Odds On Racing - Harness Racing

Governor Proposes Changes to Help Illinois Horseracing

May 12, 2005

By Kimberly A. Rinker

Illinois Governor Rod Blagojevich’s recent proposals to help the Prairie State’s troubled budget deficit has been a hot topic of discussion in Chicago in the past month. At a March 31 press conference at Oak Park and River Forest High School, near Maywood Park Racetrack, the Governor said that he was proposing a plan to implement additional slot machines at Illinois riverboats in order to garner the public school system an addition $300 million.

Previously, the governor has said publicly that he was vehemently opposed to any expansion of gambling, and in 2003 curtailed legislative attempts to add slots at Illinois racetracks or any more casinos or additional gaming portals.

"We’re looking to make additions to existing gambling establishments, in order to create higher standards for our public school system," Blagojevich said.

What effect will this have on the racing industry in Illinois? IHHA President Tony Morgan says he believes that horsemen have a lot to gain should the governor’s new proposal come to fruition.

"Prior to this last press conference a political ally of the horsemen contacted me," Tony said. "He told me that the governor was going to come out with some topics that a lot of people weren’t going to be in favor of. He also told me that the governor was going to have a proposal for gaming which included five or six points, and that if these issues weren’t addressed fully, that he wouldn’t be signing any gaming legislation."

Morgan says that the governor’s proposal would include capping the racetrack’s take of future monies at roughly $100 million. The proposal would also allow existing riverboats to increase their gaming positions from the current number of 11,000 to 24,000. He would also allow another riverboat license to become viable, pushing the number of boats up to 11 from the current nine boats (the existing tenth license at Rosemont is tied up in litigation). As well, there would be no other type of gambling expansion (no more casinos or riverboats); a provision would be included to make sure the horse racing industry was given the help that it needs; and there would absolutely not be slots at any Illinois racetracks.

Although Morgan was somewhat vague as to what is meant by "giving the horse racing industry the help that it needs," he was confident that the governor would stick to his word and devise a plan to help both the ailing Standardbred and thoroughbred industries in Illinois.

"I really don’t think the governor has changed his stance on gambling at all," Tony said. "He had always promised, both before and after he was elected, to help the horsemen and to bring some relief to our industry on a state-wide basis. That’s one of the reasons that we lobbied so hard to get him elected."

For the horsemen’s sake, getting the help that they need would certainly mean ending recapture—the legislative provision that was introduced along with full-card simulcasting back in 1995. With the advent of so many simulcast races to wager on, the live handle has suffered severely, while recapture has continued to build enormously on an annual basis, depleting the purse account. As a result of full-card simulcasting, wagers placed in Illinois on Illinois races have dropped in 1994 from $1.181 billion to $327 million in 2004 (from 95% to 31%). Currently, the horsemen are responsible for $13.3 million (in 2005) in recapture that they must pay to Illinois racetrack owners from the horsemen’s purse accounts. This has been a constant sore spot for the horsemen since its implementation—and has been the main reason for a number of work stoppages.

Legalized gambling in Illinois includes (besides horse racing) riverboats, state lottery and charitable gaming. Roughly speaking, the state lottery accounts for about 73% of the state’s total gambling receipts, while riverboats produce 23%, and horse racing around 4%. In 2004 the Illinois horse racing industry contributed $25.1 million in revenue to state and local governments, according to the IRB figures (2004 Annual Report). The riverboats handed over $700.9 million in casino taxes to the state (a 13.4% increase from 2003, when they paid $617.8 million), according to Illinois Gaming Board figures, one of the highest such taxes in the nation.

The Riverboat Gambling Act came into effect in February of 1990, making Illinois the second state nationally to legalize riverboat gaming, and on September 11, 1991, the first riverboat casino opened in Alton, Illinois. Since then, more than 245 million people have visited the nine Illinois riverboats. However, attendance in recent years has dropped significantly—from 25 million patrons in 1996 to 15.3 million in 2004.

Those figures have been drastic enough to prompt riverboat owners to form a somewhat friendly alliance with the state’s horsemen. In fact, from 1997 through 2000 the horsemen and riverboats together in a joint venture contributed over $1.8 million to Illinois legislative leaders. Previously, from 1993 to 1996, Prairie State horsemen had given just $400,000 to Illinois lawmakers.

"When we saw that we were finally making progress, we kept pitching more money at the important parties," Tony noted. "We keep a very aggressive front in Springfield. Our (IHHA) executive director, Jack Kelley, is down there a lot, and we’ve (the horsemen) have quite a few allies in Springfield."

Having legislators on the side of the horsemen will be the key to giving the Illinois horse racing industry the boost that it so desperately needs. It would appear that Blagojevich has finally come up with a viable solution to counteract the state’s massive budget problems and at the same time enrich the public school system, while also helping the horse racing industry.