DRA backs extended casino lease, creating fund for island improvement

Members of the Dubuque Racing Association on Tuesday approved an amended lease with the city that extends the agreement and creates a dedicated funding stream for the development of Chaplain Schmitt Island.

The DRA is the nonprofit license holder for both Dubuque casinos. It leases the Q Casino facility from the City of Dubuque but, coming into Tuesday’s meeting, that pact was slated to expire in the spring of 2024.

The new agreement, green-lighted by the DRA board Tuesday, would extend that lease through the end of 2036.

It also establishes a funding stream for planned improvements to Chaplain Schmitt Island. In the past, 50% of Q Casino profits have gone to the city and 50% to local charities.

In the new deal, casino profits would be evenly split three ways among the city, nonprofits and a fund for improvements for Chaplain Schmitt Island.

The deal still awaits consideration by the Dubuque City Council, as well as the Iowa Racing & Gaming Commission.

Q Casino President and CEO Alex Dixon framed the amended lease as a major win for all parties involved, arguing that it will provide the necessary funds to bring long-term plans to fruition.

“What we have today is a lease that will enable us to take the next step (for the casino) and the next step for Schmitt Island,” said Dixon.

He said the Chaplain Schmitt Island fund likely will be established as a nonprofit itself. As for other charities benefiting from casino revenues, Dixon thinks the new approach ultimately will benefit those charity groups as well.

“The casino is the engine that helps to fund the entire operation,” Dixon said. “If you think in the long term, you want to make sure that your core can deliver returns that benefit charities and the community for years to come. This is the best way to do that.”

City Manager Mike Van Milligen expressed support for the amended lease, emphasizing that competition within the industry is continuing to heat up.

“You’ve got to grow the market,” he said. “We are in competition with Illinois and Wisconsin, and things are happening there. Rockford just opened a new casino. … Casinos in Madison area are (improving their offerings) and just reopened their facilities.”

The Chaplain Schmitt Island Master Plan calls for enhanced outdoor and recreational opportunities, expanded amenities at Q Casino and the introduction of retail and housing on the island. Leaders at Q frequently have expressed the desire to establish the island as a destination, similar to the way the Port of Dubuque helps draw customers to Diamond Jo Casino.

Van Milligen said 2021 felt like the perfect year to implement a change in the way profits are distributed. Dubuque casinos have reported strong earnings throughout the year, meaning the overall pie of funds will be higher in 2022 than in years past.

“It’s been a very, very good year,” Van Milligen said. “It makes sense to create that split now. We should still be able to make a record contribution of about $4 million to charities.”

This estimate includes contributions to individual charities, as well as the charitable endowment fund.

DRA Board Chairman Kevin Lynch offered praise for the amended lease.

“I think it is a win-win for everybody,” he said.

In addition to amending how profits are distributed, the new lease made a slight alteration to how rent would be determined. Rather than setting a fixed rate, rent paid from Q Casino to the city is based off a percentage of table game betting, sports betting and the “coin in,” or money played at slot machines. Under the new agreement, the “coin-in” percentage going to the city will increase from 1% to 1.5%.

Officials on Tuesday also reported on the latest financial figures for the city’s casinos.

Q reported gaming revenue of $3.84 million last month, up from $2.92 million in the same month last year. Diamond Jo recorded revenue of $6.18 million, easily outpacing the November 2020 total of $4.60 million.

“It was another successful month for us,” said Q Casino Vice President and General Manager Brian Rakestraw.