Riverboat casino allowed to keep its doors open until final ruling

The fate of some 260 workers at the Argosy of Sioux City was made no clearer Thursday, though they know they will have a job for at least a few more days. The riverboat casino had been scheduled to close Thursday, but District Judge Eliza Ovrom extended her stay of an Iowa Racing and Gaming Commission closure order until she rules on Argosy's appeal.

It's clear, however, that the latest extension of the casino's deadline to close has little effect on the scheduled Aug. 1 opening of the Hard Rock Hotel & Casino Sioux City or its nonprofit license-holder, Missouri River Historical Development.

"It doesn't affect us. We're looking forward to Aug. 1 and our new partnership with Hard Rock. We're looking forward to getting and distributing funds," MRHD president Mark Monson said after Thursday's hearing.Ovrom said she hoped to issue a ruling early next week.

Late last month, she had granted the casino a 10-day stay, which allowed it to stay open past the IRGC's ordered July 1 closure date. The day before Ovrum's June 26 order, the IRGC denied Argosy's request to remain open until at least Aug. 1, when the Hard Rock is set to open.

Zach Rosenbaum, operations manager at the Argosy, on Thursday said he didn’t want to discuss the most recent development in the case. 

Argosy's longtime nonprofit, MRHD, refused to sign off on an application for a license renewal after the contract between the two parties expired in July 2012. MRHD in April 2013 was granted a gaming license with SCE Partners, the developers of the land-based Hard Rock casino at Third and Water streets.

The IRGC on April 17 ordered the Argosy closure, claiming the boat is in violation of a state law that requires casino operators to partner with licensed nonprofit groups that hold the license and also share in a portion of the casino revenues for distribution to charities.

Lawyers for Argosy owner Penn National Gaming Co., based in Wyomissing, Pa., argued before Ovrom on Thursday that the casino should remain open under operation of law, a legal principle allowing the license to remain in effect while awaiting a renewal or, in the absence of one, while legal issues are pending. In this case, a separate but related lawsuit between Penn and the gaming commission has yet to be decided.

"We did not need to submit an application to renew. The license was already good under this legal procedure," said Penn attorney Mark Weinhardt, of Des Moines. "MRHD's license is operational under operation of law even if MRHD believed it didn't have one."

Argosy acts as though it does not have a license, however, attorneys for the commission and developer said.

Argosy teamed with a new nonprofit group in its failed attempt to win the land-based casino gaming license that was awarded to MRHD and Hard Rock developers. It has since discontinued making payments of 3 percent of its gambling revenues to MRHD for distribution to charities, said Guy Cook, a Des Moines attorney representing SCE Partners.

"Why have they not paid to MRHD if they continue to have a license? The answer is obvious. Their failure to pay 3 percent is a very revealing fact," Cook said.The Argosy has been allowed to remain open not under operation of law, but because of "the good graces of the (gaming) commission," Cook added."They don't have an agreement. Their license has expired. They can never get what they don't have - an operating agreement," he said. "The handwriting is on the wall. They should and must close."

Assistant Sioux City Attorney Justin Vondrak observed Thursday's hearing but did not speak. After its conclusion, Mayor Bob Scott, who was not at the hearing, said Ovrom's actions had no bearing on the city's anticipation of seeing the Hard Rock open on time."I don't believe it disrupts anything at Hard Rock," Scott said. "From the city's standpoint, we believe (Argosy) should have their day in court and the system should be allowed to work."

Argosy is challenging the IRGC's closure order, seeking to have it reversed or vacated.If Ovrum rules against Argosy next week, the casino would close. If such an order is filed, Weinhardt said, Argosy would appeal it to the Iowa Supreme Court.

Ovrom said Thursday that if she rules in Argosy's favor, the stay on the casino's closure would remain until resolution of the other legal matter involving the casino. In that case, Penn is seeking to have the court overturn or vacate a series of IRGC actions that led to the five-member commission awarding the gaming license to MRHD and SCE Partners, which beat out Penn and another applicant.

Final arguments in that case are scheduled for Sept. 26 in Des Moines.