Judge orders $112 million tax refund to racetracks

Thursday, Jan. 9, 2003 | 9:33 a.m.

DES MOINES, Iowa -- A district court judge has ordered the state to repay $112 million in taxes and interest to racetrack casinos in Altoona, Dubuque and Council Bluffs.

"Ouch," State Treasurer Michael Fitzgerald said when he learned of the ruling Wednesday. "With the state's financial condition, $112 million is a significant setback."

Polk County District Judge Scott Rosenberg ordered the refund this week following a December hearing.

The Iowa Supreme Court ruled 4-3 in June that the special tax against the casinos was unconstitutional. The ruling said the casinos should be taxed at the same 20 percent rate as the riverboat gambling operations.

Rosenberg said the tracks are entitled to repayment of unconstitutional taxes collected between Jan. 1, 1997, and last June. His order requires state officials to pay refunds plus 5 percent simple interest.

Prairie Meadows is owed $53.7 million, Dubuque Greyhound Park and Casino $12.7 million and Iowa West Racing Association, which holds the license for Bluffs Run Casino and Greyhound Park in Council Bluffs, $45.9 million.

The ruling could not have come at a worse time for the state -- which has been fighting tight budgets in the last few years and can ill afford to come up with more than $100 million to pay the casinos.