Gaming profits sink in Des Moines

Monday, Nov. 6, 2000 | 10:23 a.m.

Prairie Meadows Racetrack and Casino officials said in a copyright story in The Des Moines Register that increased property taxes and falling gambling revenue makes it impossible to keep paying $27 million a year to the county.

Declining gambling profits threaten Polk County's ability to bankroll all of its proposed projects.

Track officials have indicated they are unwilling to pay more than rent after its contract with Polk County expires in 2002 and have made an early offer of $14.5 million a year. That's about half of the $27 million being paid now. County planners say that would leave little money for any of its typical casino-funded projects.

"If those numbers are anywhere near the truth, that puts a severe strain on everything and anything we do," said Supervisor Gene Phillips.

Among the recent commitments Polk County has made with track revenues are $9.6 million for a new juvenile detention center and $9 million for renovation of Iowa Highway 5. Other plans included spending $7 million for maintenance at Veterans Memorial Auditorium and the Polk County Convention Complex.

Officials acknowledge that an unfavorable contract with Prairie Meadows, coupled with the annual commitment to the Iowa Events Center, could mean an end to tax-free capital-improvement projects.

Consultants last week rolled out a $64 million plan for a Polk County Courthouse renovation and annex. The Polk County Jail, bursting at the seams for years, will cost taxpayers $3 million to $5 million a year just to house prisoners in other counties. Meanwhile, Polk County will be expected to contribute to a planned road extension of Martin Luther King Jr. Parkway that could cost as much as $40 million.

Even the Iowa Events Center project might become a burden on taxpayers. Supervisors have promised to use track revenues and not property taxes to pay off $90 million in bonds for the project. The pledge, however, is contingent upon passage of a 2002 voters' referendum that would allow Prairie Meadows to keep its gaming license.

Prairie Meadows representatives said growing state taxes and a $219 million drop in revenue last year make it impossible to continue steering profits to Polk County, which owns the 232-acre Altoona attraction.

"It's a more bleak picture than it was a few years ago," said Jim Rasmussen, chairman of the nonprofit Racing Association of Central Iowa. "Obviously, there isn't as much money available for distribution when taxes go up each year."

The nonprofit group manages the track and casino because Iowa law prohibits governments from operating gambling businesses.

County Manager Teree Caldwell-Johnson is confident the county can do better than Prairie Meadows' initial $14.5 million offer, particularly if the facility's recent addition of 336 slot machines helps boost revenues.

"Obviously, any numbers that are being presented now are preliminary," Caldwell-Johnson said. "In negotiations, one side starts high, the other side starts low and you end up somewhere in the middle. Obviously, this is low."