The Rhythm City Casino in Davenport. (File photo)

DUBUQUE — Davenport appears to be back at square one in its search for a land-based casino.

An Isle of Capri representative told the Iowa Racing and Gaming Commission on Thursday that the potential sale of Davenport’s Rhythm City casino boat has collapsed. Michael Fries, the Isle’s vice president of legal affairs, called the recent development a frustrating one.

“The Isle believes this transaction is not going to occur,” Mike Fries told the commission. “We are exploring all options.”

After the meeting, Fries declined to elaborate on his report to the commission.

The latest report to the gaming commission is a 180-degree turn from the August commission meeting when Fries said the sale was gaining momentum. The city’s agreement to build a land-based casino with developer MSEG ends in November.

That doesn’t deter Davenport Mayor Bill Gluba from thinking positively about the city’s gaming future.

“The whole thing is going through lots of twists and turns, and this is one of them,” he said. “I have lots of confidence in the value of our gaming market.”

He points to the success of Rock Island with its land-based Jumer’s Casino & Hotel and the Wild Rose, located in Clinton.

“This is a great market with huge potential,” he said. “I have great confidence that something will get done.”

Davenport officials have said they will follow the two-year agreement with MSEG until it expires but have voiced frustration with the company’s inability to get a sale done. City attorney Tom Warner, who attended the meeting with Alderman Gene Meeker, at large, said the report wasn’t a surprise.

Steve Edelson, a partner in MSEG, didn’t return a call or email seeking comment Thursday.

The economic climate is difficult for a sale, said David Schwartz, director of the Center for Gaming Research at the University of Nevada-Las Vegas.

“In general, gaming is a tough market because the credit is dried up,” he said. “Six years ago, a casino with 500 slot machines, someone would be willing to pay a few million dollars.

“Today, you’re not going to find that money.”

Racing and Gaming Commission chairman Jeff Lamberti said the panel is willing to be patient but knows what it wants from the Davenport market. He did say the latest development is frustrating but not a surprise.

“We do believe we have to go land-based to help the local community,” he said, adding that the Rhythm City continues to lose market share. “These are complex transactions.

“You just can’t snap your fingers and make it happen.”

Mary Ellen Chamberlin, president of the Riverboat Development Authority, which holds Rhythm City’s gambling license, said she saw Thursday’s news coming.

“We’ve never had an agreement (with another operator), and they can’t do anything without an agreement with us,” she said. “We wouldn’t approve a new contract without a memo of understanding with us.”

She said she has been following negotiations with a potential new operator, adding the progress has been sluggish. She declined to identify the potential buyer.

“We’ve had exchanges with our attorneys,” she said. “The last thing that came to us was not satisfactory. They only thing we loved about them (a potential operator) is they wanted to be downtown.”