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CDI Denied Illinois OTB Licenses

The Illinois Racing Board (IRB) on Thursday deadlocked 5-5 on a vote to allow Churchill Downs, Inc. (CDI), to retain control over simulcasting in 2022 at inter-track wagering (ITW) outlets that the gaming company currently operates under its expiring Arlington International Racecourse licensure. The tie in the voting meant the measure did not advance, and it did not come up for a re-vote.

Several IRB commissioners and executives with the Illinois Thoroughbred Horsemen's Association (ITHA) expressed sentiments that Illinois racing will be better off in the long run without CDI's involvement after the gaming corporation intentionally missed a 2019 racino licensure deadline and then entered a purchase-and-sale agreement this past September to sell the iconic racetrack for development.

But the denial of ITW licensure to Arlington will also create near-term purse revenue problem for Illinois horsemen, because no one will be running those simulcasting facilities until a new licensee gets approved to take them over.

Executives of Hawthorne Race Course have indicated an interest in running the venues that Arlington will be vacating, and earlier this year Hawthorne already started operating several ITWs that Arlington walked away from. But state law dictates the number of ITWs any given track owner can control, and Hawthorne will need that law changed if it wants to operate any ITWs beyond the one parlor remaining under its current allotment.

“When and if presented with any applications for parlors, we'll take action,” IRB executive director Domenic DiCera said after the vote in response to a commissioner's question about what the next steps were in the process. “At this moment, there's no predictive action that we can take. I think it's been well-stated that potential legislative action is required. So [the fate of the ITWs] is undetermined and unknown at this time.”

CDI's president and chief operating officer, Bill Mudd, was repeatedly grilled by commissioners prior to the vote about why CDI wants to retain ITW privileges even though it is in the process of abandoning Arlington, which is widely considered one of the most opulent Thoroughbred tracks in America.

Mudd said the reason CDI wants to run ITWs is “because we are looking for an alternative racing solution in the state of Illinois, particularly in the Thoroughbred side.” He added that once CDI finds that property, they don't want to have to “recreate” an entire network of ITWs from scratch.

But even though commissioners pressed Mudd for specifics on CDI's vision for a new racetrack, no details were forthcoming, as Mudd held firmly to vague, corporate-speak phrasing the gaming company's executives have been uttering for months.

“In terms of specific locations that we're looking at, I'd say we're looking everywhere,” Mudd said. “What I won't say [or] identify is specific properties that we're looking at. That's competitive information.”

The dialogue soon grew circuitous. Although several commissioners clearly wanted answers, the entire tone of the questioning about why CDI pulled the plug on Arlington stood out in contrast to the perplexing wall of silence that commissioners mostly upheld during the early part of 2021, when CDI's bid-soliciting process for Arlington began.

Commissioner Benjamin Reyes said he didn't believe CDI was truly looking to operate a new racetrack, and he likened what is happening with Arlington to the recent demise of Hollywood Park and Calder Race Course, two other prominent Thoroughbred tracks that went belly-up during CDI's stewardship.

“What's to convince us that you guys are looking for something? I don't think you guys are in the state of Illinois, I'll tell you that much,” Reyes said. “I would recommend to the commissioners that maybe we not give you [an ITW] license, and only consider giving you a license once you come up with a new [track] site. That way you have some motivation to move up finding a location if that's what you really have in the back of your mind.

“In California you did this. In Florida you did this,” Reyes continued, referring to the Hollywood and Calder shutdowns. “And now you did it in Illinois. What's there to [show us] you're operating on good faith? I don't see anything. I'm not convinced of anything that you could do that will help the horse racing industry here.”

Commissioner Alan Henry agreed.

“CDI could have applied for placeholder racing dates in 2022 and cobbled together a year or two of status-quo racing while hoping to finalize their development plans,” Henry said. “Instead, they chose to permanently shut down Arlington Park, in the process condemning both [Thoroughbred and Standardbred] breeds to drastically reduced dates next year and an increasingly perilous future.

“As I interpret what I consider the logical intent of state statutes, the conclusion I reach is that CDI must have an organization license for 2022 in order ultimately to conduct inter-track and off-track betting on racing in Illinois. It does not have that license, nor did it apply for one. Simple common sense tells me that should be end of story. But apparently, it's not.”

Henry continued: “By word and deed, after lobbying for and then rejecting the opportunity to apply for a racino license, then jilting the track, I believe Churchill has acted in a manner that directly subverts this board's mission to support and enhance the state's horse racing industry. By that I mean that in no way, shape, or form does shuttering Arlington Park ensure that Illinois remains competitive with neighboring states or stimulate growth within the industry…or encourage the state's breeding programs. In fact, CDI's actions have done exactly the opposite. And we absolutely should not be enabling them…

“To be clear, this is not about looking backward in anger,” Henry said. “This is about looking forward with confidence that the racing industry is not going to once again be blindsided by a corporation driven by objectives not compatible with a healthy racing industry.”
Prior to the vote, David McCaffrey, the executive director of the ITHA, asked commissioners to hold CDI accountable for its cumulative harmful actions.

“On what planet does a racing corporation that lobbied for years and years to get a gaming bill; that chose not pursue the [racino license granted by the] gaming bill, then chose to sell [Arlington] to a non-racing interest when [other] racing interests had submitted bids to buy the property and essentially harm the game beyond repair [get] held accountable?” McCaffrey said.

IRB chairman Daniel Beiser and commissioners Beth Doria, John Stephan, Henry, and Reyes all voted against granting CDI the ITW licensure.
Voting in favor were commissioners Leslie Breuer, Marcus Davis, Lydia Gray, Charles MacKelvie and Leslye Sandberg.

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CDI Grilled by IRB About Arlington’s Control of ITWs

Exactly 50 days after executing a purchase-and-sale agreement that will see Arlington International Racecourse demolished to become the future site of a football stadium, the gaming corporation Churchill Downs, Inc. (CDI) came before the Illinois Racing Board (IRB) Thursday to request 2022 licensure to retain control over simulcasting at its inter-track wagering (ITW) locations even though it won't be hosting any live racing next year.

The IRB heard contentious pro-and-con testimony on the Arlington-related agenda items, but in the end essentially punted on the matter by voting 10-0 to “lay over” the decision-making process until its December meeting.
Four issues stood out during the extended debate Nov. 18:

Firstly, Arlington president Tony Petrillo is intent on spinning the ITW licensure as a “demonstration of the [corporation's] continued commitment to be involved in horse racing in the state” that will preserve jobs.

Secondly, Hawthorne Race Course president and general manager Tim Carey said that Hawthorne Race Course is “absolutely” interested in taking over the operation of the most lucrative of the simulcasting parlors should Arlington not be granted a license to run them. And IRB commissioners appeared in agreement that those locations will end up generating roughly the same amount of revenue if Hawthorne operates them instead of Arlington.

Thirdly, the Illinois Thoroughbred Horsemen's Association (ITHA) is against Arlington retaining control of the parlors, citing the fact that since Arlington doesn't hold a license as a track, it can't then be granted ITW privileges.

Finally–and perhaps most surprisingly–the IRB itself repeatedly questioned the motives of CDI after commissioners had remained largely mute on the devastating topic of the Arlington sale for the better part of the last year.

“I just have a concern, as a board member, in how we've been treated by Churchill Downs,” said IRB commissioner Marcus Davis, noting that CDI could have opted to work out a plan to sell its land while preserving racing at Arlington in the short term, thus allowing for a smoother transition to year-round, dual-breed racing at Hawthorne.

“I don't get the sense that I can trust what Churchill has to say when they do the things that they do [like closing Hollywood Park and Calder Race Course],” Davis said.

IRB commissioner Alan Henry went a step further, advocating against granting ITW licensure to CDI.

“I don't think it's in the best interest of the public or horse racing to have [CDI] operate these parlors,” Henry said. “This is the same company that shut down the most beautiful track in the country…and it was just thrown in the ash heap for an alleged higher purpose that doesn't make any sense to me. I don't know that we should be rewarding the company with parlors when they don't have a track to run at.”
Henry said that in recent years, CDI has “torched” IRB directives aimed at fostering and promoting the sport.

“What I see in these [ITW] requests seems an awful lot like the farmer who sells his prized Holstein, then expects to still get paid for some of the milk it produces,” Henry said.

Henry noted that Arlington closed two of its parlors in 2020, and is set to “offload” four of its least-profitable remaining ones over the next few weeks.

Petrillo kept reiterating that CDI still wants to be involved in racing in Illinois, although he was vague on specifics.

“Our commitment to racing in the state and the product is indicative of our pursuit of these licenses,” Petrillo said. “At this time, we don't have any locations that we could identify, but we continually pursue this each day for another location.”

Petrillo said that keeping the ITW locations under Arlington's control will generate only a relatively small amount of revenue for CDI itself–about $250,0000 to $300,000–but that horsemen would reap the benefits of purse money derived from ITW bets.

“These licenses overall will produce a significant amount of handle–$76 million in handle, and will see about $8 million in host fees and purses going directly to Hawthorne,” for 2022, Petrillo said.

“We feel it's important that the board take action on these licenses today, as 80 to 100 [ITW workers] would be sitting in suspense on whether they have jobs or not,” Petrillo said.

“It would cause a lot of unrest for the public as well,” Petrillo added–without explaining how that strife could ever top the industry-wide calamity CDI triggered by deep-sixing Arlington.

IRB commissioner Beth Doria politely but firmly upbraided Petrillo by saying, “I've heard you reference the loss of jobs multiple times in your presentation today. And I'm just wondering where that concern was when you actually closed the racetrack itself.”
Davis underscored that it won't make much of a fiscal difference which licensee operates the ITWs.

“There may be a small [operational] hiccup. But if Hawthorne took over the OTBs, that money will still flow to the state; it will still flow to the horsemen. But at least we know that [Hawthorne has] a commitment, because they've committed to racing year-round. I don't see anything like that ever coming from Churchill Downs,” Davis said.

Despite some of the commissioners' misgivings about licensing Arlington to run the ITWs, the now-defunct track does have some relative precedents on its side.

Petrillo pointed out that when Arlington was rebuilding from its fire in the 1980s and was later emerging from a separate closure in the 1990s, the IRB let it keep operating ITWs without live racing.

And John Gay, the attorney for the IRB, said when asked during Thursday's meeting that “it is my opinion that the plain language of the [state] statute allows the board to issue these licenses if it so chooses.”

Henry disagreed.

“I am well aware that [CDI] can apply for these licenses because they raced for 60 days in 2021,” Henry said. “And yes, they may have operating control of a racetrack because they control the property. But they turned down their right to request 2022 racing dates, and they do not have a license to conduct pari-mutuel racing in 2022, nor have they requested one.

“I know it's a matter of legal dispute, and there are what I consider dissimilar precedents that allowed previous [ITW] approvals,” Henry said. “But common sense tells me that ITW licenses should only be granted to viable track operators that actually want to engage in horse racing, and that disqualifies these applications.”

When asked by Davis why CDI should be trusted to be involved with Thoroughbred racing in Illinois based on the Hollywood and Calder closures, Petrillo answered by saying that with regard to Hollywood, the current CDI management team was not involved in that decision. He didn't address Calder, which did close under the corporation's current regime.

As for the decision to sell Arlington, he said it was a “very heart-aching decision” for Bill Carstanjen, CDI's chief executive officer, to make.

When Petrillo was asked by Henry if he thought CDI's decision to rid itself of Arlington represented “fairly dramatic damage to the Illinois racing industry in the near term,” Petrillo admitted that Arlington's closure “could be construed as negative.”

But, Petrillo added, shifting into spin mode, “the one racetrack [Hawthorne] that will be remaining to conduct Thoroughbred racing will also see a significant amount of revenue being sent to their facility.”

Henry asked Petrillo if he had any regrets about CDI intentionally missing a deadline in 2019 to build a racino at Arlington after more than a decade of working with the ITHA to get the Illinois Gaming Act passed.

“I don't think that my personal feelings or my personal opinion is of any relevance in this matter,” Petrillo replied.
Henry said that as racinos at Hawthorne and Fairmount Park do open in the state, “The industry in a post-CDI world, in my opinion, will emerge on stronger and more reliable footing. Further, I see no signs that CDI's commitment to racing is going to improve.”

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Bears-Arlington Partnership ‘Makes Too Much Sense to Blithely Dismiss’

As the only member out of 10 on the Illinois Racing Board (IRB) to directly address the pending closure of Arlington International Racecourse and the devastating effect it will have on the state's racing circuit, commissioner Alan Henry said at Thursday's monthly meeting that a losing bidder in the track's sale is still working behind the scenes to fashion a deal to keep racing alive alongside a new football stadium on the 326-acre parcel.

Back on Sept. 29, Churchill Downs, Inc. (CDI), the gaming corporation that owns Arlington, announced the signing of a $197.2 million purchase and sales agreement that would transfer the crown jewel of Illinois racing to the Chicago Bears for the planned construction of a new stadium and mixed-use development.

With Arlington out of the equation for 2022, Thoroughbred dates in greater Chicago will wither to just 76 programs over two seasonal meets at Hawthorne Race Course, which will also host 75 dates of Standardbred racing next year.

One day after the Arlington sale became public, the state's Senate Executive Gaming Committee met to discuss the future of horse racing in Illinois. Henry said at the Oct. 14 IRB meeting that he came away “with a bad feeling” after listening to that hearing.

“I get that it looks bleak,” Henry continued. “But 30-year Marine Corps veteran Roy Arnold, the front man for the underbidders, made it clear to the subcommittee that he is not retreating.”

Arnold formerly worked for CDI as Arlington's president, starting in 2006 and resigning in 2010. When the track was put up for sale earlier this year, he partnered with a group of developers and investors to try to buy the property. That group's bid was the only known offer to preserve racing at Arlington.

When the Bears won the bidding process, Arnold said at the next-day Senate hearing that he would be willing to either work with the new owners to keep the track operational on 125 acres of the site or to step in and pursue the purchase if the football team backed out.

Henry said that a purchase and sales agreement is “not evidence of a done deal. There are still many variables out there. Just one of them is that at any moment, Chicago's mayor could throw some serious cards on the table [regarding a counter-proposal to keep the Bears in their current downtown home] now that the Bears have called her bluff.”

Henry continued: “Sure, Arlington Park's permanent closing may be likely, But it is not inevitable. Why? Because a Bears-Arlington Park partnership makes too much sense to blithely dismiss. And because if the Bears withdraw, [Arnold's group] is standing at the ready.”

Henry said that as “everyone in the industry knows, the 2022 racing calendar is a stopgap that is likely unsustainable beyond next year. Half a season for either breed is simply not enough.”

One idea that has been floated is for a harness track to be built on the site of a former state-owned mental health facility in the village of Tinley Park, about 30 miles southwest of Chicago. That would allow Hawthorne to transition over to full-time Thoroughbred racing, and each breed would have its own year-round racetrack.

“The consensus among horsemen is the construction of a harness track in Tinley Park is an integral piece of the solution, and should be treated as a priority. But right now that is just not happening,” Henry said.

“As I hear it, some Thoroughbred trainers are now considering moving to Florida, Louisiana and Arkansas at the end of the current Hawthorne meet and not coming back in late winter,” Henry said. “Some are also looking at Minnesota, Iowa, Indiana, and other states for 2022 given the need to lock in stalls next summer.”

Henry continued: “Then there's the reality that advance-deposit wagering platforms are grabbing rapidly increasing percentages of the betting handle. That means money is increasingly being diverted away from the [horsemen's] already paltry purses. The laws governing that split have to be rewritten to better ensure a healthy industry.”

Henry also noted that although racinos have been legal in the state since June 2019, none are yet operational at either Hawthorne or FanDuel Sportsbook and Horse Racing (the rebranded Fairmount Park), so purses aren't being supplemented by gaming revenues.

Henry suggested that moving forward, there should be a standing item on every IRB agenda for Hawthorne and FanDuel to update their progress on building racinos, and also “to address the harness track situation.”

But beyond one commissioner thanking Henry for his “particularly interesting” comments, no other IRB members voiced support for Henry's suggestion about the standing agenda item. And none of them chimed in about the state of the racing circuit when given the chance to speak during the “commissioner comments” section of the agenda.

This “elephant in the room” pattern of largely ignoring the most dire and pressing racing issue in the state has persisted at IRB meetings for the better part of 2021. With the exception of Henry, who has been outspoken about Arlington's pending closure for six consecutive IRB meetings since CDI declared the property would be sold for non-horse-racing purposes, the other nine IRB commissioners have, for the most part, maintained a stunning silence about the collapse of Chicago racing.

So what other matters did the IRB take up on Thursday? The proceedings were almost entirely officious.

By 10-0 votes, the IRB approved the licensing of an outrider and an entry clerk for Hawthorne's upcoming harness meet, disbursed Quarter Horse purse funds to FanDuel for the four races that track carded this past season, and signed off on granting a pari-mutuel tax credit to tracks and off-track betting licensees.

The IRB also had to bring back and ratify its 2022 dates order from last month because the way it had been voted in didn't comply with the state's open meetings act. This required commissioners to electronically sign the related documentation, and the meeting stalled briefly when several commissioners couldn't figure out how to do it.

The IRB also spent time during Thursday's public meeting congratulating a staffer for running a marathon, and discussed the upcoming move to new office space, which was described as a more modernized “new playground.”

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As Arlington Closes, Hawthorne To Shoulder ’22 Dual-Breed Dates Burden

Under the shadow of Arlington Park potentially going dark forever after Sept. 25, the Illinois Racing Board (IRB) on Thursday unanimously approved a 2022 race dates package that shifts the burden of hosting all Thoroughbred and Standardbred racing in the Chicago area to Hawthorne Race Course.

And while horsemen's groups for both breeds expressed gratitude for Hawthorne stepping up to implement a crammed-and-jammed, year-long race calendar that will be unprecedented in Illinois racing, representatives of the Illinois Thoroughbred Horsemen's Association (ITHA) said during the Sept. 23 meeting that the new arrangement isn't a viable long-term solution.

“Right now, on the Thoroughbred side, we're going to be going from 120 race days this year to 76 next year,” said David McCaffrey, the ITHA's executive director. “You always are reluctant to say we're at rock bottom because it maybe can get worse. But a second track in Chicago is so important for both breeds.

“And with Arlington's absence next year, we're seeing the importance of that second track play out. Because both breeds are having to share Hawthorne,” McCaffrey continued. “Hawthorne's having to turn their track [composition] over four times. One breed's going to be there for three months. Another breed's going to be kicked out for three months [for racing and training]. And then it's going to start all over again the latter part of the year. The importance of a two-track system in northern Illinois cannot be overstated.”

Half a century ago, greater Chicago had five competing tracks sharing Thoroughbred and Standardbred meets. Washington Park closed in 1977. Sportsman's Park briefly switched to auto racing in 2003 before being demolished. Maywood Park and Balmoral Park both shuttered in 2015.

In February of this year, Churchill Downs, Inc. (CDI), Arlington's corporate owner, announced an industry-devastating intention to close and sell Arlington. Although at least one known bidder in the sales process has stated an intention to keep Arlington alive for Thoroughbred racing, CDI long ago telegraphed its intention to sell the property for “non-horse racing” purposes, ostensibly so a new owner won't be able to compete with CDI's existing and proposed Chicago casinos.

On Thursday, for the fifth consecutive IRB meeting since CDI declared that Arlington would be snuffed out, nine of the 10 commissioners continued to maintain an astounding silence about the prospect of losing the state's most opulent and historic Thoroughbred venue.

The lone exception, once again, was commissioner Alan Henry, who, as he has at past IRB meetings, spoke passionately for about five minutes on what the loss of Arlington means for the sport in Illinois.

“I will tell you, frankly, that it dismays me to have to vote in favor of the 2022 racing dates that were reluctantly put before us today,” Henry said. “I'm well aware that it was the least-bad option. I also know that if this becomes the new normal in Illinois, we're on the road to the suffocation of an entire industry.

“The fault for this calendar, most of it, belongs to CDI. Their decision to permanently close Arlington Park, then to not apply for 2022 racing as a placeholder–even while one of the groups still alive in the bidding process wants to keep the track open–

has been a masterwork of corporate single-mindedness.”

Henry implored fellow commissioners to remember CDI's harmful actions if and when the gaming corporation ever comes before the IRB again to try and make a pitch for another racing license for a different track. He described CDI's decision to abandon Arlington as “a brutal clear-cut for the entire sport.”

Henry also urged fellow commissioners to “get in font” of another near-term problem involving CDI that he sees looming on the horizon: even after Arlington closes, it will still be generating revenue from advance-deposit wagering and off-track betting until Dec. 31. Normally, the portion of that revenue that goes to bolster the ITHA purse account would simply carry over into the next calendar year.

“But because there's no racing at Arlington next year, this issue now is what happens to that money, which is estimated to be about $800,000,” Henry said.

“I believe CDI should be brought in, under oath if need be, to confirm that they will live up to their obligation to deliver those funds to the [horsemen's purse account] in a timely fashion,” Henry said. “To insist on anything less would be a mistake, particularly given CDI's occasional talk about building a new track elsewhere in the state in some future year where it might say they would use those funds.”

ITHA president Michael Campbell tried to put a positive spin on the near-term deal to race at Hawthorne. But he added that the racing community can't ignore the bigger picture.

“We're excited about the [Hawthorne] racino being finally built out. It's a dream come true, particularly given the fact that for 20 years we've worked on this,” Campbell said. “And of course, our deep disappointment is that Arlington chose–or CDI chose–not to take advantage of [building its own racino].

“So we'll move forward into the future. I wish I could be as optimistic as [Hawthorne officials are],” Campbell said. “You know, we've got a lot of circumstances to overcome, including a divided schedule, a shared racetrack, the inability to train part of the year…

“It's great to talk about the future,” Campbell summed up. “But having said that, when's it going to happen? What can we rely on? What can we tell these people that are breeding these horses? What can we tell the people that own these horses? Because now, with Arlington's demise–or supposed demise, anyway–where does that leave us?”

McCaffrey supplied some breeding statistics to hammer home Campbell's point, noting that 15 years ago, Illinois annually produced about 2,400 Thoroughbreds.

By 2019, McCaffrey said, that number had plummeted to 420.

“It's like an 85% decrease in the amount of foals being produced. And the reason is that there's such a murky future, and has been for 20 years,” McCaffrey said.

Thoroughbreds in 2022 will race at Hawthorne between Apr. 2 and 30 on a two-day weekly schedule (Saturdays and Sundays). Between May 1 and June 24, that schedule gets bumped up to three days by adding Fridays, plus a stand-alone Thursday card on June 23.

In the fall, Thoroughbreds will race at Hawthorne on the three-day Friday-Sunday schedule between Sept. 23 and Dec. 31 (Christmas Eve and Day both dark).

Around and in between that dates structure, Hawthorne will conduct seasonal winter/spring and summer harness meets totaling 75 dates.

FanDuel Sportsbook and Horse Racing (known for 95 years as Fairmount Park before a corporate rebranding this year), is some 350 miles southwest of Chicago and is not considered part of the state's northern circuit. It will race 61 programs in 2022 between Apr. 19 and Sept. 24. The weekly schedule will be Tuesdays and Saturdays until June 12, with Fridays added thereafter.

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