Judge Turns Down Illinois Racetrack’s Request

Racetracks owned by John Johnston, among others, lost their bid to not have to pay $80 million to four casinos that were taxed under a conspiracy by the tracks and former Illinois Governor Rod Blagojevich (l.). U.S. District Judge Matthew F. Kennelly ruled the evidence in the 2014 trial supported a plot to “improperly influence Blagojevich.”

On July 10, U.S. District Judge Matthew F. Kennelly refused to overturn a verdict ordering a group of Chicago-area horse racetrack owners to pay million to four casinos. The track owners allegedly bribed former Illinois Governor Rod Blagojevich to tax the casinos and hand the purse to horse industry interests.

The case began in 2009 when Empress Casino and Harrah’s Casino, both in Joliet, plus Hollywood Casino in Aurora and Grand Victoria Casino Elgin sued Blagojevich and John Johnston, owner of racetracks Balmoral Park in Crete and Maywood Park in Melrose Park. The casinos claimed Johnston and the tracks conspired with Blagojevich to enact the 2008 Illinois Horse Racing Act in exchange for $100,000 in contributions to Blagojevich’s re-election campaign. The law taxed 3 percent of the casinos’ adjusted gross revenues for three years; proceeds were directed to a fund to increase race purses and pay track expenses. The law was designed to compensate racetracks for losses they allegedly experienced due to riverboat casino gambling, which began in 1999 in Illinois.

In December 2014 a jury found the defendants conspired to violate the Racketeer Influenced and Corrupt Organizations Act, committed civil conspiracy under Illinois law and were unjustly enriched. The jury awarded the casinos $26 million in compensatory damages, the same amount the casinos paid in taxes under the Horse Racing Act. As required by RICO, the $26 million figure was tripled to $78 million and an additional $4 million in punitive damages also was awarded. The casinos also were awarded costs and attorney fees totaling $2.8 million.

Defendants subsequently filed motions asking Kennelly to throw out the verdicts and grant a new trial. They said the evidence did not support a plot to bribe Blagojevich and contended Blagojevich would have signed the legislation regardless even if they had not promised the $100,000 contribution.

In his recent ruling, Kennelly noted several examples from the trial that reasonably could have convinced a jury of a scheme to bribe Blagojevich. For example, Kennelly noted a 2008 email from Johnston to members of the horseracing industry stating “We are going to have to put a stronger bit in Blagojevich’s mouth.” Kennelly said this email, in connection with other evidence, indicated a plan by Johnston to “improperly influence Blagojevich.” Kennelly also found evidence supported the jury’s conclusion of a pattern of racketeering activity. He added his evidentiary and jury instruction rulings during the trial were sound.

Kennelly noted the racetracks did profit from the 60 percent that went into the horse fund. The fund increased purses, which led to better races, higher betting and more attendance at the tracks, he said.