Attorneys presented starkly contrasting views on Linn County voters’ 2021 approval of a casino gambling referendum during a judicial review hearing Wednesday on a lawsuit challenging the ballot language in that referendum – and the subsequent issuance of a gaming license to Linn County.
The lawsuit was filed Feb. 6 in Washington County District Court by the Riverside Casino and Golf Resort and the Washington County Riverboat Foundation against the Iowa Racing and Gaming Commission, the Linn County Gaming Association and the Cedar Rapids Development Group.
Because construction of the $270 million Cedar Crossing Casino in Cedar Rapids is already under way, the case is on an expedited schedule, and District Court Judge Michael Schilling, who presided over Wednesday’s hearing, said he moved the hearing to the Henry County Courthouse in Mount Pleasant due to the availability of adequate space at that facility for the case, which drew dozens of attorneys and observers.
The suit claims that the 2021 referendum, which was approved by voters and permanently authorized casino gaming in Linn County, was improperly worded, because it indicated that the “operation of gambling games with no wager or loss limits may continue” in Linn County, even though there was no casino operating in the county at that time.
“Accordingly,” the lawsuit says, “there were no games that the voters could authorize to ‘continue.’”
As a result, the lawsuit claims, the ballot measure should be considered invalid, and therefore the Iowa Racing and Gaming Commission (IRGC) lacked the authority to issue a gaming license to Linn County.
The IRGC voted 4-1 Feb. 6 to approve a gaming license for a Cedar Rapids casino.
The decision marked a key turning point for the IRGC, which had twice rejected casino proposals for Linn County, in 2014 and 2017, after commissioners largely sided with opponents who argued the state’s gaming market was saturated and a new Linn County casino would glean market share at the expense of other casinos.
Linn County voters approved a casino referendum in 2013, but the subsequent referendum vote in 2021 is now being contested.
“This case is about requiring a government agency to follow the law,” said attorney Mark Weinhardt, representing the plaintiffs. “The commands and constraints relevant to this case, particularly the ones having to do with electoral approval of the licensing process, are not confusing. They’re not obscure, and they have not been complied with in this case.”
“Judicial review exists to correct that error,” he added, “and we’re asking this court to review and reverse the decision of the Racing and Gaming Commission that it took on Feb. 6 to grant a license for the casino in Linn County.”
During his arguments, Mr. Weinhardt referenced various legal precedents, stating that the plaintiffs had legal standing to pursue the case because when “a business competitor is damaged by an act of a regulatory agency that directly affects and helps another business competitor, that business competitor who is disadvantaged has standing, even if the injury is probable [and] has not already happened.”
Because the 2021 ballot language was “misleading,” Mr. Weinhardt said, “given that there was less than a 10% margin in this election, only one out of 20 voters would have to have been misled to change the outcome of the election. We don’t need to win that the outcome of the election was erroneous. We only need to demonstrate that the ballot didn’t comply with the statute.”
Mr. Weinhardt also argued that as a result of the faulty ballot language, the IRGC did not have the legal discretion to interpret the voters’ will.
“The Racing and Gaming Commission is proud of the discretion that it has to make decisions essentially unreviewable,” he said. “This is not one of those times when it has such discretion. This is rather surely a question of law.”
He said that even though Linn County wasn’t legally required to hold the second election specifically in 2021 in order to receive a license, “Linn County did, and they made a mistake. They botched the election, and so they can’t now, based on these thin statutory arguments, pretend that the election didn’t happen. The election did happen, and it happened in a misleading way.”
A trio of attorneys spoke for the three defendants in the case.
Jeff Peterzelek, representing the IRGC, asserted that the commission has complete authority over casino gaming in Iowa.
“The Iowa Racing and Gaming Commission is a legislatively created, executive branch appointed body that has exclusive jurisdiction over gambling in the state of Iowa,” he said. “They’re the ones that control all aspects of this highly-regulated, highly-complex industry.”
He noted that since the Linn County application process began, the IRGC now has hundreds of pages of documentation from commissioners and comments from the public, as well as dozens of briefings on the merits of the legal arguments.
“Those are two things that have changed,” he said, “but what hasn’t changed is unprecedented demand from the Washington County petitioners that you disenfranchise 44,311 Linn County voters, over 24,000 of whom voted in favor of continuing approved gambling in Linn County, Iowa.”
He said that for the commission’s authority to be challenged, Linn County voters would have to have said that they didn’t want casino gambling. In fact, voters approved gambling in 2013, and that approval wasn’t challenged when Linn County casino applications were considered in 2014 and 2017.
“The purpose of the 2021 referendum, or a subsequent referendum, is really more or less of a check in,” he said. “A lot of times there might be a casino already existing, and they’re going to ask the electorate, are you still OK with gambling? Same thing here.”
The legal action in this case, Mr. Peterzelek said, would essentially overturn the will of voters in 2021.
“There isn’t any way to look at the vote of over 24,000 independent voters who voted in favor of gambling, and say those 24,000-plus yes voters are an unequivocal ‘no’ vote,” he said. “That’s the only way you can ever deprive the commission of its authority to issue a license. In this case, you have to convert 24,000-plus ‘yes’ votes into ‘no’ votes in order to deny the commission of its authority. We all know that did not happen. We all know that cannot happen.”
Attorney Sam Jones, representing the Linn County Gaming Association – the group that will oversee distribution of a portion of casino proceeds to area nonprofits – said that the case hinges on a claim that voters were confused by the ballot language, and that the IRGC’s decision was “capricious.”
He noted that all phases of Linn County’s decade-plus campaign for a casino license received extensive media attention, and as a result, voters were well-informed about the stakes. He also noted that a report prepared by a consultant on behalf of Riverside, alleging voter confusion, has already been entered into the record.
“Obviously, I have my own opinions about that report,” he said. “Ultimately, my opinions, and I think your opinions, Your Honor, are not that crucial. What is important is that the Gaming Commission considered that affidavit and weighed that affidavit against the other evidence, including a letter from the Linn County Attorney taking this issue on directly, in the absence of any statements of confusion by Linn County voters. After weighing that evidence, the Gaming Commission made a determination. To suggest that that decision was arbitrary or capricious is completely untenable.”
“To prevail today, Riverside must convince this court that an election decided by 10 points in favor of gaming in Linn County should be viewed as disapproval,” he added. “Your Honor, even if we accept Riverside’s position that the ballot is in some way imperfect, how can an imperfect yes ever be a no?”
Attorney Mark Holscher, representing the Cedar Rapids Development Group, a local investor collective providing the bulk of funding for the casino, said that the Riverside Casino is seeking to block a $270 million Cedar Rapids casino investment, as well as $6 million in proceeds to nonprofit organizations, a new STEM lab, performance spaces and more.
He noted that this case represents the first time an Iowa casino operator has challenged the issuance of a license for a competing casino, and that the IRGC is not required to issue a license to every applicant.
“The IRGC may issue a license or not issue a license,” he said. “They’re not required to because they have the authority. Having the authority to issue a license does no harm to Riverside.”
The consideration of casino gaming, by Linn voters and by the IRGC, was carefully considered, he added.
“I would submit that that deference needs to be given to the voters of the county and the IRGC,” he said. “It was a thoughtful process. Those commissioners struggled. Even commissioners who knew it might not be the best thing for their county, they struggled to do the right thing, and they did the right thing for Iowa.”
Cedar Rapids Mayor Tiffany O’Donnell, who attended Wednesday’s hearing, said she felt the latest legal challenge represented a “Hail Mary,” using a sports analogy.
“It’s just incredibly insulting that we’re here discussing whether or not citizens understood what they were voting for in Cedar Rapids,” she said. “I was on the ballot at the time, so I uniquely remember the language. I was for it then, I’m for it now. I just find it disingenuous, insulting, desperate, [to] somehow portray our voters as misinformed or confused. This isn’t about protecting Cedar Rapids voters. It’s about protecting profits.”
She used a similar argument regarding the challenge to the IRGC’s authority.
“Anytime you’re parsing out ballot language, word for word, citing statutes and former ballots from decades ago, I think it’s concerning,” she said, “and I think it speaks, again, to the desperation in this claim.”
“I remain very confident in the process,” said Anne Parmley, president of the Linn County Gaming Association. “I feel Linn County voters were very confident in their vote. We were confident in our arguments to the IRGC to grant a license, and that’s what we were focused on all along.”
Ms. Parmley also said she didn’t think the lawsuit has impeded casino construction to date, with an opening still set for Dec. 31, 2026.
“I drove by today and there were at least a half dozen trucks and backhoes working,” she said. “As far as I know, we’re on track right now.”
Mr. Schilling, the judge, requested that attorneys for both sides submit any supplemental materials for the case in the next week, and said he would issue a ruling within 60 days.
