Churchill Downs will not pursue a casino license for Arlington Park in Arlington Heights, Illinois, saying that the economic terms under which such a license would be granted would not provide “an acceptable financial return.”
The casino and racetrack operator for years lobbied Illinois lawmakers to allow the state’s racetracks to add slot machines and table games in a bid to boost its ailing horse racing industry. It decision to not add casino gambling positions at Arlington Park came as a big surprise to many.
Under Illinois’ extensive gambling expansion package, signed by Gov. J.B. Pritzker earlier this year, the state’s racetracks can now add Las Vegas-style gambling positions. However, they are required to contribute a portion of their casino revenues to racing purses. The state’s actual casinos are not required to dedicate revenues to the horse racing industry.
Churchill Downs CEO Bill Carstanjen said Wednesday that the revenue contribution requirement puts Arlington Park at a significant disadvantage. The executive elaborated that the racetrack “would enter this market with an effective tax rate that would be approximately 17.5 percent to 20 percent higher than the existing Chicagoland casinos due to contributions to the thoroughbred purse account.”
Mr. Carstanjen added that “the economic terms under which Arlington would be granted a casino gaming license do not provide acceptable financial return and we cannot reasonably proceed.”
Considering Other Options
Churchill Downs said that horse racing would continue at Arlington Park through at least 2021. However, the company is also considering other options for the famous racetrack, including relocating its license to another facility.
Mr. Carstanjen pointed out that the Chicagoland market “has seen a significant proliferation of video gaming terminals over the last several years” and the potential addition of new casinos around Illinois as well as increased gambling positions at existing casinos and video gaming outlets would further saturate the market.
Illinois’ updated gambling law authorized the addition of up to six casinos around the state, including one in Chicago, and major expansion of the state’s gambling machine sector. It also legalized the provision of sports betting services on the territory of Illinois.
Churchill Downs’ CEO said Wednesday that the company would apply for a sports betting license at Arlington Park.
While it would not pursue casino gambling at the racetrack, Churchill Downs recently revealed plans to expand the recently acquired Rivers Casino Des Plaines. The company purchased a 61% stake in the gambling venue. Churchill Downs and Rivers also announced that they would seek a license for the operation of a casino in Waukegan.
Reaction to Churchill Downs’ Arlington Park Plans
Churchill Downs’ latest announcement regarding the racetrack’s future shocked many. The Illinois Thoroughbred Horsemen’s Association said in a statement that they were “profoundly disappointed” by the operator’s failure “to do its part to grow jobs and economic opportunity for thousands of Illinois men and women both at the track and throughout the state’s agribusiness community.”
The Mayor of Arlington Heights, Tom Hayes, was less sharp in his comments, saying that he interpreted the announcement as a corporate decision and that Churchill Downs was probably unwilling to compete with Rivers.
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