorably to the casino, but there are many folks who are against it,” Andrews said in a statement. “Their views need to be considered as well as the threat a casino may have on surrounding businesses.”

Work to identify a location should include an analysis of the facility’s impact on surrounding businesses, Andrews said. She added that “impacted businesses should be given a seat at the table as negotiations take place so that their voices are heard and they know what to expect” in regards to construction, timelines, street closures and other factors.

The city also should look to construct a LEED-certified building to bring a casino online in a sustainable way, Andrews said.

Women Lead Change Chief Executive Officer Tiffany O’Donnell was an early proponent of a casino in or near downtown as “one piece of the economic development puzzle.” She said it could add jobs, spur growth around it and open a funding stream for local nonprofits, which would receive 8 percent of casino revenue — more than the state-required 3 percent contribution level.

“I hear every day from Cedar Rapidians that they want more things to do — more amenities for adults as well as for families,” O’Donnell said. “We can’t just add a casino. We need to be really intentional about making sure that we’re adding amenities for all different communities.”

As the location for a potential casino remains up in the air, O’Donnell said that was perhaps one of the factors leading to lower referendum support, potentially making it difficult for voters to imagine how a casino might affect the city. But she thinks all locations should be on the table.

It is critical that citizens have input on location and design, O’Donnell said, and that they are confident there is the necessary social and public safety infrastructure to support a casino. O’Donnell said she would look to other communities with casinos to see their practices for grappling with possible challenges such as gambling addiction and increased crime.

“We need to make sure that we look at the casino — the opportunities as well as the challenges — and be prepared as a city to accommodate all of it,” O’Donnell said.

Industry influences

A push for online casino gaming in Iowa may be on the horizon, Mitchell said.

Last month, Iowa sports betting had its second record-breaking month in a row as sportsbooks took in more than $280 million in wagers amid football season.

Though online betting is becoming more popular, the state’s 19 casino locations have seen over $500 million in revenue to date in fiscal 2022, according to Iowa’s Sept. gaming revenue report. Riverside alone pulled in over $42 million.

Online betting is limited to sports wagers in Iowa, meaning Iowans can’t play online casino games for money under current state law.

“We’re hearing a majority of Iowa casinos want to offer online casino bets for their customers,” Mitchell said. “There are pockets of private-sector reluctance within the industry. A handful of Iowa’s properties want to protect the traditional foot traffic and casino experience. Great hospitality and facilities will be critical.”

Although changes may come to Iowa’s gaming industry, Swain said he is excited that citizens permanently authorized gaming in Linn County, as he sees opportunities for economic development and for the “historic” revenue share with nonprofits.

“Once people see what we're going to bring to the market and understand the benefits to the nonprofit organizations that this is going to bring, I think we're going to have a winning project,” Swain said.

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