Hawthorne Race Course Filed for Bankruptcy. What Does that Mean for Us?
Tim Carey shared Hawthorne's plan this morning. To be clear, this is a plan — not a certainty.
Tim Carey spoke this morning with leaders of the Illinois Thoroughbred Horsemen’s Association and the Illinois Harness Horsemen's Association and shared the following:
Hawthorne Race Course today filed for chapter 11 bankruptcy and expects to be in court before a judge, to begin the next steps in that bankruptcy proceeding, early next week.
Carey feels confident that Hawthorne will secure the short-term financing necessary to pay horsemen and horsewomen — thoroughbred and harness — what they are owed; and, thereafter, pay Hawthorne vendors also awaiting payments.
Carey also believes that Hawthorne will have the funds necessary to reacquire some, though perhaps not all, of its simulcast signals.
Carey expressed confidence that the thoroughbred meet will in fact occur this spring. It’s not clear whether the meet would start on time; adjusting the racing schedule would require the cooperation of the Illinois Racing Board.
Carey yet again this morning expressed his determination to secure a partner necessary to help build and operate a Hawthorne racino.
We must be clear that when a business such as Hawthorne enters bankruptcy, the business is no longer necessarily in control of its own assets. So while Carey may seek to guide the bankruptcy proceeding in a direction that is favorable to our sport and industry — and the ITHA certainly will support him in that effort — all of this information, at this time, represents a plan and not a certainty.
We expect to know more next week, once Hawthorne has appeared before the bankruptcy judge, and we will share relevant information as it becomes available.
We look forward to working with Hawthorne in the case to make sure the ITHA and its members are protected — and for all of us to get back to racing at Hawthorne in the very near future. We will know much more once we see the relief Hawthorne is seeking, but we expect this to be only the first step in the reorganization and rehabilitation of Hawthorne.
What is Chapter 11 Bankruptcy?
The below description comes from the U.S. court system.
A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a "reorganization" bankruptcy. Usually, the debtor remains “in possession,” has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money. A plan of reorganization is proposed, creditors whose rights are affected may vote on the plan, and the plan may be confirmed by the court if it gets the required votes and satisfies certain legal requirements.
What is Hawthorne Saying?
Hawthorne issued the below statement today.
In a bid to save horse racing in Illinois and preserve 250 jobs and the homes of hundreds of backside workers and their families, Hawthorne Race Course, and its related companies, has filed for a Chapter 11 Reorganization in Federal Bankruptcy Court in Chicago today. The reorganization plan will prioritize paying accrued purses to the Illinois Horsemen as well as payroll for the track employees while restructuring the company’s debt.
The goal of the reorganization is to attract a buyer or investor willing to recapitalize Hawthorne and restart operations of the racecourse while maximizing recovery to the company’s creditors. Hawthorne will be working with financial advisor Getzler Henrich & Associates, LLC and requests the Federal Court approve Debtor-in-Possession financing to assist with the restructuring process.
“This is a difficult day for Hawthorne and for my family which has owned Hawthorne for four generations over 117 years, but filing for reorganization is the right thing to do for the Illinois horsemen and for our employees and their families,” said Tim Carey, president and CEO of Hawthorne Race Course.
Carey’s declaration in support of Hawthorne’s bankruptcy filings described the challenges and headwinds Hawthorne faced while attempting to continue its struggling operation while also supporting the entire horseracing industry in Northern Illinois and launching a “Racino”, a brick-and-mortar betting parlor at the racetrack.
“In 2016 with the closing of the Balmoral and Maywood harness facilities, Hawthorne reaffirmed its commitment to horse racing and saved hundreds of harness horsemen businesses and thousands of harness horsemen jobs thus becoming the country’s only dual breed racetrack, running both thoroughbred and harness racing on the same track by converting the surface of the track prior to the commencement of a respective race meeting.
Since 2022 and the closing of Arlington Racecourse, we undertook the sole responsibility of underwriting the Illinois horseracing industry in Northern Illinois and are the last racetrack operating in Northern Illinois bearing the increased burden of greater purses and regulatory expenses.
Carey detailed the human element of saving Hawthorne.
The racetrack employs over 250 people with its longest tenured employee spending 52 years at the track. Backside residence on the racetrack property consisting of licensed horsemen and their families varies depending on any racing season but will vary from a low of approximately 290 up to 500 or more. There have been years when over 900 people lived on the backside. The families live rent free and receive medical and dental care funded almost entirely by Hawthorne. These families are part of the community, supporting local businesses, attending church and sending their kids to local schools. Currently there are approximately 100 children, age 18 or under, living on the premises. There is a gentleman who is 84 years old and has been working at the racetrack and living on the backside for 72 years, arriving when he was 12 years old.”
After the casino expansion law passed the Illinois General Assembly and was signed into law by Gov. J.B. Pritzker in 2019, Hawthorne received a preliminary finding of suitability from the Illinois Gaming Board (IGB) to build and operate a “Racino,” with casino style gambling machines and table games at the racecourse. The IGB also issued Hawthorne a Master Sports Wagering License which permitted Hawthorne to offer retail and online sports betting. In 2024, the IGB approved continued licensing suitability for Hawthorne and renewed its sports wagering license.
At the same time, while winning approvals for the Racino, the horse racing industry continued to face stiff headwinds. Carey’s declaration describes the challenges for the Bankruptcy Court:
“The Debtors have faced substantial financial hardship in recent years, driven by challenges affecting the horse racing industry in Illinois, initially due to the expansion of casino gaming and later compounded by an increasingly competitive sports betting market, as well as other industry-wide issues, including rising costs and increased regulatory fees related to simultaneously running a troubled business and building a new business...”
The filing details that a bankruptcy filing became a required step when Hawthorne’s relationship with its lender and other creditors materially eroded. This led to a rapid succession of setbacks, foremost of which was the inability to continue the harness racing season, in addition to:
... the termination of internet and mobile sports wagering by HRC’s sports wagering partner; and the discontinuation of certain simulcast wagering arrangements by other horse racing tracks throughout the United States, resulting in litigation and monetary judgments against the Debtors.
The declaration notes there is substantial interest from potential “buyers and recapitalization partners” especially because of the opportunity to maximize Hawthorne’s “enterprise value” by completing the building and opening of the racetrack Racino. The Debtor-in-Possession financing can also help pay to reactivate simulcast signals for offtrack betting and online wagering which generates $4 million of revenue monthly.
Hawthorne hopes to appear in Federal Bankruptcy Court in Chicago next week to secure approval for its new financing.