Many questions remain on Davenport casino project

Posted Online: Dec. 02, 2012, 6:00 am
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By Roger Ruthhart
I applaud Davenport for thinking outside the box and developing its own land-based casino. I hope disaster isn't lurking.

I don't pay taxes in Davenport, but I am a citizen of the Quad-Cities. In this case, I guess I'm glad I don't live there because, if everything doesn't go according to some still-vague plan, the taxpayers could be left to pay millions of dollars in bonds.

The city has signed an asset purchase term sheet to buy Rhythm City Casino from Isle of Capri for $46 million. To cover the cost, the city would issue $48 million in bonds to be paid off over 20 years at a cost of $3.5 million per year.

In its request for proposals from private developers, the city said it wanted the casino to include:

-- A 30,000- to 38,000-square-foot casino floor.
-- A kitchen serving a buffet seating of 150, an upscale, full-service restaurant seating 100, and a cafe/deli seating 75.
-- A central bar to serve 125 people and two supplemental bars each capable of serving 75.
-- Two multi-purpose spaces (one 2,000 square feet and a second 4,000 square feet) for banquets and entertainment.
-- An adjoining 80 to 200 room hotel and parking for at least 900 vehicles.

If history has taught us anything when it comes to gambling, it is that things are very fluid. The landscape can change at the whim of the legislators -- in both Illinois and Iowa.

In the end, city officials are putting the taxpayers on the hook to pay off bonds. It's a roll of the dice that could come out a big winner for the city. But there is also a risk of bust.

What happens if the local gaming market changes sometime in the 20-year life of the bonds? What if either state significantly alters gambling? The city officials putting taxpayers on the hook for this project will be long gone.

If Illinois moves forward with its expansion plans for gambling and Quad City Downs reopens, it will gain a slice of the local gambling pie. What if there is further expansion and a casino is built in Moline? Or Muscatine? Or the Clinton casino expands? We don't yet know what the impact will be of video gaming in Illinois. What if it is also approved in Iowa? What if either state votes to curtail or end legalized gambling?

There are costs that haven't been talked about either. What will it cost to build the new casino? What will it cost to buy the land and tear down whatever is standing there today? What will the cost be to redevelop the riverfront?

We also don't know who will operate the city's casino. Whoever it is, they will be the new kid on the block going up against two well-established gaming companies.

That brings me to be biggest point of concern. Why does the city have to own it?

Casino operations across the country are generally owned and operated by private gaming companies or American Indian tribes. With all the companies already experienced in building and operating casinos, why is it that none of them are willing to spend $46 million to buy the Rhythm City Casino and millions more to build a new land-based casino?

That no company is willing to step up given the return Davenport is touting concerns me.

Is Davenport stepping up because no one else is willing to risk taking over the third casino in a three-casino market?

I also have concerns about Davenport Community Improvement Corporation -- the non-profit board to oversee operations of the city's casino. Three of the appointments are city officials (city administrator, police chief and an alderman), giving it a huge voting bloc just one vote short of controlling the panel which oversees the casino it owns.

I'm also concerned about the implications for downtown business. The city's casino will include restaurants and bars that will compete with private restaurants and bars in the downtown. Yet the city is the one that writes the ordinances governing those restaurants and bars, and also enforces health and liquor laws.

A city-owned hotel will also compete with private downtown hotels. The city-owned multi-purpose spaces will compete with wedding venues, downtown theaters and the River Center as entertainment venues.

The public still doesn't know where the casino, hotel and parking will be and who will develop them. Proposals are due Dec. 20. With taxpayers already on the hook for $48 million, I can't help but wonder if even more bonds or tax breaks will be required to get the project done. The city said it has an estimate of the cost, but hasn't been willing to share it.

Moving the casino off the riverfront makes sense. But until we have all of the specifics, it is impossible to determine if this city-owned project does.
Roger Ruthhart is managing editor of The Dispatch and The Rock Island Argus. He can be reached at


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