There’s Trouble in River City--With a Capital G : Iowa: State is under pressure to remove limits on betting to compete with other areas. Foes call it immoral.

In his 1957 Broadway hit, “The Music Man,” Meredith Willson captured some of the nostalgic flavor of his native state, portraying a land of gentle, good-hearted, if somewhat gullible, country folk who made easy targets for a traveling con man hawking high-school-band instruments.

That is part of the Iowa image, which made it all the more surprising when, in 1989, the state seemed to turn its back on its folksy ways to follow the trail of glitz and easy money.

Iowa, of all places, became the first state outside Nevada and New Jersey to authorize full-scale casino gambling--on riverboats on the Mississippi and Missouri rivers.

But Iowa hoped to avoid the high rollers who flock to Las Vegas and Atlantic City and hoped to make gambling here a wholesome, “family” diversion.

It imposed limits of no more than $5 per bet and a $200 total loss per person on any single riverboat cruise. No one would be allowed to lose the house or farm at a blackjack or roulette table in Iowa.

Three years after the floating casinos began operating on the rivers, this political compromise, which enabled the gambling law to squeak through the state legislature, is under assault, reviving a contentious debate over the extent to which Iowa should rely on gaming for revenue and as a tool to promote tourism and economic development.

Faced with fierce competition from other states that have jumped into the gaming business without betting limits--and Native American tribes that have opened unrestricted casinos on reservations here--a coalition led by business interests is pushing for elimination of the limits and an easing of other restrictions on the riverboat operations.

The coalition also has proposed that Iowa’s four struggling dog- and horse-racing tracks be allowed to install slot machines to beef up revenues that have been diminished in part because of competition from the riverboats.

But opponents of the expansion plan cry, “Enough is enough,” and argue that once the current gambling fever, encouraged by revenue-hungry state governments, has swept across the country, Iowa will never be able to compete with more glamorous locales.

In an election year, the political sniping over the issue already has begun, much of it directed at Republican Gov. Terry E. Branstad.

Branstad does not approve of gambling, but critics note that during his three terms Iowa has plunged headlong into the gaming business--first authorizing parimutuel betting, followed by a state lottery (which Branstad vetoed twice before signing) and finally the riverboats.

In November, in a lament that could have come from Willson’s lyrics, Branstad acknowledged mishandling the gambling issue.

“I’m a country kid that grew up learning hard work, and I don’t know much about gambling,” he said. “It’s probably true that I’ve not handled that very well. . . . I’ve tried to do my best, and I’m still learning.”

In January Branstad called for elimination of the betting limits in the riverboat casinos but, citing the recommendation of a state task force, said more study is needed on whether to put slot machines at the racetracks.

Both those who favor adding slot machines at the tracks and those who oppose any expansion say Branstad’s compromise is doomed in the Legislature.

Last year legislators narrowly rejected a gambling-expansion bill, in part because of squabbling among the racetrack owners and between them and the riverboat interests. This year the pro-expansion forces have formed a united front.

Rep. Fred Grandy (R-Iowa), who is mounting an unexpected challenge to Branstad in the Republican gubernatorial primary, said the governor’s plan is “a clear example of his indecisiveness.”

“I think you can’t be a little bit pregnant on this issue,” said Grandy, who advocates both putting slot machines at racetracks and eliminating casino betting limits. “You have to come down on the side of economic reality instead of moral repugnance.”

Iowa Atty. Gen. Bonnie Campbell, who is seeking the Democratic gubernatorial nomination, supports slot machines for the racetracks and raising the per-cruise loss limit on the riverboats to $1,000, which she has been told “would basically solve the problem,” said Phil Roeder, her campaign manager.

Robert Van Vooren, a lawyer and GOP activist in Davenport, is spearheading the effort to expand gambling here. Between July, 1992, and April, 1993, three Iowa riverboats left for more lucrative, unlimited markets in Mississippi and Missouri. Three remain, including The President at Davenport, but it is competing with a no-limit Illinois boat across the Mississippi at Rock Island.

“In Davenport, 1,000 jobs are in jeopardy because the Iowa statute is not competitive with the Illinois law,” Van Vooren said. “ . . . The limits must come off if Iowa is going to remain a factor in the gaming industry.”

Much of the opposition to expanded gambling is coming from religious groups. The Rev. Carlos Jayne, a United Methodist minister and lobbyist for a coalition of religious organizations, said opponents realize they cannot repeal existing gambling laws but are determined to halt further expansion.

“It’s actually an immoral thing for the state to be out promoting something and claiming it is nothing but recreation when it is in fact a very dangerous activity, like drinking and smoking,” he said.