Prairie Meadows Racetrack & Casino June 24 approved a new eight-year lease with Polk County that will pay the county $26 million in each of the first three years and perhaps more after that.
Polk County owns the property, but the facility is operated by a separate non-profit board. The previous lease had expired Dec. 31, 2010, and Prairie Meadows has been paying month-to-month rent since then.
The biggest issue was coming up with “what if” language in case the state passes legislation that reduces Prairie Meadows’ income. A smoking ban would reduce casino revenue by an estimated 20% or more, and there has been talk of raising the tax rate on Iowa casinos.
Under the terms, Polk County will receive $15.6 million in rent each year and $10.4 million in additional profits from 2011-13. In 2014-18, the county will receive 5% of Prairie Meadows’ adjusted gross revenue up to $225 million, and 6% beyond that.
“If our revenues go up, they will get more,” Prairie Meadows general manager Gary Palmer said. “We all hope we’ll do better, and if we do, the revenues will go up and they’ll get more.”
Prairie Meadows takes in about $200 million a year in revenue but hopes that increases once construction on its hotel is completed in March 2012.
The county has already approved the lease, and it now goes before the Iowa Racing and Gaming Commission for final approval.