Part Two – Illinois offers fateful warning

The following article is part two by Kimberly Rinker on the fate of harness racing in the state of Illinois. To read Part One, click here.

During that early winter of 1998, the harness horsemen struck for 35 days under the leadership of IHHA president Tony Morgan, with few positive results. George Ryan was elected governor of the state that same year, and in 2000, the legislature mandated that the “recapture money shall be reimbursed by the state to the purse account,” as dictated in the original bill.

Those infused dollars into the purse account produced a race date bidding war between Hawthorne and Balmoral, with the former winning out over the latter, and purses were boosted to $116,000 a program.

But when Ryan was convicted and sent to jail on federal corruption charges, he decided not to reimburse those recapture funds after all—citing semantics of the wording “shall,” to not necessarily mean “will.”  Thus, the notoriously bad path of recapture continued to pave the way for lower purses, and ultimately, a continued decline in harness racing dates.

Charles Bidwill III (affectionately known to all that worked in the industry as “C3”) poured out $70 million to convert Sportsman’s Park into a NASCAR facility in 1999. Renamed the Chicago Motor Speedway, the old Sportsman’s Park grandstand was torn down and rebuilt to make it auto friendly, and the track surface was converted to asphalt, and would then be resurfaced with dirt for the Thoroughbred meetings.

However, the dirt surface over the new one-mile oval was not structurally sound for the runners and caused many breakdowns and career ending injuries for the Thoroughbreds who raced there. Racing officially ceased there in 2021, and plagued by financial woes, the track shuttered forever in 2002, and was sold to the village of Cicero for $18 million a year later.

Arlington rebounded in 2000 when it was purchased by Churchill Downs, but was never the same during the heydays under Dick Duchossois’ leadership. After the demise of Sportsman’s Park, Balmoral escalated onto the national scene because of mile racing—which had become the trend due to the East Coast success of The Meadowlands Racetrack. The handle—which at one time had been strong at Maywood Park—flipped to Balmoral, which became better simply because there were not many mile ovals in North America.

Part of the lure, for gamblers at least, is that a mile raceway offers more wagering opportunities than a half-mile or five-eighths mile track offers. Traditionally, the more starters, the higher the handle.

In 2003, another strike—this one 75 days—ensued, and the Chicago horseracing product was lost to the Meadowlands and other tracks, and never fully recovered. Legislation, which had passed in 1999, giving 15% of the AGR from the state’s 10th casino to the horse racing industry became a topic of debate when the Illinois Gaming Board awarded the tenth license to the Isle of Capri Casino. It was proposed that the Rosemont, IL-based casino would pay $1.1 billion in taxes over five years, to which the purses and racetracks would each receive about $390 million.

This legislation was coined the “horse racing equity fund,” and was vehemently opposed by many of the state’s legislators, who felt these funds should be diverted elsewhere.

In 2006 and 2008, Johnny Johnston, who had taken over the helm of racing operations at suburban Crete’s Balmoral Park, while his brother Duke ran Chicago’s in-town Maywood Park, persuaded then-governor Rod Blagojevich to sign into law, two bills that imposed a three percent tax on any casino who had revenue over $200 million. This again was a helpful boost of injected monies into the sagging veins of the Illinois horse racing arms.

But then taped conversations between Johnston and Blagojevich’s Chief of Staff, Alonzo “Lon” Monk emerged, which sent the governor to jail via violation of the RICO (Racketeering Influenced and Corrupt Organizations Act) and caused Balmoral and Maywood Parks to declare bankruptcy in December 2014. Both tracks closed in 2015—Maywood on Oct. 2, and Balmoral on Dec. 26.

A lawsuit was brought by four Illinois casinos who sought restitution fees of $82 million, after hearing the tapes of Monk attempting to extort Johnston for $100,000 in campaign contributions. A jury later awarded $26.3 million in damages to four Illinois casinos, and as a result, Balmoral and Maywood sought bankruptcy protection. This became known as the “pay to play” scheme.

Meanwhile the horse racing equity three percent fund began growing after the Rivers Casino opened on July 11, 2011, making a million dollars a day. The fund quickly grew to the tune of more than $100 million, but then curiously disappeared, rumored to have been placed somewhere in the Illinois general fund by unscrupulous politicians.

When Advance Deposit Wagering kicked in, in 2009, it promised to boost racing revenue, and by 2021, those monies had leveled off at $600 million annually. The figures for 2022 show that less than $100 million was wagered on-track, and via Intertrack, with about $150 million in bets placed at the OTBs, and a healthy $300 million wagered via ADWs.

Statistics provided by the Illinois Racing Board and the 2023 Update on Wagering in Illinois by the Commission on Government Forecasting & Accountability paints a dim picture for the future of Illinois horseracing.

For instance, the total Illinois handle fell from $574 million in 2018 to $557 million in 2019, a decline of 2.9%. Those levels are down 50% from two decades earlier, and while the ADW handle increased by 5.4%, the combined on-track, intertrack, and OTB handles decreased by a combined 7.6%. Video gaming machines—legalized in 2012—found in bars, truck stops, and convenience stores throughout Illinois, had also cut a wedge into the already lessening wagering pie.

The entire Illinois horseracing handle then dropped from 14.2% in 2021 of $599.4 million to $514.1 million in 2022. The Thoroughbred handle dropped by 21.2%—from $205.1 to $151.5 million; while the harness handle declined by 20%—from $51.8 to $41.4 million, during that one-year period.

In 2022, 96.4% ($495.4 million) was wagered on simulcasts, while just 3.6% ($18.7 million) was wagered on Illinois’ live product. Overall, ADW’s accounted for 60.5% ($311.2 million), while OTBs notched 29.3 % ($150.9 million); on-track 7.8% ($40.2 million); and Intertrack 2.3% ($11.8 million).

Of Illinois’ 13 casinos, the Des Plaines’ Rivers Casino is by far the healthiest in the state, with $557.6 million adjusted gross receipts (AGR) recorded in 2023, lengths ahead of their nearest rivals—Grand Victoria Elgin ($153.4 million) and Joliet Harrah’s ($133.7 million).

And, while the June 28, 2019, approved casino expansion legislation (Illinois Sports Wagering Act) allowed for “an organizational license limited to Standardbred racing to a racetrack located in Cook County. If established, this location could have 1,200 gaming positions, and the ability to offer internet wagering on horse racing,” nothing yet has changed on the Illinois horseracing landscape.

That legislation also allowed for land-based casinos, sports betting, and six new casinos, including one (Bally’s) in downtown Chicago which opened this past September at a temporary site at the former Medinah Temple in the River North area of the city. Their permanent facility is slated to open in 2026, at the former Chicago Tribune Publishing building, with twice as many gaming positions allowed as any other Illinois casino.

Hawthorne has done nothing, despite having been granted the ability to convert their aging grandstand into a full-fledged casino. They did, however, establish a relationship with the sportsbook company PointsBet, with wagering commencing in September 2020. Hawthorne management had stated publicly that they were going to build a racino in Tinley Park (a south suburb of Chicago) after the approved legislation, along with investor Rick Heidner, but an Oct. 11, 2019, Chicago Tribune article that same year accused Heidner of having mob ties, and state officials then turned their back on the Hawthorne-Heidner partnership. Heider was later exonerated of all charges.

Fairmount Park Racetrack, located in Collinsville, IL, near to St. Louis, which also sports a one-mile racing oval, partnered with Fan Duel (the facility is now called FanDuel Sportsbook and Horse Racing), and had plans to open a full casino by the end of 2024. Curiously, however, FanDuel has not revamped the Fairmount facility either. Is it possible that Fairmount/FanDuel is waiting to see what happens with the vacant land where Arlington Park once stood?

Consider this: the community of Arlington Heights was dependent on Arlington Park to provide them with tax revenue for almost 100 years. The Chicago Bears purchased the 326-acre property for $197 million, stating they planned to move from their downtown location of Soldier’s Field to the vacated Arlington site.

What’s curious also is that the Bears haven’t yet moved forward, and speculation swirls that Bears management is now considering building a new facility in their parking lots on the city’s lakefront, just south of where Soldier’s Field now stands. If the Bears do not build on the Arlington property as planned, then the community is going to look elsewhere for revenue. It is possible that FanDuel might procure that property, and bring racing back, in the form of a racino.

Remember, Illinois legislated a 5,000-machine racino for Arlington Park—undoubtably, until its demise at least, the state’s flagship racing venue. A facility of this magnitude would draw people from O’Hare, the nearby states of Wisconsin, Iowa, and Indiana, as well as from Chicago, garnering hefty tourism dollars. The Arlington locale is also preferable to the Rivers Casino site because it has the acreage and ability to generate two to five times the tax revenue for the village of Arlington Heights.

The landmass allows for more entertainment options such as shopping and concert halls. This draw would bring in sorely needed revenue for Illinois, Cook County, the village of Arlington Heights, and importantly, the racing community.

Then there is Balmoral Park, formerly known as Lincoln Fields in the heyday of the 1920s, ‘30s and ‘40s—when it played host to dignitaries such as Amelia Earhart and some of Chicago’s biggest political figures.  Located in suburban Will County, Balmoral was sold to Horse Shows In The Sun (HITS), a New York based company specializing in producing equestrian events such as show jumping, for $1.6 million after it ceased harness racing operations on Dec. 26, 2015.

In January 2021, the 200-acre Crete facility was purchased by trucking magnate Radomire Dobrasinovic for $3.9 million. Dobrasinovic’s daughter Kiki was quoted in a Sept. 2, 2022, Chicago Tribune story as saying, “We want to go back to horse racing.”

While the HITS group revamped the barn era, erecting state-of-the art stabling, the track’s second turn would need to be rebuilt, and the racing surface updated, in order to hold a harness meeting. The only thing standing in the way of conducting racing at the Balmoral one-miler is a clause in the 2016 deed sold to HITS stating that gambling is prohibited at Balmoral until 2026.

Taking all these thoughts into consideration, perhaps it is too early to criticize Hawthorne for not moving forward with their plans to convert their family-owned facility into a full-fledged racino. Perhaps they are hesitant after studying nearby states, who, while the racing appears to be flourishing, the undercurrent tells a different story.

For instance, in Ohio, where there are seven racinos in operation, the casino revenues are indeed impressive, increasing annually, while the racing handles are not. From 2011—the last year without racinos—through 2022, the total racing handle has fallen 53% from $234 million to $109 million in the Buckeye State. Likewise, in Indiana, the horseracing handle has dropped from $180 million in 2007 to $46 million in 2021. Clearly, these revenues are not being generated by the horseracing themselves, but by the casinos attached to them.

Illinois and other states, such as Indiana and Ohio who are doing well, need to have solid legislative representation at the highest level. When Illinois lost Governor Jim Edgar, undoubtedly horse racing’s best friend in the 1990s, there was no longer protection or representation for the varying breed industries. Edgar understood racing and the people involved at all levels—from the trainers, drivers, and jockeys to the breeders and owners. He could speak horse and he could speak to the people.

“The casino bill could have revived Illinois racing, but nothing happened. We’re letting a great opportunity slip through our fingers,” Edgar said in a March 23, 2023, Chicago Tribune feature.

Since 1990, the percentage of on-track handle at Illinois raceways has fallen from 49% to just eight percent by the end of 2022. ADWs garnered 61% of the market in 2022, with Intertrack and OTBs accounting for another 31%. That eight percent live handle generated at the two Illinois tracks in 2022 was $12.8 million from Hawthorne and $5.4 million from Fairmount, with half a million dollars amassed from the county fairs.

Despite all the flaws in Illinois, hope abounds. One only has to look to The Meadowlands and owner Jeff Gural for the answer. Gural saved the Meadowlands when he purchased it and spent millions of dollars revamping the facility, and as a result the New Meadowlands has seen the handle increase by more than $200 million in the last five years—proving that with the right resources, large fields, and a first-class product, harness racing can not only survive, but thrive.

Another state which has seen a rebirth in its harness racing program is Kentucky. Through legislative intervention, harness racing in the Bluegrass State has grown from a two-week, fall Grand Circuit meeting at Lexington’s Red Mile, to a seven-month circuit at two new harness tracks (Oak Grove & Corbin), each sporting tremendous purses. As a result, the future for Kentucky harness horsemen has never been brighter.

Illinois has two, one-mile racetracks, and the hidden gem is Hawthorne, with its close proximity to downtown Chicago. With the right resources, racing could return to the aging oval with a vengeance and be one of North America’s premier racing venues. Gamblers love a mile oval, full fields, and a comfortable place to ply their wares. By using the New Meadowlands and Kentucky as blueprints for what “could be,” it is easy to imagine that Hawthorne would flourish.

by Kimberly Rinker, for Harnesslink