CDI takes a pass on casino license for Arlington

By: Tom LaMarra

Posted: Aug. 28, 2019

Citing the lack of an “acceptable financial return,” Churchill Downs Inc. will not pursue a gaming license for Arlington Park in Illinois, the company announced Aug. 28, the deadline to apply for a license.

CDI owns 61% of the Rivers Casino Des Plaines, which is located not far from Arlington. After the Illinois Gaming Act—it provides racetracks with casino-style gambling—was signed into law in late June, the company indicated it may not pursue gaming at Arlington.

“Notwithstanding our steadfast commitment to the Illinois Thoroughbred racing industry and despite the good-faith intentions of everyone involved in the passage of the Illinois Gaming Act, the economic terms under which Arlington would be granted a casino gaming license do not provide an acceptable financial return and we cannot responsibly proceed,” CDI Chief Executive Officer Bill Carstanjen said in a release. “The Chicagoland market has seen a significant proliferation of video gaming terminals over the last several years and now faces the potential introduction of five new gaming facilities as well as increased gaming positions at existing casinos and video gaming outlets.”

A key component of the gaming bill is allowing racetracks to have slot machines and table games in order to increase purses and bolster breed development in the Thoroughbred and Standardbred industries in Illinois. CDI claims that revenue share puts it at a financial disadvantage.

“Arlington would enter this market with an effective tax rate that would be approximately 17.5%-20% higher than the existing Chicagoland casinos due to contributions to the Thoroughbred purse account,” Carstanjen said. “This disadvantage in a hyper-competitive gaming market, coupled with substantial licensing and reconciliation fees and new, unviable horseracing requirements in the Illinois Gaming Act, makes construction of a casino at Arlington financially untenable.

“It is with a heavy heart that we conclude that we can’t make this work.”

Illinois Thoroughbred Horsemen’s Association statement on decision by CDI

The release states that Arlington will conduct racing in 2020 and 2021 and also apply for a sports betting license—no revenue would go to racing—”while longer-term alternatives are explored. The company indicated that one option is “moving the (Arlington) racing license to another community” in the Chicago area or elsewhere in Illinois but provided no details.

The Illinois Racing Board ultimately decides the fate of racing dates. Arlington already applied for its traditional meet for 2020, and the IRB will hold a hearing on racing dates at a Sept. 17 meeting.

The company said it will “continue to work with legislative and community stakeholders, as well as Arlington’s customers, employees and horsemen to find a solution that takes into account the many constituents across the state of Illinois who depend on horse racing for their livelihoods.”

Meanwhile, CDI, which owns 61% of Rivers Casino, has applied for up to 800 more slot machines and plans to expand the facility.

Hawthorne Race Course and Fairmount Park both committed to obtaining a gaming license immediately after the bill became law. Hawthorne won’t host its customary Thoroughbred meet in late winter and early spring in 2020 to allow for reconstruction of its facility.

The Illinois Thoroughbred Horsemen’s Association worked with Hawthorne management to keep stalls available for Thoroughbreds from the end of live racing in early January through the end of March or until Arlington opens its barn area for its 2020 meet. The ITHA noted Hawthorne also will provide dormitories for backstretch workers and their families.

There will be harness racing at Hawthorne from mid-February through September. The evening programs won’t conflict with the ongoing construction.