The Illinois Racing Board recently cut a combined 15 percent of the live dates from the Chicago area’s two horse racetracks, Arlington International Racecourse, owned by parent company Churchill Downs Inc., and Hawthorne Race Course, privately owned since 1909. The board hopes the move will allow the tracks to spread their purses over fewer races to keep them competitive. However, fewer racing days could force owners and trainers to take their horses to states with more race days and higher purses. “What you lose, you will not get back. I’m going to be confident that something will be done by the legislature. If not, there will be a complete migration,” said Mike Campbell, president of the Illinois Thoroughbred Horsemen’s Association, which represents around 2,400 owners and trainers statewide.
For three years, impact fees from Illinois casinos totaling about $75 million have helped Chicago’s two racetracks enhance purses and make improvements. But now that pot is empty and the tracks are forced to fund purses only from wagers.
And that resource is diminishing, partly due to more competition from the Illinois casinos, resulting in a 42 percent drop in betting on horses since 2004 to $618 million in 2013. Nationally, bets are down by about one-third over the same period to $11 billion in 2012, the most recent figure available, according to the Association of Racing Commissioners International. As a result, revenue from pari-mutuel taxes over the same period has declined by one-half to $6.3 million.
With the average number of horses per race—plus a dwindling fan base—racetrack revenue is the lowest it has been in at least a decade. Horseracing in Illinois ”is just about ready to collapse,” said Arlington Chairman Richard Duchossois. His Elmhurst-based investment company is the largest stakeholder in Louisville, Kentucky-based Churchill Downs Inc., Arlington’s publicly traded parent company. With a summer race schedule, Arlington remains profitable, although revenue has dropped by 23 percent since 2009 to less than $70 million. And at privately held Hawthorne, $40 million in revenue is not enough to support its 350 employees and maintain its facilities.
Under state law, the two racetracks cannot host live races at the same time, so Arlington holds races in the spring/summer and Hawthorne’s races are held in the fall. The tracks also split revenue from simulcast wagering during “dark-host” or non-live racing days.
Recently state regulators rejected Arlington’s request to drop spring racing at Hawthorne. Arlington claimed it would use the extra dark-host revenue from those days to build its summer-racing purses. Arlington General Manager Tony Petrillo said, “We’re very interested to hear from the commissioners that voted for a schedule that hasn’t worked for the past 11 years how that is going to improve racing.” Hawthorne President Tim Carey responded that thousands of agribusiness jobs, from horse trainers to farmers, depend on year-round racing. “We’ve been losing money for years. But we choose to stay in this because of what we think the future holds for us,” Carey said.
That future, he hopes, will include slot machines at the tracks, which has become a huge source of revenue for racetracks in other states. In the past two years, Illinois Governor Pat Quinn has vetoed bills that would have allowed racinos. But state lawmakers are at work again on another gaming bill, sponsored by state Rep. Robert Rita. The measure still faces opposition from existing casinos and includes a proposed, controversial casino in Chicago.
