ITWs | Horse Racing Free Tips

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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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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