SIOUX CITY | Lady luck certainly wasn't on Sioux City's side during early efforts to land a riverboat casino to dock along the banks of the Missouri River.
Two failed partnerships could have sunk the city's chances of getting a floating casino before local investors stepped in to secure gambling in Sioux City, nearly two years after riverboat casinos could legally begin cruising Iowa's waters.
"I think we felt comfortable from the very beginning. We just had no idea that it was going to take so long," said Larry Clausen, an original member of the Missouri River Historical Development board, a nonprofit formed to jointly hold the state gambling license with the casino developer. Iowa law then, as it does now, required casino operators to team with a local nonprofit entity.
The first effort ended when developers were unable to secure financing, and a second developer backed out because of concerns over competition from a land-based casino being opened by the Winnebago Indian Tribe in Sloan, Iowa.
"It was a small market, and it's a big investment and we had a hard time getting a developer interested," said Dave O'Brien, a former Sioux City attorney who was on the MRHD board and now lives in Cedar Rapids, Iowa.
A group of local investors finally was able to bring a boat to Sioux City, and the Sioux City Sue opened in January 1993, and started plying the Missouri River that May.
Iowa's first floating casinos began cruises on the Mississippi River on April 1, 1991, 25 years ago this Friday. But Sioux City had to wait two more years, due to months of missed deadlines, extensions and failed partnerships since Woodbury County voters in September 1989 passed a referendum approving gambling.
In March 1990, the Iowa Racing and Gaming Commission awarded MRHD and its California-based partner, Fried-Schagen, a gambling license. The developers were able to obtain $4 million in equity, but couldn't secure long-term financing, even after receiving a series of deadline extensions. The company lost $160,000 in a scam that had promised to secure a $16 million loan to the company.
"The first one we had, those guys were just shaky as hell, but they were the only game in town," Clausen said.
Seven months after granting the license, the IRGC revoked it.
In November 1990, the IRGC granted another license to MRHD and its new partner, Bettendorf, Iowa-based Steamboat Development. After several delays, Steamboat voluntarily surrendered its license, citing competition from the planned Winnebago casino.
"They were just looking for excuses" to back out, O'Brien said.
What MRHD board members were quickly learning was that the gambling business wasn't quite as lucrative as some may have initially thought.
"Our biggest problem was the size of the market and the lack of developers who were interested," O'Brien said.
What out-of-town developers couldn't achieve, local investors finally did. A number of investors headed by Sioux City businessman Ted Carlson formed Sioux City Riverboat Corp. They and MRHD were awarded a license in July 1992. Unlike previous efforts, the local group was able to secure financing, buy a riverboat in New York and open the casino.
Had that deal failed, too, riverboat gambling might never have landed in Sioux City, O'Brien said.
"We were at Plan D by that point," he said. "I don't think there was a Plan E."
Needless to say, MRHD board members were relieved to finally see a riverboat casino docked near downtown Sioux City.
"When the boat got here and opened, we were thrilled," said Clausen, whose term on the board ended in January.
The Sue was replaced in 1994 by the larger Belle of Sioux City, which gave way to an even bigger Argosy riverboat in 2004. The latter vessel was a fixture on the riverfront for more than a decade before it was replaced by the land-based Hard Rock Hotel & Casino Sioux City on Aug. 1, 2014, a move that launched legal actions still being contested in the courts.
The boat may now be gone, but all the work to bring it here was worth it, Clausen said. Dozens of schools, community groups and nonprofit organizations have received grants funded by gambling revenues.
"I was very happy to be part of the process," Clausen said.