SIOUX CITY — The nonprofit that holds the gambling license for the Argosy Sioux City riverboat casino has voted to temporarily stop sending grants to local charities and government agencies.
A legal dispute with the operator of the casino, Penn National Gaming Co., has prompted Penn National to withhold more than $900,000 from the nonprofit Missouri River Historical Development Board since May.
As a result the board voted Monday to suspend its grant activity until Penn National resumes sending the nonprofit’s share of gambling revenue, the Sioux City Journal reported.
Under Iowa law, casinos are licensed to nonprofits and they contract with a company that usually owns and operates the facility. A percentage of the gambling revenue is forwarded to the nonprofit for distribution to charitable organizations and local government groups for community improvement projects, scholarships and other programs.
Penn National filed a breach-of-contract lawsuit last year against the historical development board after the contract between the two expired and the board chose to partner with Hard Rock Hotel & Casino to build a new casino in downtown Sioux City.
Though the operating agreement between the two parties expired in July 2012, the board claims it is still legally entitled to 3 percent of the Argosy’s gross revenues because it continues to hold the boat’s gambling license.
Penn National also is suing in Polk County District Court to overturn a series decisions by the state’s gambling regulator, the Iowa Racing and Gaming Commission. The commission decided in June 2012 to take bids for a land casino after growing frustrated when Penn National couldn’t reach a long-term contract with the historical development board.
Penn National eventually partnered with a different nonprofit and submitted a bid for a new casino project. The commission, however, voted in April to grant a new license to the Hard Rock project instead of Penn National’s proposed project.
With all the litigation and uncertainty, the board believed it was “better to be conservative” with its funds, said its president, Mark Monson.
“Hopefully, we’ll be back awarding grants soon,” he said.
The decision means $30,000 in scholarships for local college students and $100,000 in holiday gifts to a small number of local nonprofits will not be awarded this month.