Iowa casinos join lawsuit to keep audits secret

By Jason Clayworth
Des Moines Register
Dec. 14, 2016

A group of state-regulated casinos has joined a lawsuit that would keep confidential their annual audits, which are records that have been available to the public for nearly 30 years.

The audits have been used for decades to help report about the financial stability of Iowa gambling operations, which last year generated more than $312 million in gambling taxes and nearly $40 million to charities.

The information is released under a section of Iowa law enacted in 1989 and has previously helped shape conversation about the need for more gambling in Iowa. It is of particular interest to communities and nonprofits that depend on gambling taxes or charitable contributions to help provide services to their constituents.

For example, much of Polk County’s annual $26 million cut of casino profits is used to help pay for the Iowa Events Center, while dozens of charitable groups like United Way also receive annual grant allocations.

But in documents filed in Polk County District Court seeking a permanent injunction against the audits being released, 16 of Iowa’s 19 state-regulated casinos argue financial reports provided annually to state gambling regulators serve no public purpose. The information amounts to trade secrets that should be considered exempt from an Iowa law that mandates government transparency, the casinos argue.

The lawsuit was filed after Patrick Fox, an executive of Grand Traverse Band Economic Development — which is part of three Native American casinos in Michigan — requested the documents.

“We have no problem giving that information to our regulators, but it shouldn’t be given to our competitors,” said Wes Ehrecke, president of the Iowa Gaming Association, which represents all 19 of Iowa’s state-regulated casinos.

Ehrecke said his group will additionally lobby lawmakers this year to change the law to specifically make the reports secret.

Some question the thought behind the lawsuit. That contingent includes Wild Rose, which owns three Iowa casinos and abstained from joining the lawsuit.

Some of the detail in the Iowa reports is already made public in federal reports through filings required by the U.S. Securities and Exchange Commission. But the most important point, they said, is that public transparency has a longtime record that has served Iowa well without harm to casinos.

“At this point, we didn’t see the benefit of the injunction,” said Jamie Buelt, a Wild Rose Casino spokeswoman. “Since the first gaming licenses were awarded, the financial statements have been public information. We’re not sure what’s changed.”

Attorneys for Iowa Attorney General Tom Miller declined to defend the longtime release of the audits. In an answer filed in response to the lawsuit, Miller’s office took no position on whether the information is confidential or fails to serve a public purpose.

“If the court so determines, (the Iowa Racing and Gaming Commission) will refrain from releasing the information requested,” Miller’s office said in court documents.

Randy Evans, executive director of the Iowa Freedom of Information Council, said the effort to squelch information from public release is part of an ongoing and concerning pattern.

Evans has recently spoken against efforts by Iowa State University to make secret the list of passengers who travel on its planes. His council also launched a battle against a state rule that is now being reconsidered that makes it illegal to publish birth and death records.

“The thing the public hears with increasing frequency is that letting the public in on these things will put them at a competitive disadvantage or harm the entities,” Evans said. “The ones who would be left in the dark going forward is the public.”

Prairie Meadows ruling

Prairie Meadows casino in Altoona does not have to abide by the state’s open records law since it no longer owes debt to Polk County, according to an opinion the staff of the Iowa Public Information Board has recommended its board adopt Thursday.

The Des Moines Register sought an opinion from the board after the casino — which earlier this year lost its federal nonprofit status — declined to release records pertaining to contracts of its top executives.

The casino, whose board is appealing the IRS decision to yank its nonprofit status, said it no longer has to abide by the state’s open records law because of a definition of “government body” in the law. Facilities that have “indebtedness” are required to abide. The casino — which operates from a facility owned by Polk County — no longer owes debt, the casino noted.

The Register argued “indebtedness” is a broad term used in other sections of Iowa law to reference general liabilities or risks the public holds in relationship to a facility. The casino’s actions could directly and adversely affect taxpayers, which maintains “indebtedness,” the newspaper argued.

The Iowa Public Information Board is expected to vote on the matter during a meeting that begins at 1 p.m. Thursday [Dec. 17, 2016] in the third-floor conference room of the Wallace Building, 502 E. Ninth St. in Des Moines.

These Iowa casinos that have joined the lawsuit (listed by location):

Altoona: Prairie Meadows Racetrack and Casino
Bettendorf: Isle Casino Hotel
Burlington: Catfish Bend Casino
Council Bluffs: Ameristar Casino
Council Bluffs: Harrah’s Casino
Council Bluffs: Horseshoe Casino
Dubuque: Diamond Jo Casino
Dubuque: Mystique Casino
Marquette: Lady Luck Casino
Northwood: Diamond Jo Worth Casino
Osceola: Lakeside Hotel Casino
Riverside: Grand Falls Casino Resort
Riverside: Rhythm City Casino
Riverside: Riverside Casino & Golf Resort
Sioux City: Hard Rock Hotel & Casino
Waterloo: Isle Casino Hotel

These Iowa casinos are not plaintiffs in the lawsuit:

Emmetsburg: Wild Rose Casino & Resort
Clinton: Wild Rose Casino & Resort
Jefferson: Wild Rose Casino & Resort