Gaming board moves ahead with Cedar Rapids casino

OSCEOLA – The Iowa Racing and Gaming Commission will accept license applications for a proposed $100 million casino in Cedar Rapids through Sept. 3, it decided Thursday.

Voters in Linn County approved a gambling referendum in March and a group of local businessmen have created the Cedar Rapids Development Group to apply for a gambling license. Other casino operators in eastern Iowa unsuccessfully tried to dissuade voters from approving the referendum, fearing another casino would siphon business away.

Iowa currently has 18 state-regulated casinos and three Native American casinos not regulated by the commission.

Immediately after setting the deadline for the Cedar Rapids project, the commission voted Thursday to hire a consultant to conduct a statewide gambling market study. Commission Chairman Jeff Lamberti said the study likely would be finished by early next year, at which time the commission will consider whether there are still areas of the state that could support additional casinos.

Lamberti said it’s possible no new casinos will be approved, but it’s too early to say until the study is complete.

“That is why we’re moving forward with these marketing studies. We don’t want to have this be an endless process that carries out over years about potential new casinos. We want to bring this to an end,” he said.

Among other business the commission attended to Thursday, it also encouraged Davenport officials to move forward with a plan to allow casino operator Dan Kehl to buy the Rhythm City casino located near the Mississippi River and move it to a new proposed $110 million casino-hotel complex near Interstate 80. Kehl already operates casinos in Riverside and Larchwood.

Though the Davenport City Council had endorsed a local businessman’s organization to develop the new complex, the Riverboat Development Authority, which holds Rhythm City’s gambling license, chose Kehl’s organization.

Davenport Mayor Bill Gluba told the commission that some city officials are concerned allowing Kehl to operate a third casino in Iowa doesn’t accomplish the goal of increasing competition. He said the city would negotiate with Kehl but wanted the commission to speak on the issue of competition.

“I have no concerns,” Lamberti said. “We’re going to judge the project on its merits when it gets here and whether it provides adequate competition for Iowa.”

The Davenport market has been losing gambling customers to Jumer’s Casino and Hotel across the river in Rock Island, Ill. If the project is approved by the commission, Kehl’s organization expects to build the new casino in 18 months.

The commission took no action Thursday on a dispute over gambling licenses in Sioux City. Penn National Gaming, the owner of Argosy Casino Sioux City riverboat, said the commission acted illegally in April when it awarded a license to Sioux City Entertainment, which plans to build a Hard Rock-branded casino.

Attorney Mark Weinhardt, speaking for Penn National, said revoking the license of an active casino operator and awarding it to a competitor for no cause is unprecedented in the U.S.

Penn National has casinos in 18 states. It had proposed a new Hollywood-themed casino to be built in downtown Sioux City or at a rural site.

Weinhardt said the commission action violates the company’s right to due process and violates a state gambling laws designed to protect casino operators that invest millions of dollars. He asked the commission to reverse its April decision and start over to clean up a “big fat mess.”

“We feel we were within our authority to act as we did,” Lamberti said of the board’s in action in an interview after the meeting.