Davenport casino sale approved
After several years of debate and negotiation, the Iowa Racing and Gaming Commission (IRGC) unanimously approved the sale of Rhythm City Casino in Davenport.
The IRGC approval came Thursday, January 9, 2014 at their monthly meeting in Waterloo, Iowa. It’s the last step to complete the purchase of the casino by Developer Dan Kehl. He is buying Rhythm City from the Isle of Capri Corporation for $51 million.
Kehl and Riverboat Development Authority President Mary Ellen Chamberlin said they are both excited and ready to move forward with development of a new $110 million land-based casino located off Interstate 80 on 123 acres east of Brady Street and north of Veterans Memorial Parkway.
“It’s been a long time to get this project to this point and… soon we will have a land-based casino in the Quad Cities on Interstate 80, so we’re very excited about that,” Kehl told the IRGC.
Kehl’s plan is to close on the purchase agreement on February 3, close Rhythm City for two to three days to install their hardware and software, then reopen February 5.
Kehl said he plans to operate Rhythm City for about a year and a half. Meanwhile, he says he plans to be on the road raising funds from other equity investors and working on the design of the new casino. If all goes according to that timeline, Kehl says they will break ground in September 2014 and open in the fall of 2015.
The IRGC’s decision on Thursday was both an ending and a beginning.
The city of Davenport and the Riverboat Development Authority (RDA) – the non-profit that holds the gaming license – have wanted to improve casino life in Davenport for nearly a decade.
“We hope it will get us back in the ball game in terms of where we were in the hay day of riverboat gambling when for three or four years we were at the $4 million mark and we were able to do some really important projects,” Chamberlin said. “I don’t want to mitigate the value of the grants we do to other organizations, but we were the first county in the state of Iowa to help classrooms have internet access and we built the addition to the RiverCenter and the Kahl Education Center so there were some very impactful projects during that period of time and we’re looking forward to being able to do those kinds of things again in the future.”
Currently, the RDA receives a guaranteed $2 million with the casino on the boat, but after four years on land, Chamberlin says they’ll be guaranteed $2.5 million. She says she believes in the future the RDA could work their way back to that $4 million mark.
“It will be some years before that happens, but it will happen.”
Kehl adds that his company’s non-profit agreement with the RDA pays 5.25% of the adjusted net gaming revenue, but that number climbs to 8.5% four years after the opening of the new facility. Out of that 8.5%, Kehl says 1.75% goes to the city of Davenport, 0.35% goes to the Downtown Davenport Partnership, and 0.4% will be earmarked for casino district improvements, which the city and RDA will work together on to decide what enhancements can be made with that money.
The deal is ground breaking, according to Kehl. He says the IRGC has never before seen a joint development agreement between three parties: a non-profit, a gaming company, and a community.
“It just shows the spirit of cooperation I think it’s going to be moving forward between the RDA and the city and obviously with us,” Kehl said. “We all want the same thing and that’s the number one casino in the Quad Cities.”