DUBUQUE STARTS OVER WITH NEW BOAT, HOPE

DUBUQUE, Iowa The London Times came to Dubuque when the nation's first riverboat casino opened here in April 1991. Riverboat gambling's spread to the Midwest was big news.

But gambling was no big deal to this city of 60,000. Hoping to revitalize the city's flagging economy, in 1983 Dubuque voters passed a $7.8 million general obligation bond that enabled the city to build Iowa's first greyhound racetrack.

This occurred in a city that has two Catholic colleges: a Bible college and the University of Dubuque, which ordains Presbyterian and Methodist ministers.

The dog track had 70 percent of the vote, and riverboat gambling later won 66 percent.

Most people in Dubuque were ecstatic about their huge, new riverboat. The Dubuque Casino Belle had four decks and held 1,800 people. The second deck was reserved for dining. The third deck was occupied both by a lounge featuring musical revues and a supervised children's play area.

The riverboat paid for $4 million in riverfront improvements in its first year, including a visitors center where the region's tourism is promoted.

"It has been a huge success," says City Manager Michael Van Milligen, five months on the job.

All of this became past tense when the riverboat left Dubuque on April 1. Though one year remained on his contract, owner Bob Kehl sold the boat for $17 million a $12 million profit from a boat he'd already paid for. The sale by Kehl, who has operated an excursion business in Dubuque for nearly 20 years, stunned the city.

"People were upset, especially people in the hospitality industry," said Marilee Fowler, director of the Dubuque Convention and Visitors Bureau.

That boat now is in Mississippi being re-outfitted. It will begin operating in St. Charles once gambling begins in Missouri.

Dubuque already has landed a smaller replacement boat which will begin operating in August, even though another gambling boat already is operating across the Mississippi in East Dubuque, Ill.

Kehl, who has a health problem, claims that unequal competition from Illinois riverboats and nearby Indian reservations played a role in his decision to sell the casino.

Iowa allows only 30 percent of the space on the riverboats to be dedicated to gambling, and the state legislature so far has resisted attempts to raise its $5 bet and $200 loss limits. Illinois has no gambling limits and much less restrictive controls on space allotments.

In Iowa, gambling licenses are shared by the gaming company and a nonprofit corporation in each riverboat town. Each nonprofit corporation makes its own deal, and Kehl contends that Dubuque's was a little too fat.

With the city manager and members of the city council sitting on its board, Dubuque's nonprofit corporation pulled in more than $7 million from the riverboat in two years. That compared to the $200,000 per year another Kehl boat was paying downstream in Clinton, Iowa.

In the boat's first year, the nonprofit corporation received $5 of each admission and 15 percent of the after-tax gambling proceeds. During the second year, the nonprofit corporation allowed the boat to keep the $5 per admission.

Though the boat was profitable, Kehl said, "For the investment, it wasn't making enough."

Bruce Wentworth is the general manager of the Dubuque Racing Association, the nonprofit corporation which shared the riverboat gambling license with Kehl and operates the dog track. Wentworth said the DRA is reserving the right to sue Kehl, but so far is concentrating on getting the new boat operational. Other Iowa cities that lost riverboats haven't been able to replace them.

"There's a niche-finding going on in the industry as far as assets that float," Wentworth said.

The new riverboat is getting a sweeter deal, with the DRA taking only 8 percent of the first $15 million and then proportionally larger amounts thereafter.

The DRA is in favor of raising Iowa's gambling limits and increasing the space allotment from 30 percent to 50 percent.

In Dubuque, 75 percent of the nonprofit corporation's revenues go to the city for capital improvements, which include expenditures for tourism and economic development. The remainder is donated to charities.

Last year the DRA provided $337,500 to the city and $112,500 to 35 charities.

Despite losing the riverboat, people on the street look favorably upon the contribution gambling has made to their community. (For an exception, see related story.)

Wentworth says Dubuque was economically depressed when the dog track was built. "People were selling T-shirts saying, `Last one out turn off the lights.' It needed a shot in the arm."

Today, both the dog track and the riverfront improvements are paid for. "We made good on our promises and are totally debt-free," Wentworth said. "That makes us unique in the business."

Van Milligen, who used to be a policeman in Carbondale, sees many similarities between Cape Girardeau and Dubuque.

Like Cape Girardeau, Dubuque is a regional business hub in the middle of an agricultural economy. The closest big city, Chicago, is three and one-half hours away.

"I'm sure it can be a success for the city of Cape Girardeau," he said.