COUNCIL BLUFFS, Iowa — In a 3-2 vote Thursday, the Iowa Racing and Gaming Commission awarded a state gaming license to the developer of a Hard Rock-branded casino.
The $118.5 million project incorporating the historic Battery Building in downtown Sioux City beat out three other land-based bids.
They included Penn National Gaming Co., which operates the Argosy Sioux City gambling boat, which will be replaced by the Hard Rock, most likely in summer 2014.
Penn, which offered a pair of Hollywood-themed land casino proposals, becomes the first Iowa operator forced out of a market through competitive bidding since the state legalized casino gaming in 1989.
Although all the developers offered strong proposals, the three commissioners in the majority said the Hard Rock plan had the best option to grow casino revenues, tourism and economic activity in the state and local community.
"I just felt there was a slight edge on the overall economic impact for Hard Rock," commission Chairman Jeff Lamberti said after the meeting at the Mid-America Center in Council Bluffs.
Commissioners Carl Heinrich of Council Bluffs and Kris Kramer of New Hampton joined Lamberti in voting for the Hard Rock. Commission Vice Chairman Greg Seyfer of Cedar Rapids, supported the Hollywood Casino in downtown Sioux City, and Commissioner Delores Mertz of Algona favored the Warrior Casino & Hotel.
The nail-biting vote Thursday capped nearly five months of deliberations by the commissioners and an emotional, high-stakes fight for more than a year that led to the high-profile breakup of Penn and Missouri River Historical Development, the local nonprofit group that has shared the state gaming license for the Sioux City riverboat since 1993.
After talks between the nonprofit and Penn on a long-term deal that would have included a new land casino collapsed last summer, the gaming commission took the unprecedented step of putting the Woodbury County license up for bid.
Last fall, Missouri River Historical Development switched its allegiance to Sioux City Entertainment, the Las Vegas-based Hard Rock developer.
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Bill Warner, president of Sioux City Entertainment, was beaming after the vote.
"I'm obviously excited," Warner said. "I feel very good. I feel very thankful for the support of people of Sioux City."
Penn spokeswoman Karen Bailey said the company was "obviously disappointed" with the commission's decision and how it would affect the company's employees and shareholders.
The vote left many Argosy Casino employees who traveled by bus to Council Bluffs shocked as they filed out of the meeting. Several employees, wearing T-shirts that read "I Love Hollywood Casino," left in tears.
Lance Morgan, CEO of Ho-Chunk Inc., which led the Warrior development, said the group spent in excess of $800,000 putting its bid together. Ho-Chunk is the economic development corporation owned by the Winnebago Tribe of Nebraska.
A potential court fight looms over the selection. Last year, Penn asked a state judge to review the gaming commission's decisions to put the Argosy's license up for grabs and not approve a contract extension between Penn and Missouri River Historical Development. In a separate court filing, Penn also is suing the nonprofit for breach of contract.