Illinois Racing Board Chairman Dan Beiser acknowledged Churchill Downs Inc.’s departure from Arlington International Racecourse created a “dramatic effect” on horse racing, but he also struck an optimistic tone looking forward, as plans continue for the state’s two remaining racetracks to expand into racinos.
CDI’s decision to leave Illinois for horse racing — it is trying to finalize a sale of the Arlington property to the Chicago Bears for $197.2 million — was the last ripple from a series of events over the past few years that have yet to truly settle. To fill Arlington’s void, Hawthorne Race Course in the Chicago suburbs of Stickney will have a greatly expanded race schedule for the second consecutive year in 2023, while FanDuel Sportsbook & Horse Racing (formerly Fairmount Park) on the other side of the state near the Missouri border shuffled its race dates to grow economic viability.
All the while, both tracks are moving forward at varying speeds for a racino, which the venues were permitted to build with the 2019 gaming expansion bill that also legalized sports wagering in Illinois. Churchill Downs, which has a majority stake in Rivers Casino in Des Plaines, was one of the loudest voices in support of that expansion, but then stunned and angered many in the industry when it opted not to pursue a racino license shortly after the bill was signed.
Churchill Downs CEO Bill Carstanjen explained at the time that it was because the “effective tax rate” was nearly 20% higher than other Chicagoland casinos, due to the contributions it would have to make to the thoroughbred purse account.
Bottom line: Illinois needs racinos
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In an email exchange with US Bets, Beiser expressed hope that the racinos would “lead to the opening of a second Chicago-area race track and strengthen racing in Illinois across the entire state.”
When including off-track betting, Hawthorne Race Course accounts for more than 80% of the $157.5 million in year-to-date handle through September. That figure, though, is 22% lower than the $201.8 million for the same period in 2021, when CDI conducted its final year of racing, which included the final local running of the Arlington Million.
Though representatives from both Hawthorne and FanDuel’s track offered progress reports regarding their respective racinos — both were deemed “preliminary suitable” by the Illinois Gaming Board to receive casino licenses in 2020 — Hawthorne is much further along. Track President Tim Carey testified last month that he was waiting on IGB approval for financial-related disclosures before beginning construction, offering a chance of Hawthorne’s racino opening in late 2024 if everything went to plan.
In contrast, FanDuel Sportsbook & Horse Racing General Manager Melissa Helton had vague answers on multiple aspects, which frustrated Beiser and the board during last month’s meeting. Of note was Helton testifying that the March 2021 agreement FanDuel’s track had in place with DraftKings at Casino Queen to run the legal casinos operations of the potential racino had lapsed, with no replacement lined up. In the email exchange, Beiser said the board “strongly encourage Fairmount (now FanDuel) to follow Hawthorne’s lead when it comes to planning and construction of a racino.”
Hawthorne is partnering with Australia-based PointsBet for the sports wagering and casino gaming components of its planned racino, and it has offered retail sports wagering at its track since September 2020.
The IRB and IGB are operating in independent regulatory lanes when it comes to the racinos. The gaming components fall under the latter’s purview, though the two agencies are in regular contact. Beiser further explained that the IRB does not have any regulatory authority when it comes to the construction of the racinos, but appreciated that both tracks are making the effort to provide updates.
Trying to lighten Hawthorne’s burden
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Given the storied history of the Carey family and Hawthorne’s status as the primary custodian of horse racing in Illinois, it was not surprising that the track took on an increased responsibility to try and keep the industry going. Beiser singled out both for “stepping up in a big way after the closing of Arlington last year,” and added, “Tim and the horsemen have worked diligently to think outside the box and come up with creative schedules for both 2022 and 2023.”
As part of the increased schedule, Hawthorne has sought an increase in the number of OTB sites it can operate. It currently oversees 15 locations, one shy of the maximum allowed by the state, and there is an active bill in the General Assembly that would raise the number allowed to 34 if passed. Beiser said the IRB “is supportive” of Hawthorne’s lobbying for that increase and hopes the bill will be brought up for consideration next year.
Hawthorne also began running non-parimutuel races in the state capital of Springfield this year to help 2-year-olds be more race-ready late in the year.
At last month’s meeting, Beiser showed plenty of interest in the backstretch of both tracks. The backstretch is essentially the community of industry people — jockeys, grooms, trainers, and their respective families — who are on-site throughout the season. The IRB chairman sought assurances that additional amenities would be provided at both tracks, pointing out these are the groups who are essential to helping horse racing thrive in the state.
“If you do not have a backside, you don’t have a front side,” Beiser explained. “That’s why backside improvements are so important. The grooms and exercise riders, they start at 4:00, 4:30 in the morning. And they work, basically, through the day and through the night, and they are entitled to livable conditions and facilities that provide for their basic human needs. As commissioner, as long as I’m with the IRB, I’m going to be keeping an eye on these conditions and push the tracks to make improvements.”