Commission to launch latest review of Linn County casino application

Now that a two-year moratorium on consideration of new gaming licenses in Iowa has expired, Linn County’s third effort to bring a casino operation to Cedar Rapids is officially under way. At its meeting Monday at Prairie Meadows Casino and Hotel, the Iowa Racing and Gaming Commission (IRGC) voted unanimously to direct IRGC staff to prepare a Request for Proposal (RFP) for a market study on a potential new Linn County casino, as well as a timeline for the commission to consider a Linn County casino application. The commission will meet virtually at 8:30 a.m. Friday to review the RFP and timeline. The issue resurfaced for the commission after the two-year state gaming license moratorium expired June 30.  Now, representatives of Peninsula Pacific Entertainment (P2E) and the Linn County Gaming Association (LCGA) said Monday they plan to file a joint gaming license application with the IRGC for a gaming license with the IRGC by the end of July, as well as their own market study on the impact of a potential new casino. IRGC administrator Tina Eick indicated that in the past, the commission has typically taken six to nine months to review new gaming applications. That would put a decision on a Linn County application sometime between January and April 2025. IRGC member Alan Ostergren, the commission’s newest member, said in his view, there’s no “rubric” in the state’s administrative gaming code that would allow the commission to assign points in various categories as part of their deliberations. “It's a very holistic review,” Mr. Ostergren said. “I think it will be very important to get as much information as we can from the licensee, the applicant (and) the community stakeholders and just look at it overall, as to what's in the best interest of the gaming industry, community and state.”

Doug Gross, an attorney with BrownWinick Law in Des Moines, spoke to the commission Monday as a representative of the Cedar Rapids Development Group, comprised of nearly 100 local investors, and the Linn County Gaming Association. He said the local groups were "really excited" about the expiration of the state's moratorium and confirmed that Linn County gaming interests were expecting to file an application by the end of July. The announcement of plans for a Linn County casino, dubbed Cedar Crossing, is the latest chapter in the years-long effort to bring a casino to Linn County. The IRGC has 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 “cannibalize” revenue from existing state-licensed casinos.

But all five members of the IRGC are newly-appointed since the last decision. And Linn County voters have approved two referendums supporting gaming in Linn County, most recently in November 2021. As a result of the second vote, developers are now allowed to seek a casino license for the county in perpetuity, without returning to voters for further approvals. After Monday’s meeting, P2E board member Jonathan Swain said he continues to be optimistic about Linn County’s latest effort to receive a casino gaming license. “The outcome of setting a timeline, post-moratorium, sets us back to where we were in 2021,” Mr. Swain said. “Same site, same partners, same location, a very similar project. A lot of the things that we were talking about in 2021, before the moratorium was passed, is now what we want to show this commission. And that's why we think it’s a winner.” Mr. Swain said he feels the current casino proposal is the best of the three that have surfaced to date. “It’s the best location, better facilities, a better partnership with the nonprofits,” he said. “The development agreement is better with the city. So we just think that what we were talking about a couple of years ago, was bringing the best project the state of Iowa has ever seen. And that's our intent, to bring something that's very powerful, that a commission can look at and say ‘wow, this is job growth, construction, economic opportunities, and all this new revenue that you're going to generate.” Mr. Swain noted that a December 2021 study commissioned by the IRGC found that a Cedar Rapids casino would increase total statewide gaming revenue by $51 million in new revenue. He said Monday he believes that figure will be reflected in the new market study, and perhaps rise to as much as $70 million. If granted a license, leaders say Cedar Crossing will support local nonprofits with contributions of 8% of its annual gaming revenue. That would be the highest percentage in the state, and well above the state’s mandate that licensed casinos donate at least 3% to nonprofit organizations. LCGA president Anne Parmley said that figure is critical because the financial needs of local nonprofit organizations have grown substantially. “The stakeholders that are served by those nonprofits have grown, and there's more people with needs in our community,” Ms. Parmley said. “The vibrancy of our community has grown too, and that's really exciting because it's building on that momentum. But our nonprofits have additional funding needs that aren't always met by the traditional sources in our community. So they need other means to generate those funds to serve those folks. And this is a great opportunity to do that.” Previously, Ms. Parmley also stressed that the lifting of the state moratorium doesn’t guarantee that a gaming license will be issued to Linn County. “Some people who don’t track the process as well think this means we can now build a casino,” she said. “But there’s a process, and we need to go through that process.” Mr. Swain also noted that new casinos in adjacent states, including Nebraska and Illinois, have created more competition for Iowa casino revenue. Developers and supporters first unveiled plans for Cedar Crossing in May 2022. As proposed, Cedar Crossing, with a budget estimated at $250 million, would incorporate Iowa’s 20th state-licensed casino, as well as bars and restaurants featuring celebrity chefs. In July 2023, the Cedar Rapids City Council voted to approve preliminary terms of an agreement with the Cedar Rapids Development Group on an option for potential purchase of city-owned property on the west side of the Cedar River.

Under the proposal, the CRDG would pay the city an option fee of $165,000 to retain the right to purchase city-owned property between F and I avenues NW and First and Fifth streets NW. Most of that property was previously occupied by the Cooper’s Mill restaurant and Best Western Hotel before those facilities were demolished due to damages sustained in the 2008 flood, and the property was subsequently acquired by the city. The option to purchase the property extends through Dec. 31, 2025, but if the IRGC were actively considering a Cedar Rapids casino application at that time, the option could be extended for another year at an additional cost of $55,000, officials have said. The city has an exclusive memorandum of understanding with the CRDG and the Linn County Gaming Association to develop a casino in Cedar Rapids. That memorandum extends through October 2029. Under the terms of the agreement, the developer would be required to complete a 125,000-square-foot gaming facility that would incorporate restaurant space, event space and a gaming floor, no less than 1,500 parking spaces, and a minimum investment of $150 million.