.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:400px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 10px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 10px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 10px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} One of Jeff Nelson’s favorite things to do as marketing director of Prairie Meadows Racetrack and Casino is to stand in the casino’s new lobby as people leave a concert and watch where they go. He has noticed that more people are staying for the entire evening, eating dinner at the new steakhouse before the event and gambling afterward.

“There’s just an energy,” he said.

These options became available as Prairie Meadows completed a $60 million expansion early this year, which added space for more table games, a large banquet and convention hall with a stage, a buffet restaurant and AJ’s Steakhouse. The expansion has allowed the casino to book a strong lineup of bands and major events nearly every weekend and has attracted a crowd interested in a classy experience or activities other than gambling.

But this may be only the start of Prairie Meadows’ development into an entertainment complex as it considers whether to construct a hotel. In addition, the expansion has increased the casino’s value, which could add fuel to a grassroots campaign to give Polk County residents a chance to vote on whether the county should sell the casino to a private company.

Enticing the non-gambler

Casinos throughout Iowa are catching the Las Vegas fever, adding an array of entertainment options beyond racing and gaming.

“What started as small riverboats with some slot machines are now growing into entertainment complexes that offer a lot more than just slot machines and table games,” said Nelson, who joined Prairie Meadows this January with nine years of experience in Las Vegas.

“What you’re seeing now is the next generation of casinos that are evolving to include hotels, conference centers for doing concerts and the like, plus in some cases now, golf courses, spas and salons,” said Wes Ehrecke, executive director of the Iowa Gaming Association.

Iowa casinos have begun to reinvest in their product, especially to better compete as four new casinos came on board in the past couple of years.

Of the 17 non-Indian casinos in the state, Prairie Meadows ranked second in adjusted gross revenues for fiscal year 2007, which ended June 30, with $188.7 million, making it one of four casinos above $100 million in gaming revenues.

Though Polk County Supervisor Tom Hockensmith said it’s “too early to tell” how Prairie Meadows’ expansion will affect its business, it already increased its gaming revenues 5.5 percent from fiscal year 2006, with additional gaming tables and the event center opening partway through fiscal 2007.

“It’s something they needed to do to stay competitive in the market,” Hockensmith said.

Still, the casino, which is operated by the nonprofit Prairie Meadows Racetrack and Casino Inc. and pays the county to lease its land and building, sees an opportunity to grow even further by adding a hotel connected to the existing complex.

Nelson said it’s not a matter of whether to build the hotel; it’s when and how. “We’re looking at all the options of how to do it,” he said. “We know we need one.”

Though about 65 percent of gamblers at Iowa’s casinos are from out of state, “a very small percentage” of those visit Prairie Meadows, Nelson said. “I think there’s an opportunity there,” he said.

This change would help rake in even more revenues, which could further entice a private company to look at buying the casino.

Cash out now?

Last week, a group of 10 people met with a lawyer to determine when and how to go public with a campaign to sell Prairie Meadows.

The movement grew out of the campaign to defeat the “Say Yes to Destiny” proposal, which would have raised the local option sales tax in Polk, Dallas and Warren counties by one percentage point. George Davey, who led that campaign, said he wanted to come up with a new plan that would generate money to support cultural and recreational projects without raising taxes. During his efforts to defeat the Say Yes to Destiny proposal, he said, people kept talking about concerns over how Polk County uses the money it makes from Prairie Meadows and the millions Prairie Meadows, the casino licensed holder and operator, pays to subsidize horse racing each year.

In the same month the Say Yes to Destiny referendum was rejected, the group against the proposal launched www.polkcountyjackpot.com, which suggested that the county could sell the casino to a private operator for around $600 million. This would create an immediate cash flow that would cover renovations to the Polk County Courthouse and help fund Blank Park Zoo’s expansion and other cultural projects.

The organization also proposed requiring that a percentage of the casino’s revenues go into a fund that would generate $100 million every two years. With a 28E agreement, a group of city mayors and other leaders would decide how that money would be distributed. Davey said this plan would provide a lot more than the $360 million Prairie Meadows has given in Community Betterment grants and to charity since 1994.

Under private ownership, Prairie Meadows still would be required to give at least 3 percent of its gross revenues to charity, 22 percent to the state, 0.5 percent to the city of Altoona and 0.5 percent to Polk County.

The county also receives $20 million a year from Prairie Meadows through a lease agreement for the casino to rent its land and building, most of which Hockensmith said goes toward paying off the debt created in constructing the Iowa Events Center. The casino pays about $950,000 in tax to the county, and after the Iowa Supreme Court deemed it was unconstitutional to make land-based casinos pay more in taxes than riverboats, Prairie Meadows signed an agreement with the county to give one-third of its decrease in taxes back to the county, which was about $7 million last year. This could increase as the casino’s revenues increase.

Prairie Meadows, which is managed by a non-profit organization (the only other Iowa casino run by a nonprofit is Dubuque Greyhound Park), currently pays a far greater portion of its revenues to charity than required by casinos run by private companies. Last year it donated $35.1 million in Community Betterment grants and to charity, or 19.4 percent of its revenues.

Developer and casino operator Gary Kirke likes the idea of the casino being run by a private company. “I see a lot of immediate advantages in a cash sale,” he said. “It would pay off a lot of Polk County debt and still serve the community well and run best as a private enterprise.”

But he believes the price of $600 million could be too high given the large portion of the casino’s revenues that now goes toward taxes and charity. “It’s worth a lot of money, but you have to get what the real true net cash flow of the operation is,” he said. “I don’t know what that is.”

But, he added, “I think that anybody would consider investing in Prairie Meadows at the right price. … It’s a desirable property.”

Davey believes a private company would move faster to build a hotel and other improvements that would bring in more money.

“They have a great market,” he said. “They also are one of the biggest casinos in Iowa. They should be able to turn more profit, do more expansion and give more money.”

The organizers of the effort to sell Prairie Meadows are still researching a plan about how to proceed. Davey predicts they could begin collecting signatures as early as next year to bring the issue to a public vote. Prairie Meadows needs to renegotiate its contract with the county by 2010.

The backlash

The idea of selling the casino to a private company “is a ridiculous idea that’s not well thought out,” Hockensmith said.

He pointed out that the county would lose the steady stream of money it receives from the lease agreement in return for a quick influx of cash. With that much money coming into Polk County coffers at once, Hockensmith said, the county could risk losing some of the funding from the state because it would see the county as being better off financially. Plus, if the casino is sold to a non-local owner, it could cause “millions and millions of dollars to flow out of the state annually,” he said. “It’s all-around a terribly bad idea.”

Hockensmith said the idea of selling Prairie Meadows also came up when he ran for office in 2002, but he believes Polk County’s relationship with Prairie Meadows has benefited the county significantly. “If it wasn’t for our lease payment there,” he said, “there would be no Wells Fargo Arena, no Hy-Vee Exhibition Hall and a lot less infrastructure improvements.”

Prairie Meadows also is strongly against the idea.

“There is no validity to that rumor,” Nelson said. “A Web site was built throwing out the idea, but as a not-for-profit right now, I don’t think the county would ever want to give that up. The casino gives too much back to the community. … If a company were to come in that was completely numbers driven, they wouldn’t give as much as we’ve given to charity.”

Nelson added that a private owner would likely discontinue horse racing, which is not a moneymaker in a market the size of Des Moines.

Davey would eventually like to get the Greater Des Moines Partnership involved in this effort as well.

So far, spokeswoman Amanda Stewart said, the Partnership is not involved with discussions and has not seen any proposals to sell the casino. The Partnership has refocused its attention on working with city, state and federal governments and Bravo Greater Des Moines to gain funding for cultural organizations and reduce property taxes.

“We know from Project Destiny that those things are all issues important to the community,” she said. “We’ll continue to look at ways to make it happen. It’s just a different approach than we’ve taken in the past.”