06/15/2009 11:00PM

Illinois casinos claim foul

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Four northern Illinois casinos have taken legal action that could prevent distribution of about $76omillion to the state's horse racing industry this summer.

Last Thursday, lawyers for the casinos filed a lawsuit with the U.S. District Court in Chicago accusing former Illinois Gov. Rod Blagojevich, the campaign fund Friends of Blagojevich, and John Johnston, a major player in Chicago harness racing, of racketeering and corruption.

Also named in the suit, though not accused of wrongdoing, were Arlington Park, Hawthorne Race Course, and Fairmount Park. The suit alleges that Blagojevich helped push House Bill 1918 through the state legislature and signed the bill into law in 2006 in exchange for $125,000 in campaign contributions from Johnston.

The bill required the four casinos to pay 3 percent of their adjusted gross revenue for two years to the racing industry. The casinos quickly filed suit against the legislation in the summer of 2006, and began making payments into a escrow fund. A judge in Will County ruled in their favor, saying the legislation was unconstitutional, but the Illinois Supreme Court overturned that decision last year. The casinos appealed to the U.S. Supreme Court, which on June 8 said it would not hear the appeal.

That cleared the way for money in the protest fund to be moved into the Horseracing Equity Trust Fund. But the filing by casino interests last week seeks to impose a "constructive trust" to hold the money while the latest lawsuit is considered. The federal suit has yet to be assigned to a judge, but quick action will be required, since the Illinois Racing Board has a scheduled a hearing on how to distribute the impact-fee funds for July 14.

Also last week, casino lawyers filed a petition for relief from judgment with the county court where the 2006 lawsuit was heard. The motion relies on the same rationale as the federal lawsuit, claiming that information regarding Blagojevich and Johnston wasn't available when the Illinois Supreme Court ruled in 2008. A hearing on the motion is scheduled for June 17.