Story of the Year

Story of the year: Sioux City casino saga

2012-12-30T00:00:00Z Story of the year: Sioux City casino sagaDAVE DREESZEN Sioux City Journal
December 30, 2012 12:00 am  • 

SIOUX CITY | U.S. gaming officials began to tune in as relations between Penn National Gaming and Missouri River Historical Development started to deteriorate.

The industry paid closer attention to what happened next.

After Argosy Sioux City owner Penn and its nonprofit partner, MRHD, failed to come to terms on a long-term agreement that would have included replacing the gambling boat with a larger onshore casino, the Iowa Racing and Gaming Commission took unprecedented action.

In June, the five-member commission reopened a casino license for the first time, inviting any operator to submit a land-based project for Woodbury County.

By year's end, Penn and two other applicants were pitching casino and entertainment complexes with price tags in excess of $120 million.

The Journal selected the yearlong casino saga as the top story of 2012.

Gaming officials not only in Iowa but also from Atlantic City to Las Vegas, watched as the story unfolded. It was picked up by a number of national trade publications and online sites.

The Fantini Gaming Report, a daily report of industry happenings emailed to 3,000 gaming executives, investors and analysts, regularly linked to Journal stories, said editor and publisher Frank Fantini.

Throughout the year, the Journal's coverage also was prominently featured in the AGA SmartBrief, a daily newsletter by the American Gaming Association, the industry's largest trade group.

Among the casino executives who learned of the Sioux City case in the AGA SmartBriefs was Bill Warner, CEO of Las Vegas-based Warner Gaming.

After breaking up with Penn, MRHD teamed with Warner to propose a Hard Rock-themed casino and hotel that incorporates the historic Battery Building in downtown Sioux City.

Another group, led by Winnebago, Neb.-based Ho-Chunk Inc., proposed a casino and hotel around the historic Warrior Hotel and Davidson building.

After forming a new nonprofit group, Penn also applied, offering the IRGC a choice of a downtown or rural site for a Hollywood-themed casino.

The IRGC will select one of the four sites on April 18.

As the application process moves forward, Penn continues to pursue dual legal challenges. The nation's second-largest gaming operator went to court seeking to overturn the IRGC's decision to put its license up for bid, and to sue MRHD for breach of contract.

The possibility of a local nonprofit board of unpaid volunteers challenging one of the most powerful casino operators piqued the interest of many industry officials. The Sioux City case also shined a bright light on Iowa's unique gaming law.

Iowa is the only state that mandates that a local nonprofit, known as a Qualifying Sponsoring Organization, or QSO, jointly hold the casino license and share in its profits.

IRGC administrator Brian Ohorilko said he has fielded a number of calls in the past year from regulators and casino operators in other states wanting to learn more about how the law works.

With their own contracts up for renewal in the coming years, other Iowa casino operators and nonprofits are closely following the Sioux City case, said Wes Ehrecke, executive director of the Iowa Gaming Association.

Ehrecke said it's too soon to know if the case will establish a new precedent. But he added it certainly raises new questions about the relationship between the casino operator and QSO, including who controls the state license.

Copyright 2015 Sioux City Journal. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.