Illinois Thoroughbred Horsemen's Association | Horse Racing Free Tips

Churchill Downs Announces It Will Sell Arlington Park

Churchill Downs announced Tuesday that it has launched a process to sell Arlington Park, which sits on 326 acres of real estate 30 miles northwest of downtown Chicago. The sale will be handled by CBRE Group, a full service commercial real estate firm.

Arlington's future looked bleak in September of 2019 when Churchill Downs made the surprising decision to not take the necessary steps to open a casino on the racetrack property. It is widely believed that Churchill did not want to create competition between an Arlington casino and a casino it owns near the track. Churchill owns the Rivers Casino in Des Plaines, Illinois, which is about seven miles from the Arlington.

After confirming that it did not seek a casino license for the track, Churchill said it would only commit to racing at Arlington through 2021. In Tuesday's press release, Churchill said that it would honor the commitment to hold a meet that is scheduled to begin Apr. 30 and end Sept. 25.

“On the one hand, when you hear that Churchill is going to sell Arlington Park ,your heart immediately goes into your mouth because we are planning on racing there in two months,” said David McCaffrey, the executive director of the Illinois Thoroughbred Horsemen's Association. “We are a bit relieved that at least they are committed in writing to racing this summer That's the short-term gain part but we're deeply saddened that it looks like our worst fears will come true, that Arlington Park's last ever race will be held in September.”

In Tuesday's press release, Bill Carstanjen, the CEO of Churchill Downs Incorporated, said the company will pursue opening a racetrack/casino at a new location somewhere in the state. Once Arlington closes, Hawthorne will be the only track in the Chicago area, and Hawthorne and Fairmount Park will be the only tracks left in the state. Arlington opened in 1927.

In the release, Carstanjen touted Arlington as an attractive property for development.

“Arlington's ideal location in Chicago's northwest suburbs, together with direct access to downtown Chicago via an on-site Metro rail station, presents a unique redevelopment opportunity,” he said. “We expect to see robust interest in the site and look forward to working with potential buyers, in collaboration with the Village of Arlington Heights, to transition this storied location to its next phase,” said Bill Carstanjen, CEO of CDI.

As for the potential of opening a new racetrack in the state, Carstanjen said: “We are exploring potential options with the State and other constituents and remain optimistic that we can find solutions that work for the State, local communities and the thousands of Illinoisans who make their living directly or indirectly from Thoroughbred horse racing. We are committed to the Illinois Thoroughbred racing industry and will consider all options in working toward opportunities for it to continue into the future.”

McCaffrey said there would be several obstacles standing in the way if Churchill tried to open a new track in the state.

“Moving the racing license would require an awful lot of regulatory steps and probably changes to the state statutes,” he said. “It would be much easier said than done. To us, this is not a good solution. The good solution for us was to make Arlington Park the biggest and best racino in the country, bar none. Because of its location, its history, because there is a train station right at the track, it was the perfect spot for a casino. None of those things will exist in a place built somewhere else and I can promise you it would not have the grandeur of Arlington Park.”

Finding a location in a saturated market where a casino and racetrack would thrive will not be easy. There are already 10 casinos in Illinois, which does not include the casinos that have yet to open at Hawthorne and Fairmount.

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Request to Escrow $4.9M in ‘Recaptured’ Arlington Purses Again Shot Down By State

For the second time in four months, the Illinois Racing Board (IRB) Jan. 21 declined a request by the Illinois Thoroughbred Horsemen's Association (ITHA) to put $4.9 million of “recaptured” purse funds in escrow so that money can only be collected by Arlington Park if the track runs its entire slate of 68 dates in 2021.

During Thursday's IRB meeting, the ITHA restated the same argument it articulated back on Sept. 16, when the 2021 dates were initially granted: that the Illinois racing community doesn't have faith that Churchill Downs, Inc. (CDI), the gaming corporation that owns Arlington, will follow through on running a race meet in its entirety, so ITHA wants the statutorily legal recapture funds conditionally withheld by the IRB as a cudgel of compliance.

The litany of distrust between the ITHA and Arlington is based on three recent incidents: 1) A stunning 2019 decision by CDI to intentionally miss a deadline to apply for racino licensure at Arlington after working for more than a decade with the ITHA to get a gaming law passed; 2) An acrimonious eight-month battle over race-meet contracts for 2020 and 2021 that included numerous blown deadlines and required IRB mediation; and 3) Comments made last July 30 by Bill Carstanjen, CDI's chief executive officer, that CDI will honor its 2021 race meet contract with the ITHA “if we elect to do so” and that the Arlington property “will have a higher and better purpose for something else at some point.”

Recapture has been a controversial entity unique to Illinois racing for 25 years. It's based on a 1995 law that states that if in any given year, total Illinois handle falls below 75% of the state's 1994 benchmark, any track whose handle also falls below its own 1994 individual benchmark is entitled to deduct 2% of the difference from its horsemen's purse account.

To give a long-view example of how much money that law has cost Illinois purse accounts since its implementation, David McCaffrey, the ITHA's executive director, testified Thursday that Thoroughbred and harness tracks statewide over the decades have reaped $298 million in recaptured funds, with Arlington alone raking back $98 million in money that had been earned for purses.

ITHA President Michael Campbell added that recapture “is harmful. It is what has caused the almost total erosion of the industry in Illinois.”

But although they have a problem with the recapture law itself, McCaffrey and Campbell both admitted that Arlington is not doing anything illegal in taking the recapture money according to the Illinois statute.

“It's their legislative right,” Campbell said. “But at the same time, it doesn't mean that it's a good law.”

Campbell noted that Hawthorne Race Course, the other stop on the two-track Chicago circuit, is deferring any collection of its recapture funds until more money is generated for purses when the Hawthorne racino gets up and operational.

Yet Arlington president Tony Petrillo testified that his track already does work with the ITHA to the extent that, “Arlington, prior to this year, has voluntarily capped or put a ceiling on recapture of $4.5 million.”

Petrillo added: “Regarding the [escrow] payment schedule that the ITHA is seeking, first I would say Arlington should not be treated differently than any other racetrack in those terms…. We cannot control the results of the pandemic…. We have accepted 68 days of racing [and] fully intend to run those 68 days of racing…. I don't think [escrowing the recapture funds] would be in the best interest of racing and to set that type of precedent.”

Back in September, when the ITHA first asked the IRB to hold back 2021 recapture funds until Arlington's 68-date season was completed, the IRB's attorney said that statutory provisions didn't allow the attachment of such a stipulation to dates orders. Based on that advice, board members at that time voted 6-0 to grant Arlington's schedule with no escrow strings attached.

But it was noted at that same meeting that the ITHA could bring up the subject again in January, when the IRB had to vote upon setting the 2021 recapture payment schedule.

Yet on Thursday, after hearing from both the ITHA and Arlington for 25 minutes on the topic, no IRB members stepped forward to attach the ITHA's escrow request to the motion listed on the agenda to certify the recapture amounts.

In fact, the IRB didn't even discuss the issue prior to voting 6-0 to release the recapture payments as requested by the tracks.

For Illinois' three Thoroughbred tracks, the approved recapture amounts this year will be: Arlington ($4,948,020), Hawthorne ($2,879,530) and Fairmount Park ($1,934,464).

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Illinois Grants 2021 Dates Amid Distrust for Arlington’s Corporate Ownership

Citing distrust in Churchill Downs, Inc. (CDI), the gaming corporation that owns Arlington International Racecourse, the leadership of the Illinois Thoroughbred Horsemen’s Association (ITHA) on Sept. 16 asked the Illinois Racing Board (IRB) to impose a condition on 2021 race dates that would withhold millions of dollars in purse fund “recapture” money from the track if it did not end up racing its applied-for 68 days next year.

The IRB, which was meeting with three newly appointed commissioners for the first time on Wednesday, probed Arlington president Tony Petrillo about CDI’s intentions for racing in suburban Chicago in 2021 and beyond.

Board members specifically wanted clarification on earnings-call comments made July 30 by Bill Carstanjen, the chief executive officer of CDI, that said the corporation will honor its 2021 race meet contract with the ITHA “if we elect to do so” and that the Arlington property “will have a higher and better purpose for something else at some point.”

But after the IRB received advice from its attorney that statutory provisions covering recapture don’t allow the attachment of such a stipulation to dates orders, board members voted 6-0 to grant Arlington’s schedule with no strings attached.

The IRB also unanimously approved 2021 racing at Hawthorne Racecourse for 50 dates. Since 2016, the two Chicago-area tracks, Arlington and Hawthorne, have presented a unified race dates and dark-day host status template for the IRB’s approval.

Fairmount Park, which is 350 miles south and not considered part of that Chicago circuit, got its requested 53 dates.

Prior to the ITHA’s request for the recapture provision, Petrillo told the IRB that Arlington anticipates “running eight races per day during those 68 days and being able to offer a purse structure that will allow us to attract a sufficient horse population to fill those races, as well as conducting a stakes schedule that is necessary to support a long race meet over five months over the most competitive time of the year.”

John Walsh, Hawthorne’s assistant general manager, said the 10-month Chicago circuit arrangement “is good for the industry. The horsemen will have a place to be, and they’ll have something to look forward to in 2022 as we hopefully finish our casino sometime toward the end of next year.”

But despite the news of apparent accord, ITHA representatives made it clear the horse community didn’t have 100% faith that CDI would follow through on its contracted commitment to 2021 racing.

ITHA executives cited last year’s stunning decision by CDI to intentionally miss a deadline to apply for newly legalized racino licensure that would have bolstered purses at the track, plus an acrimonious eight-month battle with Arlington over recently inked contracts for 2020 and 2021.

“[Arlington saying] that they’re going to run in 2021 after the difficult time with the contract we had this year, that’s purposeful. It’s meaningful. We’re grateful for that,” said ITHA president Michael Campbell. “However, Arlington is the organizational licensee. CDI is not. And CDI will do whatever is in their best interest to fulfill their [corporate] fiduciary responsibility. And that’s a problem for us given [the disconnection] that we are greatly concerned about. We cannot go through another year as horsemen [with] even the possibility that there’s going to be some disruption or the cancellation of the racing season.”

David McCaffrey, the ITHA’s executive director, then made the request for the recapture provision.

“It’s not meant to be antagonistic or provocative in any way. And there really shouldn’t be any resistance, in my judgment, on Arlington’s part if their intention is to truly race,” McCaffrey said. “Because if they race, this would be meaningless. [It] would at least give some surety to the horsemen. Or, if for some reason, the meet doesn’t happen, at least it preserves the $4.5 million in recapture that would be taken out of the purse account.”

IRB chairman Daniel Beiser asked Petrillo to clarify CDI’s intentions for 2021 and beyond. But the Arlington president’s drawn-out reply was vague and laden with corporate-speak.

“Although 2022 will be here before we know it, there is some time needed to sort this out,” Petrillo said, in part. “And I know that these conversations have come up daily within the confines of the strategic team at Churchill Downs. And I know that they are working on some solutions. What they are at this time I don’t think that anybody could comment on publicly on that right now. But we…do feel our responsibility to the industry as well as the community. And we intend to fulfill that in 2021, and beyond that when the opportunity does exist.”

Beiser, after considering the ITHA’s request to use recapture payments as a cudgel for compliance, asked if Petrillo could provide written clarification from CDI regarding the gaming corporation’s intentions for Arlington.

Petrillo replied that the IRB would get that written assurance in the form of a signed dates acceptance letter that licensees are required to submit to the commission after getting dates orders. He bristled at the proposed “unprecedented conditions” over recapture that “might cause a flurry of legal matters to arise.”

Petrillo continued: “I think we’re opening up a can of issues that then also impede upon the agreement that we have with the horsemen’s association. Again, I just want to reiterate that it is our intent to race in 2021. When that acceptance is signed, that’s written in stone. If we do not comply, the IRB has a number of mechanisms to try and enforce that acceptance or penalize Arlington if there’s a failure to fulfill those commitments.”

Beiser again told Petrillo he’d prefer a separate form of written commitment. The IRB then recessed and voted upon the slate of dates after hearing advice from the board’s attorney. It was noted that while the IRB doesn’t have the authority to attach the recapture stipulations to the dates order, it does have the power to set the recapture payment schedule, and board could consider that when it certifies recapture payment amounts in January. But that would be nearly four months before the track even opens for racing.

Next year will see the return of a spring Thoroughbred meet at Hawthorne (Mar. 6-Apr. 25), which had been cancelled this season to allow for racino construction at the property.

Arlington’s dates will span Apr. 30-Sept. 25.

Hawthorne races again in the autumn, Oct. 1-Dec. 26.

Fairmount races Apr. 27-Sept. 6.

The actual race dates were awarded in blocks. The days cited above account for the dark days at the beginnings and ends of meets that were indicated in each track’s application.

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Influential Illinois Racing Commissioner Resigns

Commissioner Thomas McCauley, who volunteered his time to play a major role in mediating the recently contentious contract negotiations between Arlington International Racecourse and the Illinois Thoroughbred Horsemen’s Association (ITHA), abruptly resigned from the Illinois Racing Board (IRB) “effective immediately” on Sep. 4.

No reason was cited for McCauley’s sudden departure, which was announced in an IRB press release late Friday afternoon on the cusp of the Labor Day holiday weekend.

McCauley, an attorney who specializes in gaming law and regulatory compliance counsel as a partner at the Chicago-based Nisen & Elliott, LLC, was frequently the only member of the IRB to ask direct, pointed questions of racing industry stakeholders at IRB meetings. He served two stints on the IRB, first in 2014 and again starting in 2017.

McCauley was especially blunt over the past year in repeatedly grilling executives from Arlington and its corporate parent, Churchill Downs, Inc., (CDI). At an IRB meeting last September, he chastised CDI for lacking “any regard for social responsibility whatsoever” after the gaming corporation intentionally missed a deadline to apply for gaming licensure after a decade of working with the ITHA to get a state law passed to attain that privilege.

IRB Chairman Dan Beiser said in the release that “The Illinois horse racing industry has benefitted immensely from Tom’s service over the years and will definitely miss his valuable input.”

Commissioner Arlene Mulder, whose term on the IRB recently expired, was not reappointed, the IRB release also noted.

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