07/02/2009 11:00PM

Illinois board faces $2 million shortfall

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ARLINGTON HEIGHTS, Ill. - The Illinois Racing Board is facing a financial crisis that could have serious negative consequences in the coming months.

The IRB, charged with regulating racing and maximizing state revenue from it, began its 2010 fiscal year July 1 facing a budget deficit of some $2.1 million, according to executive director Marc Laino. The IRB already has cut back on staffing, and could take more radical action absent some kind of financial relief.

"It's a serious crisis, one we've never faced in racing operations," said Laino. "It's at a point where the industry is no longer self-sufficient."

The IRB does not derive its funding from the general state budget. Its operating expenses are drawn from the state's horse racing fund, which receives money from parimutuel taxes on bets made in Illinois. Handle has decreased so much here the last two years that the IRB finds itself in a perilous financial position. Laino said that overall in-state handle was down 10 percent in 2007-08 from the previous year, and is trending the same way for 2008-09. That 20 percent decline comes after declines of 3 to 5 percent the previous five years; current handle levels are roughly the same as in 1975, Laino said.

Laino said the IRB budget would become clearer by the end of July. An advance-deposit wagering bill has passed the Illinois legislature, and if signed into law by Gov. Pat Quinn, could generate $800,000 in parimutuel taxes. The IRB also is in the midst of labor arbitration that could reduce payroll obligations.

Still, Laino said a major deficit could lead to deleterious consequences. Minor race meets at fairs could be canceled, and IRB staff could be laid off. If the IRB can only afford to operate on a limited basis, it could curtail the number of racing dates awarded in 2010. And track operators might be asked to shoulder regulatory costs in order to maintain the status quo.

"Some of these regulatory functions might have to be shifted to the racetracks," said Laino.

If the state is asking for help paying for regulatory operations, Arlington president Roy Arnold wants more information.

"What I don't think anybody should be asked to do is write a blank check," said Arnold. "I think the board needs to give the tracks some idea of their budget. What are fixed costs? What are administrative costs?"

Arnold said he also hopes for clarification of the IRB's status before 2010 dates applications are filed this summer.

"It's difficult to think of next year without knowing the range of solutions the board may be contemplating," he said.