Bankrupt Chicago Horse-Racing Tracks Look for Buyers

Want to place a bet on two Chicago-area horse-racing tracks?

Balmoral Park and Maywood Park are going up for sale as part of a deal to end a legal fight with Illinois riverboat casino operators. The casino operators won an $82 million judgment against the tracks’ owners over an alleged bribery scheme involving disgraced ex-Illinois Gov. Rod Blagojevich. The tracks filed for bankruptcy in December to prevent the casinos from trying to collect that money.

As part of a negotiated settlement between the gambling-industry competitors, racetrack officials face a June 29 deadline to hire an investment banker to help look for buyers, according to documents filed in U.S. Bankruptcy Court in Chicago. (The sale strategy still needs a judge’s approval.)

Court papers didn’t indicate how much the two racetracks, which employ 240 people, are worth.

Built in 1925 as Lincoln Fields, Balmoral Park’s harness horse racing facility has a one-mile track, seats for about 10,000 people and stables for more than 1,000 horses. The Maywood Park’s half-mile racetrack, located in Chicago’s Melrose Park suburb, has hosted harness races for 68 seasons in a row, which is the longest streak in state history.

Races at both tracks are also broadcast to about 3,000 outside locations, including at offtrack betting parlors.

The sale proposal marks a turning point in the bankruptcy for the racetracks, whose owners put them into chapter 11 protection on Dec. 24 with a plan to appeal the $82 million judgment won by the state’s four largest riverboat casinos.

The riverboat casinos had filed a lawsuit that accused the racetrack’s owners of illegally promising to contribute money to Mr. Blagojevich’s campaign if he renewed a 3% tax on the riverboat casinos. That deal was captured on wiretaps during the Federal Bureau of Investigation’s five-year investigation into public corruption in Illinois, according to the federal lawsuit that the riverboat casinos filed in 2009.

The lawsuit said that Mr. Blagojevich’s campaign committee got $125,000 in donations from Balmoral-related entities and was scheduled to take in another $100,000 around the time that he was arrested in late 2008 on federal corruption charges. (In 2012, he began serving a 14-year prison sentence.)

After a weeklong trial in December, a jury decided in favor of the riverboat casinos, leading to the multimillion-dollar judgment.

In earlier court papers, Balmoral Park’s lawyers called the allegations of extortion “nonsense.”

Money from the riverboat tax, which was created in 2006, has flowed to horsemen and horse-racing track improvements to help make up for the financial hardship that hit Illinois’s horse-racing industry after riverboat gambling was legalized in the 1990s.

“The proliferation of river boat gambling casinos, video lottery terminals and ‘racinos’…in most other states has seriously impaired the ability of Maywood [Park racetrack], Balmoral and all of the other tracks to operate profitably,” said Chief Financial Officer Randall Olech in earlier court documents.

A sale could remove the racetracks from ownership grasp of the Johnston family, which owns more than a 60% stake in their operations.

Write to Katy Stech at [email protected]. Follower her on Twitter at @katystech