Illinois Casinos File Suit Over Subsidies to Horse Racing

Some $35 million a year in subsidies promised to the Illinois racing industry in recently passed legislation appears headed for court rather than the tracks. The situation threatens to become a replay of events that derailed an even bigger subsidy approved seven years ago.

Two of the four riverboat casinos that would be taxed to provide the new funding source have filed suit in Will County, charging the new law is unconstitutional. And, prolonged litigation could doom the subsidy entirely since, in its current form, it expires after two years.

The legislation was passed in the waning days of the spring legislative session and signed into law by Gov. Rod Blagojevich during the Memorial Day weekend. Blagojevich said the bill would protect racing-related jobs and "create a more level playing field that will allow the horse racing industry to remain competitive in Illinois."

The rationale was that a sweeping reform of all state gaming legislation passed in 1999 wound up benefiting the riverboat casinos at the expense of racing. Riverboats won the right to conduct dockside gaming, among other lucrative concessions. But a race track subsidy promised from revival of a moribund 10th Illinois casino has been tied up in a Gordian knot of litigation that seems to defy resolution.

Racing interests, who supported the 1999 reform, view this year's legislation as redressing that inequity.

The casino operators don't see it that way.

They argue legislative supporters opted to tax them and exempt five other casinos as part of the wheeling and dealing needed to win passage of the bill. That, they argue, is unconstitutional.

The four casinos –- the Empress and Harrah's in Joliet, the Grand Victoria in Elgin and the Hollywood in Aurora –- asked that the new taxes be held in escrow pending resolution of the lawsuit.

That could further complicate racetracks' efforts to extend the subsidy past its current two-year "sunset" date. That provision was inserted in the law, most observers believe, to ensure that racing would support Senate President Emil Jones's efforts next year to expand Illinois gaming dramatically, including authorization for a land-based casino in downtown Chicago.

In that scenario, Jones would support extended racing subsidies only as part of the overall gaming expansion. Prolonged litigation could compromise that possibility.