Let the Cedar Rapids casino chase begin, again

So, the clouds of a state gambling license moratorium are lifting. Clouds of tobacco smoke remain inside casinos, but we can’t have everything.

The moratorium ends Monday. Then, all Cedar Rapids casino backers need to do to win a license is convince state gambling regulators to abandon their entire philosophy and approach for awarding new casino licenses.

It’s in the bag. Winner, winner all-you-can-eat buffet dinner.

Historically, the Iowa Racing and Gaming Commission has encouraged expensive, large destination-style casinos with hotels, spas, golf courses and other amenities. Unlike South Dakota, we don’t have a mini casino in every gas station.

In exchange for those large investments, the gaming commission has shielded casinos from harmful competition. Regulators won’t approve a new license for a project that cannibalizes a big chunk of its revenue by stealing business from existing venues. That’s why casinos in Iowa don’t operate as independent businesses. They’re members of a protected cartel.

This will be the Cedar Rapids Development Group’s third attempt to crack the cartel. This time a $250 million Cedar Crossing casino will be proposed. Go big or go home.

But has anything changed since failed bids in 2014 and 2017?

Well, it’s new commission. Not one of its members served during those ill-fated bids. Will that make a difference? Maybe, or maybe not.

Since Nebraska voters passed three ballot measures in 2020, four state-licensed casinos attached to existing racetracks have come online. In 2023, the casinos rang up $89 million in revenue. According to reporting by the Nebraska News Service, Council Bluffs casinos saw a $13 million drop in revenues between 2022 and 2023. Not huge, a roughly 3 percent decrease, but perhaps a sign of larger losses to come.

Investors who want to build Cedar Crossing — hey, if you like a name, stick with it — hope that a potential hit to state gambling revenues would make a new casino more attractive to regulators.

But again, the cartel is built to protect each casino’s turf. The effect on overall state gambling revenues hasn’t factored into state licensing decisions, at least not yet.

The dreaded cannibalization remains a bigger factor.

In 2014, Cedar Crossing Classic, a $165 million facility, had some momentum. Investors and local government leaders made a convincing case a new casino would help a community still recovering from the epic flood of 2008. At times, it felt like a slam dunk.

But then the results of market studies authorized by the commission came back. Cedar Crossing Classic would grab huge percentages of its revenue from Riverside Casino & Golf Resort and the Isle Casino Hote in Waterloo, both just a short drive down and up I-380. Iowa’s gambling market, according to the studies, was saturated.

Cannibalization and saturation led to frustration when the commission voted 4-1 against Cedar Crossing Classic.

Local investors offered up another Cedar Crossing plan in 2017. But they also submitted plans for a smaller downtown casino adjacent to the Alliant Energy PowerHouse, DoubleTree hotel and the city’s convention complex. Another investment group proposed a Wild Rose “boutique” casino also in the city’s downtown.

Two market studies showed that even the small projects would pull millions of dollars in revenues from existing casinos.

“Our belief is that gaming licenses were issued in good faith to operations who employ citizens and pay taxes to the state, and to license competing entities in a saturated and well- served market is not well-serving the industry or the state,” WhiteSand Gaming wrote in its market study.

The commission voted 3-2 to reject the applications.

Does the Iowa gambling market feel less saturated? With its 19 state-licensed casinos? In 2019, Iowa made sports betting legal. Now you can carry a bookie in your pocket and bet to your heart’s content, or your bank account is empty.

Can a new Cedar Crossing find its place in the market? A new property could reinvigorate the market and prompt some new customers to part with their money. You know, capitalism, the free market and all that jazz.

But the public and behind-the-scenes push against a Cedar Rapids gambling parlor will be fierce. The opposition will no doubt be led by Dan Kehl. CEO of Elite Casino Resorts. It owns casinos in Riverside, the Quad Cities, Lyon County in far northwest Iowa, a Nebraska property, and a casino in Illinois. So Kehl is a big dog in the cartel pack.

But his most effective lobbying was done by his employees, who told regulators they would surely lose their jobs if a Cedar Rapids casino opened. Forget the casino baron. But remember what might happen to the people who make the buffet.

It will be fun to watch, regardless of the outcome. Can the saturated cannibals prevail?

The good news is Cedar Rapids wants a casino but doesn’t need one. Just think, if local investors had been successful in 2014, there might be no Big Grove or Pickle Palace. I don’t want to live in that world.

Let the Casino Games begin. And may the odds be ever in your favor, unlike at an actual casino.

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