Cedar Rapids mayor, lawmakers propose building smoke-free casino, changing gambling laws

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CEDAR RAPIDS, Iowa — Iowa's first smoke-free casino would be built in Cedar Rapids as part of a bipartisan plan unveiled Tuesday to overhaul state gambling laws.

Months after regulators rejected a $164 million Cedar Rapids casino development, Mayor Ron Corbett and lawmakers announced they would seek approval during the legislative session that begins next month.

Corbett has pushed for years for a casino in the state's second largest city, saying it would bring jobs, entertainment and a boost to a downtown recovering from flooding. But the Iowa Racing and Gaming Commission voted 4-1 against the plan in April, saying it would take too much business from casinos in Riverside, Waterloo and Dubuque.

Corbett, a former Iowa House Speaker, spent months developing a plan that would appeal to urban and rural lawmakers and some key lobbying constituencies. He announced details at a news conference where he was joined by Sen. Wally Horn, a Cedar Rapids Democrat, and Sen. Dan Zumbach, a Ryan Republican who represents rural northeastern Iowa.

"We tried to develop a proposal that touched each one of the needs that the industry and those that aren't in the industry would want to see in a bill," Corbett said. "We feel that this is a comprehensive approach."

The plan would create a special license for casinos that don't allow smoking, and grant the first to Cedar Rapids. Lawmakers exempted casinos from the state's indoor smoking ban in 2008, but public health advocates have made it a priority to change that law. Corbett said Cedar Rapids could be a test case to prove whether a non-smoking casino can be successful.

The plan also would double the amount of gambling revenue, to $22 million, that the state awards to 84 of the 99 counties that don't host casinos. Foundations in those counties currently receive about $130,000 annually for local projects.

A third provision would eliminate roughly $22 million in taxes that casinos pay on free-play promotions given to customers. The gambling industry has pushed to remove that tax, saying it's a competitive disadvantage to casinos operated by American Indian tribes that don't pay it. Corbett said half of the savings would be given to nonprofits that have the licenses for the existing 19 state-regulated casinos to increase funding for charitable causes.

Lastly, the plan would enact a 10-year moratorium on any new casino licenses. The state's gambling commission in July announced an informal three-year moratorium, saying the state was saturated with casinos. Corbett said the longer period would help casinos invest in needed upgrades to remain competitive without worrying about new competition.

Reaction to the plan was mixed.

Gov. Terry Branstad is "interested in the possibility of a smoke-free casino" and would carefully review legislation, spokeswoman Greta Johnson said.

Wes Ehrecke, executive director of the Iowa Gaming Association, which represents casinos, said pieces of Corbett's proposal have merit but shouldn't be attached to a Cedar Rapids casino. He said lawmakers shouldn't overrule license decisions by the gaming commission.

"It would be unprecedented to usurp their regulatory authority," he said.

Rep. Guy Vander Linden, R-Oskaloosa, said the commission's rejection of the Cedar Rapids casino may make the plan a harder sell. But he said it's certainly not "dead on arrival."

Vander Linden, chair of the state government committee that would consider the legislation, said he expects vigorous debate.

"Overruling the commission might lead to pitfalls down the road," he said. "But certainly it's not beyond the realm of possibility."

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