Law judge denies Argosy casino request to delay hearing

DAVE DREESZEN ddreeszen@siouxcityjournal.com | Posted: Wednesday, February 19, 2014 10:15 pm

DES MOINES | An administrative law judge has turned down the Argosy Sioux City's request to postpone a hearing over whether the riverboat casino can stay open without an agreement with a licensed nonprofit gaming group.

The ruling means Argosy's contested case hearing before the Iowa Racing and Gaming Commission will proceed as scheduled on March 5 in the Des Moines suburb of Altoona.

Argosy parent Penn National Gaming Commission Inc. is appealing the IRGC's Aug. 15 denial of the gambling boat's application for a standard one-year renewal of its license.

Iowa gaming law requires operators in counties that approve casino gambling to sign operating agreements with nonprofit groups, known formally as Qualified Sponsoring Organizations, and share a portion of the casino revenues, with the charitable groups.

In denying the Argosy's application to renew its license, the commission cited the absence of an active agreement with a QSO.

The Argosy's long-term deal with MRHD lapsed in July 2012, according to the IRGC. To keep the boat's 300-plus employees working and the casino's revenues flowing into state and local coffers, the IRGC allowed the Argosy to stay open under what's known as operation of law.

The IRGC, however, has signaled its intent to shut down the vessel upon the completion of the Hard Rock Hotel & Casino Sioux City, which is under construction at Third and Water streets downtown and slated to open in late summer.

Argosy attorneys have described the IRGC action as a "defacto" revocation of the boat's license without cause.

On Dec. 24, Argosy filed a motion to stay the IRGC hearing over the renewal of the boat's license until the breach-of-contract lawsuit Argosy filed against MRHD in September 2012 is finished.

The IRGC, represented by the Iowa Attorney General's office, opposed Argosy's motion, saying it amounted to an "indefinite delay" of the hearing. The outcome of the MRHD contract dispute, the IRGC said in documents, "cannot change the fact that MRHD allowed its license to conduct gambling games at the Argosy Casino to expire."

In a four-page ruling, Administrative Law Judge Christie Scase agreed the contested case hearing should go forward as scheduled.

"At best, the outcome of the MRHD litigation is marginally relevant to the issue to be heard in this contested case," Scase said. "Indefinite delay of the hearing to await the outcome of that litigation does not serve the interest of judicial economy or the regulatory function of the commission."

After growing frustrated with months of failed contract talks between Penn and MRHD over a new long-term deal, the IRGC decided in June 2012 to take bids for a land casino that would replace the Argosy.

Penn, the nation's second largest gaming operator, is pursuing a number of regulatory and legal moves to keep the boat open and overturn the April 18 IRGC vote that awarded the land license to Hard Rock developer Sioux City Entertainment and its nonprofit, MRHD.

The Hard Rock group beat out three other applicants, including Penn, which offered two different sites for a Hollywood-style casino.

Argosy officials have repeatedly told the IRGC that it has a different nonprofit group, Greater Siouxland Improvement Association, or GSIA, ready to step into MRHD's former role. GSIA, led by former Woodbury County treasurer Bob Knowler, partnered with Penn on its Hollywood casino applications.

In December, GSIA applied for a joint gaming license with the Argosy. IRGC administrator Brian Ohorilko has said the agency will deal with the request in a manner consistent with other new applications, but has not announced a date when the commission will consider it.

The application has raised the potential for two casinos operating in Sioux City at the same time.