draw_demo is an unused course that can be found in /Race/Course. Draw_demo looks like a corrupt version of Mario Circuit. Playing it will give you a glitched version of Mario Circuit. If you replace the BRRES files from Draw Demo into Mario Circuit, you'll get Mario Circuit with stars everywhere. However, if you point the draw_demo MDL0 to Mario Circuit textures, everything is exactly like the normal Mario Circuit. Playing it on the Wii has a similar effect to playing the standard draw_demo on the Wii, except with the non-replaced BRRES files working properly.
Due to the name (draw), it was guessed that it was used for TEX0 testing. This is very unlikely, since the TEX0 version is 2, while the direct ports of GCN Mario Circuit use version 1. It also uses MDL0 version 11 instead of 8 like the direct ports of GCN Mario Circuit. All the *_demo.szs files except draw_demo.szs are used for cutscenes (loser_demo.szs for losing a GP, winningrun_demo.szs for winning) so it is very likely that Nintendo wanted to use draw_demo.szs for ties in GPs. In the middle of the developement (since the TEX0 version is between the direct port of GCN Mario Circuit and the final tracks) they apparently choose to use the loser_demo.szs instead for ties with the text "Draw" in green instead of "The COLOR team lost." in the Team's color. Also, it is only possible to recieve a draw in Team GP since the game will "let you win" if you play solo.