Commission puts hold on riverboat casinos

Tuesday, June 17, 2008

JEFFERSON CITY, Mo. -- The Missouri Gaming Commission on Monday all but killed the chances for a group of Cape Girardeau investors to apply for a casino license before November.

In a meeting held less than 10 days before the commission's regularly scheduled monthly session, the five-member commission voted unanimously to approve the moratorium.

David Knight, owner of barbecue oven manufacturer Ole Hickory Pits, and Jim Riley, owner of Red Letter Communications, failed as they sought to persuade the commission to vote down a proposed moratorium on new gambling license applications. They also urged, but did not convince, the five-member commission to make an exception for Cape Girardeau.

Knight and Riley have been quietly purchasing property north of Broadway to reassemble the land once part of Boyd Gaming Co.'s failed attempt to land a casino license for Cape Girardeau in the 1990s. They were preparing to spend another $50,000 to apply for a gambling license and were actively seeking a casino company as a partner to build and operate the facility.

"I am kind of overwhelmed by the decision," Knight said. "We need time to consider our alternatives."

The commission, voting unanimously, imposed a moratorium on new applications until November, when voters may see a ballot measure on casino gambling. The ballot measure, proposed by a group called the Yes for Schools First Coalition and bankrolled by Ameristar and Pinnacle Entertainment casino companies, is currently being checked by local election officials to see petitioners collected enough signatures to make the ballot.

The resolution takes note of the initiative. If it fails to make the ballot or is thrown off the ballot by court action, the commission's moratorium would be void.

The ballot proposal includes a permanent moratorium. It would also remove the $500 loss limit at casinos, increase the tax on casino profits to 21 percent from 20 percent and audit casino tax spending to make sure the money is added to, not used to replace, other funding for education.

The resolution was specifically aimed at preventing Riley and Knight, operating as DREAMbig LLC, from submitting a license application, said Gene McNary, executive director of the commission. "Cape Girardeau was the most obvious situation," he said. "We knew they would be quick to get an application in. It was also a notice to every other prospective applicant. It was not easy to say 'put things on hold.'"

Knight had a meeting scheduled with commission staff this week with hopes of putting his application request before the Gaming Commission at its regularly scheduled meeting next week.

In their presentation Monday, Riley and Knight portrayed a casino boat in Cape Girardeau as the catalyst for redevelopment of the area from Broadway to Sloan Creek. Riley described the process used to acquire the land once owned by Boyd Gaming, as well as additional properties, to create a 30-acre area ready for redevelopment. "Translating dreams into reality requires a plan, and that plan has to work from a business standpoint," Riley said.

Along with Cape Girardeau, the commission action Monday halted progress on a proposed casino in Sugar Creek, Mo., in eastern Jackson County. The proposed moratorium drew criticism from two lawmakers representing the Sugar Creek area, Sen. Victor Callahan, D-Independence, and Rep. Ray Salva, D-Sugar Creek.

Callahan, who has fought against casino industry attempts to impose a moratorium through legislative action, said the commission-mandated moratorium set a bad precedent. "I don't want the gaming industry determining gaming policy," he said.

The moratorium was not urged on the commission by any gambling company or lobbying group, McNary said. But with the likelihood that the measure will be on the ballot, the commission needed to act to prevent a rush of new applications before the November vote. The decision, he said, is contrary to the past policies of the commission, which was to let market forces determine where and when new licenses would be issued.

"For us to move now" on new applications "would be for us to pre-empt a vote of the people," McNary said. "Again, the staff feels discretion is the better part of valor."

The case for a casino in Cape Girardeau, McNary said, "is a good one." And the Sugar Creek application is "outstanding," he said.

The criticism the commission expects for the moratorium would also be expected if there was a rush to license new boats before the vote, McNary said. "We have watched the initiative petition to come to fruition, we have waited for the signatures to be collected. At that point we are faced with a decision -- do we just quickly move in the face of a vote of the people or do we defer and wait until that is voted on and be guided by a vote of the people?"

Representatives of gaming interests attended Monday's meeting but did not speak. Mike Winter, lobbyist for the Missouri Gaming Association, said his group did not ask for the resolution. But the association is concerned about the affect a Sugar Creek casino would have on the profits of other Kansas City area boats and supports the ballot measure with the permanent moratorium, Winter said.

"Obviously, with the initiative petition out there, it is hard to tell the impact at this point," Winter said.

And Jorgen Schlemeier, lobbyist for Ameristar casinos, arrived at the meeting late and said his company did not ask for the moratorium. "We didn't anticipate these guys acting," he said.

Since voters first approved casino gambling in 1992 with a vote in favor of excursion riverboats, the casino industry has sponsored two successful initiatives to make their operations more profitable. In 1994, after the Missouri Supreme Court ruled that boats could not have slot machines, the ruling was reversed by Amendment 6.

In 1998, when the court called into question the placement of casinos in ponds near the Missouri and Mississippi Rivers, the casino companies successfully pushed Amendment 9 allowing the so-called boats in moats.

In each case, casinos donated nearly $10 million to gather signatures and pay for election advertising.

McNary was vague about how the resolution approved Monday was proposed. "I don't know who first thought of it or dreamed of it," he said, but added that a "consensus" was developed that the moratorium was a good idea. Asked if there had been discussions among commission members, McNary said that "there's no Sunshine problem here."

During his presentation, Knight told commissioners that the quick move for a moratorium just as he and Riley were readying an application "just didn't smell right."

The commission, he said, was taking action that wasn't needed. "This was not a groundswell of public demand," Knight said. "We have the fox in charge of the hen house."

335-6611, extension 126

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