116 3rd St SE
Cedar Rapids, Iowa 52401
Iowa Senate doesn’t extend pause on new casinos, opening door for Cedar Rapids to seek license
House looked to extend two-year moratorium passed in 2022 that thwarted city’s third try for casino
- In 2022, Iowa lawmakers passed a moratorium on new casino licenses, thwarting hopes for a casino in Cedar Rapids.
- On Saturday, the Iowa House passed an amendment that would have extended the moratorium by five years, but the Senate did not pass the amendment.
- Beginning in July, the five-member Iowa Racing and Gaming Commission will be able to consider new casino license applications.
DES MOINES — Casino backers’ long-held dreams to build a gambling facility in Cedar Rapids stayed alive early Saturday after the Iowa Senate didn’t take up a five-year extension of a moratorium advanced by House lawmakers that would have blocked new casino licenses and tightened restrictions on new licenses awarded beyond 2029.
The gambling regulations were part of Senate File 2427 and would have again thwarted Cedar Rapids’ potential third try for a gaming facility near downtown. The House passed the amendment extending the pause in a 71-21 vote and advanced the final bill, 76-16. The Senate adjourned the legislative session without considering the measure.
The two-year pause lawmakers enacted in 2022 is slated to end come July. Now, Cedar Rapids will have to let the chips fall where they may.
Months before lawmakers in 2022 halted new casinos, the Iowa Racing and Gaming Commission had set in motion the application process for a Linn County gaming license. The moratorium put the brakes on Cedar Rapids’ third attempt after the panel rejected licenses in 2014 and 2017.
The panel looked to take applications because voters in November 2021, for a second-consecutive time, passed the gaming referendum in Linn County, giving Cedar Rapids the ability to seek a license in perpetuity from the state commission.
But under the bill the House advanced Saturday, the number of state-licensed casinos would have been capped at 19 through June 30, 2029. Only counties with a license as of June 1, 2022 could have a license.
Once that pause expired, starting July 1, 2029, the commission would have had to issue a socioeconomic study on the impact of gambling on Iowans before issuing a new gambling location license.
The bill would have blocked the commission from issuing a new license for a new location that “would negatively impact an existing licensee” located in a county touching the Iowa border or a rural county with a population of less than 30,000.
Of Iowa’s 19 licensed casinos, that language applies to all except Prairie Meadows in Altoona and Isle Casino in Waterloo.
That means the commission would stave off competition to the casinos in Davenport and Riverside operated by Elite Casino Resorts, whose chief executive officer Dan Kehl has long argued a Cedar Rapids casino would “cannibalize” revenue from existing properties.
Cedar Rapids gaming interests have argued that while Iowa is increasingly competing with Nebraska for gaming revenues and Elite has expanded there, now is a prime time for a casino here.
Mayor Tiffany O’Donnell said the city was merely asking for the opportunity to apply for a gambling license that voters “overwhelmingly” wanted.
“We're not asking for any special treatment,” O’Donnell said. “We just want to push forward with our plans, so hopefully this means we can do that.”
While the two-year pause has been in effect, O’Donnell said this allowed extra time to ensure the potential casino reflects modern gaming. It would have expanded entertainment and sports betting opportunities while the popularity of online gambling threatens brick-and-mortar facilities.
“One of the challenges when the market is impeded, there's very little incentive for existing casinos to be innovative and evolve,” O’Donnell said. “And this new facility represents the way people game today. It is an entertainment facility that happens to have gaming inside.”
‘Perfect time to press pause’
Rep. Bobby Kaufmann, R-Wilton, chair of the House tax policy committee, who offered the amendment to a Department of Revenue policy bill, said the five-year extension lines up with when state regulators’ gaming study will be concluded.
“Which means this is the perfect time to press pause until after a new study comes out to show cannibalization, saturation, what the impact of new casinos might look like,” Kaufmann told The Gazette. “This moratorium matched up with conclusion of that study.”
Kaufmann said he feels there’s enough data that shows “a very real concern” a new casino would cannibalize revenues from existing casinos, “which has a real impact on Iowa workers” and state gaming revenues.
“This isn’t a last-day Hail Mary,” he said before the House debated his amendment. “This has been discussed every week of every month of session. I just felt that today, we finally reached the critical mass in the House to do this. And that will give the Senate the opportunity to see where they’re at.”
Rep. Sami Scheetz, D-Cedar Rapids, said during debate on the House floor that the city “has been denied that right and opportunity by this legislative body” to seek a license. He said it was wrong to file the amendment on an “irrelevant bill” in the legislative session’s final hours and this would effectively ban a casino in Cedar Rapids.
“Some of the same people who are building casinos in Nebraska are proposing or helping to propose pieces of this agenda,” Scheetz said. “Cedar Rapids has a right, as I said, to go through the process, just like 19 other casinos in this state have for the past two decades. This is an injustice on the second largest city in our state.”
After the Senate failed to take up the gambling regulations, Scheetz said in a statement “this outcome is a significant victory for Cedar Rapids, as we may now have the opportunity to make our case to the Iowa Racing and Gaming Commission.”
“Our community has waited patiently for the chance to enhance our economic landscape, and we are ready to present a compelling argument for why Cedar Rapids deserves this opportunity for growth and revitalization,” Scheetz said.
The makeup of the five-member commission has largely stayed the same since 2022, so it’s possible the state regulators will take applications for a Linn County license again.
Since 2022, only one member has changed. Gov. Kim Reynolds appointed Alan Ostergren, a former Muscatine County prosecutor, to the panel in 2023. Ostergren is president and chief counsel for the Kirkwood Institute in Des Moines, a conservative public-interest law firm focusing on economic and property rights, constitutional governance and separation of powers.
Casino backers have Cedar Rapids plans
Hoping the pause would sunset as planned, the Cedar Rapids City Council last year signed off on a deal to earmark land in the northwest quadrant near downtown for a potential casino, should state regulators eventually award a license. The agreement spans through Dec. 31, 2025 but could be extended if the commission is actively considering issuing a Linn County license.
The option-to-purchase agreement with the Cedar Rapids Development Group, an entity of mostly local investors, set aside city-owned property between F and I Avenue NW and First and Fifth Streets NW to be purchased and redeveloped into the Cedar Crossing Casino. This was the site of Cooper’s Mill before it was destroyed in the 2008 flood and later demolished.
Peninsula Pacific Entertainment, the city’s preferred casino operator, has plans to build a $250 million, 160,000 square-foot gaming and entertainment complex at the site. The developer paid the city $165,000 for the option to purchase the property.
Jonathan Swain, president of Peninsula Pacific Entertainment, said in a statement the development team is “pleased the Iowa Legislature made the decision to not extend the moratorium.”
“The Iowa Racing and Gaming Commission is responsible for the regulation and growth of the industry, which has resulted in thousands of jobs and millions in taxes and nonprofit funding,” Swain said. “We are excited to continue to explore opportunities for Cedar Rapids and Linn County.”
Still, the Cedar Rapids Development Group and Linn County Gaming Association, the nonprofit that would allocate 8 percent of revenue annually to local nonprofits, have a deal guaranteeing the city’s support in the license application process until Oct. 9, 2029.
Under the deal, which took effect in 2012, the development group pays $75,000 a year to the city for its support. The nonprofit and development team would jointly apply for a gaming license.
“It’s good news for the possibility of gaming in Cedar Rapids,” City Manager Jeff Pomeranz said Saturday. “We look forward to a continuation of the commission’s process.”
Opponent has long held political sway
For years, Kehl has bankrolled Iowa lawmakers’ campaigns, but since the pause on new casino licenses was enacted, Linn County gaming interests have started to do the same.
Kehl’s political action committee, Elite PAC, has doled out $536,050 to Iowa candidates, officeholders and both major political parties since 2016, state records show. Cedar Rapids casino backers have contributed $185,000 since its formation in 2022 of the Cedar Rapids Development Group PAC.
Given Elite has funneled nearly three times that amount to Iowa politicians’ campaigns over the course of six more years than Cedar Rapids casino backers, Kehl has been a dominant political force.
But Elite has contributed slightly less than that group — $170,500 — to Iowa politicians since the Cedar Rapids PAC’s creation. That accounts for campaign contributions since July 15, 2022 — the beginning of the third reporting period of 2022, when Cedar Rapids gaming interests started their PAC.
In that time, the Cedar Rapids PAC lined Gov. Kim Reynolds’ campaign coffers with $32,500. Elite PAC has contributed $5,000 to Reynolds’ campaign.
Both PACs have contributed to current leadership including Republican House Speaker Pat Grassley, Speaker Pro Tem John Wills, House Majority Leader Matt Windschitl, Senate President Amy Sinclair and Senate Majority Leader Jack Whitver, as well as Minority Leader Jennifer Konfrst and Senate Democratic Leader Pam Jochum.
Since July 2022, Cedar Rapids casino backers donated $68,250 to those legislative leaders — more than the $52,000 Elite contributed. Local gaming interests pumped $6,250 into Kaufmann’s campaign account, while Elite donated $7,500.
Tom Barton of The Gazette contributed to this article.
Comments: (319) 398-8494; marissa.payne@thegazette.com
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