Churchill Downs Pulls Plug on Arlington Heights, Illinois Casino Idea Due to Punitive Tax Scheme
Posted on: August 28, 2019, 08:32h.
Last updated on: August 28, 2019, 11:58h.
Churchill Downs Inc. didn’t apply for a slot machine and table game license at the Arlington International Racecourse the company owns because of unfavorable tax treatment in Illinois.
Following passage of the recently enacted Illinois Gaming Act, it was widely expected that Churchill Downs, which also holds a majority stake in the Rivers Casino Des Plaines in Illinois, would be active in looking to expand its market share in the Land of Lincoln. That could still be the case, but the company sees the casino tax situation at the race track in Arlington Heights as unattractive.
The economic terms under which Arlington would be granted a casino gaming license do not provide an acceptable financial return and we cannot responsibly proceed,” said Churchill Downs CEO Bill Carstanjen in a statement.
Plans to expand the Illinois gaming market, which some industry observers believe is already saturated, are still in the formative stages, but have been dogged by concerns over high taxes. Earlier this month, a feasibility study was published by the Illinois Gaming Board (IGB), which was performed by Union Gaming Analytics (UGA). The study indicated that an operator choosing to put a casino in Chicago would essentially face a tax rate of 72 percent, making it highly undesirable for financially prudent companies and next to impossible to turn a profit in the Windy City.
Not Dealing With The Tax Man
The Illinois plan to expand gaming options is ambitious, calling for the addition of up to six casinos across the state, as well as slot machines at Chicago’s Midway and O’Hare International airports. But the taxes the state is proposing are widely viewed as onerous and unappealing to operators. For example, Las Vegas Sands and Penn National Gaming are among the companies that have already said they’ll pass on a Chicago casino project.
Carstanjen noted that a casino at the Arlington International Racecourse would have been saddled with taxes higher than existing properties in the market.
“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,” said the Churchill Downs CEO. “This disadvantage in a hyper-competitive gaming market, coupled with substantial licensing and reconciliation fees and new, unviable horse racing requirements in the Illinois Gaming Act, makes construction of a casino at Arlington financially untenable. It is with a heavy heart that we conclude that we can’t make this work.”
Illinois already has a graduated tax rate of 50 percent on gambling revenues, which isn’t the highest in the US. But it is well in excess of those found in neighboring states, such as Iowa and Missouri.
Still Committed To Illinois
While Churchill Downs is scrapping the Arlington International Racecourse casino effort, the company remains committed to the Prairie State. It will still have horse racing at that venue next year and in 2021, and plans to apply for a sports betting license for that property.
Additionally, the Rivers Casino, of which Churchill Downs owns 61 percent, is among six bidders looking to put a gaming venue in Waukegan, Ill.