Illinois: $141 million in casino impact fees released to racetracks and horsemen

ARLINGTON HEIGHTS, Ill. – After a delay of several years, more than $140 million collected from four casinos became available to the Illinois racing industry as of midnight Monday. But after being split between Standardbred and Thoroughbred tracks, and cut again between track operators and purse accounts, the money is unlikely to fundamentally alter the state’s racing landscape.

The funds were generated by a legislatively imposed impact fee garnering 3 percent of adjusted gross receipts from the four highest-earning casinos in the state. The casinos fought a long-running legal battle to prevent disbursement of the money, but that fight apparently came to an end Monday night. The casinos had requested a stay of a ruling against them last month in the 7th circuit court of appeals, but the court denied that request, and no restraining order preventing the distribution of the impact fees was filed.

"The tracks are free to distribute the money," said Marc Laino, executive director of the Illinois Racing Board, which administers the impact fees.

A total of $141.8 million is immediately available, with another $2.3 million being held in escrow pending state court litigation of a dispute between Hawthorne and Arlington over a portion of the funds. Arlington is to receive $25.9 million for purses and $19.1 million for track operations, Hawthorne $17 million for purses and $12.7 million for operations, and downstate Fairmount Park $5.4 million for purses and $6.2 million for operations. The opening of Illinois’s 10th casino in Rosemont last month triggered the cessation of impact fees because the racing industry is to receive 15 percent of annual gross receipts from that casino. But that money must first be appropriated by state government, which is highly unlikely to direct the money to racing rather than a more popular domain, like education.

How and when the impact fee funds will be put into purses remains uncertain. The legislation, first approved in 2006, envisioned paying the fees on an ongoing basis, not as a lump sum, and it will be up to tracks and horsemen’s groups to decide how to distribute the funds. Both Arlington and Hawthorne have proposed spreading the money out over three seasons, but neither track has struck a contractual agreement with the Illinois Thoroughbred Horsemen’s Association. Theoretically, Arlington could raise purses immediately, but the track would prefer to wait until next week.

Tim Carey, Hawthorne’s president, said $2.7 million in impact fee funds would be used to erase a purse overpayment. Hawthorne also plans to restore the Hawthorne Gold Cup’s $500,000 purse, and will race five days rather than the previously scheduled four this fall. Average daily overnight purses, however, would be paid at $165,000 to $185,000 at the meet compared to $156,000 last fall, hardly a seismic shift.

"I just don’t see this as a game-changer," said Arlington’s general manger, Tony Petrillo.