Request to Escrow $4.9M in 'Recaptured' Arlington Purses Again Shot Down By State

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Arlington Park | Four Footed Fotos

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For the second time in four months, the Illinois Racing Board (IRB) Jan. 21 declined a request by the Illinois Thoroughbred Horsemen's Association (ITHA) to put $4.9 million of “recaptured” purse funds in escrow so that money can only be collected by Arlington Park if the track runs its entire slate of 68 dates in 2021.

During Thursday's IRB meeting, the ITHA restated the same argument it articulated back on Sept. 16, when the 2021 dates were initially granted: that the Illinois racing community doesn't have faith that Churchill Downs, Inc. (CDI), the gaming corporation that owns Arlington, will follow through on running a race meet in its entirety, so ITHA wants the statutorily legal recapture funds conditionally withheld by the IRB as a cudgel of compliance.

The litany of distrust between the ITHA and Arlington is based on three recent incidents: 1) A stunning 2019 decision by CDI to intentionally miss a deadline to apply for racino licensure at Arlington after working for more than a decade with the ITHA to get a gaming law passed; 2) An acrimonious eight-month battle over race-meet contracts for 2020 and 2021 that included numerous blown deadlines and required IRB mediation; and 3) Comments made last July 30 by Bill Carstanjen, CDI's chief executive officer, that CDI will honor its 2021 race meet contract with the ITHA “if we elect to do so” and that the Arlington property “will have a higher and better purpose for something else at some point.”

Recapture has been a controversial entity unique to Illinois racing for 25 years. It's based on a 1995 law that states that if in any given year, total Illinois handle falls below 75% of the state's 1994 benchmark, any track whose handle also falls below its own 1994 individual benchmark is entitled to deduct 2% of the difference from its horsemen's purse account.

To give a long-view example of how much money that law has cost Illinois purse accounts since its implementation, David McCaffrey, the ITHA's executive director, testified Thursday that Thoroughbred and harness tracks statewide over the decades have reaped $298 million in recaptured funds, with Arlington alone raking back $98 million in money that had been earned for purses.

ITHA President Michael Campbell added that recapture “is harmful. It is what has caused the almost total erosion of the industry in Illinois.”

But although they have a problem with the recapture law itself, McCaffrey and Campbell both admitted that Arlington is not doing anything illegal in taking the recapture money according to the Illinois statute.

“It's their legislative right,” Campbell said. “But at the same time, it doesn't mean that it's a good law.”

Campbell noted that Hawthorne Race Course, the other stop on the two-track Chicago circuit, is deferring any collection of its recapture funds until more money is generated for purses when the Hawthorne racino gets up and operational.

Yet Arlington president Tony Petrillo testified that his track already does work with the ITHA to the extent that, “Arlington, prior to this year, has voluntarily capped or put a ceiling on recapture of $4.5 million.”

Petrillo added: “Regarding the [escrow] payment schedule that the ITHA is seeking, first I would say Arlington should not be treated differently than any other racetrack in those terms…. We cannot control the results of the pandemic…. We have accepted 68 days of racing [and] fully intend to run those 68 days of racing…. I don't think [escrowing the recapture funds] would be in the best interest of racing and to set that type of precedent.”

Back in September, when the ITHA first asked the IRB to hold back 2021 recapture funds until Arlington's 68-date season was completed, the IRB's attorney said that statutory provisions didn't allow the attachment of such a stipulation to dates orders. Based on that advice, board members at that time voted 6-0 to grant Arlington's schedule with no escrow strings attached.

But it was noted at that same meeting that the ITHA could bring up the subject again in January, when the IRB had to vote upon setting the 2021 recapture payment schedule.

Yet on Thursday, after hearing from both the ITHA and Arlington for 25 minutes on the topic, no IRB members stepped forward to attach the ITHA's escrow request to the motion listed on the agenda to certify the recapture amounts.

In fact, the IRB didn't even discuss the issue prior to voting 6-0 to release the recapture payments as requested by the tracks.

For Illinois' three Thoroughbred tracks, the approved recapture amounts this year will be: Arlington ($4,948,020), Hawthorne ($2,879,530) and Fairmount Park ($1,934,464).

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