06/05/2008 12:00AM

Court decision a windfall for Illinois tracks

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ARLINGTON HEIGHTS, Ill. - The Illinois State Supreme Court on Thursday morning overturned an April 2006 circuit court ruling in favor of four Illinois riverboat casinos that had filed a lawsuit seeking to strike down legislation that would direct a percentage of their revenue to the state's racetracks. The Supreme Court ruled that the original legislation was indeed constitutional, and paved the way for a major infusion of cash into the Illinois racing industry.

The legislation, Public Act 94-804, was passed in May 2006 in the legislature, but soon came under appeal from the four casinos, which essentially argued that because the law exempted five of the state's nine operating casinos it was unconstitutional. In the opinion released Thursday morning, the Supreme Court disagreed with the circuit court's finding and reversed the decision. The palintiffs have 21 days to petition the Supreme Court to reconsider their decision, which was unanimous. The affected casinos also could appeal to the U.S. Supreme Court, but only if the opinion of the state court focused on federal law. Tom Swoik, executive director of the Illinois Casino and Gaming Association, a trade group, said early Thursday afternoon that he wasn't sure whether the casinos would take further legal action.

The act mandated that the four casinos, which had adjusted gross revenues over $200 million in 2004, pay a 3 percent surcharge to racing because of the negative impact casino gaming had on the racing industry since it was legalized here in 1990. When the legislation was passed, it was expected to generate some $36 million annually. Since the lawsuit was filed, money has been deposited into an escrow account; as of early May, that account had nearly $74 million in it, according to the Illinois Racing Board, which will administer payment of the surcharge to racing interests.

Sixty-percent of the surcharge will wind up in purse accounts, with the other 40 percent of the money being distributed to the state's tracks - both Thoroughbred and Standardbred. Fairmount Park will receive 11 percent of that money, with the remainder of the funds divided based on tracks' total handle on live racing in 2004 and 2005.

As of Thursday morning, the IRB was uncertain whether money in the escrow fund would be paid out retroactively to horsemen who had competed while the legal process played out. Further specifics regarding the financial windfall of the ruling still were being worked through on Thursday. The legislation suggested the impact fee could double the purses paid at Illinois tracks.