06/06/2008 12:00AM

Impact-fee ruling yields more questions

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ARLINGTON HEIGHTS, Ill. - The impact of Thursday's Illinois Supreme Court decision that could put $79 million in casino revenue in the hands of the state's racetracks and horsemen was still rippling through the industry Friday. And while no one doubts the cash infusion would represent a boon for the industry, it remains uncertain whether the money racing could receive will be a short-term fix or a long-term pipeline and how the money marked for purse increases will be distributed.

The state Supreme Court on Thursday overturned a circuit court ruling in favor of four northern Illinois casinos that had filed a lawsuit seeking to strike down legislation enacted in May 2006 that required the casinos to pay racing interests 3 percent of their adjusted gross receipts. The so-called impact fee was justified by the advent of dockside gambling on riverboats that once had been required to cruise, a change in the state's casino business that was said to have a deleterious affect on the racing industry.

The circuit court ruled last June that the law was unconstitutional, since it exempted five lesser-performing casinos from the fee, but the Supreme Court disagreed.

While the legislation went through the legal system, the four casinos paid money as required by the law into a fund that has swelled to nearly $80 million. The soonest that money could be moved into the state's horse racing fund is July 10, and the four casinos still have legal recourse.

The casinos have three weeks to ask the court to reconsider its unanimous decision, and an appeal also could be filed with the U.S. Supreme Court.

The original legislation came with a sunset clause and expired May 26, so the amount in the escrow fund established by the casinos is fixed for now. A bill passed the Illinois House of Representatives this spring would have extended the 3 percent impact fee indefinitely unless racetracks gained another source of state-supported revenue, such as slot-machine parlors, but that bill stalled in the Senate. Racing interests remain hopeful that the impact-fee legislation could be extended.

The Illinois Racing Board, which will administer the impact fees when, and if, they become available, has produced a rough outline of how the money would be distributed. About $47.4 million - 60 percent of the total - would be directed to purses, of which about $27 million would go to Thoroughbred racing, the rest to Standardbreds. The remaining 40 percent of the fund goes to racetrack operators: Fairmount Park would receive about $3.5 million, Hawthorne Racecourse about $9.2 million, and Arlington Park about $9.5 million. The legislation offers only general guidelines on how tracks could use the money.

Roy Arnold, president of Arlington, said the track already has made unusually large capital investments the last two years.

"We've spent $17 million sort of on good faith in bringing the synthetic surface in and on other capital improvements," Arnold said.

Talks are ongoing concerning how impact-fee funds designated for purse improvements could be applied. Frank Kirby, president of the Illinois Horsemen's Association, said he didn't favor giving retroactive purse increases to races run during the time the casino money was held in escrow.

"I'd rather just be looking forward," Kirby said Thursday afternoon.

Kirby also said he hoped purses wouldn't be flooded by a lump-sum payment.

"I'd hope they'd take the money and spread it over two years," he said.

Cloudy's Knight eyes Stars and Stripes

While Kirby as president of the ITHA has found himself at the center of several demanding racing industry issues of late, Kirby the trainer watched his stable star Cloudy's Knight finally return to action last weekend at Churchill Downs. And while Cloudy's Knight finished a wide seventh of 10 in the $100,000 Opening Verse Stakes, Kirby seemed pleased enough by the comeback run.

"He came out of the race really good," Kirby said. "It looked to me like he needed a race."

The Opening Verse marked Cloudy's Knight's first race since he won the Grade 1 Canadian International last fall at Woodbine. That race came over 12 furlongs, and the one-mile Opening Verse was at a distance far shorter than Cloudy's Knight's best.

"The whole idea was to get a good race into him for the Stars and Stripes," Kirby said, referring to the 1 1/2-mile Arlington grass race on July 4.

Turning in a Polytrack breeze Wednesday at Arlington was another stakes-class, Kirby-trained grass horse, the 4-year-old filly Ciao. Ciao finished a troubled fifth when she made her 2008 debut in an overnight stakes race here May 17. Kirby said she was slated to start next weekend in the Mint Julep Stakes at Churchill.

"She really likes that turf course," Kirby said.

Allowance feature tough to figure

Good luck to handicappers puzzling through Sunday's featured ninth race, a second-level allowance carded for a mile on turf. The race drew 12 entries of all stripes, from Alabama Gold, a conditioned claimer earlier this year, to Cherokee Triangle, who competed in the Breeders' Cup Juvenile Turf last fall.

The tepid pick to capture the race is King A.J., winner of an entry-level Polytrack allowance sprint in his most recent start, but second to the good grass horse Corrupt in his only prior turf try.