The Iowa Racing and Gaming Commission (IRGC) met on Thursday, January 13, 2022 at Prairie Meadows Racetrack & Casino (PMR&C) in Altoona, Iowa. Commission members present were Vice Chair Daryl Olsen, and members Amy Burkhart and Mark Campbell. Chair Julie Andres and member Lance Horbach participated by telephone.
APPROVE AGENDA: Vice Chair Olsen called the meeting to order at 8:30 AM and requested a motion to approve the agenda. Commissioner Campbell so moved. Commissioner Burkhart seconded the motion, which carried unanimously.
Vice Chair Olsen welcomed Commissioner Burkhart to the Commission.
Vice Chair Olsen stated the Commissioners always enjoy coming to PMR&C. He acknowledged the work to keep the property maintained and updated.
WELCOME: Michelle Wilkie, Senior Vice President of Administration, welcomed everyone to the facility on behalf of Gary Palmer, General Manager, and all of the employees. She noted PMR&C was born out of the farm crisis in the 1980’s and was designed to provide good paying jobs, serve as an economic engine for the agricultural economy, and promote tourism and economic development in the state. Ms. Wilkie stated that with the addition of slot machines in 1995 that concept has come to fruition. PMR&C has helped lessen the burden of government by infusing over $2 billion into the State of Iowa through taxes and charitable contributions. In 2022, PMR&C plans to invest $12 million to remodel the hotel and will distribute more charitable contributions than in any other single previous year. Ms. Wilkie stated PMR&C considers it a privilege and honor to operate a non-profit casino in the State of Iowa, and thanked the Commission for their guidance and continued support.
APPROVE MINUTES: Vice Chair Olsen moved to the approval of the minutes from the November 18, 2021 Commission meeting. Commissioner Campbell moved to approve the minutes as submitted. Commissioner Burkhart seconded the motion, which carried unanimously.
ANNOUNCEMENTS: Brian Ohorilko, Administrator, advised there would be no meeting in February. The next Commission meeting will be held on March 3rd at HGI-Lakeside Casino in Osceola. Submissions for that meeting are due in the Des Moines office by February 18th. Mr. Ohorilko stated this is the meeting where the Commission considers the license renewals. He noted the Commissioners like hearing from the operators and the qualified sponsoring organization licensees. He indicated their attendance at the meeting would be appreciated.
SOCIOECONOMIC MARKET STUDY PRESENTATIONS
Spectrum Gaming Corporation: Mike Pollock, Managing Director for Spectrum, Mike Lipsman with Strategic Economic Group, and Mike Diamond and Matt Roe from Spectrum, presented the findings of their study to the Commission. The full report can be found on the Commission’s website: https://irgc.iowa.gov/publications/studies.
Commissioner Campbell thanked Spectrum for their presentation. With regard to the potential impact of a casino in Linn County for the other markets, or a 76% overlap within 45 minutes, he asked about the cannibalization rates for Waterloo and Riverside.
Mr. Roe stated Spectrum did not have data for the individual zip codes to show where people are coming from; they cannot say that a specific number of people are coming from a specific area to any specific market. He stated they looked at a map to see where people are coming from, and where are they going to go.
Commissioner Burkhart noted there are significant differences between the two studies being presented today in terms of the projections for 2024 gaming revenue. She noted Spectrum’s report shows a smaller decline in the revenue; but their report also references a ramp-up period in Nebraska. She asked if Spectrum expected to see an additional decline in revenues beyond 2024 or if they feel those projections are where the Iowa market will settle.
Mr. Roe stated Spectrum feels there will continue to be ramp-up after 2024 as the Nebraska casinos are likely to open in late 2022 or early 2023. They feel the ramp-up period will last approximately 18 months.
Commissioner Burkhart asked if they would expect an additional decline or a leveling off if they were projecting out to 2028. Mr. Roe answered in the affirmative, noting at some point the market becomes fixed.
Commissioner Horbach stated he was a big fan of the data provided and the report was well done. He noted that when looking at the social impact of a casino, the data provided was based on the location of a building, and not the location of the participants. He presented the following example: The study shows Cedar Rapids is well-served as far as gaming, but on the social side because a building is not located there, Linn County is measured as a non-casino county versus a casino county.
He referenced a participation illustration that measures population by 30 minutes to show the impact on the metro areas outside of the state but the Commission wanted to know the impact to Linn County as well as Riverside, Waterloo and Dubuque. If the 30-minute circle is drawn around Riverside and Waterloo, neither would reach Linn County. He asked why they chose 30 minutes versus 50-minutes.
Mr. Roe stated they chose 30 minute drive time from outside the state or border to see who is crossing the border and if visitors are driving further to visit Iowa casino from other states.
Commissioner Horbach again noted the study referenced the location of a building, but in considering those locations, Spectrum refused to cross a county line. As an example, Omaha would be considered a non-gaming community, but the social impacts should have been assigned to the Council Bluffs casinos. Following that thought process, the social impacts for Linn County would have been assigned to Riverside and Waterloo. He stated he was impressed with the report, but was frustrated in how some of the data was measured for social impacts.
Mr. Roe stated the studies require careful analysis as many of the problems identified by Commissioner Horbach, and Spectrum has endeavored to identify, in comparing casino counties to non-casino counties is that social impacts do not stop at county or state lines. He used the example of problem gambling and Iowa had more of a regional monopoly, people who lived in other states were gambling in Iowa but the social impacts didn’t have to be addressed here as they didn’t live in Iowa. Those are some of the issues which require that all of the data and charts be looked at with extreme care.
Mr. Ohorilko presented the following question from Chair Andres: The numbers for the social or economic impact are not as dramatic as she had expected. She questioned if that is true in other states or if Iowa is different than other states with regard to some of the social and economic impacts of gambling.
Mr. Pollock stated it is beyond the scope of the study to try to answer some of the questions raised; Spectrum would have to spend time in each jurisdiction conducting interviews and surveys. He stated they included county level data when possible, and went down to the municipal level when necessary. Mr. Pollock stated the findings in Iowa are similar to studies in other jurisdictions with regard to higher crime rates, particularly the pick pocket thefts. He noted casino usually are located in metro areas, which experience higher crime rates.
Mr. Diamond stated it is not unusual to see the same kind of results, but it’s not as clear as state versus state versus state. Sometimes, it is better to look at casinos in urban markets across state lines, casinos in suburban markets and compare them to each other, and rural markets. He stated there is nothing particularly unique about Iowa in terms of social impacts that would be dramatically different than what they would see in other markets.
The Innovation Group: Thomas Zitt, Executive Vice President, presented the findings of their study to the Commission. The full report can be found on the Commission’s website: https://irgc.iowa.gov/publications/studies.
Commissioner Campbell noted the report seems to indicate a 21% cannibalization rate for the east central market, which includes both Riverside and Waterloo, if Linn County were to get a license. He noted the same question has been asked in previous studies, and the rates seem to be higher than what actually occurred. He asked Mr. Zitt to expand on what the company is seeing in their research regarding cannibalization rates.
Mr. Zitt stated they have looked at this issue across the country. He noted when they performed a market study at Riverside prior to the facility opening, the cannibalization rate was within two points of what they projected. Mr. Zitt stated they have a good track record in that area. In looking at what is happening across the country and actual impacts, it has been rare to see anything higher than 30%. The one exception to that would be the casino in Lawrenceburg, IN that is located 45 minutes to an hour outside of Cincinnati. Ohio legalized casinos, and now there are three casinos in the Cincinnati area. Mr. Zitt stated that would not happen in the Council Bluffs market as the drive time distance is not that great. When casinos opened in the St. Louis market, other markets experienced around 15-20% impact.
Commissioner Burkhart asked if there were any challenges they encountered during the acquisition of data that would have a material impact on the findings. If so, she asked Mr. Zitt to explain how the findings might vary in any of the categories.
Mr. Zitt stated they did not have access to the player data bases for every property, so there could be a couple of properties where the numbers are off a little bit, but stated he is comfortable with the data they did have.
Commissioner Campbell noted the Spectrum study discussed online sports wagering and the social and economic impacts. He asked if this study isolated that information.
Mr. Zitt indicated they did not isolate sports betting versus general betting, but stated he felt it was something that needs to be tracked in Iowa. He noted sports wagering is fairly new to Iowa, and he is not aware of what other studies have shown in this area. Mr. Zitt noted the University of Northern Iowa has a program and recommended that information continue to be provided to them to show what additional mitigation resources might be needed.
Mr. Ohorilko presented the following questions from Chair Andres: Chair Andres noted the social and economic impacts are not as dramatic as expected. She asked if the research in Iowa is similar to what you are seeing in other states.
Mr. Zitt answered in the affirmative. He noted Omaha is experiencing the social impacts of gaming, but they don’t have any funding to help address the issues. Social and economic impacts don’t stop at the border. He stated it is very important to keep funding the problem gambling program. The latest data available from 2016 shows Iowa is 4th in the nation for spending on problem gambling issues.
Chair Andres also wanted to know if there is any particular research or results in the socioeconomic studies that Mr. Zitt feels stand out or warrant more study in Iowa; was there anything that was alarming or the Commission should take a closer look at.
Mr. Zitt advised nothing really stood out. He noted Iowa does have a high level of saturation with nineteen casinos, and some in Illinois. He stated the saturation level provides a higher possibility for problem gambling to develop. Mr. Zitt noted there are some states with a similar number of casinos, but they don’t have funding to help those dealing with problem gambling issues. He stated keeping most of the economic impacts local with the non-profit structure helps to minimize the social impacts. The social impacts are counteracted by the positive job creation.
Chair Andres also asked about the impact of the casino in a smaller community – is it having a negative or positive impact, and how is that different than a casino in a larger community. Are certain areas impacted more heavily than others?
Mr. Zitt stated there are more opportunities for co-morbidities and other social factors in a more dense population than in rural areas. He stated it is hard to determine causation versus correlation. Mr. Zitt stated the one area they did look at was whether the rural counties were able to maintain population. The study did not show that a casino helped a county or area maintain population.
Commissioner Horbach stated both reports stated the days of building a casino is no longer viable, and addressed what gamers want and the age group changes. He stated the reports explicitly talk about the horizontal growth of the revenue stream, the need for amenities, and putting capital back into the building. Commissioner Horbach noted the Commission has been talking about the need for the facilities to reinvest in their properties, and wanted to point out that the reports emphasize that fact as well.
Mr. Zitt emphasized that it is very important to reinvest in the properties. With regard to the Covid situation, he noted that people still want to go to the brick and mortar property, even with the advent of online gaming options. He stated the demise of the brick and mortar facility is exaggerated.
Commissioner Horbach left the meeting following the conclusion of the socioeconomic market study presentations.
RULES: Mr. Ohorilko advised the rules before the Commission are for final adoption, and is the same package that was before them at the November meeting. Since that time, IRGC staff has held a public hearing and appeared before the Legislative Rules Review Committee. He noted there are no changes to the rules. He advised staff did receive some questions from DraftKings, FanDuel and BetMGM with regard to Item 16. Mr. Ohorilko stated he met with representatives and feels their concerns have been resolved. DraftKings also commented on Item 26 specific to the fantasy sports platform with regard to the timing of the rule. Following discussions, their concerns were resolved.
Mr. Ohorilko requested approval of the rules for final adoption.
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Campbell moved to approve the rules for final adoption as presented. Commissioner Burkhart seconded the motion, which carried unanimously.
ADVANCE DEPOSIT SPORTS WAGERING OPERATOR AGREEMENTS:
Ameristar Casino Council Bluffs, LLC (Ameristar): Paul Czak, General Manager, requested approval of an Updated Intercompany Agreement between Ameristar and theScore Bet. He advised theScore Bet is now wholly owned by Penn National Gaming.
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Burkhart moved to approve the Updated Intercompany Agreement between Ameristar and theScore Bet as presented. Commissioner Campbell seconded the motion, which carried unanimously.
IOC Black Hawk County, Inc. (IOCW): Chad Moine, General Manager, requested approval of an Online Market Access Agreement with SBOpco, LLC (SuperBook). He advised IOCW is adding another skin to their sportsbook. SuperBook was established in 1993 in at the Westgate Casino in Las Vegas, and is known as the world’s largest sportsbook. They have an online presence and are currently operational in Arizona, Nevada, New Jersey and Colorado. Mr. Moine stated the company is well-known for their integrity and world-class offerings at their retail and online locations.
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Campbell moved to approve the Online Market Access Agreement between IOC Black Hawk County, Inc. and SBOpco, LLC (SuperBook). Commissioner Burkhart seconded the motion, which carried unanimously.
CONTRACT APPROVALS (OSV – OUT OF STATE VENDOR; RP – RELATED PARTY):
HGI-Lakeside, LLC: David Monroe, General Manager, presented the following contracts for Commission approval:
- AJR Equities, Inc. – Marketing Giveaway Items
- Pilot Travel Centers, LLC – Marketing Giveaway Items
- Technology by Design – LED Video Wall
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Burkhart moved to approve the contracts as submitted by HGI-Lakeside, LLC. Commissioner Campbell seconded the motion, which carried unanimously.
Dubuque Racing Association, Ltd (DRA).: Alex Dixon, President of DRA, was accompanied by DRA Board President Kevin Lynch, Mayor Brad Cavanagh, and City Manager Michael Van Milligen. Mr. Dixon presented an Amended Lease between the City of Dubuque and DRA. Mr. Dixon advised the Second Amended and Restated Lease Agreement extends the current lease term by 15 years, allows DRA to take over the greyhound racing area and reinvest capital into the facility. The new lease also changes the distribution formula for net receipts. Under the old lease, 50% went to the City and 50% to non-profits. Under the new lease, the net receipts will be distributed with one-third going to the City, one-third to non-profits, and one-third to a segregated fund to advance and promote the development of the Schmitt Island Master Plan.
Vice Chair Olsen stated his understanding of the changes were the difference in how the funds are split moving forward and the term of the agreement. Mr. Dixon stated the rent would also be increasing from 1.0% of coin-in to 1.5% of coin-in commencing with the January 2022 rent payment. The facility will also be able to retain one-half percent of coin-in to increase their debt capacity to allow for reinvestment within the gaming facility.
Hearing no further comments or questions, Vice Chair Olsen requested a motion. Commissioner Campbell moved to approve the Amended Lease with the City of Dubuque. Commissioner Burkhart seconded the motion, which carried unanimously.
Contracts: Mr. Dixon presented the following contracts for Commission approval:
- Agilysys NV, LLC – Point of Sales System (OSV)
- City of Dubuque – Staffing Service Management Agreement (RP)
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Burkhart moved to approve the contracts as submitted by DRA. Commissioner Campbell seconded the motion, which carried unanimously.
Wild Rose Clinton, L.L.C. (WRC): Steve Nauman, General Manager, presented a contract with McComas-Lacina Construction to be the General Contractor for the Coaches Corner Remodel.
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Campbell moved to approve the contract as submitted by WRC. Commissioner Burkhart seconded the motion, which carried unanimously.
Ameristar Casino Council Bluffs, LLC (Ameristar): Paul Czak, General Manager, presented a contract with Mark it Smart for Marketing Promotional Items (OSV).
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Burkhart moved to approve the contract as submitted by Ameristar. Commissioner Campbell seconded the motion, which carried unanimously.
Riverside Casino & Golf Resort, LLC (RCGR): Damon John, General Manager, presented a contract with Shreveport Communications for Radio System Upgrade Hardware and Software (OSV).
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Campbell moved to approve the contract as submitted by RCGR. Commissioner Burkhart seconded the motion, which carried unanimously.
IOC Bettendorf, L.C. (IOCB): Nancy Ballenger, General Manager, presented the following contracts for Commission approval:
- Tri-City Electric Co. – Ongoing Electrical Enhancements and Data Needs
- Lithographic Communications – Corporate-selected Marketing, Printing, Direct Mail, and Postage Vendor (OSV)
- Valley Forge Fabrics, Inc. Material, Fabrication, and Installation of Hotel Room Sheers (OSV)
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Burkhart moved to approve the contracts as submitted by IOCB. Commissioner Campbell seconded the motion, which carried unanimously.
SCE Partners, LLC: Doug Fisher, General Manager, presented the following contracts for Commission approval:
- Anderson Brothers Printing – Print Marketing Material
- Bananas Entertainment, LLC – Talent Agency (OSV)
- The Buzz Creative Group – Marketing Agency (RP)
- Charles Schwab – Employee Benefit 401K Plan
- Chatterkick, LLC – Social Media Services
- HyVee - Catering, Food Supplier
- Marsh USA – Insurance Provider
- Lee Enterprises d/b/a Sioux City Journal – Advertising
- Sioux Laundry – Laundry Services (OSV)
- The Fish Guys – Food Supplier (OSV)
- Deloitte & Touche, LLP – Financial Auditing and Reporting Services
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Campbell moved to approve the contracts as submitted by SCE Partners, LLC. Commissioner Burkhart seconded the motion, which carried unanimously.
PRAIRIE MEADOWS RACETRACK & CASINO, INC.
Request for Approval of the 45-Day Plan for the 2022 Mixed Meet: Derron Heldt, Director of Racing, stated the 2022 Mixed Meet will consist for 84 days of racing with races being held on Friday and Saturday with a post time of 6:00 PM and Sunday and Monday with a post time of 4:00 PM. Thoroughbred racing will commence on May 13; quarter horses will start racing on June 19th. The last week of racing will have four days of racing, but two will be thoroughbreds only. Mr. Heldt advised the balance of the submission includes lists, schedules and documentation for the various areas requested.
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Burkhart moved to approve the 45-Day Plan as submitted by PMR&C with the following contingencies:
- The immediate written notification of any change in racing official positions.
- The completion of necessary IRGC licensing and DCI background checks of officials.
Commissioner Campbell seconded the motion, which carried unanimously.
Contracts: Ann Atkin, Chief Operating Officer, presented the following contracts for Commission approval:
- ADP (Automatic Data Processing) – Payroll and Human Resources Software
- Associated Computer Services (ACS) – Cisco Wireless Equipment
- Atlantic Bottling Company – Soft Drink Supply Agreement
- Blackbaud, Inc. – Grants Software Subscription and Training (OSV)
- Brick, Gentry P.C. – Corporate Legal Counsel
- CenturyLink – Internet Service
- Data Business Equipment – Cash Handling Equipment
- Insurance Office of America – Jockey’s Accident Insurance (OSV)
- Shive-Hattery, Inc. – Engineering Services
- The Underground Company – Track Drainage Repair Contractor
- The Weitz Company – General Contractor
- True North Companies – Insurance Brokerage Services
- United Tote Company – Pari-Mutuel Totalizator (OSV)
- US Foods – Food, Equipment and Supplies
- Van Wall Equipment (Farmers Supply) – Track and Grounds Equipment, Parts and Service
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Campbell moved to approve the contracts as submitted by PMR&C. Commissioner Burkhart seconded the motion, which carried unanimously.
HEARING: Mr. Ohorilko advised that Commission staff and Riverside Casino & Golf Resort, LLC have entered into a Stipulated Agreement for a violation of Iowa Code §99F.9(5) (Minor). On August 7th at approximately 10:40 AM an individual approached the turnstile and was stopped by security. After reviewing the identification produced, the facility, suspecting the individual was underage, contacted local law enforcement. Follow-up by Riverside confirmed the individual had been on the gaming floor earlier that morning, and was allowed on the gaming floor after showing security a picture on his cell phone. The individual was on the gaming floor in excess of 30 minutes, and did gamble, thus meeting the criteria to come before the Commission. Mr. Ohorilko stated the Division of Criminal Investigation interviewed the minor, who indicated he had been on the gaming floor on two other occasions. Charges were filed. Mr. Ohorilko provided the following summary: The minor entered the gaming floor unchallenged at least one time, was on the gaming floor for 66 minutes, and gambled at various slot machines. He stated Riverside has agreed to an administrative penalty of $20,000.
Mr. John stated this situation is unacceptable, and Riverside takes the situation very seriously. The employee in question was immediately and concisely retrained to insure the guest is asked for proper identification in accordance with Standard Operating Procedures. He noted after the situation was uncovered, the facility followed up with local law enforcement to ensure the minor was charged. He further advised the minor and their adult companion have been banned from the property.
Hearing no comments or questions, Vice Chair Olsen requested a motion. Commissioner Campbell moved to approve the Stipulated Agreement with an administrative penalty of $20,000. Commissioner Burkhart seconded the motion, which carried unanimously.
PUBLIC COMMENT: Jon Moss, Executive Director of the Iowa Horsemen’s Benevolent & Protective Association, noted July 1st is rapidly approaching, which is when the Horseracing Integrity and Safety Act (HISA) is to go into effect and take over a dramatic amount of regulation, specifically health and safety aspects. He noted the Federal Trade Commission has released rules, and provided a 15-day window to comment. He noted the National HBPA and Association of Racing Commissioners International (ARCI) will submit comments. He suggested the Commission look at the rules in light of the short window to comment. Mr. Moss stated there are several items that have caught his eye. All medication aspects have been tabled as the parties have not been able to agree on the requirements. Mr. Moss stated some of the proposed drug testing rules were carbon copies of what is being done on human athletes. He stated IRGC will still be conducting testing for the upcoming racing season, but expressed concern that there will be two sets of standards and two sets of rules for the upcoming meet. Mr. Moss stated another state will be entering the lawsuit as to the constitutionality of HISA. Additionally, he advised a federal judge in Texas has agreed to a hearing on the initial request in mid-February. It is not clear when a decision will be issued.
Mr. Ohorilko confirmed Mr. Moss’ comments regarding the HISA rules. He noted staff is trying to triage specific areas that are important and will impact the Commission. He noted staff is working with ARCI to file any comments directly on behalf of the Commission; they will be including our comments in their documentation. Mr. Ohorilko advised staff is doing what they can to stay on top of the issue, and have 2-3 meeting per week on this topic. He stated staff is working to be able to implement HISA on July 1st if need be.
Vice Chair Olsen requested that Mr. Ohorilko and staff continue to monitor the situation and keep Commission members in the loop.
Mr. Moss stated his organization has reached out to Iowa’s representatives in Washington, D.C.
ADMINISTRATIVE BUSINESS: None
ADJOURN: Hearing no further business to come before the Commission, Vice Chair Olsen requested a motion to adjourn. Commissioner Burkhart so moved. Commissioner Campbell seconded the motion, which carried unanimously.