Mere days after a study concluded a new Chicago casino would be financially insolvent because of high gaming taxes, it was announced the same factor could force an Arlington racetrack relocation.
Interested parties in the Chicago suburbs hoped for much the opposite. Those hopes have now been turned into concerns.
Why the Arlington racetrack relocation is possible
According to a news release from Churchill Downs CEO Bill Carstanjen, the company considers adding casino games to the Arlington International Racecourse “financially untenable.” The main reason given is Illinois’ gaming tax rate.
Arlington would enter this market with an effective tax rate that would be approximately 17.5%-20% higher than the existing Chicagoland casinos due to contributions to the Thoroughbred purse account. It is with a heavy heart that we conclude that we can’t make this work.
The Arlington Heights facility’s future is now up in the air. The new law gave Churchill Downs, the owner of the track since 2000, the freedom to add up to 1,200 gaming positions to the track.
Without casino games, it’s possible the racecourse may close up shop. Churchill Downs only has horse racing planned there through 2021.
It’s hard to imagine Churchill Downs giving up entirely on a $71 million investment that’s less than two decades old, however. Before cutting its losses and moving on, the racetrack would probably be relocated.
Where that would be in Illinois is up in the air. According to the statement, another Chicago suburb is a possibility.
Even if that were to happen, it wouldn’t mean the end of Churchill Downs’ business in the Windy City region. There are plans to expand operations elsewhere.
Churchill Downs’ gambling expansion plans
Churchill Downs does plan to expand its operations in two other Chicago suburbs: Des Plaines and Waukegan.
The Louisville, Kentucky-based corporation has submitted one of six bids to build a new casino in Waukegan. Its plan is for a 1,600-position facility, which is 400 fewer than the new maximum.
Plans exist to reach that maximum in Des Plaines, however. Churchill Downs is the majority owner of Rivers Casino there.
Not only do plans for Rivers in Des Plaines involve an expansion to the 2,000 gaming position cap, but Churchill Downs intends to place a sportsbook there as well.
A timetable for granting the Waukegan bid is as unknown as when Illinois sports betting will roll out. If Churchill Downs wins the Waukegan bid, it would be safe to rule out the racetrack being relocated there.
What’s also possible is that the threat of relocation could be Churchill Downs exercising what leverage it has.
Adding fuel to the already-fanned flames
The conclusion of the aforementioned study on a new Chicago casino already looked bad for Illinois lawmakers. The possible relocation of the Arlington International Racecourse might add to that.
It’s a classic “take my ball and go home” ploy. The Illinois Legislature could adjust the new gaming tax rates as easily as it set them.
By threatening to relocate the racetrack along with nixing plans to add casino games, Churchill Downs is sending a clear message to the Legislature that the tax rates are too high in its opinion.
The Illinois Legislature already may have had to reconsider the new tax structure to make a Chicago casino viable. This news could add fuel to that fire.