By Dave DeWitte

The rejection of a casino license application for the Cedar Crossing Casino in Cedar Rapids was a letdown to supporters of a unified community effort, and could cause Cedar Rapids to reevaluate its strategy for flood recovery on the west side of its downtown area.

The Iowa Racing and Gaming Commission, meeting April 17 in Council Bluffs, rejected the proposal for a $174-million “urban casino” project by a four-to-one vote. Weighing heavily on the minds of commission members were two market studies conducted for the state that indicated that the state’s casino market was essentially saturated, and that much of the revenue the casino would generate would come at the expense of surrounding casinos in Waterloo and Riverside.

Chairman Jeff Lamberti said the “impact for me on existing facilities is simply too large, and risks destabilizing the casino market in Iowa.” He said voting for a casino in Cedar Rapids would be a significant shift in policy from past commission decisions, and he was not ready to make that change.

Only one member, Delores Mertz of Ankeny, voted against denial. She said that her position stems from her economic perspective as a farmer.

“To me, gambling is a lot like farming and I’ve always been a firm believer (in the free market),” Ms. Mertz said.

Mr. Lamberti said the commission has never taken a free market approach, however, and instead has taken a balanced approach between the desire for new licenses and the stability of the state’s gaming industry.

Linn County voters had overwhelmingly approved a casino referendum in March 2013 after a local group of investors was put together by Steve Gray and Drew Skogman at the urging of city council members.

The project was expected to generate real estate investment on the west side of downtown Cedar Rapids, which is still recovering from the flood of 2008, by drawing more visitors and creating a local destination.  The project was also expected to help bring guests to the city’s new DoubleTree by Hilton Cedar Rapids Hotel and Convention Center.

Mr. Gray, lead investor of the Cedar Rapids Development Group, which initiated the application, tempered his disappointment at the commission’s decision with pride in the community’s support.

“Even though we are disappointed with today’s decision, we are so proud of the strong community support that has continued to build over the last 18 months,” Mr. Gray said in prepared remarks. He enumerated the broad coalition of city leaders, organizations and citizens that “came together to push for something that could be meaningful for our local economy. We truly appreciate and are thankful for your support throughout this entire process.”

A spokesman said Mr. Gray was not available for comment after the vote. In an interview the previous week, Mr. Gray said that Cedar Rapids was going to be fine regardless of the outcome, and carried forward that theme in the prepared statement. He declined at that time to discuss what the investor group’s next move might be if the license is rejected, such as a potential reapplication at a later date.

“There are a lot of great things going on in Cedar Rapids and Linn County,” he stated after the vote. “Let’s keep the positive momentum and continue to move forward.”

Ed Raber, executive director of the Washington Economic Development Corp., which was not in favor of a Cedar Rapids casino due to its potential effect on the Riverside casino, said he hopes that regional cooperation in the Corridor can get back to normal.

“Life will go on,” Mr. Raber said. “We’ll keep partnering and looking for opportunities to work on projects together.”

Mr. Raber added that he applauds the strong community and economic development efforts for flood recovery and community growth in Cedar Rapids and Linn County, including the Highway 100 extension project that will soon begin.

Dee Baird, CEO of the Cedar Rapids Metro Economic Alliance, praised the community and the Cedar Crossing management team in a message to alliance partners.

“While the outcome is incredibly disappointing, we are proud of our members and community for displaying such unity around this project. We want to compliment the Cedar Crossing Casino management team for an excellent project and effort,” Ms Baird said.

Mr. Lamberti said he was doubtful there was much that the Cedar Rapids group could have done to make its application any better, sharing praise for the Cedar Rapids effort heard from several other commission members. He said the legislature and the governor could create a different policy that would lead to more licenses, but that it would probably require a serious look at the state’s tax rates and “how much gambling do we want?”