Key ruling for casinos in Blago-linked case

Published: Wednesday, Aug. 21, 2013 12:29 a.m. CDT

CHICAGO – A judge in a long-running civil case has ruled decisively against riverboat casinos that claimed Illinois legislators passed laws benefiting competitors in the racetrack industry under pressure from Rod Blagojevich as the then-governor sought to cut pay-to-play deals.

The four casinos filed the suit in 2009 asking the U.S. District Court in Chicago to return $90 million that they paid in an effective tax imposed by the Legislature. The money, which was 3 percent of the casinos’ adjusted gross revenue, went to five financially struggling racetracks.

But Judge Matthew Kennelly concluded in a 17-page ruling posted late Monday that the casinos had failed to demonstrate a link between lawmakers’ decision to pass laws in 2006 and 2008 forcing those payments and Blagojevich’s push for campaign donations from racetracks.

Evidence entered by casinos that at least one Republican legislator accused his Democratic counterparts in 2006 of caving in to Blagojevich and voting for the legislation wasn’t good enough, Kennelly said.

While the judge pointed out that there was abundant proof of wrongdoing by Blagojevich, he said no evidence showed “Blagojevich or anyone associated with him offered any improper inducements to legislators who changed their votes.”

“For all anyone knows, the legislators who decided to vote yes were persuaded by logic, reason, and considerations of sound public policy,” Kennelly wrote.

To justify the payments, racetracks claimed the advent of legal gambling in Illinois lured away their patrons and made it tougher for them to make money.

Casinos shot back that one better-off sector of an industry should not be forced to subsidize its direct competitors.

With his finding, Kennelly tossed the last remaining count of racketeering in the civil case – appearing to dash casinos’ last hope of recouping the millions of dollars paid out to the tracks. All other allegations in the original lawsuit had been previously dismissed.

Blagojevich, who was arrested months before the casinos sued, is now serving a 14-year prison term for corruption, including for bribery conspiracy for attempting to extort racetrack owner John Johnston.

Johnston is a defendant in the related civil case ruled on by Judge Kennelly. Johnston’s attorney, William McKenna Jr., welcomed the judge’s finding, saying it should finally end the complex, four-year legal saga.

“It’s important to understand, my client was a victim,” McKenna said. “Blagojevich’s crime was not getting a bribe – but attempting to extort my client.”

Johnston, who testified against the ex-governor at his criminal trials, did not pay the $100,000 Blagojevich pressed him for in 2008; earlier contributions were not made with the understanding that Blagojevich would make official decisions benefiting the tracks in exchange for the donations, McKenna said.

The casinos have a month to decide whether to appeal Kennelly’s ruling. The casinos’ attorney, Robert Andalman, declined comment Tuesday.

The executive director of the Illinois Casino Gaming Association, Tom Swoik, said he couldn’t comment on the ruling. But he said the laws mandating the disputed payments were phased out by 2011.

The plaintiffs included Empress Casino Joliet Corp., Des Plaines Development Ltd., Hollywood Casino-Aurora Inc., and Elgin Riverboat Resort-Riverboat Casino.

In addition to Johnston, other defendants included Balmoral Racing Club Inc., Maywood Park Trotting Association Inc., Arlington Park Racecourse LLC, Fairmount Park Inc., and Hawthorne Race Course Inc.

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