Sioux or sue?
There’s a “fight to the death” brewing in Iowa where Penn National is being threatened by the possible loss of its successful Sioux City license to an as-yet unknown competitor for a dry-land license in the downtown area.
Penn is already in court trying to head-off the possible loss of its license in a state whose casinos have never sparked controversy.
Penn owns the M Resort near the south end of the Las Vegas Strip and continues to shop for a second Las Vegas location. It is the third largest and one of the healthiest U.S. casino companies with 27 facilities in 19 jurisdictions. But Iowa officials have decided they want a downtown landside casino.
Penn’s Argosy subsidiary has been in Sioux City for years. Iowa was the first state to approve dockside or riverboat casinos. That was back in 1989. The trend spread through middle America over the next several years.
Penn CEO Peter Carlino did his best to project a polite tone as he discussed the subject recently with analysts but there was no mistaking his astonishment and even anger at the recent actions of the Racing and Gaming Commission, actions that he said will have a “destabilizing effect” on the Iowa casino business.
Penn will be bidding for the landside license as it continues to operate the Argosy property that operates under a license issued to the Missouri River Historical Development. The outcome of both Penn’s court action and the request for bids will not be known for months, a fact that Penn officials say contributes to the uncertainty that involves several hundred employees.
How long will Penn continue to operate?
“We intend to operate forever, but we can’t predict the behavior on the other side,” Carlino said. “We have a business and an investment to protect. So you can imagine that absent a favorable agreement this will be a fight to the death.”
Penn’s commitment to bidding for rights to operate the landside license will be “tricky” since the company still has “unamortized costs” associated with its current license which has been given another year to operate as the Commission awaits the results of its request for landside proposals.
Lawmakers and regulators in both Iowa and neighboring Illinois have been all over the map during recent years with attitudes toward their respective casino industries that projected extremes – efforts to nourish it at one moment and in the next to squeeze it to death.
“The idea that you would pull a successful license from a high performing operator is madness,” Carlino said.”
He sees the Iowa action as a “bad precedent” that he hopes other jurisdictions will be smart enough to ignore, adding, “I hope that saner heads will prevail.”
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