Bankrupt Illinois Racetrack Accuses State Official of Diverting Funds to Rival

Posted on: May 29, 2026, 09:13h. 

Last updated on: May 29, 2026, 09:18h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.
  • Bankrupt Hawthorne alleges state funds were diverted to rival track
  • Federal judge approves subpoenas targeting Costello brothers and officials
  • Dispute emerges as Illinois horse racing industry faces uncertainty

Bankrupt Illinois racetrack Hawthorne Race Course is accusing Jerry Costello, director of the state’s Department of Agriculture (IDOA), of diverting horse-racing funds to a competing track whose affiliated horsemen’s group is represented by his brother, lobbyist John Costello.

Hawthorne Race Course, Jerry Costello, Illinois horse racing, Fairmount Park, Illinois Department of Agriculture
Hawthorne Race Course has accused state officials of steering horse-racing funds to a rival track. A federal judge has approved subpoenas as the track seeks records related to the allegations. (Image: Hawthorne Race Course)

John Costello denied the allegations, calling them “defamatory” in a statement to the Chicago Tribune. Jerry Costello has declined to comment, citing ongoing litigation.

Hawthorne, a historic racetrack in Stickney near Chicago, filed for Chapter 11 bankruptcy protection in February, listing assets of between $50 million and $100 million and liabilities of between $100 million and $500 million.

‘Troubling Connections’

In court filings, the track alleges that since entering bankruptcy, IDOA has reduced Hawthorne’s share of state horse-racing funds by about $317,000 while increasing allocations to Fairmount Park, its chief competitor in Collinsville, Ill.

The filing cites “troubling connections” between the agriculture director and his brother, who represents the Illinois Horsemen’s Benevolent & Protective Association.

Despite no material operational changes, Fairmount Park received disproportionately large allocations while the debtors’ share was significantly reduced,” Hawthorne’s lawyers wrote.

The attorneys alleged that the funding decisions “were made at the direction of Jerry Costello through the IDOA and the Thoroughbred Board, and were influenced by the lobbying efforts of John Costello.” The allegations have not been proven in court.

On Wednesday, a federal judge granted the track’s request to file subpoenas and seek depositions from the brothers, as well as Fairmount Park officials, in order to investigate its allegations.

Hawthorne for Sale

In January, the Illinois Racing Board ordered the track to cease live racing and suspend its off-track betting (OTB) operations after horsemen were issued purse checks that bounced.

The track’s current owners are seeking a buyer through the bankruptcy courts and will sell to the highest bidder. Hawthorne President and CEO Tim Caey has said there was “substantial interest from potential buyers and recapitalization partners” due to the potential transformative value of a casino project at the track.

In 2019, the state granted Hawthorne preliminary approval to build a casino, and the track began demolishing part of its grandstand in preparation for redevelopment. However, the project has stalled.

A new bill in the Illinois legislature, sponsored by Rep. Bob Rita (D-Blue Island), seeks to stabilize the horse racing industry by reducing racino related gaming fees and extending repayment times for racino operators.