Illinois gaming bill seen as path forward for horse racing

By: Tom LaMarra

Posted: June 3, 2019

A massive gambling expansion bill that passed both houses of the Illinois legislature in the final days of its recent session is being called a game-changer for the state’s horse racing and breeding industry.

The measure, which is expected to be signed by Gov. J.B. Pritzker, passed the House of Representatives by an 87-27 vote June 1 and the Senate by a 46-10 on June 2. It is the result of about 20 years of lobbying by Thoroughbred and Standardbred racing and breeding representatives in Illinois.

“We did it,” said Illinois Thoroughbred Horsemen’s Association President Mike Campbell. “For two decades, year in and year out, we have urged Illinois lawmakers to let tracks offer casino-style gaming for the purpose of boosting purses—and helping Illinois racing compete on a level playing field with other states already doing just that.”

The bill, more than 800 pages, allows Arlington Park and Hawthorne Race Course to each have a maximum of 1,200 slot machines, as well as table games. The tracks and their inter-track wagering outlets also will be eligible for sports-betting licenses.

Fairmount Park in downstate Illinois can have up to 900 slot machines and sports betting, and there is a provision that allows for a new Standardbred track—it can be built in one of seven townships in Cook County, where Chicago is located—to have 1,200 gaming positions.

In addition, the ITHA, Illinois Harness Horsemen’s Association, Illinois Horsemen’s Benevolent and Protective Association and the respective breeder organizations were successful in ending a practice called recapture, which has shifted almost $300 million in purse money to racetracks as compensation for a loss of revenue from live pari-mutuel handle due to full-card simulcasts that were authorized in the mid-1990s.

“It will spell the end of recapture—the albatross of Illinois racing,” Campbell said.

The legislation also links slots licenses with protection of live racing dates. For the two Chicago-area Thoroughbred tracks, the formula is as follows:

If there is only one track with a gaming license, it must offer 110 racing days in the first year of gaming operations, 115 in the second year, and a minimum of 120 in the third year and thereafter.

If there are two tracks with gaming licenses, the combined number of live racing days in the first year of gaming operations must be at least 139. That number increases to 160 in the second year and 174 in the third and subsequent years.

Any track with slot machines must ensure that 12.75% of annual gross receipts of up to and including $93 million goes to the purse account. The percentage would gradually increase to 26.5% should annual gross receipts from slots top $125 million.

At a track that offers Thoroughbred and Standardbred racing—Hawthorne currently does—the purse contribution would be based on number of racing days per breed, but the ratio can’t exceed 60% for either breed.

On the Thoroughbred side, 12% of the purse share will go to the Illinois Thoroughbred Breeding Fund which, according to language in the bill, will become a “non-appropriated trust,” meaning the money can’t be used by the state for other purposes. Of the Standardbred purse share, 15% must go toward the Illinois Standardbred Breeders Fund.

It’s unclear how much time it will take for racetracks to apply for licenses, win approval, and begin construction on gaming parlors.

“To be clear, it will take some time before Illinois Thoroughbred purses are substantially improved,” Campbell said. “But when the terms of this new law are fully implemented, Illinois can once again become a world-class destination for Thoroughbred horse racing. We look forward to sharing more details, as we have them, specific to the roll-out of our state’s new and considerably improved gaming landscape.

“We are grateful for the leadership of House Speaker Mike Madigan, Gov. Pritzker and former Gov. Jim Edgar on this legislation. We also appreciate the support demonstrated by all the lawmakers who voted to help return our sport and industry to its true potential.”

Campbell also noted that Illinois horsemen during the recent legislative session were successful in lobbing lawmakers to include $1.7 million in reimbursement for owners’ award, which means the money won’t have to come from the regular purse account. Horsemen also won approval for the reimbursement last year.

Campbell noted the “leadership and steadfast commitment to protecting the best interests of horsemen” by the ITHA Board of Directors and members of the ITHA staff “who worked so diligently to help pass (the gaming) bill.”

As for sports betting, the state tax rate for in-person and online wagering is set at 15% of adjusted gross receipts. License fees vary, though a limited number of mobile-only licenses would each cost $20 million. No revenue from sports betting will be dedicated to purse accounts at racetracks that offer it.

(Photo courtesy of ITHA)