Rhythm City Casino breaks ground

The new casino will be built near interstates 80 and 74 along the Elmore Avenue extension. Dan Kehl, CEO of Rhythm City Casino Resort, said the casino and six-story hotel will spur economic development, increase tourism "and allow us to be an even stronger partner for community organizations and our nonprofit license holder."

Kehl Management took over the gaming license in 2014 after paying Isle of Capri $51 million for the Rhythm City riverboat casino in downtown Davenport. Mr. Kehl said he expects the casino and hotel to be complete by Memorial Day 2016.

The firm also operates Riverside Casino and Golf Resort near Iowa City and Grand Falls Casino and Golf Resort in northwest Iowa. Earlier Thursday, it received approval from the Iowa Racing and Gaming Commision to consolidate the ownership of the three Iowa casinos.

The newly formed Elite Casino Resorts will employ more than 1,500 people and generate more than $225 million in revenue each year, making it the second largest revenue producer in the state, Mr. Kehl said.

Mayor Gluba thanked Mr. Kehl for his "belief and confidence" in Davenport and said he expects the new casino will do well. 

"You've picked a great location -- the best location in the region," Mayor Gluba said. "The intersection of I-74 and I-80 has traffic counts and visibility like no other location.

"The road you are building right now will lead to $250 million in new taxbase for Davenport and Davenport schools, and more than 2,000 jobs in our community."

After Thursday's ceremony, Mr. Kehl said the battle for gaming market dollars in the Quad-Cities -- challenged by expanded video gaming in Illinois -- has prompted his firm to lower annual revenue expectations for the new casino by $10 million.

He initially projected $80 million annually in gross gaming revenues. On Thursday, Mr. Kehl said that projection now is $70 million per year, with 3 to 5 percent annual growth.

Since 2008 when the $150 million Jumer's Casino and Hotel opened in Rock Island, it has been the top revenue producer of the Quad-Cities' three casinos. All three, however, have seen gross gaming revenue diminish in recent years. 

In 2013, Jumer's reported more than $81 million in gross gaming revenue; 2014's was approximately $76 million.

Iowa casinos operate on a July 1-June 30 fiscal year. In fiscal year 2005, Rhythm City Casino had more than $76 million in gross gaming revenue; last fiscal year it had only $44 million. In Bettendorf, the Isle of Capri recorded more than $103 million gross gaming revenue in 2005; last fiscal year that figure was about $70 million.

Last month, Isle of Capri broke ground for a $55 million to $60 million land-based casino in Bettendorf. The new 35,000-square-foot gaming floor will be placed in the existing courtyard between Isle's two hotel towers. That casino also is projected to open sometime in 2016.

"It feels to me the market is getting saturated," Mr. Kehl said. "I don't feel there is a lot of room for more licenses in the marketplace.

"But we can't control what the state of Illinois is going to do," he said. "We're going to operate our business as best we can."

Despite the lower revenue projection, Mr. Kehl said the Riverboat Development Authority -- the nonprofit group that holds the Rhythm City Casino license -- should get more than $2 million annually from casino revenue it uses to distribute grants to civic groups and other organizations.

Davenport will get more than $1 million in property taxes on the new casino, Mayor Gluba said. Currently the riverboat casino pays no property taxes, he said.

"There will be more money for everybody," said Mayor Gluba. He added that, when the current Rhythm City Casino leaves the riverfront, the city will expand LeClaire Park by nine acres. A new pier for Viking Cruise Line ships also is planned.