07/13/2009 11:00PM

Illinois funds still tangled in court

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CHICAGO - In a meeting here Tuesday, the Illinois Racing Board laid down the parameters for distributing $76.4 million in casino impact-fee funds to the state's beleaguered racing industry. But the fate of the money, which has sat in a court-administered protest fund since 2006, remains uncertain, and various racing factions are poised to start squabbling over the cash if it's released.

Legislation signed into law in 2006 required four northern Illinois casinos to pay 3 percent of adjusted gross receipts to Illinois racing. The affected casinos quickly filed a legal challenge and won their case in a Will County court, but saw that decision reversed by the Illinois Supreme Court in 2008. Last month, the U.S. Supreme Court declined to hear the casinos' appeal of the state court ruling, but before the money could be moved from the protest fund to a state-administered horse racing trust fund, the casinos filed two more suits, one in federal court that slowly is taking shape, and another in the same Will County court that ruled in their favor in 2006.

The Will County judge, Bobbi Petrungaro, on Monday heard a motion from the Illinois attorney general's office to dismiss the casinos' latest lawsuit, which contends that the impact-fee legislation should be reviewed because of new evidence involving former Illinois Gov. Rod Blagojevich. Petrungaro said she would rule on both the motion to dismiss and the legality of a second impact-fee bill signed into law last year on Aug 3.

On Tuesday, racing commissioners voted 9-1 during their regular July meeting to accept the IRB staff's interpretation of the 2006 law, and certify the disbursement of the $76.4 million. The money is to be divided between harness racing (43 percent) and Thoroughbreds (57 percent), and between purses (60 percent) and licensed track operators (40 percent). The amount track operators received is based on 2004-05 handle. The exception is Fairmount Park, which was given an 11 percent cut, far greater than their proportion of state handle. Purse subsidies are based on purses earned in the prior calendar year, in this case 2008.

Using these calculations, Arlington Park will receive $10.3 million, and $13.6 million in purse money. Hawthorne's cut is $6.8 million for the track, and $9.4 million in purses. Fairmount would receive about $3.3 million as a track operator, and $3 million in purses.

However, the law contains ambiguous language, and there are disagreements in interpretation.

Hawthorne wants the portion of the money that would have gone to the National Jockey Club had the impact fees been promptly paid in 2006. NJC raced at Hawthorne in 2004-05, but has since ceased operating. The IRB believes the NJC was specifically written into the 2006 law, but became ineligible to collect funds when it went out of business. In such a case, the IRB contends, the statute says that the NJC money is to be evenly distributed among all licensed operators eligible to receive funds. This difference of opinion could wind up in court.

It also is likely that a group of Illinois owners will mount a legal challenge to the IRB's decision that impact-fee funds would be paid to purses going forward, not retroactively, a position endorsed by the Thoroughbred and Standardbred horsemen's groups. Certain owners, however, contend that the purse money should be paid retroactively beginning at the time of the law's passage. This impasse also could come before a judge.

* The IRB voted 9-0 to let Fairmount Park vacate 18 racing days late this summer because the impact-fee funds have not yet become available. This option was part of Fairmount's 2009 dates application approved by the board last year.