Friday, December 26, 2008

Tracks Could Lose Revenue in Fed Inquiry

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by Blood-Horse Staff

Federal inquiries into allegations that Illinois Gov. Rod Blagojevich traded and sold political favors for personal gain could derail a state law requiring casinos to share their revenue with the horse racing industry, according to a Wall Street Journal report.

A bill that Blagojevich signed into law Dec. 15 requires the state’s four highest-grossing riverboat casinos to give 3% of their revenue to the horse racing industry. The provision is estimated to be worth as much as $30 million a year, and by law is divided 60% for purses and 40% for tracks.

According to the Journal, a federal affidavit includes allegations that the governor pressured horse racing officials for a $100,000 campaign contribution in exchange for his signature on the most recent revenue-sharing legislation. Blagojevich signed the bill six days after he was arrested for allegedly trying to sell President-elect Barack Obama’s U.S. Senate seat.

Revenue at both Thoroughbred and Standardbred tracks have declined since casinos began operating in Illinois in the 1990s. Casinos have argued the reason is because horse racing’s appeal as a sport is fading. After years of lobbying, a law was passed in 2006 that required the casinos to share their revenue, but the racetracks haven’t seen a nickel because of legal challenges. Casinos filed a suit that argued the law violated the state constitution. In June, the Illinois State Supreme Court ruled against the casinos, which intend to file an appeal with the U.S. Supreme Court. Meanwhile, an estimated $80 million collected under the provisions of the 2006 law sits in an escrow account.

The Journal reported that state campaign-contribution records show the Maywood and Balmoral harness racetracks, owned by a group controlled by Illinois racing veteran William H. Johnston Jr. and his sons William III and John, gave $95,000 to Blagojevich from 2002 through 2007.The tracks’ lobbying group, Racing Association of Illinois, also contributed $65,000 from 2002 through 2007. State records also show that these same tracks in May 2007 hired AM3 Consulting Ltd., the lobbying firm of Alonzo Monk, Gov. Blagojevich’s former chief of staff,

Balmoral Treasurer F. Phillip Langley told the Journal that he never had a conversation with Monk or any lobbyist about giving a contribution to Blagojevich. He also said he hadn’t been contacted by federal investigators. Langley did say the formula within the new law for distributing casino dollars to the racetracks would provide Balmoral and Maywood a combined $3.5 million annually.

Click here to read the full story.

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