IRGC Meeting - Altoona

The Iowa Racing and Gaming Commission (IRGC) met at Prairie Meadows Racetrack & Casino in Altoona, Iowa on January 21, 2021.  Commission members present were Kris Kramer, Chair; Pennie Gonseth Cheers, Vice Chair; and members Julie Andres, Lance Horbach and Daryl Olsen.

APPROVE AGENDA: Chair Kramer called the meeting to order at 8:30 AM and advised staff had received a request from Diamond Jo to remove Agenda Item 8(D)4, a contract with Gitchi Gaming, Inc.  Chair Kramer requested a motion to approve the agenda as amended.  Commissioner Olsen moved to approve the agenda as amended.  Commissioner Gonseth Cheers seconded the motion, which carried unanimously.

APPROVE MINUTES: Chair Kramer moved to the approval of the minutes and requested a motion.  Commissioner Horbach moved to approve the minutes for November 19, 2020 as presented.  Commissioner Andres seconded the motion, which carried unanimously.

ANNOUNCEMENTS: Brian Ohorilko, Administrator of IRGC, advised there would be no meeting in February.  The March meeting will be held on March 4, 2021 at Prairie Meadows Racetrack & Casino in Altoona.  Submissions are due in the Commission office by February 18, 2021.

RULES: Mr. Ohorilko advised the rule packages before the Commission were presented at the October and November meetings under a Notice of Intended Action.  Since that time, Commission staff has held public hearings and appeared before the Legislative Rules Review Committee.  No concerns or comments were raised during either of those for the racing rules package.  Mr. Ohorilko noted Commission staff did receive some feedback on the casino sports wagering package pertaining to Item 11, the electronic wagering accounts.  Mr. Ohorilko stated changes were made to the rules to reflect comments, which have been circulated to the stakeholders.  Regarding Item 18, the account registration, there were questions raised during the Legislative Rules Review Committee meeting.  Staff worked with the representative raising those questions, and believe the issues have been resolved.  Mr. Ohorilko advised he was not aware of any other outstanding issues or questions regarding either rule package, and requested approval of the rule packages under final adoption.

Hearing no comments or questions, Chair Kramer requested a motion to approve both rule packages.  Commissioner Olsen moved to approve the final adoption of rules as presented.  Commissioner Gonseth Cheers seconded the motion, which carried unanimously.

REQUEST FOR APPROVAL OF FINANCING PURSUANT TO IOWA ADMIN. CODE 491-5.4(8)(a)(2): Ross Curnow, legal counsel representing Affinity Gaming and its subsidiary HGI-Lakeside, LLC, presented a request for approval of refinancing.

Commissioner Olsen asked how many states would need to approve the refinancing.  Mr. Curnow advised Affinity Gaming has subsidiaries in three states: Nevada, Missouri and Iowa.  Commissioner Olsen asked if Nevada or Missouri had approved the financing.  Mr. Curnow stated Nevada has approved the financing. 

Commissioner Olsen stated he felt the bond rates were extremely high.  He asked if the rates presented were standard in the gaming industry.  Mr. Curnow indicated the bond rates were consistent with the market rates for the gaming industry.

Hearing no further comments or questions, Chair Kramer requested a motion.  Commissioner Gonseth Cheers moved to approve the financing of Affinity Gaming and HIG-Lakeside, LLC pursuant to Iowa Admin. Code 491-5.4(8)(a)(2) together with the documents inherent therein specifically including the Credit Agreement, Guarantee and Collateral Agreement, Mortgages, Intercompany Subordination Agreement, Indenture, Collateral Agreement, and First Lien Intercreditor Agreement.  Commissioner Andres seconded the motion, which carried unanimously.

REQUEST FOR APPROVAL OF REVISED SECURITY PLANS:

Grand Falls Casino Resort, LLC: Sharon Haselhoff, General Manager, stated the plan does not change the minimum security staffing levels, but changes the typical officer schedule by reducing the need for Podium 2, which reduces the need for four officers but increases the supervisor level by one during this time.  She noted the property has three podiums, but with Podiums 1 and 2 being so close to each other the staffing of Podium 2 is no longer needed.  She noted Podium 3 is not seeing as much early morning traffic as it used to so having it closed in the early morning provides staffing flexibility.  She requested approval of the revised security plan.

Hearing no comments or questions, Chair Kramer requested a motion.  Commissioner Andres moved to approve the revised security plan as presented by Grand Falls Casino Resort, LLC.  Commissioner Horbach seconded the motion, which carried unanimously.

Rhythm City Casino, LLC: Ms. Haselhoff stated the revisions reallocate the existing security officers to the busier times. She requested approval of the revised security plan on behalf of Rhythm City Casino, LLC.

Hearing no comments or questions, Chair Kramer requested a motion.  Commissioner Horbach moved to approve the revised security plan as submitted by Rhythm City Casino, LLC.  Commissioner Gonseth Cheers seconded the motion, which carried unanimously.

ADVANCED DEPOSIT SPORTS WAGERING OPERATOR AGREEMENTS:

Casino Queen Marquette, Inc.: Don Ostert, General Manager, requested approval of the sports wagering amended agreement between Casino Queen Marquette, Inc. and Vigtory, Inc.  He advised FuboTV has announced they are in the process of acquiring Vigtory. 

Hearing no comments or questions, Chair Kramer requested a motion.  Commissioner Olsen moved to approve the Amended and Restated Advanced Deposit Sports Wagering Operator Agreement between Casino Queen Marquette, Inc. and Vigtory, Inc.  Commissioner Horbach seconded the motion, which carried unanimously.

HGI-Lakeside, LLC: David Monroe, General Manager, requested approval of the First Amendment to the Advanced Deposit Sports Wagering Operator Agreement with American Wagering, Inc. d/b/a William Hill Sports Book. 

Chair Kramer requested an explanation of the changes to the agreement.  Mr. Monroe advised the agreement now includes a clause which provides Lakeside an opportunity to terminate the agreement by December 31, 2021 with 90 days written notice, and changes the “Digital Performance Rent” from 25% to 50% for any mobile/online sports betting accounts tracked to Lakeside.  He indicated this change was driven by their interest in wanting to advertise and promote sign-ups.

Hearing no further comments or questions, Chair Kramer requested a motion.  Commissioner Gonseth Cheers moved to approve the First Amendment to the Advanced Deposit Sports Wagering Operator Agreement between HGI-Lakeside, LLC and American Wagering, Inc. d/b/a William Hill Sports Book.  Commissioner Andres seconded the motion, which carried unanimously.

Catfish Bend Casinos II, LLC: Rob Higgins, General Manager, presented a contract with VHL Iowa, LLC, better known as 888, as their second skin.

Chair Kramer asked for additional information on the company.  Mr. Higgins advised VHL is better known as an igaming company.  He stated this is their first endeavor with sports wagering; they are more of an online gaming operation.  Mr. Higgins stated VHL was brought to Catfish by PointsBet as the two entities currently have a relationship. 

Hearing no further comments or questions, Chair Kramer requested a motion.  Commissioner Olsen moved to approve the Advanced Deposit Sports Wagering Operator Agreement between Catfish Bend Casinos II, LLC and VHL Iowa, LLC as submitted.  Commissioner Gonseth Cheers seconded the motion, which carried unanimously.

CONTRACT APPROVALS (OSV – OUT OF STATE VENDOR; RP - RELATED PARTY):

Wild Rose Clinton, L.L.C.: Steve Nauman, General Manager, presented a contract with Tietjens Painting and Carpentry as the general contractor for hotel repairs from the derecho.

Hearing no comments or questions, Chair Kramer requested a motion.  Commissioner Andres moved to approve the contract as submitted by Wild Rose Clinton, L.L.C.  Commissioner Gonseth Cheers seconded the motion, which carried unanimously.

Dubuque Racing Association, Ltd.: Brian Rakestraw, General Manager, presented a contract with RDG Planning & Design to design the hotel expansion.

Hearing no comments or questions, Chair Kramer requested a motion.  Commissioner Gonseth Cheers moved to approve the contract as submitted by the Dubuque Racing Association, Ltd.  Commissioner Horbach seconded the motion, which carried unanimously.

SCE Partners, LLC: Doug Fisher, General Manager, presented the following contracts for Commission approval:

• Buzz Creative Group, LLC – Marketing Agency (RP)
• Buzz Entertainment Group, LLC – Talent Agent (RP)
• Deloitte – Financial Audit and Reporting
• Friedmutter Group – Architectural Services (OSV)
• Glazer’s Distribution of Iowa – Beverage Distributor
• L & L Distributing Co., Inc. – Beverage Supplier
• Lee Enterprises d/b/a Sioux City Journal – Advertising
• Nu Concepts, Inc. d/b/a USA Entertainment – Talent Agent
• Reinhart Foodservice, LLC – Food Supplier
• Stoney Creek Hotel & Conference Center – Hotel Room Night Stays and Banquet Services
• The Home Depot – Cleaning Supplies
• United Healthcare – Group Health Insurance
• USPS – Postage for US Mail 

Commissioner Olsen asked if additional bids were solicited with regard to the Buzz Entertainment Group contract.  Mr. Fisher noted they did not, and advised that it is no longer a related party contract.  He stated owners of SCE Partners previously owned the company, but have sold it.  Commissioner Olsen asked if there was any related party connection.  Mr. Fisher advised there was not.   Commissioner Olsen then asked if the contract with Buzz Creative Group was still a related party.  Mr. Fisher answered in the affirmative.

Commissioner Andres asked if the fees reflected on the Request for Transaction Approval were management fees or if they included the entertainment as well.  Mr. Fisher advised the fees for Buzz Entertainment were for management.

Hearing no further comments or questions, Chair Kramer requested a motion.  Commissioner Gonseth Cheers moved to approve the contracts as presented by SCE Partners, LLC.  Commissioner Andres seconded the motion, which carried unanimously.

Diamond Jo, LLC: Wendy Runde, General Manager, presented the following contracts for Commission approval:

• 7G Distributing – Beer Distributor
• Blue Moon, Inc. d/b/a Holiday Inn – Hotel Rooms for Casino Guests
• Conference Technologies, Inc. (CTI) – Audio/Video Infrastructure Replacement of Outdated Equipment
• King Food Service, Inc. – Seafood Purchases
• Lamar Advertising – Billboard Advertising
• Matthews Distributing – Beverage Purveyor
• Nu Concepts, Inc. d/b/a Penguin’s – Entertainment Booking
• Platinum Holdings, LLC – Lodging at the Grand Harbor Resort and Waterpark
• Radio Dubuque – Radio Advertising
• Reinhart Foods – Food and Beverage Purveyor; Paper Products
• Telegraph Herald – Newspaper Advertising
• NRT Technologies, Inc. – Guaranteed Check Cashing Services (OSV)

Ms. Runde advised ten of the contracts are ordinary recurring contracts, one is for audio/video infrastructure upgrades, and the last is for guaranteed check cashing services.

Hearing no comments or questions, Chair Kramer requested a motion.  Commissioner Horbach moved to approve the contracts as submitted by Diamond Jo, LLC.  Commissioner Andres seconded the motion, which carried unanimously.

Diamond Jo Worth, LLC: Scott Smith, General Manager, presented a contract with NRT Technologies, Inc. for guaranteed check cashing services (OSV).

Commissioner Horbach asked if the contract was for $3 million.  Mr. Smith advised that is what the facility expects in guaranteed check cashing when they review past history.  Commissioner Horbach advised he raised the question as the Request for Transaction Approval form reflects $300,000 instead of $3 million.  He asked if the $300,000 was part of the $3 million.  Mr. Smith answered in the affirmative.

Hearing no further comments or questions, Chair Kramer requested a motion.  Commissioner Gonseth Cheers moved to approve the contract as presented by Diamond Jo Worth, LLC.  Commissioner Olsen seconded the motion, which carried unanimously.

Grand Falls Casino Resort, LLC: Ms. Haselhoff presented the following contracts for Commission approval:

• Carrier Access IT, LLC – Technology Solutions: Hardware, Software and Support Services
• Lange Sign Group – Main Entrance Pylon Display Repair and Pool Display Purchase
• United States Postal Service – Direct Mail Marketing Postage

Hearing no comments or questions, Chair Kramer requested a motion.  Commissioner Andres moved to approve the contracts as submitted by Grand Falls Casino Resort, LLC.  Commissioner Horbach seconded the motion, which carried unanimously.

IOC Bettendorf, L.C.: Nancy Ballenger, General Manager, presented the following contracts for Commission approval:

• Sysco Foodservices of Iowa – Food Vendor
• Wilson Restaurant Supply, Inc. – Restaurant Supplies and Equipment

Hearing no comments or questions, Chair Kramer requested a motion.  Commissioner Gonseth Cheers moved to approve the contracts as submitted by IOC Bettendorf, L.C.  Commissioner Olsen seconded the motion, which carried unanimously.

Harveys Iowa Management Company, LLC: Rob Brown, Vice President of Operations, presented the following contracts for Commission approval:

• Burton Plumbing – Plumbing Contractor
• Johnson Controls/JC Fire Prevention – Fire Control Systems
• MCL Construction – Construction Vendor

Hearing no comments or questions, Chair Kramer requested a motion.  Commissioner Andres moved to approve the contracts as submitted by Harveys Iowa Management Company, LLC.  Commissioner Gonseth Cheers seconded the motion, which carried unanimously.

Iowa West Racing Association d/b/a Horseshoe Casino: Mr. Brown presented a contract with Johnson Controls/JC Fire Prevention for fire control systems.

Hearing no comments or questions, Chair Kramer requested a motion.  Commissioner Horbach moved to approve the contract as submitted by Iowa West Racing Association d/b/a Horseshoe Casino. Commissioner Olsen seconded the motion, which carried unanimously.

PRAIRIE MEADOWS RACETRACK & CASINO, INC. (PMR&C): Gary Palmer and Derron Heldt, General Manager and Vice President of Racing respectively, were present to address the agenda items.

Request for Approval of the 45-Day Plan for the 2021 Mixed Meet: Mr. Heldt stated PMR&C will have an 84-day race meet, which will commence on April 30 with 26 days of thoroughbred only racing and end on June 14th.  On June 18th, the blended mixed meet will commence for 58 days of racing with the last day of racing being Saturday, September 25th.

Commissioners Horbach and Olsen commended Mr. Heldt on the 45-Day Plan submission noting that it was well put together and provided a significant amount of information.

Hearing no further comments or questions, Chair Kramer requested a motion. Commissioner Horbach moved to approve the 45-Day Plan as submitted with the following contingencies:

• The immediate notification of any change in racing official positions.
• The completion of necessary IRGC licensing and DCI background checks of officials.

Commissioner Andres seconded the motion, which carried unanimously.

Contracts: Mr. Palmer presented the following contracts for Commission approval:

• Agilysys – Accounting/Inventory Control/Recipe Building Software and Support (OSV)
• Gander Group – Promotional Items (OSV)

Hearing no comments or questions, Chair Kramer requested a motion.  Commissioner Gonseth Cheers moved to approve the contracts as submitted by PMR&C.  Commissioner Olsen seconded the motion, which carried unanimously.

HEARINGS:
Wild Rose Clinton, L.L.C.: Mr. Ohorilko advised Commission staff and Wild Rose Clinton have entered into a Stipulated Agreement for a violation of Iowa Code § 99F.9(5) related to underage gambling. On June 9th, an underage male entered the gaming floor unchallenged, was on the floor for 95 minutes and did gamble.  The underage male entered the gaming floor on June 13th, unchallenged, was on the floor 44 minutes and gambled.  The male was identified by a housekeeper on the staff, who saw the individual and recognized him.  The housekeeper notified security and an investigation into the matter revealed the male had been on the gaming floor 40 times, 27 of them the underage male gained entrance by using identification with a photo with similarities to the individual.  Mr. Ohorilko advised Wild Rose Clinton has agreed to revise their policies and procedures with regard to identification requirements, and scheduled staff training.  Mr. Ohorilko stated Wild Rose Clinton has agreed to pay an administrative penalty up to $20,000. 

Tom Timmons, President of Wild Rose Entertainment, LLC, noted the situation sounds bad when you read the report, but stated that when he analyzed the situation he doesn’t know what could be changed other than the fact that security officers did not request identification.  He stated he tries to use situations where the facility is cited as a teaching situation but was not sure what that would be in this situation.  The individual was using his cousin’s identification and they were almost identical twins.  Mr. Timmons stated the individual was caught because the facility was having hotel housekeeping come in to wipe off the machines and his aunt recognized him and reported him to Security the next day, who started reviewing tapes.  He acknowledged the error in judgement made in not requesting identification each time; but from a customer service standpoint, if the same person is at the podium that just checked the identification earlier, he asked what would change.  Mr. Timmons advised they contacted the Division of Criminal Investigation (DCI) to determine what other actions could be taken in a similar situation. He stated DCI came up with the idea of handwriting analysis, and provided a 6-hour training course to all security staff.  Security staff has implemented this procedure.   

Commissioner Andres asked about adjustments or changes to policies, and asked for more detail regarding the handwriting analysis.  Mr. Nauman stated if the security personnel have any doubt about the individual and the identification presented, they ask the individual to sign the log book. They have found simply making the request scares the individual; they have had approximately six people leave because they didn’t want to sign the log book.

Commissioner Horbach asked what triggers the request for a signature.  Mr. Nauman stated any doubt the officer may have regarding the individual and the identification being presented such as hair color, glasses, etc.  Requesting a signature is the last resort if the security officer has any doubt.

Commissioner Horbach noted the Commissioners had a lengthy discussion on this matter. In addition to being a regulatory body, they are also interested in protecting the experience of the consumer.  He stated he would find multiple requests for identification insulting, but it is still part of their requirements.  He stated he goes back to the thirteen times when no identification was checked.  Mr. Nauman stated most of those times the individual was going to the lobby, to his car, or getting food and re-entering the gaming floor. Most of the time it was the same security officer who saw him leave that was still at the podium when he returned.

Commissioner Olsen noted that while the individual looked almost identical to the picture on the identification, it is the Commission’s job to protect the integrity of gaming in Iowa. On paper, this situation looks really bad.  He expressed his appreciation for all of the comments received and the changes made, they don’t change how the Commission approaches the matter. 

Commissioner Andres stated the situation provides an opportunity for everyone to learn.

Hearing no further comments or questions, Chair Kramer requested a motion.  Commissioner Andres moved to approve the Stipulated Agreement as presented with an administrative penalty of $20,000.  Commissioner Gonseth Cheers seconded the motion, which carried unanimously.

Riverside Casino and Golf Resort, LLC: Mr. Ohorilko advised Commission staff and Riverside Casino and Golf Resort, LLC have entered into a Stipulated Agreement for a violation of Iowa Code § 99F.9(5) related to underage gambling.  The individual entered the gaming floor on September 19th unchallenged, was on the gambling floor over two hours and did gamble, and consumed an alcoholic beverage.  The individual left the gaming floor and was discovered when he attempted to re-enter the gaming floor.  The security officer requested identification and discovered the individual was underage and was not permitted on the floor.  As a result of the violation, Riverside Casino and Golf Resort, LLC has agreed to pay an administrative penalty in the amount of $20,000.

Ms. Haselhoff advised she had read through the information available on this incident, and advised  it would have been avoided if the security officer at the turnstile had done his job like the second officer did, which is to ask for the proper identification and for the mask to be lowered to allow for proper identification prior to entry onto the gaming floor. Security personnel are trained to request identification from individuals that look 30 or younger.  Ms. Haselhoff stated a mistake was made that should not have occurred.  Proper identification procedures have been reinforced with all security personnel and team members on the floor.  She noted that beverage servers also have a responsibility to request identification if they feel someone is underage.  Ms. Haselhoff advised when identification is requested, and the individual does not have the proper id, personnel is to wait for a supervisor to come and insure the proper identification and documentation occur. She noted the documentation for this individual is questionable.

Commissioner Horbach asked what the protocol is for any casino when there is an identified underage gambler or identified underage drinker; are they allowed to walk out.  Ms. Haselhoff stated facility personnel should get the supervisor as soon as possible, who would contact DCI if they are on property.  If DCI is not available, they reach out to local law enforcement if they are available. If neither is available, documentation is provided to DCI when they are on property next.

Hearing no further comments or questions, Chair Kramer requested a motion.  Commissioner Olsen moved to approve the Stipulated Agreement with an administrative penalty of $20,000.  Commissioner Gonseth Cheers seconded the motion, which carried unanimously.

PUBLIC COMMENT: Jon Moss, Executive Director of the Iowa Horsemen’s Benevolent and Protective Association, advised the Horse Racing Integrity and Safety Act was tacked on to the end of the overall Omnibus bill that was passed by Congress within the last month.  He stated this Act is one of the biggest changes to the horse racing industry since the Interstate Horse Racing Act of 1978.  In the Interstate Horse Racing Act of 1978, the federal government decided how the states were going to interact with each other on items such as simulcast, how horsemen and tracks were going to interact with each other and create contracts; the government created the framework and stepped aside.  The Horse Racing Integrity and Safety Act takes away the state’s rights; and they must turn over everything to the new organization that will dictate medication procedures and safety procedures.  He stated that any of rules the Commission just approved under Final Adoption will be removed from their jurisdiction.  The new organization will have the ability to dictate to the states.  Mr. Moss stated this is a major issue for the horsemen, who have been fighting this piece of legislation for the last seven or eight years.  The only reason this legislation passed is because it was tacked on to the Omnibus bill, thus effectively causing any representative opposed to the bill to vote for it in order to pass the Omnibus bill, which contained funding to help with corona virus issues.  Mr. Moss stated there are three reasons the horsemen oppose this legislation: 1) Abdication of states’ rights; 2) New organization is unchecked in how much they can charge the horsemen, racetracks or the states in order to regulate the racing industry; 3) No oversight; the new organization decides who sits on the board.  No one currently associated with the horse racing industry is allowed to sit on the board.  He advised the new legislation is to go into effect in July 2022. 

The bill also eliminates the use of Lasix/furosemide, which is utilized as a preventative measure to stop the horses from bleeding. This will result in more horses bleeding/hemorrhaging and being unable to race.  This issue affects the horse’s lungs and could cause them to die on the track due to bleeding/hemorrhaging.

The biggest issue is no control over how much this is going to cost the states, tracks and horsemen for oversight, administration, testing, etc.  He stated the IHBPA and other horse organizations may reach out and ask for the Commission’s assistance in trying to stop this piece of legislation from being implemented.  Mr. Moss noted there are major issues facing the horse racing industry, but the industry is trying to address those issues and improve the industry.  He stated this piece of federal legislation does not help the horse racing industry.

Commissioner Horbach thanked Mr. Moss for his comments.  He asked what steps the IHBPA has taken to express their opinion or to amend the law.  Mr. Moss advised the IHBPA is part of a larger national organization; different groups have reached out to local representatives to try to mitigate the impact the best they can.  There have been discussions about possibly filing a federal lawsuit.  Mr. Moss stated some feel the legislation could be deemed unconstitutional as it takes away state’s rights and gives them to a non-regulated group.  He stated they are still trying to figure out what the next move. 

Commissioner Horbach noted staff had brought the Commission members up-to-date.  He stated the Commission has not formed an opinion; it’s too early.

ADMINISTRATAIVE BUSINESS/ADJOURN: As there was no Administrative Business before the Commission, Chair Kramer requested a motion to adjourn.  Commissioner Gonseth Cheers so moved.  Commissioner Horbach seconded the motion, which carried unanimously.