Casinos‘ suit: Taxing us for horse racing is illegal

Joliet – The Empress Casino and Harrah’s Joliet Casino & Hotel are plaintiffs in a lawsuit filed Tuesday to stop a new casino tax that would send money to the horse racing industry.

The Joliet casinos, along with Hollywood Casino in Aurora and the Grand Victoria Casino in Elgin, contend they were unconstitutionally singled out to pay the tax in order to get political support from downstate legislators to pass the law authorizing the tax.

The tax, which raises USD 36 million a year for the horse racing industry, does not apply to the five other Illinois casinos that are outside of the Chicago area.

The lawsuit, filed in Will County Circuit Court, comes four days after Gov. Rod Blagojevich signed the legislation authorizing the tax. At the time, Blagojevich and legislators from the St. Louis metropolitan area pointed out the special benefits for the Fairmount Park racetrack in Collinsville.

In turn, the lawsuit contends Fairmount gets a disproportionate share of the money despite its distance from the casinos that must pay the tax.

„Fairmount is 250 miles away from the nearest casinos required to pay the surcharge,“ said Eric Schippers, a spokesman for Penn National Gaming, which owns the Empress and Hollywood Casino.

Schippers pointed out that the Casino Queen in East St. Louis, only 10 miles from Fairmount, and the Alton Belle, only 25 miles away, don’t have to pay the tax.

„Clearly the legislative history reflects that votes were to be garnered by excluding the five other casinos,“ Schippers said. „When all the casinos were included earlier, the vote failed.“

A revised version of the tax was passed May 4 late in the afternoon just before the General Assembly adjourned for the spring.

Casinos blasted the legislation as an unfair tax of one industry to support another.

The horse racing industry, however, has argued that the tax makes up for missed benefits that were to come to the tracks in 1999 legislation that established a 10th casino license, dock-side gaming and other benefits to the casino industry.

Because of problems associated with the 10th casino license, the financial benefits for the horse racing industry never developed, said Marc Laino, executive director of the Illinois Racing Board.

The casinos „reaped all the benefits from that legislation,“ Laino said. „Here we are six years later, and the horse industry doesn’t see any relief.“

The lawsuit itself may delay the benefits of the legislation, as well. The casinos are paying the tax under protest, and the lawsuit requests that the taxes be held in a special protest fund until the legal challenge is resolved.

The lawsuit contends the tax is unconstitutional primarily because:

– It violates the Takings Clause of the Illinois Constitution by compelling the casinos „to directly subsidize a less successful competitor’s operations.“

– It violates the Uniformity Clause of the Illinois Constitution and equal protection rights under both the state and federal constitution. „In order to secure the votes necessary to pass the Act, the sponsors exempted the five riverboats located in downstate Illinois from the surcharge,“ the lawsuit states.

– It amounts to „unconstitutional special legislation, which is designed to benefit particular racetrack owners in a way that is not rationally related to any legitimate state purpose.“

Blagojevich issued a statement as he signed the legislation saying the tax would „help protect the jobs of thousands of hardworking people who depend on the horse racing industry for their livelihood“ and „create a more level playing field that will allow the horse racing industry to remain competitive in Illinois.“

Abby Ottenhoff, a spokeswoman for the governor, said Tuesday she had not seen the lawsuit and could not comment on it.

But, she said, „We feel that the revenue sharing law is legal. Beyond that, it’s critical to the struggling horse-racing industry in Illinois that employs 40,000 people.“