The Week in Review: If Arlington Closes, What Happens to Chicago Racing

[Wandering Eyes]

Anger and betrayal were the prevalent responses from the Illinois Thoroughbred community in the wake of last week’s stunning announcement by Churchill Downs, Inc., (CDI) that the corporation intentionally missed a racino application deadline and will not seek slots and table games at Arlington International Racecourse after 12 years of teaming with horsemen to finally get the Illinois Gaming Act passed in June.

A chief reason cited by CDI in its Aug. 28 press release was the cost burden of having to contribute gaming revenues to purses.

CDI’s shocker generated no shortage of accusations that the corporation simply cannot be trusted to put its stewardship of the sport on par with its quest for bottom-line gaming profits.

But that aspect of the argument is old news considering how CDI for years has been widely believed to have sped the demise of racing at now-defunct Hollywood Park (which it sold to developers) and to have orchestrated the present dismal state of Calder Race Course (from which CDI reaps casino benefits while leasing out the shell of a racing facility to a competitor to fulfill its racing obligations).

Ten months ago, CDI bought a 61% stake in a casino 12 miles from Arlington, and it has recently declared interest in opening another that’s being pitched as the most potentially profitable gaming venue in metro Chicago. You can read TDN‘s initial take and timeline of the controversial Arlington decision here. But now that the news has had time to sink in over the long holiday weekend, here are the key branches in the decision tree that will contribute to the tangled thicket moving forward.

Is the threat of walking away from Arlington after 2021 a leverage bluff by CDI to get the Illinois Legislature to make Gaming Act changes that would be more favorable to the corporation, or is closure of the highest-profile track in the state a real possibility?

Bluffing for leverage is a possibility, but not a sure bet. The Daily Herald, a publication that covers suburban Chicago, wrote in a Saturday editorial that “the track is not alone in its strident objections to the rules in the recent gambling legislation. Officials in the city of Chicago are all but demanding that the tax formula be changed to make a city casino more tenable.”

But David McCaffrey, the executive director of the Illinois Thoroughbred Horsemen’s Association (ITHA), explained to TDN that his organization is treating the closure of Arlington as a very real possibility. He said it was a telling sign that CDI didn’t at least put in an application for racino status, even just to serve as a placeholder to lay claim to gaming privileges while it lobbied for a rewrite of taxation terms.

Without a license in the pipeline to bolster purses via gaming, the property loses considerable value to any prospective buyer who might be thinking of acquiring Arlington to run it as a racino. Perhaps CDI wants it that way: It could sell Arlington to a developer, reap a presumed profit, and not have to worry about a racino competing against its two nearby casinos.

If Arlington closes, would Hawthorne Race Course become the epicenter of Chicago Thoroughbred racing?

It depends. Hawthorne is moving forward with its transformation into a full-blown racino. Even though the track announced Aug. 1 that it will not run a 2020 Thoroughbred spring meet to allow for gaming-related construction, that plan has the backing of the ITHA, and the first racino-bolstered meet is supposed to start there in autumn 2020.

But Hawthorne is also home to a long-standing harness meet, and it’s the lone remaining Standardbred venue in metro Chicago now that Balmoral and Maywood are gone. A section of the Gaming Act carves out a provision for a new harness-only Chicago-area racino. The location that is being pitched for it is a former mental health center on environmentally contaminated land that the state owns in the village of Tinley Park, about 30 miles southwest of the city.

“So in a very ironic twist of fate, the future of Thoroughbred racing paradoxically depends on whether this harness track gets up and going,” McCaffrey told TDN. “Because one of the things that could happen is that Illinois adopts the Indiana model, in which one track would be designated for Thoroughbred racing–Hawthorne–and one track for harness racing, this Tinley Park.

“Under that scenario, this works for both Thoroughbred racing and for harness racing, because each breed would get to race at each venue as often as they wanted–9, 10, 11 months of the year,” McCaffrey continued. “If Arlington is taken out of the mix, the problem comes if the new harness track does not get up and going. Then Thoroughbred and harness racing have to share Hawthorne. And while the purses will be OK because they’ll be subsidized by all the gaming revenue that will happen, the amount of time that either breed can race will be limited because both breeds have to share the same racetrack.”

One recently established entity, Playing In The Park LLC, has already applied to construct a harness racino at Tinley Park. Further underscoring the confusing, intertwined nature of the various power players in the Chicago gaming equation, the Chicago Tribune reported Aug. 7 that one of the principals of that company is Tim Carey, Hawthorne’s president and general manager.

CDI said in its press release that it would explore longer-term alternatives “including moving the racing license to another community in the Chicagoland area or elsewhere in the state.” What does that mean?

No one seems to know and CDI isn’t saying. But publicly traded companies almost never disclose that type of information in a press release unless the wording has been carefully vetted by every figurehead up and down the totem pole, so we have to assume CDI mentioned it for a reason.

Crain’s Chicago Business reported last Thursday that CDI could attempt to transfer its racing license to Quad City Downs, a former harness track 165 miles west of Chicago that last ran Standardbred races in 1995 and was later operated by CDI as a simulcast center until 2015.

Theoretically, this would allow CDI to open a racino in a part of the state that is not as gaming-saturated as Chicago. It’s difficult to believe that lawmakers and regulators would allow such a plan to come to fruition if CDI pulls the plug on Arlington. But this is Illinois, and stranger political things have happened there.

There’s also apparently nothing stopping CDI from bidding on the Tinley Park racino, which would add yet another layer of irony to an already bizarre situation.

Assuming CDI does intend to jettison this jewel of a racetrack, is there any off-the-radar entity positioned to swoop in and save Arlington?

There is one longshot possibility I have not heard anyone mention so far: The Jockey Club.

At the 2018 Round Table Conference in Saratoga, Stuart S. Janney III, the chairman of The Jockey Club, made the surprise announcement that the organization had started a process to “develop plans to consider track ownership and operations” in an attempt to keep foundering racetracks from going out of business.

“Quite simply, we would willingly step in as an owner, lessor, or partner when a racing resource is imperiled, not unlike what The Jockey Club of the United Kingdom has done,” Janney said last year. “The Jockey Club has, and will be, there for this industry.”

If there was ever an imperiled track that made sense as a takeover target–in terms of being a modern, high-end venue on a metropolitan circuit with a rich history, the potential for gaming licensor, a safe, synthetic main track, and an established trio of Grade I grass stakes that annually draw top international talent–Arlington is it.

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