Posted Online: Jan. 08, 2013, 10:27 pm

Davenport officials get closer look at Dubuque casino model

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By Stephen Elliott, selliott@qconline.com

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Photo: Stephen Elliott
Davenport Mayor Bill Gluba asks questions of Dubuque City Manager Michael Van Milligen during a tour of Mystique Casino. Mr. Van Milligen said Dubuque's city-owned casino has kept revenue in the community and helped keep property taxes down in the city.
For Davenport Mayor Bill Gluba, the "Dubuque Model" works.
It's a message Mayor Gluba and other Davenport officials heard on Tuesday while touring Dubuque's two casinos, one city-owned and the other privately owned.

On Tuesday, about 30 people -- including Mayor Gluba, city manager Craig Malin and members of the city council, Riverboat Development Authority and Davenport Community Improvement Corp. -- toured Dubuque's city-owned Mystique Casino and then stopped at the Diamond Jo Casino.

The message from Dubuque officials was their model of a city-owned casino works, and it's something Mayor Gluba hopes Davenport can achieve. The Mystique Casino is city-owned and leased by the city of Dubuque to the Dubuque Racing Association, a 21-member nonprofit board overseeing casino operations.

"This is quite a testament," the mayor said while touring the casinos. "Clearly, the benefits to the community are incredible."

Mayor Gluba asked Dubuque City Manager Mike Van Milligen if there was a downside to a city-owned casino.

Mr. Van Milligen said he couldn't think of one.

"In fiscal year 2007, the city received $15.3 million in boat revenue alone to hold down property taxes," Mr. Van Milligen said.

He told the visitors during a presentation at Mystique Casino that Dubuque's property tax rate is the second lowest in Iowa for cities with more than 50,000 residents. He attributed that to gaming revenue the city receives.

From 2003 to 2012, Mystique Casino has contributed more than $99 million in gaming revenue to Dubuque, while the privately owned Diamond Jo Casino contributed more than $17 million.

Jesus Aviles, president and CEO of Mystique Casino, said the Dubuque market brings in about $125 million annually in gross gaming revenue. Mr. Malin said the Quad-Cities gaming market is estimated at about $250 million.

Mr. Malin thought Tuesday's presentation brought to light the potential for Davenport's plans to have a land-based, city-owned casino.

"Clearly, they (Dubuque) have been successful," Mr. Malin said. "They (Dubuque) have both lowered their property taxes and provided a significant amount of revenue to charitable organizations.

"Dubuque is a smaller market, and they're giving twice as much money to the DRA."

The RDA, the nonprofit that holds Rhythm City Casino's license, distributes about $2.1 million received from Rhythm City Casino's gaming revenues annually. The money is distributed to various groups and charitable organizations in the Quad-Cities, but the RDA would like to receive more money.

"The money that is produced here stays here," Mr. Van Milligen said. "I am extremely proud of this model. I'm surprised it does not exist elsewhere."

Davenport needs the approval of both the RDA and the Iowa Racing and Gaming Commission for it to go forward with any plans for a new casino.

RDA member Carol Sommer attended the Dubuque tour. She was impressed with Dubuque's operations but said its numbers are slightly different than those Davenport is contemplating.

Mr. Van Miligen said Dubuque's operations began in 1985 with costs in the neighborhood of $12 million. Three development proposals in Davenport for land-based casinos have ranged in cost projections from $75 million to $155 million.

Davenport has proposed paying $46 million to purchase Rhythm City Casino using 20-year general obligation bonds.

"As a citizen of Davenport, yes, the cost gives one pause," Ms. Sommer said. "In Dubuque, I see a city that took an opportunity in a time when the economy was crashing.

"A $12 million downtown bond is substantially different from a $40 to $50 million bond. But, I cannot help but be impressed by what Dubuque has accomplished."

Davenport Ald. Sheila Burrage asked Mr. Van Milligen why other cities weren't copying the Dubuque casino model. He didn't have an answer but said he supported Davenport's idea of a land-based, city-owned casino.

"You are going to be successful," Mr. Van Milligen said. "Or, you'll see a lot of private casino owners invest a heck of a lot more in their own casinos.

"People come to play here (Mystique). There is a sense of ownership. They (citizens) know the money stays here."

Joe Taylor, president and CEO of Quad Cities Convention and Visitors Bureau, said he came away from Tuesday's presentation learning how competitive the gaming industry is.

"No. 2, I'm coming away thinking the marketing the convention and visitor's bureau does is vital to the success of casinos in the Quad-Cities," Mr. Taylor said. "The number I heard today is 70 percent of Dubuque's business comes from within 50 miles of the casino."

Mr. Taylor said the convention and visitors bureau has not taken any position on Davenport's plans for a land-based casino.

"It would seem to me that trends are toward a land-based casino," Mr. Taylor said.