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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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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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Flash Of Mischief, Talamo Edge Irish Unity In St. Louis Derby

Flash of Mischief, an Into Mischief colt bred and owned by Jerry Namy and trained by Karl Broberg, emerged with a one-length victory over Irish Unity in the $250,000 St. Louis Derby on Saturday at FanDuel Sportsbook and Horse Racing, the track previously known as Fairmount Park in Collinsville, Ill.

Ridden by Joe Talamo, Flash of Mischief ran the 1 1/16 miles on a fast track in 1:46.59. He paid $6.60 as the third betting choice in the field of seven 3-year-olds.

Irish Unity, trained by Steve Asmussen, finished a head in front of Gagetown, the 8-5 favorite, with W W Crazy fourth, Two Worlds fifth, Hozier sixth and Ekatimorningstrike last.

Irish Unity and Brian Hernandez Jr. set the early fractions of :24.36, :48.16 and 1:12.54 for the opening six furlongs. Flash of Mischief was just a length behind, then engaged the front-runner at the top of the stretch, putting his head in front at the furlong pole and gradually edging away to the margin of victory.

The win was the fifth in 10 starts for Flash of Mischief, who was coming off a fourth-place finish to Jackie's Warrior in the G2 Amsterdam Stakes at Saratoga. The latter came back to win Saturday's G1 H. Allen Jerkens Memorial at the upstate New York track.

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