Herald Bulletin Staff and Wire Reports

DES MOINES, Iowa - Day and night, gamblers crowd into the casino east of Des Moines and sit at thousands of slot machines and gaming tables - but the stands are largely empty at the complex's horse racing track.

The scene at the Prairie Meadows Racetrack and Casino is repeated at many of the three dozen racetrack casinos - or racinos - across the country, and the disparity in crowds and other factors have led more people to ask a question:

Why do laws allowing these state-controlled casinos to operate require them to divert so much of their profits to subsidize money-losing horse tracks instead of the public programs they're also supposed to support?

"Slot machines prop up their industry," said Dr. Guy Clark, a New Mexico dentist who is chairman of the National Coalition Against Legalized Gambling. "Why should the racetrack industry need bailing out by the government any more than any other industry? If it were some other industry that had outlived its usefulness, we generally would let it die."

Michael Brown, executive director of the Indiana Horse Racing and Breeding Coalition, said the industry sees the investment of casino revenues in horse racing as an economic development decision, not a "subsidy."

"For starters, I think we've established here in Indiana, we've recognized that money that derives from the horse-racing industry and the equine industry in general is really agribusiness," he said.

Thousands of people work in the horse-racing industry and support industries, Brown said.

"It's an important industry to support Hoosiers in small towns," he said.

Money from the casinos will be used to improve the quality of horse racing and horses in general, Brown said.

"Our idea is to build grass roots of racing in Indiana," he said.

The funds will also increase purses for the racing experience.

At an Anderson Parks Board meeting in February, Hoosier Park officials said horse racing handles tend to decrease when a casino is added.

"The casino customer is not the same person as the horse track customer," Brown said.

Both Indiana Downs in Shelbyville and Hoosier Park gave the state $250 million each to install slot machines into the facilities. That money was used to offset property taxes.

Other revenue generated from Hoosier Park is set to sponsor a scholarship program through the city of Anderson.

Gambling at Des Moines' Prairie Meadows in 2006 generated more than $180 million and $57 million in profits. More than $20 million went to public programs and $4 million was given to charity, but nearly $30 million went to horse race purses and overhead.

Nationally, 36 racinos in 11 states generated about $3.6 billion in gross gaming revenue in 2006, according to the American Gaming Association. Most of that money was generated by slot machines. Racinos paid out $1.4 billion in tax revenue to state and local governments in 2006, a 12.5 percent increase over 2005.

"I just feel that the money is not being spent properly or appropriately right now," said Bill Knapp, a prominent Des Moines real estate developer who is involved in a variety of community projects.

Knapp proposes diverting more money to charitable causes, support of rural economic development efforts and public projects. He also says the track should shorten its calendar to cut expenses and redirect some of its profits.

"I think the legislatures in all of these states realized that this is an agriculture industry and they wanted to preserve that for whatever reason and that's how this all came about," said Richard Thalheimer, an economist from Lexington, Ky., who specializes in gaming issues.

A 1999 study by an Iowa State University economics professor concluded that horse racing and breeding in Iowa created more than 3,000 jobs and generated $252 million for the state's economy.

Staff reporter Jessica Kerman contributed to this story.

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