Kehl predicts gaming commission will deny casino license

Riverside CEO spent $600,000 on the "Just Say No Casino" campaign

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March 28, 2014 | 12:21 pm

CEDAR RAPIDS — Dan Kehl concedes this: Steve Gray and his Cedar Rapids casino investor group got their foot in the door, but that’s all.

Kehl, CEO of the Riverside Casino and Golf Resort south of Iowa City, said Wednesday he is confident that the Iowa Racing & Gaming Commission will do the right thing, conclude that a Cedar Rapids casino will damage the Riverside Casino and deny the Cedar Rapids casino a state gaming license.

A Cedar Rapids casino, he said, would mean job losses at the Riverside Casino, the closing of some of its restaurants and, perhaps, the shutdown of the casino’s golf course.

“We’ve built a beautiful destination resort, and it will go from that probably to a ‘grind operation,’ ” said Kehl, which he defined as a place that focuses on slot-machine revenue and closes down the casino’s amenities.

Kehl and Gray have become household names in recent weeks in Cedar Rapids and Linn County after a $2-million-plus ad blitz aimed at persuading Linn County voters to either reject or support a casino.

Gray’s Cedar Rapids investor group, which has reported spending about $1.5 million to date on its campaign, won an overwhelming victory Tuesday — 61 percent to 39 percent — to allow casino gaming in Linn County. The Kehl-funded Just Say No Casino campaign spent $728,000 to date.

Kehl said he and Gray are just as far apart on another crucial number.

Gray has said his market studies show that a Cedar Rapids casino will bring in about $80 million in adjusted gross revenue a year. He said only $18 million of that will come from existing casinos, half of which will come from the non-state-licensed Meskwaki casino outside of Tama.

Kehl said Gray’s numbers are inaccurate. Kehl’s own market study shows that $66.5 million of a Cedar Rapids casino’s $80 million in annual revenue will be taken from existing casinos in Eastern Iowa. Worse for Kehl, a Cedar Rapids casino will take more than 30 percent of the Riverside Casino’s business, he said.

The prospect of such a revenue loss prompted Kehl to jump into the Linn County casino campaign.

“Yes, I’ve been portrayed as a bad guy and a lightning rod behind this thing, and folks are upset that we funded this (Just Say No Casino) campaign,” Kehl said, “but we thought it was necessary to protect our interest. It doesn’t mean that we are anti-Linn County by any means.”

In the waning days of the Linn County casino campaign, Kehl surprised everyone with a proposal to build a $30 million water park across the Cedar River from downtown where the Gray group wants to build its casino. Kehl’s offer, though, came with a caveat. He would build only if Linn County voters rejected their casino proposal. He couldn’t afford the water park, he added, if a Cedar Rapids casino took revenue from Riverside Casino.

On Wednesday, Kehl said the water park idea is on hold. He said he needs to see if the state commission denies a gaming license for a Cedar Rapids casino. Even then, he said, it would be difficult to invest in a water park if the commission leaves the door open for the Gray group to get a casino license later.

Kehl dismissed the idea of competing against the Gray group’s proposal to build a casino in Cedar Rapids, saying the Gray group’s support from the Cedar Rapids City Council and the Linn County Board of Supervisors would make a competing proposal a waste of time.

“I’m a lifelong Iowan, and my family has done quality entertainment projects in the state our whole life,” he said. “That’s all my family has done.

“The success of Linn County is paramount to the success of Riverside. However, we don’t believe that there is enough room for another casino in this market. We think it’s detrimental to everything that we’re trying to do.”

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