Divided state panel rejects request to keep open Arlington Park's OTBs
A divided state panel Thursday denied Arlington Park and parent company Churchill Downs Inc.'s request to keep open their network of off-track betting parlors now that the racetrack is closed.
The rare 5-5 vote of the Illinois Racing Board will mean the closure of at least six OTBs by the end of the year: at Arlington Trackside on the racecourse property at Euclid Avenue and Wilke Road in Arlington Heights, on Weed Street in Chicago, and in Green Oaks, Hodgkins, Rockford and Villa Park.
It won't mean complete closure of all the venues themselves, officials say. For instance, the popular Joe's Bar on Weed Street will still host concerts and serve chicken wings; horseplayers just won't be able to place bets next door.
Four parlors formerly operated by Arlington - in Aurora, Hoffman Estates, McHenry and North Aurora - were picked up by Hawthorne Race Course, but the Cicero-based racetrack needs the approval of state legislators to acquire any of Arlington's other OTBs.
After Arlington Park's Sept. 25 closure and announced pending $197.2 million sale to the Chicago Bears, Churchill officials said they wanted to keep the OTBs open as they search for a new thoroughbred racetrack elsewhere in Illinois. But several members of the appointed state panel didn't take that as a commitment to the Illinois horse racing industry.
"You had 20 years to look for another site since you were already thinking of moving on Arlington Park. You had 20 years and you haven't come up with anything," said Commissioner Ben Reyes. "What's to convince us that you are looking for something? I don't think you guys are. Not in the state of Illinois, I'll tell you that much."
Reyes voted with board Chairman Dan Beiser, and fellow Commissioners Alan Henry, Beth Doria and John Stephan to reject Churchill's intertrack wagering license request.
The Thursday morning session, held virtually, marked the first time members of the regulatory agency board could publicly question top company brass of the Louisville, Kentucky-based horse racing and gambling corporation who were directly involved in the decision to sell the 326-acre Arlington Park site.
"Is there something different that you are looking for that you didn't have at Arlington?" Commissioner Beth Doria asked two company executives who appeared for the meeting. "I'm trying to reconcile why you would want to close a preeminent park that you already have and that has everything you could ask for, to look for another location."
Churchill President and Chief Operating Officer Bill Mudd said the prime acreage in Arlington Heights was sold because of the high value of the land, reiterating a previous statement of his boss, CEO Bill Carstanjen, that the site has "a higher and better" use as something other than a racetrack. Mudd said the corporation is looking at opportunities elsewhere, but he declined to identify specific properties.
Even if Churchill did open a new racetrack, Beiser asked Mudd, would it make any difference to the company's bottom line? The board chairman referenced Carstanjen's statements at an October quarterly earnings call when the CEO blamed "archaic" Illinois horse racing laws going back 30 years for the decision to sell the track and not pursue additional gambling there.
While declining to detail what Churchill wants to change in the old laws, Mudd said the company is working through the legislative process as officials search for a new site. He did go into specifics about what he doesn't like about the 2019 state gambling expansion package that allowed Arlington to add the slots and table games officials there once lobbied for: a required reconciliation payment due three years after opening the "racino," and new casinos in Chicago, Waukegan and Rockford that would increase competition.
But in the end, the economics of what the Arlington Park land was worth led to the decision to sell, Mudd said.
"It just wasn't even close. They took the ref out of the game," Mudd said. "Part of the issue is that property at Arlington Park - one big continuous piece of land right on the train station - is worth a lot of money. As a public company, that unfortunately is the position that we get put in, because we do have a fiduciary obligation to our shareholders."
Henry, a frequent critic of Churchill, said the company subverted the state horse racing industry by lobbying for and then rejecting the opportunity to apply for a racino license, then "jilting" the track.
"We absolutely should not be enabling them," Henry said.
Arlington's OTB application was formally opposed by Hawthorne, the lone remaining Chicago-area track that is hosting truncated schedules of thoroughbred and harness races in 2022. Also lodging opposition was the Illinois Thoroughbred Horsemen's Association, which represents horse owners and trainers at Hawthorne and formerly Arlington.
The board voted 9-1 to approve a separate Churchill request to maintain its TwinSpires mobile betting platform in Illinois. Henry cast the lone "no" vote. Despite the closure of Arlington, Churchill will be able to keep its app - known more technically in the industry as advanced deposit wagering - through a contract with Fairmount Park in downstate Collinsville.
Opposition to that arrangement seemed to lose steam when the horsemen's group at that track, the Illinois Horsemen's Benevolent and Protective Association, Thursday morning dropped their formal objection to the bid.