The Elbert Files: Success after failure at casino
Friday, August 23, 2013 7:00 AM
As successful as Prairie Meadows Racetrack and Casino is today, it’s worth remembering that it didn’t happen overnight - or easily.
I’ve been writing about the Des Moines Chamber of Commerce this year as it celebrates it 125th anniversary.
And although Prairie Meadows was never an arm of the chamber, chamber members were essential to its creation and to the success of the cash cow that has funded many chamber efforts in recent years.
The modern history of horse racing in Iowa began when Terry Branstad was first elected governor in 1982. Branstad’s predecessor, Robert Ray, had kept gaming at bay during his 14 years as governor by pledging to veto efforts to legalize gambling.
As a candidate, Branstad took a similar stance, but when he took office, the farm crisis was entering its second year. Democrats in the Iowa General Assembly voted to legalize pari-mutuel wagering in 1983, and Branstad signed the bill, saying it would create economic development.
Iowa Cubs owner Ken Grandquist received Iowa’s first pari-mutuel license in 1984. He had planned to build a $30 million horseracing track near Bondurant but moved the site to Altoona at the urging of Altoona lawyer Ed Skinner.
Grandquist was unable to obtain financing and turned his license over to the Racing Association of Central Iowa (RACI), a group that was initially led by former Des Moines City Manager Richard Wilkey. RACI persuaded the Polk County Board of Supervisors to back a $40 million bond issue to build the track.
The track opened on March 1, 1989, amid snow flurries and fogged-over windows. The 7,148 people in attendance bet $437,581, which was much less than expected and a portent of things to come.
During the first 53-day race meet, patrons wagered barely half the original projection of $588,000 a day.
The track made cuts, but still ended its first year with a deficit of $6.2 million.
Polk County had to step in and take over the bond payments and operation of the track. Voters reacted by voting out two county supervisors who were up for re-election in 1990.
After limping through a second season, the track filed for bankruptcy court protection. The original RACI board resigned, and there was no live racing at the track in 1992.
The court gave ownership of the track to Polk County, which was able to refinance the debt at a lower interest rate. But when the track reopened in 1993, it continued to struggle.
“After spending all of that money on this beautiful facility, we had to do something to keep it,” said Prairie Meadows CEO Gary Palmer.
Iowa Racing and Gaming Commission Chairman Bud Pike suggested bringing in casino gaming. Iowa had been the first state to approve riverboat gambling in 1989, and Pike suggested that slot machines might be the answer to Prairie Meadows’ problems.
In 1993, horse owner Jim Rasmussen and businessman Jim Cownie worked with the county and Palmer to push legislation that would allow casino-style gambling at the racetrack.
“The last day of the Legislature in 1993, we lost by one vote,” Palmer said.
“We knew in 1994 the county was going to close it if we didn’t get the legislation,” Palmer said. “This time on the last day of the session, we won by one vote.”
The clubhouse was quickly expanded to create room for additional gaming.
“When we opened on April 1, 1995, we owed the county $90 million,” Palmer said. “In 20 months, we had it completely paid for plus interest.”
Since then, Prairie Meadows has contributed more than $70 million to local charities, while providing $460 million directly to Polk County, $33 million to the city of Des Moines, $4 million to local schools and it has paid state gaming taxes of nearly $720 million.
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