Iowa Court Upholds Ruling That Tracks Unfairly Taxed

The Iowa Supreme Court said Aug. 6 it would not revisit its ruling that the state's three racetrack casinos are unjustly taxed. The chance remains the state, in need of revenue, could appeal.

The high court ruled in June that the Iowa legislature illegally singled out horse and Greyhound tracks for higher tax rates than riverboat casinos, which pay 20% of gross revenues to the state. The tracks, including Prairie Meadows, have only slot machines. They have been forced since 1997 to bear an annual tax increase of 2 percentage points until 2004, when the tax was to top out at 36%.

The Iowa attorney general argued that lawmakers were within their authority to treat the two types of casinos differently, but justices, in a 4-3 decision, ruled the tax scheme was arbitrary.

The Des Moines Register reported that the Supreme Court upheld the ruling when Chief Justice Louis Lavorato denied the state's petition for another hearing. The matter now heads back to trial court, where a Polk County district judge must determine how much money the state owes the racetracks.

Track officials contend they are owed $100 million in back taxes, plus $10 million more in interest. Officials at Prairie Meadows said they are entitled to about $54 million, but they called that figure negotiable.

"We've always said, if the state wants to talk to us about some other arrangement, that we'd be sensitive to the state's situation," racing association attorney Tom Flynn told the Register. "The goal is trying to work this out in a way that's fair and reasonable to everyone."