Argosy closed

Customers walk out of the Argosy Sioux City riverboat casino on its last day of business on July 30, 2014. A breach of contract lawsuit filed by the former casino's owners and its former nonprofit partner, Missouri River Historical Development, has been set for trial for February 2018 in Polk County District Court in Des Moines.

SIOUX CITY | A recent Iowa Supreme Court action concluded a long-running legal battle between the former Argosy Sioux City riverboat casino and state gambling regulators.

But lawyers are far from through resolving the legal issues that arose from months of conflict with the gambling boat's former local partner over contracts and state gaming laws.

Still remaining to be decided is a breach of contract lawsuit Penn National Gaming Co. filed against Missouri River Historical Development, the state-licensed nonprofit gaming group that had held Woodbury County's gambling license with the Belle of Sioux City, a subsidiary of Wyomissing, Pa.-based Penn National Gaming Inc. Also pending is MRHD's countersuit against Penn, the nation's largest gaming operator.

And yet to be addressed is the fate of nearly $1.8 million in revenue-sharing payments the Argosy owner withheld from MRHD during the last year the casino operated.

"I expect that will be a subject of conversation among all remaining parties," said MRHD's attorney, Doug Phillips, of Sioux City.

The Iowa Supreme Court on Monday denied 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 on July 30, 2014. Belle had challenged the Iowa Racing and Gaming Commission's actions denying the company a license renewal and instead awarding it to the partnership that led to the construction and opening of the Hard Rock Hotel & Casino in downtown Sioux City on Aug. 1, 2014.

With that administrative case now finished, the focus turns to a 2012 lawsuit in which Penn claims that MRHD schemed to replace the Argosy with another operator even before their 20-year contract expired in July 2012.

MRHD had been unable to come up with a long-term contract extension that would have included a land-based casino with Penn, 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 denied the charges and 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.

Both sides are seeking damages in their claims.

Phillips declined to comment on MRHD's arguments in its counterclaim, but he said resolution of the previous case involving the IRGC may affect the breach of contract case.

"I think the resolution of the administrative case will resolve a number of issues raised in that case," Phillips said. "The parties had agreed that we should resolve the administrative case, and once that was resolved we could begin our discussions on how to resolve the remaining case."

Phillips declined to say what filings may be forthcoming or when, but that lawyers for both sides would need to meet to discuss schedules and how to proceed.

Penn officials did not respond to requests for comment for this story.

As for the $1.8 million that Argosy withheld from MRHD, some type of legal action is possible, but it's not clear what form that action might take or by whom.

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, in a 3-2 vote, awarded the county's first land-based license to MRHD and the Hard Rock operator, SCE Partners.

In a November 2013 ruling, a Polk County District Court judge denied Penn's motion to appoint a third-party receiver to collect and distribute the funds until its breach-of-contract lawsuit against MRHD is settled. State regulators also rebuffed Penn's request to redirect the funds to a new local nonprofit for distribution in the community.

By the time the floating casino closed on July 30, 2014, the uncollected funds totaled about $1.8 million. The boat has since been sold and removed from the riverfront.

MRHD board president Mark Monson said $1.8 million is a significant amount that is owed to the community, but that it's not MRHD's job to pursue it.

"It's my opinion that that is the responsibility of the Iowa Racing and Gaming (Commission)," Monson said.

IRGC administrator Brian Ohorilko said many questions need to be answered about the money believed to be owed to MRHD.

"Those payments weren't made. I think it's something the commission really needs to talk to our attorney about and try to determine if the state will try to recoup that money," Ohorilko said.

The earliest the IRGC could publicly discuss the matter is at its July meeting.

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