September 17, 2021

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Linn County casino backers commit portion of revenue from potential gaming operation to local nonpro

Three Cedar Rapids casino proposals were considered — and rejected — by state regulators in 2017. They included (from left) Cedar Crossing 2.0, Cedar Crossing 1.0 and Wild Rose. (renderings provided by casino development groups)

CEDAR RAPIDS — Not-for-profit organizations in the area would receive 8 percent of net revenue from any casino potentially developed in Linn County, under an agreement announced Wednesday between the Linn County Gaming Association and longtime partner Peninsula Pacific Entertainment.

The association, the group helping to rally support for passage of the Linn County gaming referendum on the Nov. 2 ballot, said it is looking to give local organizations a boost considering the financial challenges they have faced from the 2020 derecho and the ongoing COVID-19 pandemic.

Casino backers long have touted the role of gaming operations in attracting tourists and boosting the local economy. But Iowa law also requires that a certain percentage of gaming revenue be directed to a local nonprofit entity, called a “qualified sponsoring organization.”

This entity would hold the state gaming license for the local community and disburse a share of the casino’s revenue into the community. The allocation percentage is agreed upon through deals between each casino owner and its sponsoring organization.

In this case, the Linn County Gaming Association would partner with the operator, Peninsula Pacific Entertainment, to disperse funds to local not-for-profit organizations, should Linn County voters approve the referendum Nov. 2 and should the community ever obtain permission to build a casino.

This 8 percent allocation announced Wednesday is more than double the 3 percent state-required minimum percentage.

According to Iowa Gaming Association data from 2019 — the most recent year not affected by COVID-19 — $11.8 million was distributed to the 84 counties without a casino through their community foundations, equating to approximately $140,000 each. However, the 15 counties with casinos distributed much more revenue — over $95 million, or an average of $6.3 million per county annually.

“We want to be able to say that we now are reaping the benefits of the gaming operation and contributing to our nonprofits,” said Anne Parmley, board president of the Linn County association.

The Iowa Racing and Gaming Commission would have to approve a license for any proposed casino. That would be a tall hurdle for Cedar Rapids — the five-member panel has twice before opposed plans for casinos here, in 2014 and 2017, saying in part that a Cedar Rapids facility would siphon off customers from other licensed casinos already in the region.

The county association would support another application process for Peninsula Pacific Entertainment to seek a license and develop a casino.

“Our focus is on service, quality and community,” Peninsula Pacific Entertainment Chief Financial Officer Natalie Schramm said in a statement. “While we are national leaders in gaming, we got our start in Iowa more than two decades ago and recognize how a casino can be a catalyst for economic prosperity and community lift. We look forward to helping Linn County nonprofits reach their full potential.”

Association board member Todd Bergen, the vice president for commercial real estate and business development for Skogman Realty, said this would help fill unmet needs among local not-for-profit groups. He and Parmley said they believe it is time for Linn County to have a licensed gaming operation of its own.

“It’s hard for me to believe that the second largest county doesn’t have a gaming operation, and that the state of Iowa isn’t taking advantage of the opportunity to leverage the strengths in Linn County, in this region to generate revenue for the state, but also to stimulate the economy in this region and further assist the not-for-profits,” Bergen said. “I believe it’s our turn.”

Some Iowa casino backers are eyeing changes across state lines after Nebraska voters authorized gambling there, which they suspect could hurt Iowa’s gaming revenues and in turn boost Cedar Rapids’ casino prospects. Additionally, the Iowa Racing and Gaming Commission has four new members and one vacant spot.

The gaming referendum will be on the Nov. 2 ballot along with school board and city council candidates, including Cedar Rapids mayoral hopefuls. The three candidates — TrueNorth executive and Advocates for Social Justice Vice President Amara Andrews, Mayor Brad Hart and Women Lead Change Chief Executive Officer Tiffany O’Donnell — support the gaming referendum’s passage.

Several Linn County communities also are placing measures to extend their local-option sales tax on the ballot, which in Cedar Rapids funds the Paving for Progress street-repair program.

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Linn County casino backers commit portion of revenue from potential gaming operation to local nonpro