SIOUX CITY | Missouri River Historical Development will likely have to go it alone in its effort to recoup nearly $1.8 million in revenue-sharing payments withheld by the former Argosy Sioux City riverboat casino.
State gambling regulators believe that pursuing the money is not their responsibility.
"We really think it's a matter that falls outside of the commission's jurisdiction," said Brian Ohorilko, administrator for the Iowa Racing and Gaming Commission.
MRHD, the state-licensed nonprofit gaming group that had held Woodbury County's gambling license with the Belle of Sioux City, a subsidiary of Penn National Gaming Inc., which operated the Argosy, believes it is owed the money. MRHD board president Mark Monson had previously said that he believed it was the IRGC's responsibility to pursue the money.
Monson said he was told by legal counsel not to comment because of ongoing litigation involving a 2012 breach of contract lawsuit that Wyomissing, Pennsylvania-based Penn filed against MRHD, which countersued Penn, the nation's largest gaming operator.
MRHD's attorney, Doug Phillips, also declined to comment because of the litigation.
Ohorilko said MRHD's best option may be to address the payment withholdings as part of the breach of contract lawsuit.
"This issue may fit in better with their other litigation," he said.
MRHD could still ask the IRGC to address the issue at a future meeting. The earliest the issue could be heard is at the commission's Oct. 13 meeting in Davenport. It's too late for the issue to be placed on the agenda of the Aug. 18 meeting at the Grand Falls Casino and Resort in rural Lyon County near Larchwood.
Under Iowa law, casino operators are required to partner with licensed gaming nonprofit organizations such as MRHD, which collect and distribute a portion of gambling profits to charitable and civic organizations.
Penn stopped making the Argosy payments -- 3 percent of the casino's adjusted gross revenues -- to MRHD in June 2013, two months after the IRGC awarded the county's first land-based gaming license to MRHD and SCE Partners, the operator of the Hard Rock Hotel & Casino, which opened Aug. 1, 2014, two days after the Argosy was closed.
A Polk County District Court judge later denied Penn's motion to appoint a third-party receiver to collect and distribute the funds until its breach of contract lawsuit against MRHD was settled. State regulators also denied Penn's request to redirect the funds to a new local nonprofit for distribution.
In its breach of contract lawsuit, Penn claims that MRHD schemed to replace the Argosy with another operator before their contract expired in July 2012. The two had been unable to agree on a long-term contract extension, and the IRGC took the unprecedented step of putting Woodbury County's license up for grabs and began accepting proposals for a land-based casino.
MRHD countersued, claiming that Penn interfered with MRHD's prospective relationships by sending letters threatening legal action against potential operators with whom MRHD might pursue an agreement. MRHD also claimed that Penn's actions prevented or delayed it from negotiating a more lucrative land-based casino agreement.
There are no hearings scheduled in the case, filed in Polk County District Court, and nothing has been filed in nearly a year.
Action in the case is expected to resume in the wake of the Iowa Supreme Court's May decision to deny the Belle of Sioux City's request to review an Iowa Court of Appeals ruling that upheld previous rulings that led to the casino's closure. Belle had challenged the IRGC's actions denying the company a license renewal and instead awarding it to the MRHD partnership that led to the construction and opening of the Hard Rock in downtown Sioux City.