Judge refuses request for fresh look at $80 million judgment for casinos over horse tracks owners' conspiracy with Blagojevich

By Dan Churney | Jul 16, 2015

A federal judge has refused to buck a verdict ordering a group of Chicago-area horse track owners to pay about $80 million to four casinos, because the track owners allegedly bribed former Gov. Rod Blagojevich to tax the casinos and hand the purse to horse industry interests.

In 2009, Empress Casino and Harrah’s Casino, both in Joliet, as well as Hollywood Casino in Aurora and Grand Victoria Casino Elgin sued several defendants, including Blagojevich and John Johnston, the owner of the Balmoral Park and Maywood Park race tracks in suburban Crete and Melrose Park, respectively.

The casinos claimed Johnston and the tracks conspired with Blagojevich to enact the 2008 Illinois Horse Racing Act in exchange for $100,000 in contributions to Blagojevich’s reelection campaign. The law taxed 3 percent of the casinos’ adjusted gross revenues for three years, with the proceeds going into a fund to increase race purses and pay track expenses. The law was intended to compensate tracks for losses allegedly incurred since the inception of dockside casino gambling in 1999.

The case went to trial in December 2014, and a jury found the defendants conspired to violate the Racketeer Influenced and Corrupt Organizations Act (RICO), committed civil conspiracy under Illinois law and were unjustly enriched. The jury awarded the casinos approximately $26 million in compensatory damages, which mirrored the amount the casinos paid in taxes under the Horse Racing Act. The $26 million figure was tripled to $78 million, as required under RICO. An additional $4 million in punitive damages was also awarded. U.S. District Judge Matthew F. Kennelly presided over the trial in federal court in Chicago.

Defendants subsequently filed motions asking Kennelly to toss the verdicts and grant a new trial, arguing there was insufficient evidence a plot took place to bribe Blagojevich.

However, in his July 10 ruling, Kennelly pointed out several examples from the trial that could have reasonably convinced a jury of such a scheme. As one example, Kennelly noted a 2008 email from Johnston to members of the horse-racing industry, in which Johnston, referring to Blagojevich, wrote, “[W]e are going to have to put a stronger bit in his mouth.”

Kennelly said this email, in connection with other evidence, indicated a plan by Johnston to “improperly influence Blagojevich.”

Kennelly also found there was enough evidence to support a jury’s conclusion there was a pattern of racketeering activity and there was nothing amiss in his evidentiary and jury instruction rulings during the trial.

Defendants contended Blagojevich would have signed the legislation regardless whether they had promised the $100,000 contribution, and that at worst, given the promise of the money, Blagojevich inked his signature perhaps two months sooner than he otherwise would have done. Kennelly swept this aside as “speculation,” again noting there was sufficient evidence for the jury to decide Blagojevich signed the law because he expected $100,000.

Defendants also asked Kennelly to reduce the amount of the compensatory damages, saying the race tracks only kept 40 percent of the proceeds from the casino tax, with the remainder going to an overall horse industry fund. However, Kennelly made short shrift of this request by noting compensatory damages are “measured by the amount the plaintiffs lost, not the benefit defendants gained.”

Nonetheless, Kennelly added the tracks still conceivably profited from the 60 percent that went into the horse fund, because this fund increased purses, which in turn made for better races and higher betting and attendance at the tracks.

Besides the judgments in their favor, the casinos were also awarded costs and attorney fees totaling $2.8 million.

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