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Cedar Rapids, Iowa 52401
Cedar Rapids casino referendum survives for now
State regulators said a challenge is outside their purview
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JEFFERSON — Iowa gambling regulators declined Thursday to decide whether inartful language in a 2021 Linn County referendum should prevent a proposed casino from being considered there.
That maintains, for now, the viability of a potential casino for Cedar Rapids, which is set for a final license vote by the regulators in two weeks.
Linn County's 2021 referendum to approve gambling in the county was challenged by the nearby Riverside Casino & Golf Resort, which stands to lose substantial revenue if the Cedar Crossing Casino & Entertainment Center is built, studies have shown.
Riverside contends the referendum ballot language voters approved said improperly that gambling in the county "may continue." The casino argued that because gambling had not commenced in Linn County, it couldn't continue.
The Iowa Racing and Gaming Commission, in a 4-1 vote, declined to answer Riverside's challenge. A majority of the commission agreed that, based on their understanding of state law, the decision was not theirs to make.
The challenge came in the form of a request for a declaratory order from the commission, which is often used to seek guidance from commissioners about an unclear issue. The Iowa Administrative Code says commissioners can reject the requests for several reasons, including if the requests do not "aid in the planning of future conduct" and instead seek to litigate past conduct.
"I think at this point in time we decline to answer and say, 'This needs to be settled somewhere else,'" said Commissioner Daryl Olsen, who is the commission's chair.
The lone "no" vote was cast by Commissioner Alan Ostergren, a lawyer who argued the commission is required to decide and said it should side with Riverside.
"We do have to answer this question one way or another," he said. "We don't have the authority to issue a license until all the boxes have been checked."
Riverside has about a month to appeal the commission's decision in district court.
A gambling revenue fight
Riverside's primary concern — and the reason Cedar Rapids casino licenses were rejected in 2014 and 2017 — is the amount of gambling revenue Cedar Rapids would siphon from other Iowa casinos.
The proposed Cedar Rapids casino would cost about $275 million and 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.
Brent Wittenberg, of Marquette Advisors, which was commissioned to study the financial effects of the proposed casino, said the offerings are "really well distinguished" from other existing casinos and "in terms of the entertainment, probably unmatched."
"We do anticipate that Cedar Crossing will quickly become the dominant facility relative to the local market," he said Thursday.
But that means its presence is likely to reduce the revenues for Riverside — which is about 30 miles south of Cedar Rapids — by about $34 million annually, Marquette projected.
Meskwaki Bingo Casino Hotel, a tribal facility near Tama, is projected to lose about $14 million to Cedar Rapids, and the revenues of Isle Casino in Waterloo might drop about $9 million.
That so-called "cannibalization" effect from other existing casino revenues would account for about 57 percent of Cedar Crossing's revenues, the study found.
However, the new casino would increase the overall gambling revenues statewide during a downturn in those earnings, which makes this the right time to build it, said Todd Bergen, of the Linn County Gaming Association.
He said Iowa casinos face increased competition from those just across state borders and that the Cedar Rapids site would help curtail it and infuse the local economy with substantial money and new jobs.
"The economic impact is dramatic," Bergen told The Gazette.
Potential roadblocks
Two bills were introduced this week in the Iowa House and Senate that would impose a five-year moratorium on new gaming licenses.
One of the bills, filed in the Iowa House, would be retroactive, nullifying a Cedar Rapids license even if the gaming commission approves one. The commission is expected to vote on the license Feb. 6.
A two-year moratorium in 2022 blocked the potential approval of a Cedar Rapids casino. When it expired in 2024, backers of a Cedar Rapids casino filed the new request for a license.
"The idea that the Legislature would once again circumvent this process is not only disheartening, it's incredible frustrating," Cedar Rapids Mayor Tiffany O'Donnell told The Gazette.
Rep. Bobby Kaufmann, R-Wilton, represents the area where the Riverside casino is located and said he worries about potential job losses and other negative effects for his district, should a Cedar Rapids casino be built.
The previous moratorium followed the successful public measure that was intended to authorize gambling in Linn County indefinitely, should regulators allow a casino. It passed with about 55 percent of the vote, according to county data.
The gaming commission is expected to issue its formal notice Monday that refuses to answer Riverside's request about the ballot language. Ostergren indicated he would write a dissent.
"We believe that the questions about the 2021 Linn County casino election should be answered by the Racing and Gaming Commission now," Mark Weinhardt, an attorney for Riverside, told The Gazette. "We respectfully disagree with the four commissioners who voted against that proposition today."
He declined to say how Riverside might proceed.
The ballot language also could be challenged as part of an appeal of a Cedar Rapids license. It's unclear whether the commissioners will issue one. All five members — who are appointed — were not on the commission when Cedar Rapids casino licenses were rejected in the past.
Comments: (319) 368-8541; jared.strong@thegazette.com
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