Creditors hound Hawthorne Race Course as liens exceed $5 million

Nearly five years after a racino was promised at the Chicago track, horsepeople are still waiting.

by Neil Milbert

For the third time in six months, Hawthorne Race Course has made the front page of the Chicago Tribune. The latest came over the Memorial Day weekend.

But, like the earlier stories on Dec. 19 and April 12, the May 25 article by Robert McCoppin didn’t have anything to do with what was happening on the track itself.

Instead, it again put the focus on the major problems confronting the track and the people who race their horses there.

The story revealed that liens totaling in excess of $5 million have been filed either against Hawthorne or its owners, Carey Heirs Properties LLC.

“The debt calls further into question whether Hawthorne can get financing to build a planned racetrack/casino combination, known as a racino,” McCoppin wrote. “Hawthorne officials said they settled one of the claims, and plan to pay off the debt as soon as they get financing for the project. Track president Tim Carey repeatedly has promised financing was in the works and construction would begin soon, but after nearly five years, it has yet to happen.”

According to the Tribune story:

• General contractor W.E. O’Neil Construction Co. in 2022 filed a lien and a lawsuit claiming breach of contract for an agreed debt of $5 million that Hawthorne “refused to pay.” O’Neill and several subcontractors were hired in 2020 and did $12 million in demolition work in preparation for the construction of a casino at the track. Now, O’Neil claims it’s owed the unpaid $5 million, plus 12 per cent annual interest and attorney’s fees, equaling $107,000 by the end of 2022 and accruing an additional $1,400 each day.

• Another contractor, Milburn Demolition, has filed a lien seeking $430,000 for work it performed.

• Gurtz Electric Co. has filed a lien claiming it is owed $1.1 million.

Contacted by Harness Racing Update for comment, Carey released a statement that reiterated his commitment to the racino project and emphasized that the liens wouldn’t be an obstacle.

The statement is as follows:

“As shared with the Illinois Gaming Board, Hawthorne is in the advanced execution phase of a $400 million financing with an investor that will make the Hawthorne Racino development a reality.

“Hawthorne has a multi-million credit facility with its bank, similar to thousands of businesses across the country. Those proceeds have been used to help rebuild harness and thoroughbred horse racing in Illinois, while also funding the expansion development so far.

“The lines of credit as well as the unfunded agreements with the former general contractor are intended to be repaid in the scope of this soon-to-be-completed financing.

“All of this work and the significant capital race is being done to benefit the future of horse racing.”

A 2019 law enacted by the Illinois legislature and signed by Gov. J.B. Pritzker permits the state’s racetracks to add casino gambling with 3 per cent of the proceeds earmarked for racing purses, thereby upgrading the quality of racing and making the product more attractive, both at the track and in the North American simulcast marketplace.

It seemed at the time that Illinois racing had a bright future.

But the best of times became the worst of times because corporate owner Churchill Downs, Inc. discontinued racing at the world-renowned thoroughbred track Arlington International Racecourse following its 2021 meeting to eliminate horse racing and casino gambling competition for nearby Rivers Casino, the state’s most profitable casino, in which it had purchased a 62 per cent interest in 2018. The Arlington property was sold to the Chicago Bears and the NFL team in 2023 demolished the grandstand and clubhouse to lower its real estate tax bill.

Suddenly, because of Arlington’s demise, Hawthorne and the people racing harness horses and thoroughbreds in the Chicago metropolitan area found themselves in a bind because the dual-purpose venue had become the only remaining track in the nation’s third biggest sports market.

To control the incalculable damage, since 2022 Hawthorne and the horsepeople have worked out varying time-sharing arrangements with the breeds dividing the calendar year.

This year, the standardbreds concluded a meeting, that began last Sept. 9, on Feb. ١٢. The thoroughbreds took over on March ٢٣ for a meeting that will run through Oct. ١٣. Then, the harness horses will return for an Oct.١٩-Dec. ٣٠ meeting.

To provide more opportunities for the standardbreds, the Illinois Harness Horsemen’s Association, Hawthorne and the Illinois Department of Agriculture instituted a summer program of non-betting races at the State Fairgrounds in Springfield and DuQuoin. Hawthorne is funding the races through its purse account and additional money is coming from the Department of Agriculture’s horse racing department.

This year’s races were scheduled to begin on May 25 at Springfield but rain forced postponement of the card until Saturday (June 1). It will be the first of 30 such programs — 19 at Springfield and 11 at DuQuoin — laying the groundwork for the Hawthorne meeting. After recessing in August for five days of pari-mutuel racing at the Illinois State Fair in Springfield and three days of pari-mutuel racing at the DuQuoin State Fair, the non-betting races will resume in September and continue through Oct. 11.

Looking beyond the current year, a worst-case scenario would find Hawthorne having the same fate as Arlington and Hawthorne’s former next-door neighbor, Sportsman’s Park — the once popular harness and thoroughbred track — that went into bankruptcy following an ill-fated attempt to make it into a combination auto racing and thoroughbred venue. Sportsman’s closed after its 2002 thoroughbred meeting, was demolished and remade into a liquor warehouse.

The O’Neil Construction Co. complaint stated that if Hawthorne does not pay the amount it owes, the defendants could be found personally liable and the racetrack should be sold at auction with the proceeds used to pay its debts.

Carey doesn’t envision that happening.

“We’re doing everything we can,” Hawthorne’s president said. “We’re on the cusp [of finalizing the racino project financing].”

If Hawthorne were wiped off the map it would leave the thoroughbred track Fairmount Park in Collinsville, across the Mississippi River from St. Louis, as the only pari-mutuel venue in Illinois, putting standardbreds and thoroughbreds on the endangered species list in the state.

However, that seems unlikely because a new track or two almost certainly would be built to replace Hawthorne.

In 2023, Greenway Entertainment Group told the Illinois Senate executive committee that it wanted to build a $300 million harness racino on an 80-acre site in south suburban Richton Park.

Greenway Entertainment Group appealed to the legislature to eliminate the statutory boundary that prohibits a track to be built within 35 miles of an existing track; because Hawthorne in Stickney is less than that distance from Richton Park it has the right to veto any racetrack inside the boundary.

The Dec. 19 front page story in the Tribune amplified the frustration of members of the Illinois Harness Racing Association and the Illinois Thoroughbred Horsemen’s Association because of Hawthorne’s inability to make progress on the racino project, while the April 12 Page 1 story detailed the trip to the state capital in Springfield by IHHA leaders to push for elimination of the boundary rule.

IHHA members were hoping the legislature would do away with the boundary during the spring session that ended this week but no action was taken.

They are hoping that a bill will resurface in the fall veto session.

In the meantime, IHHA executive director Tony Somone said: “We’ll continue to do whatever we can to remedy this difficult situation we find ourselves in.”