Government

Iowa Racing and Gaming Commission rejects Cedar Rapids casino proposals

Members vote 3-2 in denying three applications

DUBUQUE — Three years later, same result.

State regulators called it a difficult decision. They believed a casino would benefit Cedar Rapids. There were high quality applications.

But three and a half years after denying a Cedar Rapids gambling license, the Iowa Racing and Gaming Commission came to the same conclusion on Thursday: the market is saturated, they said.

“I’m right now not sure adding a new license will help the state in any way. I think it would shift ... our resources (away) from rural areas,” said commission member Carl Heinrich of Council Bluffs. “I don’t think now is the time to change the dynamics of what we are seeing working well.”

The five-member, governor-appointed commission voted 3-2 to deny three applications — Wild Rose Cedar Rapids and two Cedar Crossing concepts — for a downtown Cedar Rapids casino, during a meeting in Dubuque. Heinrich, Jeff Lamberti of Ankeny, and Kristine Kramer of New Hampton, voted against a license. Chairman Richard Arnold, of Russell, and Dolores Mertz, of Algona, voted in favor.

The panel, which oversees the 19 state licensed casinos, is made up of the same members who voted 4-1 against a casino in 2014, with Mertz casting the lone vote of support.

“It’s just a big disappointment for our community,” Cedar Rapids Mayor Ron Corbett said. “A lot of money and a lot time was spent on the preparation of these applications only to have the same result. They probably just should have told us at the beginning, ‘Hey guys, don’t bother because nothing has changed.’ It is a big letdown for us.”

Corbett, who is running for governor, said it’s “time to clean house” on the commission.

ARTICLE CONTINUES BELOW ADVERTISEMENT

The commission made no indication about when it might be open to granting a license, although there is already some interest in taking another run. This would likely mean voters would need to vote to continue the Linn County gambling referendum, which expires in 2021.

REACTION: Wild Rose's Jamie Buelt

The $40 million Wild Rose Cedar Rapids, proposed for next to the Skogman Building on First Avenue SE, was introduced in September 2016, prompting the commission to invite applications for a Linn County casino license. Applications were due in February.

The Cedar Rapids Development Group, in partnership with Peninsula Pacific, stepped forward with the $105 million Cedar Crossing Central, attached to the DoubleTree Hotel on First Avenue NE, and the $165 million Cedar Crossing on the River, proposed for land at First Avenue and First Street SW.

Cedar Crossing on the River is identical to what the commission rejected in 2014, citing cannibalization or heavy financial impact on the Riverside Casino & Golf Resort, which is 45 minutes south of Cedar Rapids.

Existing casino operators breathed a sigh of relief on Thursday.

“I think it was the right decision,” said Dan Kehl, chief executive of Elite Casino Resorts, which operates Riverside Casino. “I am glad it is over.”

Todd Connelly, general manager of Isle of Capri in Waterloo, said, “Obviously, we are elated with the results of the vote. It’s 50 jobs we will keep at our facility and economic benefits will continue in our community.”

Their casinos were predicted to lose millions of dollars and see dozens of workers laid off if a Cedar Rapids casino were built.

Kramer noted Cedar Rapids had a chance for a casino in 2003, but did not want one at that time. That decision opened the door for the properties in Riverside and Waterloo, she said.

ARTICLE CONTINUES BELOW ADVERTISEMENT

“I realize what any one of these casinos could do for Cedar Rapids, but at what cost outside of Cedar Rapids,” she said. “The economic effect would hurt the casinos and trickle down and hurt the people in rural Iowa. I would not believe these jobs would be replaced.”

Those voting against a casino license noted that while Iowa’s gambling market is not growing, it’s also very stable, and they are hesitant to disrupt that.

State licensed casinos were a nearly $1.45 billion industry in fiscal 2017, which was up just 1 percent from the year before — although 12 casinos posted declines — and down about 1 percent from five years ago.

The industry provided $317 million in state and local taxes in fiscal 2017, and contributed another $41 million to charities in local markets.

Casino supporters picked up one more vote in favor of a Cedar Rapids license compared to 2014.

Arnold said he was impressed by Cedar Crossing Central, which had a ratio of investment compared to gambling positions that was higher than anywhere in the state.

“That project seems to be the perfect fit to complement downtown Cedar Rapids,” Arnold said.

He said the financial boon for the state and community outweigh concerns about cannibalization. A new casino was predicted to generate $23 million to $47 million in untapped revenue, depending on which option was selected.

Mertz said Iowa’s second largest city deserves a casino and supported all three proposals but liked the larger, Cedar Crossing on the River.

ARTICLE CONTINUES BELOW ADVERTISEMENT

All commission members made a point to say no outside pressure, including from Gov. Kim Reynolds, were put on them in making their decision. Political influence had become a theme in the months leading up to the decision.

Applicants were predictably disappointed.

“We are disappointed, and disappointed for Cedar Rapids,” said Jamie Buelt, a spokeswoman for Wild Rose Cedar Rapids. “Right now, this just happened. We will review our options and continue to focus on opportunities to grow.”

While Buelt did not address how Cedar Rapids might fit into future plans, the Cedar Crossing team said they will be back.

“Unfortunately we don’t like this decision. The decision of three commission members, who we respect greatly, didn’t go our way,” said Jonathan Swain, a leader of the Cedar Crossing project. “Tomorrow, we are going to brush ourselves off and move forward with the process. We are in this for the long haul.”

Swain said Cedar Crossing officials didn’t have high expectations the application would succeed, but their hand was forced to apply when Wild Rose stepped forward. The Cedar Crossing group, which led the gambling referendum in 2013, preferred to wait.

Swain said 2019 or 2020 might be the right time to reapply when some key changes have taken place, including new members on the commission, a new financial outlook for the state and changes in the casino industry.

l Comments: (319) 339-3177; brian.morelli@thegazette.com

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.