Law glitch: Iowa horse track illegally took bets on foreign simulcasts for decades

By: - July 29, 2021 3:24 pm

Prairie Meadows casino simulcast international races for three decades before learning the practice was illegal. State lawmakers passed a bill to allow the foreign simulcasts. (Image by Clarence Alford from Pixabay)

Prairie Meadows Racetrack & Casino in Altoona took bets on foreign races for as much as 32 years in apparent violation of state law. 

The international simulcasts, suspended by state regulators who discovered a legal glitch last fall, resumed earlier this month after a new law took effect July 1. 

The Iowa Racing and Gaming Commission noted the discrepancy in December, 32 years after Prairie Meadows opened in Altoona, Prairie Meadows officials said. The facility had simulcast foreign races all along, and those events accounted for 5% to 10% of revenues, Derron Heldt, vice president for racing, said in an interview. 

State officials had never questioned the practice before this year, Heldt said.

Other Iowa racetracks and casinos also have offered international simulcasts, though it was a small part of their business, state officials said.

Mexico dog race brings legal issue to light

Brian Ohorilko, administrator of the Iowa Racing and Gaming Commission since 2012 and an employee since 2004, said he isn’t sure why the discrepancy wasn’t noticed earlier. The state law in place for years was fuzzy on the issue, he said.

“The language wasn’t specific,” Ohorilko said.

The international simulcasts were suspended after the Iowa Greyhound Park in Dubuque asked the commission for permission to simulcast an event at Caliente greyhound park in Tijuana, Mexico.

State officials investigated the Mexico track to make sure it was properly licensed and  treated dogs properly, Ohorilko said. A  review by the Iowa attorney general’s office last fall found that Iowa law didn’t expressly allow simulcasts of foreign events at Iowa tracks and casinos.

Lynn Hicks, chief of staff for the Iowa attorney general’s office, said the review of the Dubuque application showed that the law at the time only referred to simulcasts from other states, and didn’t mention foreign jurisdictions. He said the attorney general’s office had not addressed the issue in the past, most likely because the simulcasts were infrequent and mostly limited to Prairie Meadows.

The Iowa facilities had to shut down the international feeds until July 1, when a law passed in this year’s legislative session legalized the international simulcast of horse and dog races at Iowa tracks and casinos.  The tracks and casinos requested the legislation soon after the suspension of the simulcasts.  

Prairie Meadows: ‘We’ve done it for years’

“We’ve done it for years, but I guess someone found an article that said we couldn’t do it,” said Gary Palmer, president and CEO of Prairie Meadows. “So we stopped it for a few months until they put in a bill and passed it.”

Ohorilko said over the years, Prairie Meadows and Horseshoe Casino Council Bluffs had asked to simulcast international events before Dubuque made its request, but he is unaware of others. Palmer said casinos and tracks had offered international races for years, but not a large number. 

Online platform TVG also is licensed to allow Iowans to bet on international races. Express Bet is in the process of getting a license, Ohorilko said.

Prairie Meadows also sends its signal to tracks in other countries so people can bet on Prairie Meadows races around the world, Palmer said.

Prairie Meadows has simulcast major horse races from Saudi Arabia and Canada, for example, since just after the track opened. Dog races from Mexico also have been simulcast, Heldt said. 

Animal rights debated

It was the international dog races that brought the only questions on the legislation, which passed both chambers after about four minutes of debate in each chamber.

Sen. Nate Boulton, D-Des Moines, said he wanted to ensure that animals involved in the foreign races weren’t mistreated. Floor manager Sen. Roby Smith, R-Davenport, assured him the Racing and Gaming Commission would be watching for abuses. In the process, Smith acknowledged the foreign races had been simulcast for years.

“In the research for this bill I called the Racing and Gaming Commission, (Administrator) Brian Ohorilko, and he assured me that over the past number of years they (have taken) into account the corruption if there is (any) at the track, the condition of the track, the condition of the workers and the condition of the animals, if they think there is a problem in any one of those things,” Smith said during floor debate. He did not mention the legality of the simulcasts had been questioned.

Animal rights group opposed bill

In the House, floor manager Rep. Mike Sexton, R-Rockwell City, told lawmakers he had promised to amend the law next year if there is any evidence of abuses at the foreign tracks whose races are simulcast in Iowa. “I gave them my word,” Sexton said of speakers at a subcommittee meeting concerned about animal abuse.

Sexton noted the legal discrepancy before his colleagues approved House File 513, 81-12, on Feb. 23. The bill passed the Senate, 34-12, on May 19.

“Up until December, we could simulcast horse and dog races in our casinos and riverboats. In December, (the Racing and Gaming Commission) decided that we really (couldn’t) because the Iowa Code did not expressly allow foreign races to be simulcast inside the state of Iowa” Sexton explained. 

“The bill adds foreign jurisdiction so we can go back to  the way we were doing it for the past many years,” Sexton added.

Animal rights groups had questioned the bill, fearing abuse of dogs in particular.

Sen. Claire Celsi, D-West Des Moines, said she voted against the legislation because of those fears, and was not aware that the simulcasts had been conducted illegally for years. Celsi said the animal rights group objected to “using animals for human entertainment.”

For Celsi, the issue was broader: “I hate gambling, period, especially racetracks. I can’t stand them.”

Sen. Joe Bolkcom, D-Iowa City, voted “no” for similar reasons. “I don’t think the state should be endorsing gambling to the extent it does,” he said in a interview.

New laws benefit casinos

Iowa’s casinos now operate under new laws that should save them millions of dollars.

Several bills passed by state lawmakers in the most recent session now are affecting operations at 20 state-licensed casinos and racetracks.

The Iowa Gaming Association lobbied for many of the changes.

Tax break

In passing tax legislation, Senate File 619, the Legislature agreed to phase 0ut a tax on so-called promotional play.

Wes Ehrecke, president and CEO of the Iowa Gaming Association, compared the situation to a department store offering a 20% discount coupon. The store would not be taxed on the 20%.

But casinos that offered a discount coupons were charged taxes as if the full price had been charged. The legislation reduces the tax on promotional play receipts until the tax ends on July 1, 2026.

Minnesota, Illinois and Nebraska had already scrapped the tax on the promotional play, putting Iowa casinos at a competitive disadvantage, Ehrecke said. The gaming association had lobbied for the change for years.

Once the tax on promotional receipts is gone, Iowa casinos will save a combined $25.8 million a year, he added.

Wage debate

New legislation also could save the casinos money on wages. Iowa’s casinos are required to pay 25% over minimum wage, and often pay more than that, Ehrecke said. Currently, with a $7.25 an hour state minimum wage, the casinos must pay at least $9.07.

But casino operators were concerned that if the state were to raise the minimum wage to above the $9.07 the casinos now pay, the expense could be significant, Ehrecke said. The new bill allows casinos to pay the $9.07 minimum until the state minimum wage surpasses it. Then, casinos would pay the standing minimum wage.  

DCI agents

Another bill provides money from the state general fund to cover the cost of the third required state Division of Criminal Investigation agent at the seven smallest casinos. That was a compromise after state lawmakers rejected industry calls to reduce the number of agents, now a combined 57.

Ehrecke said the casinos have long sought to reduce the number of DCI agents required at casinos in part because most incidents are handled by police and private security officers. 

There is some thought the state would be better off using those agent positions for cybersecurity work or patrol, Ehrecke said. 

The 57 DCI agents now required under state law cost about $200,000 each, including benefits, uniforms and cars, Ehrecke said.

He’s betting the debate over DCI coverage will continue.

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Perry Beeman
Perry Beeman

Perry Beeman has nearly 40 years of experience in Iowa journalism and has won national awards for environmental and business writing. He has written for The Des Moines Register and the Business Record, where he also served as managing editor. He also is former editorial director of Grinnell College. He co-authored the recently published book, "The $80 Billion Gamble," which details the lottery-rigging case of Eddie Tipton.