Lawmakers fast-track casino moratorium that would block Cedar Rapids proposal

DES MOINES — Iowa lawmakers hope to fast-track legislation that would thwart Cedar Rapids casino backers' hopes for a new $275 million facility.

House lawmakers on Monday advanced legislation to create a five-year moratorium on new state-licensed casinos in Iowa. The move comes as the Iowa Racing and Gaming Commission nears a decision at its Feb. 6 meeting on whether to grant a license for a Linn County casino.

The bill passed out of the House Ways & Means Committee Monday evening, 17-8, sending it to the full House for debate and a floor vote set for Thursday.

House Study Bill 80 would retroactively enact a five-year moratorium on issuing new casino licenses in the state from Jan. 1, 2025 through June 30, 2030.

While retroactive, Rep. Bobby Kaufmann — who chairs the House Ways and Means Committee and represents the area where the nearby Riverside Casino & Golf Resort is located — said he plans to get the legislation passed before state gambling regulators decide on a Cedar Rapids casino license.

  Buy Photo

A Republican from Wilton, Kaufmann said he worries about potential job losses and other negative effects for his district, should a Cedar Rapids casino be built.

The bill also sets new criteria that the Iowa Racing and Gaming Commission would use to consider future casinos, including whether and how much it would drain revenues from existing gambling facilities in Iowa.

Regulators could not issue new casino licenses if they determine doing so would “negatively impact the adjusted gross receipts of an existing” casino by more than 10 percent, or “negatively impact the annual distributions” of grants to community organizations by the casino’s nonprofit license holder.

If an applicant was denied by the commission, another applicant in the same county could not apply for a license for eight years under the bill.

The commission also could not issue new licenses after July 1, 2030, if it “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. The language applies to all except Prairie Meadows in Altoona and Isle Casino in Waterloo, effectively staving off competition to casinos in Davenport and Riverside operated by Elite Casino Resorts.

  Buy Photo

Iowa Code already spells criteria for evaluating new casino licenses, including market saturation, economic impact and development, efficient and safe operation, community support, and other factors. Kaufmann said his bill is more descriptive and that current state law is too vague.

“It's a heavily, heavily regulated industry, and I believe decisions of this magnitude should be more compelled to consider things such as cannibalism and how it affects those who invest hundreds of millions of dollars, and most importantly, employing our constituents as we speak,” Kaufmann said.

Studies: Linn County would pull patrons from other casinos

The state’s existing casinos support a moratorium, saying Iowa’s casino market — with 19 commercial casinos and four tribal casinos — is saturated and that a new facility would “cannibalize” revenues from them and dilute the state’s gambling market.

Two market studies ordered by the Iowa Racing and Gaming Commission say a proposed Cedar Rapids casino would largely rely on pulling patrons from other Iowa casinos.

Marquette Advisors of Minneapolis estimates the Cedar Crossing Casino would generate about $118 million in adjusted gross revenues annually by 2029. However, more than half — $68 million — would come from siphoning off customers from existing Iowa casinos.

  Buy Photo

It projects Riverside Golf & Casino Resort would see a $34 million hit by 2029 — a 26 percent slice of its revenue. Meskwaki Bingo Casino Hotel would lose $14.1 million, Isle Casino in Waterloo $8.8 million, and other casinos across the state would collectively lose $11 million.

The Innovation Group of New Orleans forecast Cedar Crossing would generate $116 million in yearly revenue by 2028, with a little more than half representing new gambling revenue to the state. About $56 million is projected to come through cannibalization, mostly from casinos in Riverside and Waterloo.

Cedar Rapids casino backers, though, emphasize the $60 million in new gaming revenue for the state projected by Innovation Group.

Cedar Rapids city officials and representatives from the Cedar Rapids Metro Economic Alliance, Iowa State Building and Construction Trades Council and affiliated local unions said the proposed casino would boost the local economy, create jobs, support community projects and enhance the quality of life by attracting more tourists and providing more entertainment options.

“Our community continues to fight back from flooding and the derecho. So I cannot understate how important the economic impact from this casino would be on continuing to help us and the state in that recovery,” Cedar Rapids City Council member Ann Poe told lawmakers Monday during an afternoon subcommittee hearing on the bill before Monday night’s committee vote.

  Buy Photo

Peninsula Pacific Entertainment (P2E), developer of the proposed Cedar Crossing Casino & Entertainment Center, and the Linn County Gaming Association also have committed to distributing 8 percent of net adjusted gross revenue to nonprofit organizations annually — more than twice the state-mandated minimum. Of that, 10 percent would be distributed to nonprofits in adjacent counties, said Anne Parmley, president of the Linn County Gaming Association.

An influx of funding from a casino would help nonprofits meet needs and expand services in areas like foster care, homelessness, food insecurity and health care, Parmley said.

Frank Chiodo, a lobbyist for Elite Casino Resorts, warned lawmakers a new casino in Cedar Rapids would lead to potential job losses at Riverside and delay a planned $100 million construction project in Davenport to add 100 new hotel rooms, an amphitheater and other amenities.

Chiodo said the bill provides guard rails for the gaming commission and ensures consideration of societal impacts, including problem gambling and “cannibalization.”

“This is the opportunity for the legislature to say, ‘These are the parameters in which you operate under,’” he said.

Hiawatha lawmaker: Linn County should ‘control our own destinies’

  Buy Photo

While true that a Cedar Rapids casino would impact the profits of existing casinos, Rep. Sami Scheetz, D-Cedar Rapids, said lawmakers should be looking at the boon to overall gaming revenues at a time “when we are seeing our gaming revenue go down.”

Attendance and revenue at Iowa’s 19 state-regulated casinos dipped slightly for a second consecutive year, according to state data.

“It's time for some competition that's going to inject new money into the system,” said Scheetz, who opposed the bill both in committee and subcommittee.

  Buy Photo

“Our job as state legislators is to look at this holistically, look at the overall market, and to let the Racing and Gaming Commission do its job,” he said. “They look at all these criteria. They look at hundreds, if not thousands of pages of applications, and they are experts who don't have political biases. We do in this chamber. Let the Racing and Gaming Commission do its job.”

A union organizer for the Teamsters, Scheetz said he does not take the idea of potential job losses lightly.

“That being said, competition is going to cause change,” he said.

Rep. Aime Wichtendahl, D-Hiawatha, said local officials “should control our own destinies, and be able to go ahead and drive economic development.

“And I do not believe that the state legislature should be coming in and overriding the will of the people of Linn County,” Wichtendahl said.

Linn County residents passed public referendums authorizing gaming in the county in 2013 and 2021. The 2021 vote permanently authorizes gaming in the county.

The Iowa Racing and Gaming Commission twice has rejected proposals — in 2014 and 2017 — to bring a casino to Cedar Rapids. At the time, commissioners cited concerns that a new facility would siphon off existing customers from current casino properties in Eastern Iowa.

The state later implemented a two-year moratorium on new gaming licenses. That moratorium expired July 1 last year, allowing Cedar Rapids casino backers to move ahead with their third attempt at securing a Linn County gaming license.

Kaufmann led passage of an amendment in the House last year that would have extended a 2022 pause on new casinos in the state. The amendment passed with bipartisan support, 71-21, in the waning hours on the last day of the 2024 legislative session. The Iowa Senate, however, adjourned without taking up the measure.

Kaufmann said Republican leaders in the Senate have assured him they will take up the House bill, should it pass the chamber, and give it a hearing.

“'I’ve not been given assurances on passage,” he said, adding he’s hopeful the Feb. 6 Racing and Gaming Commission meeting puts additional pressure on the Senate to act on the bill quickly.

Commission declines to decide on Linn County referendum petition

The Iowa Racing and Gaming Commission on Monday declined to decide whether a Linn County gambling referendum allows a casino to be built in Cedar Rapids.

The referendum ballot language that was approved by 55 percent of voters in 2021 said gambling "may continue." The Riverside Casino & Golf Resort, which could lose more than $30 million of revenue annually if the Cedar Rapids casino is built, contends that the approval for gambling is invalid because gambling had never begun in the county.

It asked the commission to issue a declaratory order that says it lacks the authority to issue a gambling license in Linn County because of the invalid language. The commission voted 4-1 last week to refuse the request and issued its written declination Monday.

Riverside has 30 days to appeal that refusal to district court.

The commission cited several procedural rules that back its decision and said it will weigh the argument about the referendum when it decides next week whether to issue a license for the Cedar Rapids casino.

"This decision to decline to issue a declaratory order does not, and should not be interpreted to, signal anything about how the commission may ultimately vote on the pending license application," the commission said.

Commissioner Alan Ostergren, who disagreed with the majority of the commission about the issue, indicated in his written dissent that he agrees with Riverside because the ballot language "made no sense."

"This commission must from time to time make hard decisions," he wrote. "It is not easy to tell (the casino's backers) that their project cannot move forward because of a terrible oversight in how the 2021 referendum was drafted."

Jared Strong of The Gazette contributed to this report.

Comments: (319) 398-8499; tom.barton@thegazette.com