Court Decision Threatens Illinois Racing

 

The Illinois Racing Board is scrambling to cope with a huge civil judgment against the state's harness tracks that probably will push them into bankruptcy and threatens to impact Thoroughbred operations and jeopardize already dim prospects for new revenue sources.

 

A jury on Dec. 11 awarded nearly $80 million to several casinos in a long-running court battle with Balmoral Park, Maywood Park, and owner John Johnston. The civil suit stems from charges that imprisoned former Gov. Rod Blagojevich shook down Johnston for a big campaign contribution while considering whether to sign a bill taxing casinos for the benefit of racing.

 

William McKenna, attorney for the tracks, told the IRB Dec. 16 that Maywood and Balmoral will seek a negotiated settlement while admitting the casinos have "never been serious" in previous talks. Failing an agreement, he said, the tracks are prepared to file for Chapter 11 bankruptcy protection, which would allow them to conduct racing starting New Year's Day.

 

The IRB granted racing dates to Maywood and Balmoral earlier this year and voted 8-1 Tuesday to approve conditional intertrack wagering licenses. Commissioner Kathy Byrne voted "nay" and other commissioners expressed concerns that bankruptcy court proceedings are unpredictable and could leave the tracks unable to run their dates.

 

"This uncertainty is terrifying," Byrne said, warning Maywood and Balmoral could be forced to abandon their meeting on short notice if things go wrong in court.

 

"I'm very concerned we're going to wind up with hundreds of horses being abandoned in January and starving," Byrne said. "We have enough (public relations) problems with feral cats without this."

 

Her reference was to a well-publicized recent flap stirred up by an animal rights activist about how best to care for the cat population on the Hawthorne Race Course backstretch.

 

The bankruptcy filing likely would be made a day or two before Christmas. 

 

Commissioner Robert Schiewe Jr. suggested the board schedule a special meeting Dec. 29 to review the court's reaction to the filing and determine whether to allow the harness tracks to race during the first days of 2015. However, an informal poll suggested it might be difficult to find a quorum for a meeting between Christmas and the end of the year. IRB chairman William Berry left the possibility of a meeting open but unresolved.

 

The board did act to ensure that all payments owed by the harness tracks to other racing entities through Dec. 19 will be paid by wire transfer no later than Dec. 22. Lacking that settlement, some obligations that normally would be on a 15-day cycle could have been subject to court jurisdiction and delayed, reduced, or eliminated. Hawthorne president Tim Carey, who insisted on the special payment schedule, said his track could have been on the hook for $350,000 to $500,000 without the action.

 

About one-third of Illinois pari-mutuel wagering is conducted through Balmoral, Maywood, and their affiliated entities, IRB staff estimated, and a shutdown of harness racing ultimately also would impact purse earnings accumulated by Thoroughbred tracks through intertrack wagering.

 

Stirring up unpleasant memories of Blagojevich also is the last thing the racing industry needs as it prepares for yet another effort to win legislative support for a gaming bill that would permit slot machines at tracks—or another form or alternative funding.