Money, Influence and Louisiana: the fight over a Cedar Rapids Casino

CEDAR RAPIDS, Iowa (KCRG) – More than 800 miles separate Cedar Rapids and Bossier City, Louisiana. But they both are communities banking on transformation with gaming, and one casino closure in Louisiana could share something with the proposed one in Cedar Rapids: they share the same operator, Peninsula Pacific Entertainment.

When Peninsula Pacific bought DiamondJacks casino in Bossier City, it promised to re-invest in the aging riverboat and accompanying hotel. But instead, DiamondJacks closed during the pandemic and never re-opened; eventually the empty property became a magnet for criminals.

The city leaders and state gaming regulators were enraged.

Ronnie Jones was the head of the Louisiana Gaming Control Board and says he tried to take away DiamondJack’s gaming license since it wasn’t open.

“That week I directed the Attorney General’s office to get me an opinion on what the state of Louisiana needed to do to take his license away from him, because he had violated the terms and the conditions of that license,” said Jones.

DiamondJacks was one of many casinos in the northwest Louisiana region called the Shreveport- Bossier City Metro. DiamondJacks’ operator, Peninsula Pacific, blamed the pandemic’s financial impact for making it impossible to reopen. The same operator, now called Peninsula Pacific Entertainment or P2E, is behind Linn County’s bid for a casino.

Jones described how he learned that Peninsula Pacific wasn’t reopening after the pandemic shutdown. And he takes particular issue with how the founder and chairman, Brent Stevens, communicated with state regulators and the casino’s 349 workers.

“I get a call from a reporter from a TV station in Shreveport, and she goes ‘Chairman Jones. What’s this about Diamond Jack’s not reopening?’ I said, excuse me. She goes yeah, there’s a Facebook post to their employees that they’re closing permanently,” said Jones.

Jones, who led the Louisiana Gaming Board from 2013 to 2020, reached out to KCRG after seeing that Stevens was part of the group looking to open a new casino in Linn County.

“The only thing that I would urge is as a former regulator that they get Brent Stevens before them under oath and ask him the right questions. And I’m not suggesting he’s not deserving of a license. I’m not suggesting that he might not build a beautiful property that’s great for Iowa, but the last year experience that I had with Brent, who I considered a friend as well as a licensee, just raised some issues with me as a regulator. That’s all,” said Jones.

Steve Gray, who has led the investor group for a Cedar Rapids casino for nearly 13 years, does not share Jones’ concerns about Brent Stevens and Peninsula Pacific. Gray researched potential operators and saw the success Peninsula Pacific had running other casinos in Iowa – namely Diamond Jo Casino in Dubuque and Hard Rock Hotel & Casino in Sioux City.

Diamond Jo’s revenue grew 56 percent under Peninsula Pacific’s ownership.

Steve Gray: “I mean who are those people that have a good reputation with the commission that have done a good job, financially that have done a good job with problem gamblers that have really exemplified what the statue really intends for gaming in Iowa and our partners and now P2E that they were then known as The Diamond Jo in Dubuque they, they were just head and above everybody else from third party references.”

Beth Malicki, KCRG-TV9: “Do you have, or have you heard any concerns about Brent Stevens, Peninsula? Any of it?”

Gray: “No, no. Okay. And you know, doing what we do in life. If we were measured by our stumbles, instead of our accomplishments, investors would never invest.”

Malicki: “So, you don’t have concerns about this operator. In fact, you would elevate his performance to say, one of the best.”

Gray: “I, we, continue to believe, so when we pick them, we’d spent about a year understanding how they operated, you know, what would the project look like? How would they operate? Who would they hire? Or what would the culture be in the gaming operation and the surrounding amenities? That was really important to the local investor group. And we became convinced that they were the right people, but the sanity checks that we did with the Racing and Gaming Commission, also, provided us a little comfort… But over the last 12 years, we have really got to know them. So not only do I refer to them as partners, I refer to them as friends. They have done nothing in the last 12 years to make us, even for a second, question them as the right operator. In fact, if anything we are just absolutely thrilled with our choice.”

Those like Gray who’ve been pushing for a casino in Linn County have had to be resilient. They’ve been through two failed efforts to get a license from the Iowa Racing and Gaming Commission in 2014 and 2017; state lawmakers passing a two-year moratorium in 2022 to pause any new casinos in Iowa; and, now, an organized effort by existing casinos to prevent any new competition.

Gray: “I’m beginning to feel like General Custer felt in [the Battle of] Little Bighorn. There are a lot of different arrows, coming from a lot of different places… But this ‘Iowans for Common Sense’ is unequivocally not grassroots.”

Gray: “It’s 50 percent funded by Riverside, Elite [Casino Resorts], and the other 50 percent by other operators in the state. One thing that I do want to make very clear is that not all of the other operators are participating in this. I mean I happen to have friends that own casinos in the state and they’re not participating. So it’s just a select few people that are financially contributing to this grassroots organization.”

Malicki: “Do you think the arrows and those who are shooting them toward this project are behaving above board?”

Gray: “You know, we’re all competitive. And you know, Beth, my career over the last 40 years, I’ve competed with AT&T, US West, very dominant providers with huge balance sheets. And, by and large, we’ve done pretty well. But we’ve never stooped morally, ethically, and we’ve never even gotten into a gray area, you know, pun intended. I mean, we’ve tried to conduct ourselves above board. We don’t have the water park that we were promised.”

That water park reference is from 2013. That’s when Linn County voters were deciding if they’d support gaming and the Chief Executive Officer of Riverside Casino and Golf Resort, Dan Kehl, promised to build a water park if people in Cedar Rapids voted ‘No.’ The county voted ‘yes,’ so no water park, even though the community never got a casino.

Now Kehl is trying again to prevent competition from encroaching on his property in Washington County. Kehl employs about 700 people and his revenues at Riverside have grown 43.5 percent in five years with gaming revenue reaching $129 million in fiscal year 2024.

We asked for an interview with Kehl and did not receive a response. But he did speak to the Iowa Racing and Gaming Commission in November of 2024 at a public forum.

“We are opposed to the Cedar Rapids casino license because of cannibalization in a saturated market will significantly hurt our Iowa company,” Kehl said to the Commission.

Steve Gray and other supporters of Cedar Crossing say Kehl is pulling every lever available to stop a casino. From claiming the Linn County ballot language from 2021 is not clear enough to allow a casino to urging lawmakers to extend a moratorium to ban any new licenses.

Gray says Kehl is the main driver of a campaign called “Iowans for Common Sense.” That campaign is running commercials and gathering signatures to oppose any new casinos, but especially one in Cedar Rapids.

“Now with this petition, that was put forward as a grassroots organization, and then when we saw this email and how it’s being organized by the Iowa Gaming Association and pushed out to all the other operators and asking for their financial participation. Yeah, that’s just not right,” said Gray.

Gray provided a copy of what he says is an email from the Iowa Gaming Association. That is the trade organization supporting the state’s existing 19 commercial casinos. Iowa has four tribal casinos, but they aren’t part of the Iowa Gaming Association and don’t need a license to operate from the Iowa Racing and Gaming Commission.

The email from the Iowa Gaming Association is urging the state’s casinos to join Riverside in stopping Cedar Crossing before it starts.

Back in Louisiana, the place where DiamondJacks once sat empty, is transforming. The new casino will have a new owner and open on February 13. It will bring back hundreds of jobs and invest $270 million to build a new casino.

Diamond Jacks serves as a worst case scenario of what can happen if a casino goes bust, which is exactly what Iowa’s regulators want to avoid. And while the Shreveport – Bossier City market has a population of about 100 thousand more people than the Cedar Rapids Metro, that region alone has six casinos. Cedar Rapids is hoping for one.

And those behind the project are sure they have the right plan, with the right operator, the only question is if it’s the right time.

“This is round three to your question. Will there be a Round four? Or a round 5? Probably. But you know we’re all doing this because of what we think could be very beneficial to our home county and our hometown,” said Gray.

What one casino backer calls cannibalization, another calls competition. And the casino poised to lose the most if Cedar Crossing receives a license is Riverside.

Damon John is the General Manager at Riverside. He spoke to KCRG in early January of 2025.

“If you look at a nearly 30 percent reduction on our revenues, extrapolating that on our staff of nearly 700 employees here, I mean we’re talking 200 employees, 200 jobs on the line,” said John.

Gray acknowledges the hit Riverside would take.

“So if 30 percent, 40 percent, even 50 percent of the revenues that they enjoy come from Linn County, why hasn’t Linn County participated in the nonprofit dollars that are being distributed? It’s just disproportionate. I mean, they commit more to their nonprofit in a year than Linn County has received in the last 15,” said Gray.

Riverside is the third most visited casino in Iowa, and fourth in terms of revenue. In Fiscal Year 2024, its adjusted gross revenue reached nearly $130 million, a growth of 47 percent in a decade. And many of the Riverside patrons come from Linn County.

“Riverside’s investors have done very well in that project. They would continue to do well; it’s not going to render that facility bankrupt or insolvent. Would it be smaller? Yes. But you know what? Let’s compete. I mean create a better product as I’ve always done and let’s just compete,” said Gray.

If Cedar Crossing gets a license, Linn County is poised to get more than $6 million a year to give to local nonprofits. State law requires casinos to give three percent of gaming revenue to nonprofits. Cedar Crossing says it will give nearly triple that amount and commit eight percent to nonprofits.

In Washington County, it’s clear the impact of those nonprofit dollars. The Washington County Riverboat Foundation holds the gaming license for the Riverside Casino and Golf Resort.

Since 2006, the Foundation has given out grants totaling $58 million, with the vast majority staying in Washington County. Like the more than half a million-dollar grant for Kalona, in Washington County, from the casino-funded Foundation, and $630 thousand for an expansion on the Wellman Public Library.

The mayor of Cedar Falls, Danny Laudick, spoke to the Iowa Racing and Gaming Commission to oppose a Cedar Rapids Casino.

“This decision not only impacts one city or one county, but all of eastern Iowa, including the small communities that rely on the amenities and services that we’re able to provide as a region because of the support of the existing casinos,” said Laudick.

Parts of Iowa that don’t have casinos also receive a portion of the gaming revenues. But it’s a pittance compared to what counties with casinos get.

In 2022, the Washington County Riverboat Foundation gave the Washington County YMCA $3 million for its new pool.

That same year, Linn County received a total of $37,000 in grants from gaming revenue. The YMCA in Cedar Rapids received a grant funded through gaming revenue for $10,000 – the largest amount awarded in Linn County.

The state regulators who award licenses commissioned two studies to determine the impact Cedar Crossing would have. On the positive side, one study notes the “Cedar Crossing Casino and Entertainment Center is attractively designed and well located, such that we expect it will be successful in drawing large numbers of Iowa gamblers.”

The studies touted the 300 new jobs, the $6.8 million in added tax revenue for the state and $13.7 million in local tax revenue.

On the negative side, roughly half of Cedar Crossings’ revenue would come from cannibalization – taking money from other casinos.

The largest impact would be on Riverside Casino and Golf Resort. The Marquette Advisors Market Analysis shows Riverside would lose 26 percent of its annual revenue, starting in fiscal year 2029 with a new Cedar Rapids casino. That comes to $34 million Riverside would lose a year.

Isle of Capri in Waterloo is poised to lose 10 percent of its revenue to cannibalization, or $8.8 million a year. And tribal casino, Meskwaki in Tama, would lose 11 percent or $14.1 million.

“If Cedar Crossing were to go through we’re talking $1.32 million dollars on an annual basis from our commitment to the Riverboat Foundation that would be evaporated,” said Damon.

The money that gaming pumps into the economy, the government and nonprofits is why those outside Linn County want to stop a casino as much as those within it want to have one.

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