On paper, the date with destiny is 6 February, when the Iowa Racing and Gaming Commission (IRGC) is set to decide whether to award a licence to the project. But in reality, a vote on a casino moratorium bill before then could topple their efforts once again.
Peninsula Pacific Entertainment (P2E) and the Linn County Gaming Association (LCGA) are hopeful that their proposal will cross the finish line. It is their third attempt after being denied in 2014 and 2017. The project in question is the $275 million (£220.9 million/€263.6 million) Cedar Crossing Casino and Entertainment Center, complete with 700 slots, 22 tables and a slew of dining and entertainment amenities. If approved, it would represent a substantial investment in the state’s gaming industry in its second-largest city.
Stakeholders have dotted the Is and crossed the Ts, and have made their formal pitch to the IRGC. Prior to this week, their fate rested in commissioners’ hands. But now, it is state lawmakers who could have the final say. House Study Bill 80, championed by representative Bobby Kauffman, would retroactively enact a five-year moratorium on casino licences in the state through 30 June 2030.
The bill was fast-tracked through both a house subcommittee and the ways and means committee on Monday (27 January). It will be made available for a full house debate and vote on Thursday (30 January).
Bill would increase roadblocks for licensure
In addition to the licence moratorium, HSB 80 would effectively kill Cedar Rapids casino hopes for other reasons. It would set an eight-year ban on casino proposals from counties that have been denied licensure by the IRGC. As mentioned, Linn County has twice been denied. With so many years invested thus far, an additional eight would appear untenable.
On the topic of counties, HSB 80 would also bar the commission from issuing new licences even after 1 July 2030 if a new project would “negatively impact” existing facilities in counties along the Iowa border or those with a population of less than 30,000. According to the Gazette, this applies to all but two existing casinos.
P2E did not respond to a request for comment on HSB 80 as of publication.
Cannibalisation among retail casinos
The issue of cannibalisation is a key component of the bill, and the overall debate surrounding the proposal. If the bill is passed, the IRGC would be barred from licensing any casino that would be projected to impact the adjusted gross receipts of an existing licensee by 10% or more.
Two recent studies – one each from Marquette Advisors and the Innovation Group – did not paint a rosy picture for the state’s existing casinos.
Marquette estimated that Cedar Crossing’s adjusted gross revenue would reach $118 million per year by 2029. But more than half of that ($68 million) would be siphoned from other facilities. Innovation Group projected similar figures: $116 in annual revenue by 2028, with $56 million coming via cannibalisation.
On again, off again for Cedar Rapids
The concern of cannibalisation is not new to the IRGC, which cited that as a factor in previous denials. Those concerns were also the impetus for a two-year moratorium that expired on 1 July 2024.
Prior to that expiration, Kauffman had unsuccessfully proposed a new moratorium in the waning hours of the 2024 session. He then made it clear over the summer that he would bring up the issue again in efforts to block Cedar Crossing.
Meanwhile, the expiration allowed P2E and LCGA a short window to ramp up their efforts once again. Last week, proponents hailed the results of a study predicting that the development would generate some $2.25 billion in overall economic impact in its first 10 years of operation. The casino would also contribute 8% of its annual net AGR to local nonprofits, more than double the state’s minimum.
The regional conundrum
Overall, the potential stymie of a Cedar Rapids casino is an interesting touchpoint for the US regional casino industry. Most states look to casino development as a means to generate jobs and tax revenue. But performance and fulfillment of those obligations relies heavily on location.
Cedar Crossing, as supporters argue, would bring a casino to one of the state’s biggest metro areas, but such projects often involve the heaviest lift. This means that casino developments are sometimes swooped up by smaller communities that are more willing to invest. And when that happens, new licences and opportunities become scarce.
“This debate is one that should be a lesson for other jurisdictions to look at,” posited Brendan Bussmann, consultant at Las Vegas-based B Global Advisors. “[Stakeholders] should look at gaming as figuring out the best solution to maximise revenue and economic opportunity.”
Citing the riverboat craze of years past, Bussmann explained that regional gaming presents challenges from a business perspective. Each market is unique, and it’s hard to get things right on the first try.
“Regional gaming continues to have its opportunities in markets that have not been addressed,” he said. “But in those that have had longstanding opportunities, questions still remain on how you can improve and enhance the current model.”
Original article: https://igamingbusiness.com/casino/cedar-rapids-casino-moratorium/
