02/27/2004 12:00AM

Table games bill passes in Iowa

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The Iowa House of Representatives voted, 73-26, on Thursday to allow table games, including blackjack, at Prairie Meadows and the state's two dog tracks while prohibiting any new gambling licenses from being issued in the state.

The bill now must be heard by the state Senate. The bill is the result of a long legal battle between the tracks and the state and contains most of the major elements from a May 2003 settlement proposal made by the tracks.

Under the bill, the tracks would forgive more than $100 million in overpaid taxes and interest that the state owes them - including more than $50 million from Prairie. The tracks are currently taxed at a 20 percent rate, but under the bill the rate would rise to 24 percent.

Additionally, Prairie Meadows, in Altoona, Iowa, would pay the state a $10 million license fee to obtain table games. The track already houses 1,500 slot machines.

The tracks, which all have slot machines, sued the state in 2001 to challenge the constitutionality of a law under which they paid taxes at an escalating rate while the state's riverboat casinos paid a fixed rate. The tracks' rate began at 22 percent in 1997 and increased 2 percent per year, to be capped in 2004 at 36 percent. The riverboats pay 20 percent.

In June 2002, the Iowa Supreme Court ruled in favor of the tracks, but the state appealed to the United States Supreme Court. Last June the U.S. Supreme Court remanded the case back to the Iowa Supreme Court. Earlier this month, the state Supreme Court upheld its earlier finding that the differing tax rates were unconstitutional, prompting the new legislation.

The legislation, if made into law, will not immediately benefit horsemen at Prairie Meadows, but it should in the long term. This year is the second of a three-year contract in which purses are set at $15 million. Beginning in 2006, the bill proposes a formula in which purses would be 11 percent of the track's net adjusted gross receipts up to $200 million and 6 percent of anything exceeding that amount.

According to projections, if the bill is passed, purses at Prairie would total more than $20 million by 2008, said Scott Pope, a director of the Iowa Thoroughbred Owners and Breeders Association and a member of the state central committee of the Republican Party. Pope has been active in negotiations over the bill.