Gaming commission head doubts Davenport can get casino license in March

Posted Online: Dec. 06, 2012, 8:59 pm
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By Stephen Elliott,
It will be difficult for Davenport to receive approval for a new casino operator's license in March, according to the head of the Iowa Racing and Gaming Commission.

City officials plan to pay Isle of Capri $46 million to acquire the Rhythm City Casino and move it to an undetermined location.

But IRGC Chairman Jeff Lamberti said he has concerns about Davenport's proposal -- including the makeup of the Davenport Community Improvement Corp., anonprofit board the city created to oversee casino operations.

In November, Davenport council members approved Mayor Bill Gluba's seven appointments to the board. They include Davenport Police Chief Frank Donchez; Ald. Jeff Justin, 3rd Ward; city administrator Craig Malin; Riverboat Development Authority President Mary Ellen Chamberlin; RDA board member Christine Frederick; attorney Kelli Grubbs; and Tri-City Building Trades Executive Director Rory Washburn.

The RDA holds the gambling license for the Rhythm City Casino and awards community improvement grants from a portion of the casinos' revenues.

Mr. Lamberti said he is concerned the city would effectively control the board.

"The city would be in the business of operating a casino,"Mr. Lamberti said in a Thursday email."Thisdoes not currently exist in Iowa. The board proposed by the city would be a significant change in policy for the IRGC,"

"Personally, I do have serious concerns about this," he wrote."I do believe it would be difficult to meet a March time frame with all of the things the commission would likely want to study before making a decision."

Davenport officials have cited the Mystique Casino in Dubuque as a precedent for a city-owned casino.Davenport officials want profits from a new casino to go directly to the city and area charitable organizations, similar to Dubuque's model.

But Mr. Lamberti said the Dubuque arrangement is different than what Davenport has proposed. Although Dubuque owns Mystique Casino -- which became the nation's first nonprofit greyhound track in 1985 -- the city does not operate it or have control of the casino operator.

Mr. Malin said Davenport was wise in creating the DCIC to oversee casino operations.The city wants to take ownership of Rhythm City as early as mid 2013, and Mr. Malin said he is optimistic about the proposed time frame, noting time is money for the project.

"Although the city is emulating a model that's in place -- and very successfully in place -- in Dubuque, we are starting from a different point," Mr. Malin said.

"It will have the same fundamental transformative power as the Dubuque model, which has proven very successful," he said."But we're starting in a different place, and we have to take different steps to get to that model of success."

Mr. Malin also said on Thursday he is not adverse to criticisms and questions about the proposal.

"If any one individual thinks they have the right answer on this topic, they're wrong," he said. "And, using input from others is one way to make sure you have a solid project moving forward, which we do."

The RDA plans to meet on Dec. 14 to address members' questions about the Davenport project, Ms. Chamberlin said. She said she didn't know what would happen if the IRGC does not issue an operator's license in March for Rhythm City.

"I would not think they would close the casino down," Ms. Chamberlin said. "They (Rhythm City) could continue to operate on an extended basis with its current license, or get some provisional license.

"There is still a lot of work to do," she said. "Everything is contingent on the project being approved."

Ms. Chamberlin said the city has sent out 100 RFPs. She said the city will then interview applicants for the project.

Davenport and RDA officials plan to update IRGC members on the project at the commission's January meeting. The IRGC does not meet in February, and annual casino operator licenses are approved by the IRGC in March.

The city has issued requests for proposals, both for management of the casino and potential private/public partnerships, which are due on Dec. 20. If the project receives RDA and IRGC approval, Davenportwould issue $48 million in general obligation bonds to complete the purchase of Rhythm City.

The city estimates paying $3.5 million annually over 20 years to repay the bond issue.The city plans to operate the riverboat using existing casino employees and to build revenue as a land-based casino is sited and built.


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