Iowa: Cedar Rapids casino license challenged by Riverside Casino ahead of key May hearing

The proposed $275 million Cedar Crossing Casino & Entertainment Center in Cedar Rapids faces a critical court hearing next month as opponents from Washington County’s Riverside Casino & Golf Resort press forward with a legal challenge to its state-issued license.

The dispute is about the validity of a 2021 Linn County referendum, Public Measure G, that authorized gambling in the county. Riverside claims the ballot language misled voters by implying that gambling was already underway in Linn County, even though no casino had been licensed or built at the time.

Riverside, operated by Elite Casino Resorts, argues that the Iowa Racing and Gaming Commission (IRGC) had no authority to issue a license based on what it calls a flawed referendum. The company has asked the court to invalidate the license and claims it could lose millions in revenue if the Cedar Rapids casino opens.

Supporters of the Cedar Crossing project strongly reject the allegations. Attorneys for the Linn County Gaming Association and developer Peninsula Pacific Entertainment argue that the legal challenge is rooted in market competition, not legal merit.

Ground breaking ceremony of the casino, held in earlier February 

“Petitioners’ claimed injury from (this action) is nothing more than a competitive disadvantage due to the operation of a casino not in their county of operation,” they wrote in a court filing. “A party’s grievance over a shift in market competition is not a cognizable legal right under Iowa law.”

The dispute will be heard on May 7 in Mount Pleasant, selected as a neutral venue. While a judge previously declined Riverside’s request to pause the license, he did note that the company had shown a “reasonable likelihood of success” in its challenge to the referendum’s wording.

The 2021 ballot asked voters whether gambling “may continue” in Linn County, referencing an earlier 2013 vote that had expired. Riverside claims the language misled voters into believing gambling was already active in the area. Cedar Rapids officials maintain the language was taken from a state-approved template and reflected ongoing public support for a local casino.

In a December letter, the Linn County Attorney’s Office said the measure’s wording was appropriate, acting as a follow-up to the 2013 vote. Attorneys for the casino argue that the referendum was widely publicized and not one of the 420 public comments submitted to the IRGC expressed confusion about the ballot’s language.

Riverside’s legal team counters that economic harm gives it standing to sue, arguing that job losses and reductions in charitable contributions stemming from a decline in business would have real consequences.

Despite the pending court decision, preparations for the Cedar Crossing site are moving ahead. The Cedar Rapids City Council recently approved a zoning change to allow for a planned unit development, giving the city more control over project details such as parking and landscaping. Developers have already spent more than $20 million on design, planning, and licensing.

A groundbreaking ceremony was held on February 7. Developers have committed to a minimum property assessment of $50 million, which would generate an estimated $2 million in annual property taxes. They also pledged to allocate 8 percent of the casino’s net adjusted gross revenue to nonprofit organizations.

Judge Michael Schilling, who will hear the case, has made it clear that continued construction will not influence the court’s decision. “Nor is a decision to forge ahead with construction a defense to a defective ballot measure,” he wrote in a March order.