News From The Casino Scene

Sioux City looking ahead to a busy week of casino issues

Sioux City looking ahead to a busy week of casino issues

This week two separate, but related cases will take place in the Des Moins area, regarding the close of the riverboat casino owned by Argosy Sioux City. Their parent company Penn National Gaming Co. will formally contest the planned closure of their casino by the Iowa Racing and Gaming Commission (IRGC) which refused to renew the license granted to them last year in April.


Two days later a hearing will take place in Polk County court, which is also related to Argosy’s attempt to overturn the IRGC’s vote from 2013 which awarded the Woodbury County’s first ever land casino license to the Hard Rock Hotel & Casino Sioux City.


The District court Judge Elza Ovrom will be hearing arguments from representatives of Sioux City, which requested to join the case in support of Hard Rock development. Argosy withdrew their motion against it on Friday.


Argosy’s contested public hearing will begin on Wednesday morning at Prairie Meadows Casino in Des Moins and is an important test of the law unique to Iowa, which states that casino operators have to partner with nonprofit groups, known as QSO’s - Qualified Sponsoring Organizations. The hearing will focus on the issue of an absence of such an agreement and if it bars the casino from gaining a renewal of its license.


Argosy applied for the standard one-year renewal of their license in August, 2013, but the IRGC based it’s application refusal on the expiration of Argosy’s contract with their QSO - Missouri River Historical Development. At the moment the situation is in legal limbo, but the IRGC has allowed the boat casino to remain open so that the over 300 employees can keep working and the revenue can keep coming in the state and county coffers.


Regardless, the commission has said that it plans to shutdown the activity of the casino after the completion of the Hard Rock Hotel & Casino, which has planned its opening in Sioux City in late summer. This decision is described by Penn attorneys as a legal precedent in the gambling industry and one that “defacto” revokes the gaming boat’s license without any just cause.


The company has attempted several times to get the IRGC to license a new local nonprofit, the Greater Siouxland Improvement Association, but their long-term contract hasn’t been acknowledged by the commission.


The hearing on Wednesday will be conducted as a trial, with lawyers from both sides presenting evidence and cross-examining witnesses and experts. A five member commission will preside over the hearings with the assistance of a local judge. The IRGC will issue a written verdict later on with Argosy having the option to appeal in Iowa District Court.


The IRGC meeting will take place on Feb. 6 and the commission is expected to give standard one-year license renewals for all state approved casinos except Sioux City market. The license commission had granted Hard Rock developer Sioux Ciy Entertainment and their nonprofit partners MRHD a license for tree years, so they din’t expect they would have to reapply for a renewal again. The administrator of IRGC stated that the commission was still reviewing the license application GSIA submitted in December to partner up with Argosy. He said that the request will be reviewed in due course together will all new applications, but couldn’t set a deadline for it.


There will also be a court hearing about the city’s intervention, which is based on the opinion of the city’s administration that their interests “were not properly represented” by any of the other parties involved. The city pledged $22 million in tax-increment subsidy to help finance the infrastructure and parking around the casino. The repayment is contingent on the increased value of the property after the Hard Rock project is completed.


The city’s petition to be included in the suit comes after Polk County District Court Judge Robert Hanson suspended Hard Rock’s license at Argosy’s request, until the IRGC hearing takes place and there is a final decision on the matter. But later the Iowa Supreme Court temporarily stayed the decision of Judge Hanson effectively returning the case to the district court.


Ovrom, the judge for the new trial, vacated the stay after SCE Partners showed evidence in a separate case, in which they had not been a party. She also denied the request of the city to argue its case, citing the short amount of time there was available to consider the limited remand of the Iowa Supreme Court.


Argosy’s attorneys argue that it would be “highly inequitable” and “an insult to the legal process” if they were to let the city take part in the lawsuit filed against the IRGC over a year and a half ago.


Penn are seeking to overturn or vacate a number of IRGC actions which had their pinnacle in the vote from April 18 when they awarded the license for Woodbury County’s land casino to be given to the Hard Rock group. After getting more and more frustrated with months of failed negotiations between MRHD and Penn for a new long-term deal, the IRGC made the decision in June 2012 to accept other bids for a land casino that was going to replace the Argosy.


The Hard Rock group won among three other competitors, including Penn, who had offered two other sites for a Hollywood-style casino.


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