Gaming commission takes in 6 hours of pros, cons of Cedar Rapids casino

Four of five Racing and Gaming Commission members make official site visit to Cedar Rapids

Rick Smith
Published: April 3 2014 | 5:32 pm - Updated: 7 April 2014 | 3:09 pm in

CEDAR RAPIDS — In two weeks we’ll know.

The Iowa Racing & Gaming Commission came to Cedar Rapids on Thursday, visited the site of the proposed Cedar Crossing Casino and then listened to some four hours of public comment for and against the project at the city’s new downtown convention center.

A crowd estimated at about 1,100 was on hand to greet the four of five commissioners who made the trip, with the majority in the audience attired in white by design to show support for the proposed $130-million casino and its $28-million parking ramp.

Some 90 people came via bus from Riverside and Washington County south of Iowa City in a show of opposition to the Cedar Rapids project, which an assortment of casino market studies show will take business away from existing casinos, especially the Riverside Casino and Golf Resort.

Executives from casinos at Waterloo, Riverside, Altoona and the Meskwaki Indian Settlement and from both casinos in Dubuque as well as the mayors of Waterloo and Riverside told the commission members not to grant the proposed Cedar Rapids casino a state gaming license. The opponents said the commission’s own two market studies were correct and that Iowa’s market of 18 state-licensed casinos is saturated and that the Cedar Crossing Casino would take revenue and jobs from others.

At the start of the commissioner’s day, at 8:30 a.m., Cedar Crossing Casino investors, led by Steve Gray and Jonathan Swain, and Mayor Ron Corbett had a chance to make their case to the commissioners during an hourlong bus tour, which included an itinerary of neighborhoods ruined and now vacated as a result of the 2008 flood, the proposed casino site and a stop at the city’s Veterans Memorial Building on May’s Island for a 3-D video presentation of how the casino will look.

Six hours later, investors Gray, Swain and Brent Stevens had the last words with the commission.

Stevens picked from among the stacks of data produced by the commission’s market studies and studies from casino investors and opponents to argue that there is a Cedar Rapids-Iowa City casino market, which he said was the second largest in Iowa and the fastest growing. With a Cedar Rapids casino in the market with the Riverside casino, the market will have one gaming position for 173 residents compared to Dubuque and its two casinos, where the ratio is one in 43 and the Quad Cities where it is 1 in 112, Stevens said. The Cedar Rapids-Iowa City market, he said, will still be underserved with Cedar Crossing Casino.

During the public comment period, which began at 10 a.m. and continued on without a lunch break until 2 p.m., 43 people came to the microphone to speak to the commission. Of those, 15 were from communities with casinos and spoke against the Cedar Rapids project.

During a final short break before the session ended, Commission Chairman Jeff Lamberti said he didn’t expect that he and his four commissioner colleagues would make up their minds until their April 17 meeting in Council Bluffs when they are slated to vote on the Cedar Rapids proposal.

Lamberti said much of what the commission heard on Thursday it had heard before in what has been a lengthy commission process. But he said Thursday’s public comment session gave the commission a chance to hear from the public, and not just from the casino investors and the existing casinos.

"It is very hard and not a lot of fun," he said of the decision that now confronts the commission. "All we can do it get the best information we can get. That’s why the process takes so long. That’s why we do the studies. That’s why we listen to people.

"After serving in the legislature for 12 years, I’m used to making tough votes. But it doesn’t make it any easier."

The first of the 43 who spoke on Thursday was one-time state legislator Rich Running of Cedar Rapids who told the commission that he cast one of the deciding votes in 1983 to allow parimutuel racing in the state and in 1989 to allow riverboat casinos. One takeaway was that existing casinos in Iowa owe a piece of their existence to Cedar Rapids’ support of a legislator who played a role in creating the industry.

Dan Kehl, chief executive officer of the Riverside Casino & Golf Resort and for a year a visible, vocal opponent of the proposed Cedar Rapids casino, showed a video to the commission featuring eight of the Riverside casino’s employees who talked about their worries of job cutbacks should the Cedar Rapids project get a state gaming license.

In an argument of opposition repeated by other representatives of existing casinos, Kehl said that granting the Cedar Rapids casino a gaming license would "unravel" a regulatory system in the state in which the Iowa Racing & Gaming Commission has used to make sure that existing casinos would not be harmed by proposed new casinos.

Kehl said the Cedar Crossing Casino investors were asking the commission to "liberalize" its historic approach and adopt a "Nevada-style, open-market" system that would invite a flurry of new casino applicants.

Kehl said the commission’s market studies like his own show that a Cedar Rapids casino will cost the Riverside casino 30 to 40 percent of its revenue, which would mean job cuts, higher interest on the casino’s debt and a cut in money that goes to the casino’s non-profit group.

Jesus Aviles, president/CEO of the Mystique Casino in Dubuque, said the Dubuque casino market is under particular pressure as video gaming spreads in bars and restaurant next door in Illinois and a new Indian casino is planned in Wisconsin just 20 miles from Dubuque. Adding a casino in Cedar Rapids will only exacerbate the problem, he said.

Aviles called it an "issue of survival." Iowa could be come the next Atlantic City, which has seen its gaming fortunes drop precipitously, he said.

Waterloo Mayor Buck Clark and former Waterloo Mayor Tim Hurley, who heads up the non-profit Black Hawk County Gaming Association, spoke against the Cedar Rapids casino.

Granting Cedar Crossing Casino a state license will create "one winner, and several losers," Hurley said.

Dan Stromer, general manager of Meskwaki Bingo Casino Hotel, told the commission that the Meskwaki venue — which is one of three tribal casinos in Iowa that are not regulated by the commission — already knows what happens with direct competition close by. The Meskwaki casino lost 27 percent of its revenue and cut 285 of its 1,135 jobs when casinos opened in Waterloo and Riverside in 2007 and 2006, he said.

"This is what happens when you have one too many or two too many," he said.

The biggest cheers from the Cedar Crossing Casino supporters came after Judy Morningstar, a retired nurse, told the commission that she found the use of the word "cannibalization" — used to describe business lost by existing casinos to a proposed one — "offensive." Instead, she asked the commission to use the word "reclamation" and to shift its focus to all the dollars Cedar Rapidians spent at other casinos because there isn’t a casino in Cedar Rapids.

"Now is the time to recoup our dollars and put them back in our county," Morningstar said.

Likewise, Lon Olejniczak, senior vice president at Transamerica in Cedar Rapids, said the better word than cannibalization was "competition." Granting a casino license to Cedar Rapids will help Cedar Rapids continue to "play its part" in making all of Eastern Iowa successful, he said.

Gary Ficken, president of Bimm Ridder Sportswear in Cedar Rapids, told the commission he took exception to the Waterloo mayor’s comparison of the flood damage Waterloo sustained in 2008 to Cedar Rapids’ flood disaster in the same flood.

"Cedar Rapids has gone through its pain, and we need help from you guys," Ficken told the commission.

Like Ficken, Don Karr helped to head up a small-business recovery group in the wake of the 2008 flood in Cedar Rapids, and Karr asked the commission not to give into the "fear" expressed by existing casinos but to come down on the side of "fair."

"Cedar Rapids is the economic engine for this state," Karr, a former City Council member, said. "We need a fair opportunity to have a casino here. We need to keep that money in our own community."

Cedar Rapids promotional video presented to Racing and Gaming Commission members:

Video from the Riverside Casino and Golf Resort opposing the Cedar Rapids casino application:

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