State regulators renewed gambling licenses Thursday for casinos in Osceola and Davenport, but they sympathized with community leaders who complained that they aren't providing promised economic development and jobs.
The Iowa Racing and Gaming Commission unanimously voted to grant a one-year license renewal for Terrible's Lakeside Casino of Osceola, operated by Herbst Gaming
But the commission instructed Herbst Gaming's executives to return in June to outline plans to spend $10 million to expand the Osceola casino's 60-room hotel or build one, as well as additional improvements.
In addition, the five-member state panel asked Isle of Capri officials to report back in June with a status report on negotiations to allow a different casino company to offer gambling in Davenport.
Wil Reisinger, president of the Clarke County Development Corp., which holds Osceola's casino license in a partnership with Herbst Gaming, asked regulators to renew the license on a conditional basis. They declined his request.
"We just need development," Reisinger said. "This is the most undeveloped site in Iowa."
He complained that the hotel project has been under discussion for years with no progress.
David Ross, Herbst Gaming's chief executive, assured state regulators there was no question about his company's commitment to the hotel project. He said the company is talking with two hotel developers, one of which has already hired an architect. If those plans fall through, Herbst Gaming is prepared to build the hotel on its own.
"We will do the hotel expansion," Ross said. "It is the right thing for us. It is the right thing for the state of Iowa."
Commissioner Greg Seyfer of Cedar Rapids, who offered the motion to renew the Osceola license, instructed Herbst Gaming officials to return with detailed development plans. Seyfer also asked that construction on the project begin by Oct. 1.
He said he would be prepared to vote against the casino's license renewal in 2012 if Herbst Gaming doesn't comply with the commission's instructions.
Terrible's Lakeside Casino, about 45 miles south of Des Moines along Interstate Highway 35, opened in January 2000 and has about 370 employees, about half the staff it had when it opened.
Iowa lawmakers authorized table games in 2004 at Prairie Meadows Racetrack and Casino in Altoona, which caused gambling revenues at Terrible's to plunge, officials said.
On the Rhythm City Casino license issue, Davenport Mayor Bill Gluba asked the commission to grant a temporary or conditional renewal in an effort to force the Isle of Capri to sell its riverboat gambling operation in downtown Davenport.
Gluba and other city officials are unhappy that Isle of Capri executives haven't moved forward with a 2005 agreement to develop a $43 million casino project in Davenport, including a 181-room hotel.
Iowa lawmakers didn't authorize a gambling industry "just to benefit private casino interests," Gluba said.
But the commission declined to force a sale of the Davenport casino.
"You don't put a gun to somebody's head and tell them you have to do it in three months," Seyfer said.
Ed Quatmann, the Isle of Capri's senior vice president and general counsel, said his company is willing to cooperate with a process established by city officials, who are working to bring a new land-based casino complex to Davenport. Those talks will continue, Quatmann said.
But he said a conditional or temporary license would "destabilize" the Davenport casino operation, which has about 300 employees.
Davenport, the state's third-largest city, helped to launch the state's riverboat gambling industry in 1991, hosting the since-departed President Riverboat Casino.
The city was once one of Iowa's leading destinations for gamblers, generating $78 million in annual gambling revenue and drawing 1.4 million admissions as recently as 2005.
But its gambling fortunes have faded in recent years and gaming revenue totaled $54.7 million for the 12 months ending June 30, based on 965,035 admissions.
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