SUBURBAN DOWNS, INC. v. Illinois Racing Bd.

• Decision Date: 18 August 2000
• Docket Number: No. 1-00-0578.,1-00-0578.
• Citation: 316 Ill. App.3d 404,249 Ill.Dec. 93,735 N.E.2d 697
• Parties: SUBURBAN DOWNS, INC., Plaintiff-Appellant, v. ILLINOIS RACING BOARD, Balmoral Racing Club, Inc., Maywood Park Trotting Association, Inc., Associates Racing Association, Inc., Arlington International Race Course, Inc., National Jockey Club, Hawthorne Race Course, Inc., Ogden Fairmount, Inc., Illinois Thoroughbred Horsemen's Association, Illinois Harness Horsemen's Association, and Illinois Division, Horsemen's Benevolent and Protective Association, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

735 N.E.2d 697

316 Ill. App.3d 404

249 Ill.Dec. 93

SUBURBAN DOWNS, INC., Plaintiff-Appellant, v. ILLINOIS RACING BOARD, Balmoral Racing Club, Inc., Maywood Park Trotting Association, Inc., Associates Racing Association, Inc., Arlington International Race Course, Inc., National Jockey Club, Hawthorne Race Course, Inc., Ogden Fairmount, Inc., Illinois Thoroughbred Horsemen's Association, Illinois Harness Horsemen's Association, and Illinois Division, Horsemen's Benevolent and Protective Association, Defendants-Appellees.

No. 1-00-0578.

Appellate Court of Illinois, First District, Fifth Division.

August 18, 2000.

Carey, Filter, White & Boland, Chicago (Edward M. White and Michael J. Murray, of counsel), for Appellant.

Jim Ryan, Illinois Attorney General (Daniel P. Fitzgerald, Michael J. Hayes, Sr. and John T. Roache, Special Assistant Attorneys General, of counsel) and Hopkins & Sutter (William J. McKenna, David B. Goroff and Martin J. Bishop, of counsel), Chicago, for Appellees. Justice QUINN delivered the opinion of the court:

After a hearing to determine the allotment of racing dates for the year 2000, the Illinois Racing Board (the Board) refused to award harness racing dates to plaintiff Suburban Downs, Inc., instead awarding all harness racing dates to defendants Balmoral Racing Club, Inc. (Balmoral), and Maywood Park Trotting Association, Inc. (Maywood). The plaintiff's complaint for administrative review in the circuit court was heard and denied. On appeal, plaintiff argues that (1) the order entered by the Board was contrary to law in that the Board failed to make specific findings on the factors set forth in the Illinois Horse Racing Act of 1975 (the Racing Act) (230 ILCS 5/1 et seq. (West 1996)); (2) denial of racing dates to plaintiff because of its use of the Fontana safety rail was a denial of due process of law and was arbitrary and capricious; (3) any comparative disadvantage resulting from the Fontana rail was offset by plaintiff's one-mile track; (4) the record shows that greater revenue to the state and purses to horsemen would be produced by granting racing dates to plaintiff; and (5) the record showed that the Board's decision was motivated by considerations not permissible under the Racing Act. For the following reasons, we affirm the dates order issued by the Board.

Plaintiff, Suburban Downs, Inc., is an entity that conducts horse race meets and conducted harness racing at Hawthorne Race Course in Stickney, Illinois, from at least 1970 through 1997.¹ Defendants Balmoral, Maywood, Arlington, Associates Racing Association (Associates), National Jockey Club (National Jockey), Hawthorne Race Course, Inc. (Hawthorne), and Ogden Fairmount (Ogden) are also entities that conduct horse racing meets in Illinois. Balmoral conducts harness racing at Balmoral Park, in Crete, Illinois. Maywood conducts harness racing at Maywood Park in Maywood, Illinois. Chicago Downs Association (Chicago Downs) and Fox Valley Trotting Association (Fox Valley) have, in past years, conducted harness racing at Sportsman's Park in Cicero, Illinois, which adjoins Hawthorne Race Course.

Pursuant to the Racing Act, the Board is the agency charged with administering the Racing Act. 230 ILCS 5/2 (West 1996). The Racing Act provides that any person desiring to conduct a horse race meeting may apply to the Board for an organization license. 230 ILCS 5/20(a) (West 1996). In granting organization licenses and allotting dates for horse race meetings, the Board has discretion to determine an overall horse racing schedule that will, in its judgment, be conducive to the best interests of the public and the sport of horse racing. 230 ILCS 5/20(e-5) (West 1996).

In reaching its determination, the Board is to consider the following factors under Section 20(e-5) of the Racing Act:

(1) the character, reputation, experience, and financial integrity of the applicant and of any other separate person that either:

(i) controls the applicant, directly or indirectly, or

(ii) is controlled, directly or indirectly, by that applicant or by a person who controls, directly or indirectly, that applicant;

(2) the applicant's facilities or proposed facilities for conducting horse racing;

(3) the total revenue without regard to Section 32.1 to be derived by the State and horsemen from the applicant's conducting a race meeting;

(4) the applicant's good faith affirmative action plan to recruit, train, and upgrade minorities in all employment classifications;

(5) the applicant's financial ability to purchase and maintain adequate liability and casualty insurance;

(6) the applicant's proposed and prior year's promotional and marketing activities and expenditures of the applicant associated with those activities;

(7) an agreement, if any, among organization licensees as provided in subsection (b) of Section 21 of this Act; and

(8) the extent to which the applicant exceeds or meets other standards for the issuance of an organization license that the Board shall adopt by rule. 230 ILCS 5/20(e-5) (West Supp.2000).

Through August 1 of each year, the Board accepts applications submitted by organizations seeking an award of racing dates for the next calendar year.² 230 ILCS 5/20(e) (West 1996). The Board considers the applications and announces the award of the racing dates at its annual dates hearing in September. Those announcements are not considered final until the Board executes a formal order. 230 ILCS 5/20(e) (West 1996).

The following facts were taken from the record before the Board at the dates hearing and from the Board's dates order for the year 2000.

Plaintiff has never been awarded harness dates other than in winter, with the exception of a 10-day harness meet in May of 1992. For calendar years 1998 and 1999, plaintiff was not awarded any harness dates based on an agreement between all racetrack applicants. Instead, as a result of Arlington's absence, Hawthorne requested and was granted more thoroughbred dates at Hawthorne Race Course. Thoroughbred racing dates generate higher handle than harness dates and, as a result, Hawthorne's handle increased dramatically in 1998 and 1999 in comparison with prior years.

Additionally, the landscape of horse racing has changed markedly in recent years. On May 30, 1995, the Racing Act was amended to permit Illinois licensees to accept pari-mutuel wagering on unlimited full-card simulcasts of race programs conducted out of state. This amendment resulted in a substantial reduction of total wagering at Illinois locations on Illinois live racing, which was replaced by Illinois wagering on out-of-state races. For example, from 1994 to 1999, the percentage of total handle (the amount of money wagered on horse racing) wagered on Illinois live racing decreased from 95% to 33%. In this manner, full-card simulcasting substantially leveled the playing field among the track operators. In addition, since the authorization of off-track wagering in Illinois, the percentage of total handle wagered at Illinois race tracks decreased from 34% to 18%. The remaining percentage of handle is now wagered at intertrack and off-track locations.

On June 25, 1999, the Racing Act was amended again to eliminate host track status for matinee harness racing meets. 230 ILCS 5/3.075(e) (West Supp.1999). Prior to 1998, the Board awarded matinee harness racing dates and host track privileges to plaintiff in January and February. On those dates, plaintiff benefitted from host track privileges and handle generated from the full-card simulcasting on out-of-state races, which included thoroughbred races. With the absence of live Illinois thoroughbred racing during this period, plaintiff generated higher average daily handle numbers as compared to harness meets during nonexclusive portions of the racing schedule. Comparing plaintiff's handle with more recent figures, in January and February of 1998 and 1999, National Jockey's matinee average daily handle at Sportsman's Park exceeded plaintiff's January and February 1997 average handle, even though National Jockey did not have the benefit of live racing.

In July 1999, plaintiff submitted its application to the Board. In its application, plaintiff sought harness racing dates at Hawthorne Race Course for the period of May 7 through September 2, 2000. Balmoral also applied for harness racing dates for four days per week throughout the year 2000, with races to be conducted at Balmoral Park. Maywood and Associates both applied for harness racing dates for three days per week throughout the year 2000, with races to be conducted at Maywood Park. Chicago Downs and Fox Valley did not apply for racing dates.

In addition to their applications, and as they did in the years 1995 through 1999, each applicant submitted a written waiver of the contested cases provisions of the Illinois Administrative Procedures Act (5 ILCS 100/1-1 et seq. (West 1994)) (hereinafter the Act), and elected to present evidence to the Board at an informal dates hearing conducted on September 21, 1999. Specifically, each applicant, including plaintiff, signed a waiver that provided as follows:

"The undersigned, on behalf of [applicant's name], being fully advised, and in the interest of a speedy, practical and equitable resolution by the Illinois Racing Board of the issues involved in the award of racing dates for the calendar year 2000, does hereby waive any and all rights to a hearing in accordance with the `contested cases' provisions of the Administrative Procedures Act, (ILCS Ch. 5, Sec. 10-25 through 10-70), prior to the award of 2000 racing dates to applicants therefor."

At the dates hearing, the Board determined that each applicant had an extensive history of conducting race meets in Illinois over a period of many years. The Board also determined that all of the applicants possessed the character, honesty, and financial integrity to operate the race meets requested, and to purchase the necessary casualty and liability...