Iowa’s existing casino operators urged the state’s Racing and Gaming Commission not to award a license to any of three proposals for a casino in Cedar Rapids, Iowa’s second biggest city, at a hearing on Tuesday.
Their least favorite project of the three appears to Peninsula Pacific and Cedar Rapids Development’s bid to build a $165 million to $187 million property on the banks of the Cedar River.
The plan is almost identical to the one rejected by the gaming commission in 2014 on the grounds that it would cannibalize the casino sector in eastern Iowa.
Just in case the idea still doesn’t fly with regulators, the group is also proposing a smaller casino that would cost $105 million to $118 million, to be built near the US Cellular Center arena.
Meanwhile, Wild Rose Entertainment wants to build a $55 million “boutique” casino in the city.
But the existing operators say the market is already full. And, according to Dan Kehl, CEO and director of Riverside Casino and Resort, size doesn’t matter.
“The bottom line is a casino in Cedar Rapids whether boutique or full scale would cost Riverside about $18 to $24-million of revenue. That’s between 26 and 34 percent,” he said.
Dan Kehl said there would have to be “drastic” cuts in staff at Riverside if another casino were authorized, and noted market conditions were the same as three years ago when the idea of a new casino was scrapped.
“Nothing has changed in this market and we urge you not to grant Cedar Rapids a license,” he told the commission.
Iowa Market Needs a Shot in the Arm
But perhaps the fact that the market has not changed is part of the problem. Proponents of a new casino say the market is stagnant and that it’s worth the existing casinos taking a short term hit in order to grow the sector as a whole for the longer term.
A new investment in the city, providing new entertainment and nightlife, will attract more people to Iowa, befitting not only the casino sector but also the state, they argue.
“Most of the existing operators are still singing the blues about future competition. But what struck me as I was listening to each one of them talking about their challenges,” said Cedar Rapids Mayor Ron Corbett. “I have to wonder if the pendulum has swung so far to protect the industry that it’s actually hurt the industry.”
A crucial study of the economic impact of a Cedar Rapids casino is expected to be published next week and will no doubt inform the decision of the gaming commission when it votes on the issue on November 16.