Status quo prevails in casino decision

So the deal wasn't done after all.

Despite Cedar Crossing's impressive plans, its influential backers and community support, all that a Cedar Rapids casino could have added to Iowa's gambling industry could not overcome what it would potentially subtract.

Yeah, it was cannibalization. And we always knew it might be. The state-commissioned market studies that predicted it, in the end, delivered a knockout punch.

Iowa Racing and Gaming Commission Chairman Jeff Lamberti said Thursday that a Cedar Rapids casino would 'destabilize' the gambling market. And a commission that approved its license would fail in its responsibility to provide a 'stable and predictable environment' for existing casinos.

'This is not a decision any of us is too excited about,' Lamberti said before adding his no vote the commission's 4-1 tally against the Cedar Rapids license application.

HEAVY DRAMA

The enormous disappointment was obvious on the faces of local leaders and investors who sank their efforts and dollars into the possibility of a casino, into a push to make Iowa's second-largest city a gambling town. And that possibility looked so bright and probable not long ago.

The suspense grew heavy on Thursday morning as the decision approached. When the commission started its discussion, you could hear a poker chip drop.

But in the end, the sure thing came up way short.

'We'll think about the next steps and see where we go from here,' said lead investor Steve Gray, fighting back tears, clearly not knowing if any next steps remain.

'You know what? We gave it our best shot,' Gray said.

The commission took the easiest way out of a very tough call.

This is what commissions before this one have done. When state-funded, independent market studies show that a new casino would draw a large chunk of its revenues from existing casinos, the vote is no. Always no. As Lamberti has explained many times, the Legislature created a casino structure that encourages large, destination-style casino investments matched by regulatory structure that shields those investments from heavy competition.

PROTECTED INDUSTRY

So the commission approved licenses for Riverside Casino & Golf Resort, the Isle Casino Waterloo and other Eastern Iowa properties. And now, it's protecting them from the sort of competition Cedar Crossing would have brought, according to market studies.

The commission, no doubt, agonized and struggled with the most high-stakes licensing call in recent memory. But in the end, Iowa's casino cartel got what it wanted. It usually does, just as sure as the smell of indoor tobacco smoke still permeates the Ameristar Casino complex where the commission met, and every Iowa casino — even as it's banned in other public spaces.

'We were hopeful it would go this way,' said Dan Kehl, owner of Riverside Casino & Golf Resort, which would have taken the biggest hit from Cedar Crossing, according to market studies. He waged a long, expensive campaign against Cedar Crossing. 'I think the facts were on our side.'

Allowing Cedar Crossing would have been a watershed departure from past state policy, something unelected state boards generally are loathe to do. The power of the status quo prevailed. The idea of an urban casino as the industry's future didn't take hold.

'Let the market drive it,' said Commissioner Delores Mertz, the lone yes vote, who said casinos should take the same risks as farmers.

NOT A DISASTER

But this disappointment, as raw as it is now for backers, isn't a disaster.

Cedar Rapids has seen one of those, and has made a solid, remarkable recovery. For all the sales pitches about Cedar Crossing as the 'capstone' of that recovery, its defeat doesn't change the forward momentum.

It's not exactly good news for the city's economic development plans, but Cedar Rapids remains a growing city with a strong economic hand to play, from its big manufacturers to its blooming startup community. It's a setback for west-side development downtown, but it's not a death blow. Kingston Village will take off under its own power, even without nearby slots ringing.

As I wrote before the March 2013 Linn County gambling referendum, Cedar Rapids, unlike some towns that have sought licenses in the past, really doesn't need a casino. And that's a good thing. Cedar Crossing was not a make-or-break proposition for a struggling city.

And as for all that vacant land that won't be Cedar Crossing, ground may not be breaking, but it's time to get bold and creative. Cedar Rapids isn't going to be a casino town, but that doesn't mean its next chapter has to be all about what-ifs. A prime site on I-380 in the center of the city has to be good for something, maybe something big.

How about a water park? But it won't be built by Kehl. He promised one last year in exchange for a no vote on Linn County's referendum. It passed 61-39. The promise no longer stands.

'Not at this time, no,' Kehl said Thursday.

l Comments: todd.dorman@thegazette.com or (319) 398-8452