Prairie Meadows’ nonprofit status is facing a federal review, raising big concerns for the state’s largest casino in Altoona.
Every year, Prairie Meadows Racetrack and Casino pays more than $14 million to pay off construction debt at the Iowa Events Center. If the casino’s tax-exempt status is revoked by the Internal Revenue Service, for the most part, that money would disappear. KCCI was told by Polk County Supervisor Tom Hockensmith that the facilities would not exist without Prairie Meadows.
On Friday, Prairie Meadows board members met behind closed doors to discuss possible litigation to defend its nonprofit status. For 18 months the financial records of the casino have been under the watch of the IRS. Surprised by that, Prairie Meadows attorney Tom Flynn, said, “We were bewildered by that, and as we look at the facts and at the law, we are confident we should have that tax status. And it should not be revoked.”
Prairie Meadows’ online tax records show that in 2013 it generated $2.1 billion in revenue. According to Flynn, customers receive 85 to 90 percent of revenue in slot machine winnings, bringing the real annual revenue to around $190 million. Approximately $20 million in grants that benefit the community would be jeopardized if the casino lost its nonprofit status. Flynn said that the community has received anywhere between $400,000 and $500,000 from Prairie Meadows.
Phil Roeder, Des Moines Public Schools spokesman, said that the district relies on contributions from the casino every year for technological improvements. The district plans to spend $450,000 this year on musical instruments. Roeder said, “We’ve seen a huge increase in band and orchestra participation over the last couple of years in the school district, so we really want to make that investment and provide instruments to as many kids as we can who cannot afford them,” according to the news outlet.
Polk County received $26 million in 2012. The same year, Des Moines received $5 million, while Altoona received $1 million; area Polk County schools received $800,000, and various charities received $4 million.
Flynn denied that the approximately $650,000 annual salary of Prairie Meadows CEO Gary Palmer was the catalyst for the IRS audit. Roughly 10 years ago the casino was similarly audited. It’s not clear when the review will be completed by the IRS.