Illinois Racing Board Nixes Arlington’s OTB Licenses But Approves TwinSpires ADW

You win some, you lose some.

That's how it went for Churchill Downs Inc. (CDI) and its dormant track, Arlington Park, during Thursday's regularly scheduled meeting of the Illinois Racing Board when the 10 commissioners deadlocked on a motion to permit Arlington to continue to operate off-track betting faclities, effectively killing the measure. CDI won a second vote by a 9-1 margin permitting TwinSpires, the company's advance deposit wagering platform, to maintain its license and operate in the state in 2022.

The meeting was contentious at times, with Arlington's Tony Petrillo and Hawthorne's Tim Carey shouting over each other during discussions about ADW revenue.

Commissioner Alan Henry, a fierce critic of CDI over its decision to not race at Arlington in 2022 and sell the track property to the NFL's Chicago Bears to build a football stadium, referred to the closing as a “flagrant obscenity,” saying that, “It's now time for this board and this state to move on from Churchill Downs.”

This came after Chris Block, newly elected president of the Illinois Thoroughbred Horsemen's Association, said the move to close Arlington has put the state's Thoroughbred industry “on the brink of collapse.”

But the board apparently has a number of CDI loyalists who felt it was in the best interest of racing to permit Arlington Park to maintain its OTB network despite not operating a live race meetingin 2022  – in what the Illinois Thoroughbred Horsemen's Association said was contrary to law.

Petrillo told the IRB that CDI remained committed to live racing in Illinois, saying the company was continuing to search for a property to build a new track to replace Arlington. When pressed by the board, he couldn't offer any specifics. Two senior CDI officials, Bill Mudd and Brad Blackwell, joined the call, but they offered no specifics, either, saying they hoped to find a place to build a track and then get a casino license.

To several commissioners, that made no sense, inasmuch as CDI turned down an opportunity to add casino gambling to Arlington after enabling legislation was passed in 2019. Horsemen and CDI worked hand in hand for many years to get the legislation approved.

When it came time to vote on Arlington's OTBs, five commissioners were in favor and five against; thus, the motion did not pass. The yes votes came from Leslie Breuer, Marcus Davis, Lydia Gray, Charles MacKelvie and Leslye Sandberg. Voting against the Arlington OTB licenses were board chairman Daniel Beiser, Beth Doria, Alan Henry, Benjamin Reyes and John Stephan.

Hawthorne is expected to pick up the slack from the Arlington OTBs that will not reopen, although under current law it is one OTB short of the maximum it can operate. Hawthorne is expected to seek legislative help that will permit them to expand their network.

For an advance deposit wagering company to be licensed in Illinois, it must have a contract with a state racetrack and the consent of the representative horsemen's group.

TwinSpires had previously reached an agreement with Fanduel Sportsbook and Horse Racing, the downstate track formerly known as Fairmount Park. The Illinois Horsemen's Benevolent and Protective Association that represents horsemen at Fanduel/Fairmount withheld consent until just before Thursday's meeting. The board could have approved the license without consent, if the commissioners felt the horsemen were being unreasonable, but the agreement made that a moot point after the Illinois HBPA gave their consent.

However, there was one last chance for the IRB to block TwinSpires' operations in Illinois by denying the company an ADW license. After much debate, that license was approved by a 9-1 vote. Henry was the lone dissenter.

As commissioner Henry explained, the approval will hurt horsemen at Hawthorne because the bulk of purse revenue will remain at Fanduel/Fairmount although 75% of the ADW customers live in the Chicago area.

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Breeders’ Cup Presents Connections: In Three Decades, Block Has Seen A Lot Of Change In Illinois Racing

When people ask children what they want to be when they grow up, the answers — sometimes comical, sometimes fanciful, and rarely practical — are rarely predictive of their eventual career path.

But for Chris Block, it was always a given that no matter where his life took him, no matter what job he aspired to or settled for, horses would always follow.

“My family has been in the industry in Illinois breeding and racing for probably more than 50 years,” said Block. “I grew up around the racing industry with my father and mother allowing me to get involved and taking me to the track and giving me the experience of going to the races. It is something that I cherish from my childhood days.

“First and foremost, I love horses, so that made it easy for me to get involved. I was fascinated by the racing part of it so those two loves I just combined. I had it in my mind that I wanted to be in the industry in some capacity and training was what interested me the most.”

After attending the equine program at a junior college in Illinois for two years, during which he worked for Hall of Fame trainer Bill Mott, Block was eventually able to strike out on his own in 1989. It was his parents who would give him his first break, sending him to Kentucky with a handful of homebred horses. Block sent out his first horse at Turfway Park but kept his sights on a return to the Windy City. Greater still was the goal of acquiring stalls at Arlington Park, the beating heart of Chicago racing.

“My eventual plan was to make my way to Chicago which I did. Once I was there, my first win was at Sportsman's Park,” said Block. “My father, he enjoys the industry just as much as me, he went and bought me a couple ready-made horses out of sales and it took off from there. It wasn't easy getting stalls and getting established in Chicago but my most favorite racetrack, and my family's, is Arlington. I was fortunate enough to get in there and I got four stalls. I eventually graduated to 10 stalls and at one point I had 50 stalls.”

Since that first horse left the gate at Turfway Park, Block has sent out 1,358 winners to date and banked more than $46 million in purses. Among his top winners is Grade 1 Clark Handicap and G1 Donn Handicap winner Giant Oak, who stood at Millennium Farms in Kentucky until his premature death in 2017. Block now maintains contingents of horses in Illinois, Kentucky, and Louisiana, though his home base remains Chicago.

But three decades after Block returned to Illinois with the overarching intent of racing and supporting his state program, Block, his family, and the entirety of the Illinois Thoroughbred breeding and racing community find themselves in a precarious situation. The closure of Arlington has left the state's horsemen in limbo and while the passage of an expanded gaming bill could bring business back to the state, relief may not come fast enough.

“Arlington closing was devastating,” said Block. “The history of Illinois horse racing in the last 10 years … no one would believe the book if I wrote it. I've been heavily involved in the political process. I lobbied hard with my constituents here to get gaming at the racetracks. I stood arm and arm with the Arlington/Churchill representatives in Springfield and the Hawthorne representatives in a strong effort to save the industry that was headed in the wrong direction and behind the times.

“The model of gaming at the racetracks and 'racinos' works in every other state. We worked hard and passed the gaming bill twice, but it was vetoed twice by Governor (Pat) Quinn for various reasons. That set us back, but then we passed it again with the current Governor, J. B. Pritzker. But Churchill turned their back and partnered up with Rivers Casino. They have now left a gaping hole in the industry that I'm not sure we can recover from unless Hawthorne Park comes through with their racino and there have been major delays with that. This is a central struggle that I face as a trainer and my family and so many others face and breeders and owners.”

Faced with a truncated Illinois racing calendar that now only includes 75 days, drastically cutting the opportunities for trainers, breeders, and owners to take advantage of Illinois-bred incentives, Block is concerned that breeding with continue to decline until the program is all but snuffed out.

“We have about 60 acres and we currently we have 14 broodmares,” said Block. “That's been a number that is consistent for us. We have had more, and even though the industry has really struggled in the last 10 years, my parents have held strong. But it has been a real struggle for Team Block. We're going to hang in there, but we are concerned about the future. From a breeding standpoint, even 10 years ago the industry was producing 1,000 foals. The last count for 2021 was 151 and we hear it will dip under 100 for next year.”

In an effort to help supplement their breeding program, Block and his family have had to retool their strategy and focus some of their mares on strictly breeding to sell. For the past three years, the family have sold those designated foals at the Keeneland September Yearling Sale. The rest remain with the family and go on to race.

Similar to the change in he's seen in the breeding shed, Block has experienced a notable reduction in the number of horses in his racing stable.

“I used to have close to 50 plus horses in the barn. This year, the number of horses was 27,” said Block. “The effects of what has happened in the state can be seen right there, and I think that number will dwindle even more. The program won't work much longer unless we see benefit from the passage of the gaming bill.

“We're also hoping a miracle happens at Arlington Park and that someone partners with the Chicago Bears, who are in line to buy the property, and puts together a multi-purpose design for that ground. It's one of the most beautiful racetracks in the world and we want that to be preserved. We want the chance to be able to race there in the future. We're the third largest market for horse racing and how racing could be on death's door here is beyond me. The horsemen find it amazing that we've arrived at this point. We've tried our best, but we've been dealt bad cards along the way by entities who have turned their back on the industry.”

With so uncertainty a reality that he has come to accept, Block continues to do what he loves: train. On a brighter note, his barn continues to churn out winners — among them, 5-year-old homebred Another Mystery (by Temple City), who took the Bob F. Wright Memorial Stakes Nov. 27 at Fair Grounds Race Course & Slots.

“Another Mystery has jumped to the forefront for the barn,” said Block. “Another horse that has been the stalwart for my barn before him is Cammack (Giant's Causeway). He's 11 and he's been what I call the 'blue collar' horse. He's raced in Illinois for the majority of his life, and he's been so consistent.

“I also have a filly by the name of Fate Factor who has been a really strong one for us, and we have another filly named She Can't Sing for that I train for Mr. [Bob] Lothenbach who has had a really good year. Then we have some young horses that are really improving, so we've been doing pretty well.”

A member of the Illinois Thoroughbred Horsemen's Association board, Block plans to continue his efforts to improve the state of racing at home and has thrown his hat in the ring as a candidate for president of the association. With so much on the line, he's prepared to go to bat for his horses and Illinois racing and breeding interests. The alternative, for Block, is unthinkable.

“Really, if you looked at Indiana, and you look at Pennsylvania, and you look at New York, that is where Illinois should be,” said Block. “I just hope we don't see what is happening in Illinois in other states.

“We're at a crucial point for racing and breeding here in Illinois. It will either survive, and get really, really good, or it will crash and burn very quickly here. I want to see if I can make a difference.”

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Illinois HBPA Withholds Consent For TwinSpires To Operate In Illinois

The organization representing owners and trainers at FanDuel Sportsbook and Horse Racing (formerly known as Fairmount Park) is withholding consent for the TwinSpires betting platform to accept wagers from Illinois residents.

The board of the Illinois Horsemen's Benevolent & Protective Association, which represents horsemen at the southern Illinois track 15 miles from downtown St. Louis, cites the closure of suburban Chicago's industry icon Arlington Park by Churchill Downs Inc. (CDI), TwinSpires' parent corporation, as a prime motivation for withholding consent. With CDI not owning a functioning racetrack in Illinois in 2022, TwinSpires must under state law have a contract with another duly licensed track to conduct business in the state starting Jan. 1. The only remaining Prairie State horse tracks are FanDuel and Chicagoland's Hawthorne Race Course, with CDI seeking approval through the FanDuel track.

Illinois law also gives horsemen consent rights before an advance-deposit wagering (ADW) platform can enter into a relationship with an Illinois track to conduct business in the state.

Illinois HBPA president Jim Watkins said his organization's board believes the issue is of the magnitude that it should go before the Illinois Racing Board. The IRB has scheduled a hearing on Dec. 16 at 10 a.m. Central via WebEx. The racing regulators have the power to overrule the horsemen's veto if they believe the horsemen's action was unreasonable, he said.

“That's where we're at now,” Watkins said. “We just felt this was an issue the racing board should be able to weigh in on, whether TwinSpires continues to be allowed to operate in Illinois. That's a big reason we withheld our consent.”

Watkins said the horsemen are upset not just that CDI shut down Arlington Park but then would not sell to ownership wishing to maintain racing at the 94-year-old track. CDI is the majority owner of Rivers Casino Des Plaines, located 10 miles from Arlington Park. The company has an agreement to sell the Arlington Park property to pro football's Chicago Bears for a reported $197 million.

“CDI wants their cake and to eat it, too: 'We're not willing to be involved in the racing, but we want to still utilize our ADW powers in Illinois,'” Watkins said.

Beyond the situation with TwinSpires in Illinois, Watkins believes there are fundamental issues with the entire ADW model that the industry must address to maintain horse racing's viability.

“This is where the system is really flawed,” he said. “It's an agreement between three parties. In Illinois, the track and the ADW provider negotiate the contract, and the third — the horsemen — is just the consenter. There are so many questions left unanswered. Obviously with the increased numbers of people using ADWs, the horsemen and the tracks get so much less of that it could spell doom for us.

“The framers of these ADWs intended for it to basically be a third to the provider, a third to the track and a third to the horsemen. But they take out fees up front, and those fees are unspecified in purpose and amount. What is an ADW fee? What does that mean? The racetracks don't ask the ADW to pay their security payroll and the electric bill. And the horsemen don't ask the ADW company to pay the feed bill and hay bill and straw bill.”

Watkins said the Illinois HBPA also “wants to bring light to a flawed system” under which online betting platforms operate. Watkins said that the ADWs make the lion's share of the net proceeds at the expense of horsemen's purse accounts and brick-and-mortar tracks and simulcasting facilities, even as the online technology siphons off the majority of bettors.

“It's inherently flawed, just the way it is set up,” Watkins said. “I think it's going to be the death of horse racing if we continue to go at the rate we're going. This was so well-said by a Chicago horseman: 'We traded dollars for quarters when we went to simulcast wagering. Now, with the ADW wagering, we're trading dollars and quarters for nickels.' The recipe has to be changed if horse racing — at least for the mid-level and smaller tracks — is going to exist.”

Watkins points to a July 14 article by former New York Racing Association head Charles Hayward, now publisher of Thoroughbred Racing Commentary, that illustrates the inequities of the ADW splits.

“Because of the pandemic of early 2020, Advance Deposit Wagering (ADW), Computer Robotic Wagering (CRW) and other off-track outlets handled 97 percent of the total U.S. racing handle last year,” Hayward wrote. “The on-track handle was the remaining 3 percent, or $333 million.

“… Here is a model of how the racetrack and the purse account would split a million dollars bet through an ADW: The ADW operator receipts would be $70,000, or 40 percent greater than the $50,000 total proceeds to the racetrack and the purse account.”

The Illinois HBPA signed a one-year contract with TVG to operate in Illinois, Watkins said. FanDuel, part of the corporate enterprise that operates the TVG racing channel and betting platform, is the southern Illinois track's equity partner to operate the sports book. While the company is not a partner in the racetrack, it received branding and naming rights as part of a contract that includes the long-term sponsorship of the St. Louis Derby, worth $250,000 in 2021.

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View From The Eighth Pole: Petrillo Deserves Chutzpah Award For Gaslighting Of Illinois Racing Board

We may have to dust off the old Paulick Report Chutzpah Award in the wake of Arlington Park executive Tony Petrillo's gaslighting of the Illinois Racing Board.

Appearing via video before the regulatory agency during a regularly scheduled meeting on Thursday, Nov. 18. Petrillo lobbied to keep Arlington Park's diminishing number of OTBs operating in 2022 despite the decision by the suburban Chicago racetrack's parent company, Churchill Downs Inc., to end racing there and sell the property to the NFL's Chicago Bears for construction of a new football stadium.

Arlington Park ran its final race on Sept. 25 after deciding earlier not to seek racing dates in 2022, saying the property was being put up for sale. Four days after the 2021 meet ended, Churchill Downs announced a deal to sell Arlington Park to the Bears for $197.2 million. The company rejected a bid from a group led by former Arlington Park president Roy Arnold to purchase the property, continue racing and develop a portion of the land.

There were two agenda items related to Arlington and CDI continuing to profit off Thoroughbred racing through the continued operation of its Trackside OTB in a separate building on the south end of the Arlington Park property and five other OTBs in the state. CDI also wants its advance deposit wagering brand, TwinSpires, to keep operating in Illinois, though it must have a contract with both a racetrack and horsemen's organization and currently does not have an agreement with horsemen, either at Hawthorne and the Illinois Thoroughbred Horsemen's Association or FanDuel Fairmount Park and the Illinois Horsemen's Benevolent and Protective Association.

Attorneys for Hawthorne racetrack and the Illinois Thoroughbred Horsemen's Association argued that Arlington should not be eligible for what the racing law refers ti as “inter-track” wagering because Arlington is no longer an operating racetrack and is not licensed for 2022. Commissioner Alan Henry said the question comes down to legislative intent, the best long-term interests of the racing industry and common sense. Henry said Churchill wanting to profit off OTBs is like the farm that sells its prized Holstein to someone and then wants the profits from the milk it produces.

Counsel for the Illinois Racing Board advised the commissioners that, in his opinion, Arlington Park could be awarded the license under the law.

Hawthorne said it was willing to take over operations in some of the regions where Arlington currently has OTBs, though it is restricted to 16 OTB locations and already has 15 open.

The gaslighting began when Petrillo said Churchill Downs Inc. is committed to live racing in Illinois – less than two months after selling the state's signature racetrack for development. (In his next breath, Petrillo said racetracks can not be profitable on their own.)

“We maintain an interest in racing and pursuing other opportunities to continue live racing within the state,” Petrillo said. “At this time, we don't have any location that we could identify but we continually pursue this each day for another location.”

Petrillo started shedding what looked on my computer screen like crocodile tears.

“These (OTBs) are very important because they provide jobs, they're going to provide a number of jobs across each of these geographical areas to people to support their families. Especially in these economic times it's very important for these jobs to be maintained.”

Commissioner Beth Doria called Petrillo out for the audacious comment.

“Mr. Petrillo, I heard you reference the loss of jobs several times,” Doria said. “But I'm just wondering where that concern was when you actually closed the racetrack itself.”

Another commissioner asked Petrillo if he felt the closing of Arlington caused “dramatic damage” for the Illinois racing industry.

“Any business closing in any part of the industry has an impact that could be construed as negative,” Petrillo said in a comment that can only be construed as tone deaf by the thousands of lives affected by the closing of Arlington Park.

The Illinois Racing Board voted to delay a decision on Arlington Park's request until the Dec. 16 meeting. Let's hope the board does the right thing and denies the OTB licenses next month and allows Hawthorne to take them over. If CDI and Arlington opt to get back in racing with the construction of a new track, OTBs should be part of their operation. Until such time, they are no longer in the racing business in Illinois.

That's my view from the eighth pole.

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