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Letter to Editor: Potential Arlington Park Sale an Antitrust Violation

Dear Editor:

In your article, “Arlington Horsemen Beg for Help,” published Aug. 17, it is was stated by President Michael Campbell of the Illinois Thoroughbred Horsemen's Association (ITHA) at the public comment period before the Illinois Racing Board, that Churchill Downs may not sell Arlington Park to the highest bidder in order to avoid competition. Mr. Cambell said, it is “the worst-kept secret in Illinois–and we all know it–is that Churchill Downs and [that corporation's business entity at] Rivers Casino is attempting to eliminate horse racing at Arlington Park because they're afraid that it will turn into a [competing] gaming location.”

I offer no opinion whether the facts asserted by Mr. Cambell are true or not. That said, as an attorney, I would be of the opinion that were it true that Churchill Downs would not sell a racetrack to the highest bidder if it were part of a horse racing operation, this would constitute a serious antitrust violation. This smells of a market boycott so as to prevent or extremely hamper a potential competitor from competing. Ordinarily this would be bad, but in a highly regulated industry such as horse racing that inherently limits market entry by government regulation, this is particularly egregious. Bid rigging, refusals to deal, and unfair attempts to deprive competition of the means to compete are common forms of antitrust violation. It is the betting public that would benefit from the competition that gets ripped off. Would-be competitors and horsemen who lose out on opportunities to race would also suffer real, non-theoretical injuries.

I would remind the public that apart from being a civil violation, antitrust violations can be criminal. By way of example, members of the then mighty General Electric Company were sent to jail in the early 60's for antitrust violations committed in the late 50's. Suffice it to say, what I read was sufficiently disturbing (if the facts turn out to be true) that I hope the Antitrust Division of the Department of Justice looks into it. The behavior might violate the Illinois Antitrust Act which, among other things, makes it illegal to “Establish, maintain, use, or attempt to acquire monopoly power over any substantial part of trade or commerce of this State for the purpose of excluding competition.”

One of the more complex issues is standing to sue for these antitrust violations. Certainly the would-be gambling industry competitor that offered the highest bid would certainly seem to have standing to sue.

Rinaldo Del Gallo, III

Attorney at Law

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Arlington Horsemen Beg for Help. IRB Instead Tweaks 15-cent Admissions Tax

For the fourth consecutive meeting of the Illinois Racing Board in the six months since Churchill Downs, Inc. (CDI), announced its industry-devastating intention to sell Arlington International Racecourse for “non-horse racing” purposes, the 10-member board on Tuesday remained stunningly silent on the prospect of suburban Chicago's premier Thoroughbred venue going dark forever after Sept. 25.

How pronounced was the “elephant in the room” syndrome during the IRB's one-hour Aug. 17 teleconference?

After listening to impassioned pleas from the Illinois Thoroughbred Horsemen's Association (ITHA) and members of Arlington's backstretch community for the IRB to undertake some form of action that might stave off closure or at least ensure a fair bidding process that could help a different operator gain control of the iconic track, commission members said absolutely nothing in response.

After the IRB heard the desperate pleas of the horse people, the board quickly and mutely moved on to a non-critical voting exercise that was the figurative equivalent of rearranging deck chairs while the Titanic swiftly sank.

Among the far-flung items that the IRB devoted time to advancing unanimously by voice vote on Tuesday were a series of rulemaking initiatives pertaining to a 15-cent tax on racetrack admissions, the outdated practice of tracks issuing admission tickets to patrons, and giving permission for tracks to allow patrons in tax-free after the sixth race instead of the seventh.

Left abjectly unaddressed was the fact that as of next season, it appears more and more of a reality that the IRB won't have to worry about collecting that 15-cent admissions tax at Arlington, because the iconic Thoroughbred venue could be bulldozed for development by then.

“We find ourselves in the most difficult place of losing Arlington altogether,” ITHA president Michael Campbell said during the public commentary portion that started the meeting. “And even though there's another consortium out there that wants to buy Arlington Park for the purpose of racing, it's my belief, because of intel that I'm receiving, that the highest bid won't [save the track from redevelopment].

“Now that's inconceivable to me, because in any business situation I've been involved in, it's the highest bid that counts. But not in this one. Because the worst-kept secret in Illinois–and we all know it–is that Churchill Downs and [that corporation's business entity at] Rivers Casino is attempting to eliminate horse racing at Arlington Park because they're afraid that it will turn into a [competing] gaming location,” Campbell continued.

Campbell labeled CDI's stated attempt to make sure that Arlington gets sold to a non-racing entity as “obstructionist,” and he said such behavior by the gaming corporation is “unconscionable from my standpoint.”

Although CDI has stated it has received multiple bids on the 326-acre Arlington property, only four have been publicly disclosed by the bidding parties.

Just one, submitted by the track's former president, Roy Arnold, in partnership with developers and investors, calls for the track to remain in place, while a mid-size arena for a minor-league hockey team is constructed as part of a 60-acre entertainment district alongside a 300-unit housing development and 60 acres of industrial space. Racing would continue under that new ownership.

A public announcement on CDI's selection of the winning bid is expected to come by early fall, and the local regulatory approval process could start before the end of the year.

“I would implore this commission: Use your authority. Look into this. Create transparency in this bidding process. There's no reason that bad actors should be rewarded in this state,” Campbell said. “Please help us out here. We have to save Arlington Park.”

After the rulemaking voting took place, to close out the meeting, each of the commissioners were called upon to make comments on any topic that they felt was important for the board to address.

Most commissioners opted to remain silent. Several took the opportunity to welcome a new commissioner or to say they'd like to read a series of scholarship essays written by children from the backstretch community that had been referenced earlier. Only one of the 10, Alan Henry, brought up Arlington at all.

As he has for four consecutive meetings now, Henry read into the record prepared statements underscoring the dire nature of Arlington's pending closure.

But Henry offered no plan of action in which the IRB would step up and take an active role in trying to help the state's Thoroughbred racing survive. Hawthorne Race Course is the only Chicago-area track to have applied for 2022 dates, and its annual calendar will have to be split between Thoroughbred and Standardbred dates next season.

“From what I can gather, as of [Aug. 16], at least one group that wants to keep [Arlington] alive remains actively in the running, most realistically in 2023, and is seeking ways to make a deal work,' Henry said. “The industry is facing a totally avoidable tragedy and drifting an dangerous waters.”

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ITHA: Refusal To Apply For 2022 Arlington Race Dates ‘Disappointing But Not Surprising’

The Illinois Thoroughbred Horsemen's Association issued the following press release on Thursday:

Continuing their campaign to sabotage future gaming opportunities at Arlington Park, track executives are refusing to apply with the Illinois Racing Board for race dates in 2022.

Arlington officials are well aware of interest from other parties in continuing racing at the state's flagship racing facility, as at least one group of investors has publicly disclosed its plan to purchase Arlington and continue live racing there. But if Arlington does not apply for 2022 dates by tomorrow, thereby preserving an avenue for a future owner of the track to pursue racing, then any new owner of the track will not have the option of racing there next year.

Under Illinois law, a dates application for the next year must be filed by Aug. 1. With Aug. 1 falling on a Sunday this year, the deadline moves up to Friday, July 30 – the last IRB business day before Aug. 1.

“Churchill Downs is writing the book on bad faith, so this latest move is disappointing but not surprising,” said Mike Campbell, president of the Illinois Thoroughbred Horsemen's Association.

Since 2018, when it announced its intent to purchase its ownership interest in Rivers Casino, Arlington owner Churchill has devoted itself to eliminating the threat of competition that gaming at Arlington might pose to nearby Rivers. Churchill refused to apply for a license to develop Arlington as a racino, even though its lobbyists had spent two decades lobbying Illinois lawmakers for that privilege, and then insisted it would sell the track to another entity that would use the property for a purpose “higher and better” than horse racing.

In February, Arlington Heights Mayor Thomas Hayes told ABC7/WLS-TV in Chicago: “I think it's clear why [Churchill] did not choose to open a casino at the racetrack property – because it would directly compete with their majority interest in the Rivers Casino.”

ITHA President Campbell added: “Churchill's commitment to stopping any gaming at Arlington from competing with Rivers is the worst kept secret in Illinois. Company executives have practically contorted themselves to explain and justify their anti-competitive behavior while carefully avoiding any acknowledgment that their true motive appears to be eliminating the threat of competition from Arlington.”

With at least one group of reputable and credible investors poised to purchase Arlington to continue horse racing and pari-mutuel wagering – the highest and best purpose, without question, for one of the finest racing venues in North America – Arlington President Tony Petrillo told a local media outlet that Arlington has a racing dates application in its possession but probably will not file it.

“It's clear that Churchill Downs cares exclusively about corporate profit and that all other considerations are incidental,” Campbell said. “All we can do in this case is hope that Churchill will recognize the utility, for the sake of its interest in selling Arlington Park to the most capable bidder, of filing the dates application to preserve the possibility of future racing at the track.”

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Four Months After Announced Arlington Sale, IRB Just Now Initiates CDI Talks

After four months of no public action by the Illinois Racing Board (IRB) since Churchill Downs, Inc. (CDI), announced its polarizing intention to sell Arlington International Racecourse for “non-horse racing” purposes, IRB chairman Daniel Beiser disclosed just before the end of Tuesday's meeting that the IRB will only now begin the process of reaching out to the gaming corporation to try and get a clearer understanding of what is likely to happen to suburban Chicago's landmark Thoroughbred track, which faces potential permanent closure at the end of this season.

But Beiser said that discussion with CDI won't happen at an open, public meeting at which stakeholders can listen to sworn testimony and commissioners can ask questions about the potentially devastating blow to Illinois racing.

Instead, Beiser explained, he is asking the IRB's executive director, Domenic DiCera, to set up a private phone call “in the near term” with CDI that will include only those two IRB officials and whichever representative(s) CDI makes available.

“Hopefully it will become a reality soon.” Beiser said, seemingly indicating it's not a certainty CDI officials will agree to participate.

“Two things I want to be able to accomplish by that [call],” Beiser said. “Number one is I want to reiterate and explain to them how much this uncertainty is impacting the men, women of the horse racing industry moving forward…. The last two years have been unbearable for these men and women and their future.

“The other thing I would like to find out–as much as they'd like to divulge–[is] what's going to happen in the near term and in the long term regarding this whole process?” Beiser said.

Beiser said it was only on Monday–the day prior to the June 22 meeting–that he finally directed the IRB's executive director to initiate contact with the gaming corporation. CDI had announced its intention to sell Arlington back on Feb. 23.

“This is the proper time now to make that contact,” Beiser explained. “Prior to this, the bidding process was open and was ongoing. That has come to a conclusion. And now, from what we've been told in the past, their decision is going to be made sometime in the third quarter. But we would like to try to, again, ask them to please bring some conclusion to this that would allow for people to plan for their future.”

Beiser said he'd like CDI to accede to some form of “hopeful accommodation” that would help to preserve the linchpin track of the Illinois Thoroughbred circuit, although he did not elaborate and spoke only in general terms about what might be discussed in that private phone call.

“Once we've made that contact, I will reach out to commissioners to let them know what went on…as soon as that phone call, hopefully, is completed,” Beiser said.

The IRB has now held three teleconference meetings since Arlington was officially put up for sale. Yet instead of addressing head-on the prospect of the region's signature track vanishing or proposing ways in which regulators might help to salvage racing at Arlington under new ownership, the IRB has treated the most pressing Illinois racing issue in decades as the proverbial “elephant in the room” by almost entirely avoiding the subject during open, public sessions.

Only one commissioner, Alan Henry, has even brought up the topic at all, using the “commissioner comments” portion of the agenda during the last three monthly meetings to read into the record prepared statements seeking a “win-win” outcome for CDI, the racing community, and the state.

But up until Beiser's disclosure on Tuesday about the planned phone call, the entire nine-member board has reacted with silence and inaction regarding the Arlington sale each time Henry has spoken up.

Although CDI has stated it has received multiple bids on the 326-acre Arlington property, only two have been publicly disclosed by the bidding parties.

One, submitted by the track's former president, Roy Arnold, in partnership with a consortium of developers and investors, calls for the track's grandstand and track to remain in place, while a mid-size arena for a minor-league hockey team is constructed as part of a 60-acre entertainment district alongside a 300-unit housing development and 60 acres of industrial space. Racing would continue under the new ownership.

The other bid is from the Chicago Bears football team, which wants to build a new stadium and put up mixed-use development on the site, razing the racetrack to do so.

On June 21, officials for the village of Arlington Heights, where the track is located, voted unanimously to tweak some zoning rules to prohibit certain uses of that property, like for adult businesses, kiddie parks, funeral parlors and warehouses.

But according to a story in suburban Chicago's Daily Herald, Mayor Tom Hayes underscored at that Monday night meeting that the village does not control or own the property, and there's only so much it can do to impact the outcome of the sale.

“The ultimate decision will not be ours. Certainly we'll have some involvement in terms of uses down the road. But the proposals were not submitted to the village of Arlington Heights, but to Churchill Downs…. As I've said many times, and I think the board agrees, our goal is to put the property to its highest and best use for our community.”

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