Illinois Business Journal - Casino association may file suit to block horseracing subsidy

The Illinois Casino Gaming Association is considering mounting a legal challenge to legislation recently passed by the Illinois General Assembly to tax riverboat gambling and give the proceeds to the horseracing industry, according to Tom Swoik, executive director of the ICGA.

While the bill has yet to be delivered to Gov. Rod Blagojevich, Swoik says he fully expects the governor to sign it as Blagojevich lobbied the legislature to help get it passed.

"It's taking money from one business and giving it to another business," Swoik said. "We think that sends a very bad message to all the businesses of Illinois."

The bill, HB 1918, replaces the Horse Racing Equity Fund with the Horse Racing Equity Trust Fund. An additional 3 percent tax on riverboat gambling will generate the revenue for the fund. The fund will be administered by the Illinois Gaming Board and will be used to make grants to Illinois' six horseracing tracks - including Fairmount Park in Collinsville - and other related businesses.

State Rep. Jay Hoffman, a Democrat from Collinsville, says the legislation was long overdue.

"We're the only state in the nation that has both horseracing and riverboat gaming that doesn't provide either assistance from riverboat gaming to ensure the viability of horseracing or provide some other form of gaming at the horseracing track, such as slot machines," Hoffman said.

The bill would only impact those casinos that gross more than $200 million annually - which leaves local casinos including the Casino Queen and the Argosy Casino out.

It is not the first time the Illinois Legislature has sought to use riverboat gambling revenues to subsidize the horseracing industry. In 1999, the General Assembly passed a bill that would have given the racing industry a 15 percent stake in the 10th Illinois gaming license that has been awarded to Rosemont, Ill. That license, however, has been mired in litigation, and construction of the casino has not been able to proceed. HB 1918 is meant to fill the void created by that litigation, said Hoffman, and it sunsets in two years. At that time, if the Rosemont project has been able to proceed, the 3 percent tax will drop and the 1999 legislation will take its place.

Horseracing needs this special attention because of the negative impact that riverboat gambling has had on the industry, according to Hoffman. He says it's been a downward spiral for horseracing ever since the state passed riverboat gambling in 1989.

"The purses and the amounts the horses run for are based on the amount of money that is wagered," said Hoffman. "And the less the wagers, the less the purses - and the less the purses, the less the quality of horses - and the decreased quality of horses results in less attendance."

Hoffman adds that horseracing deserves this type of legislation because of the economic impact it has on the state in general and on the local communities in which it is located.

"You're talking about 3,000 to 4,000 direct or indirect jobs at Fairmount Race Track alone - 35,000 statewide - people who are directly or indirectly dependent upon the horseracing industry for their livelihoods," Hoffman said.

According to Paul Mann, community development/tax increment finance director for the city of Collinsville, Fairmount Park is the city's largest privately-owned employer with 500 jobs.

"They're a big employer and they're big for the tourist industry here, and good for other support services such as restaurants and hotels and so forth," said Mann. "They are an asset to our community."

Jon Sloane, spokesman for Fairmount Park, says the economic impact of the horseracing industry doesn't stop there but includes things like agriculture, feeding, stabling and utilizing other businesses and independent contractors to provide goods and services to the track.

Hoffman and Sloane point out that the legislation is not meant to help the tracks compete with the boats, but rather to compete with other horseracing venues in other states.

"There are a lot of race tracks in a lot of other states and we want to be able to have good quality horses and competitive seasons," Sloane said. "We want to make it worth the while for owners and trainers to run their horses at Fairmount Park. There are certainly a lot of fine tracks around the country that are making that same offer. So to keep all that business and keep a good product in the state of Illinois, these additional funds make that possible - and we want to keep all the good horses in competition here and not let them get away to Arkansas and other places."