Cedar Rapids casino hopes unsure as lawmakers revisit ban

Advocates for a Cedar Rapids casino have toiled for over a decade to translate their aspirations into reality, yet their dreams face potential jeopardy with an impending legislative vote.

On February 6, a pivotal decision looms when the Iowa Racing and Gaming Commission (IRGC) convenes to deliberate the licensing of the long-awaited project. However, a crucial vote on a proposed casino moratorium earlier could thwart these aspirations once again.

Peninsula Pacific Entertainment (P2E) and the Linn County Gaming Association (LCGA) remain optimistic that their proposal will finally secure approval. This marks their third attempt, following unsuccessful bids in 2014 and 2017. At stake is the Cedar Crossing Casino and Entertainment Center, a proposed investment of $275 million (£220.9 million/€263.6 million) featuring 700 slot machines, 22 gaming tables, and a variety of dining and entertainment options. If brought to fruition, it would signify a significant investment in Cedar Rapids, Iowa’s second-largest city, enhancing the state’s burgeoning gaming industry.

With meticulous planning in place, stakeholders have made their formal case to the IRGC. Yet, as of the latest developments, state lawmakers may ultimately dictate the project’s fate. House Study Bill 80, spearheaded by Representative Bobby Kauffman, seeks to retroactively establish a five-year moratorium on new casino licenses, extending through June 30, 2030.

This bill has swiftly progressed through legislative channels, advancing through both a House subcommittee and the Ways and Means Committee on January 27. A full House debate and vote are scheduled for January 30.

Proposed Legislation Presents Additional Barriers to Casino Licensure

Beyond imposing a moratorium on new licenses, House Study Bill 80 introduces further challenges for Cedar Rapids’ casino ambitions. It stipulates an eight-year prohibition on considering new casino proposals from counties that have previously been denied by the IRGC. Given that Linn County has faced denial twice, the prospect of waiting an additional eight years appears daunting.

Moreover, HSB 80 would prevent the IRGC from issuing new licenses even after July 1, 2030, if a proposed project could “negatively impact” existing gaming facilities in adjacent counties or those with populations under 30,000. As reported by the Gazette, this caveat would affect all but two currently operating casinos.

P2E has yet to provide a comment regarding House Study Bill 80 as of this writing.

The Cannibalisation Dilemma in the Casino Landscape

A significant aspect of this legislative discourse revolves around cannibalisation—the potential for new casinos to divert revenue from existing establishments. Should the bill pass, the IRGC would be prohibited from licensing any facility anticipated to diminish the adjusted gross receipts of current licensees by 10% or more.

Recent analyses, including studies from Marquette Advisors and the Innovation Group, presented a bleak outlook for the state’s existing gaming operators. Marquette Advisors estimated that Cedar Crossing could generate around $118 million in annual adjusted gross revenue by 2029, with a staggering $68 million anticipated to be drawn from existing casinos. Meanwhile, the Innovation Group projected similar numbers, estimating $116 million in annual revenue by 2028, with $56 million stemming from cannibalisation effects.

Navigating Challenges in the Regional Casino Landscape

The potential delay of the Cedar Rapids casino presents insightful reflections on the broader U.S. regional casino industry. Many states champion casino development as a strategy for job creation and revenue generation; however, the successful realization of these initiatives is intricately tied to their geographic positioning.

Supporters assert that Cedar Crossing would serve one of Iowa’s significant metropolitan areas, yet such ambitious projects typically require considerable investment and resource allocation. This often leads to smaller communities eagerly pursuing casino opportunities, resulting in greater competition for new licenses and diminishing prospects for larger cities.

Brendan Bussmann, a consultant at Las Vegas-based B Global Advisors, commented, “This debate should serve as a lesson for other jurisdictions. Stakeholders must evaluate gaming with a focus on maximizing revenue and economic potential.” Reflecting on the historical context of regional gaming, Bussmann noted the distinct challenges that arise from localized markets, emphasizing the need for nuanced strategies that cater to each community’s needs.

“Although opportunities abound in untapped markets, questions linger for established regions regarding how best to innovate and optimize the current gaming model,” he added.