Churchill Downs Inc. was directed to seek female and minority investors as a condition of gaining approval from an Illinois agency Friday to complete a deal for the lion's share of Rivers Casino in Des Plaines.
Illinois Gaming Board members voted 4-0 in favor of Churchill Downs' proposal to buy a nearly 62 percent share of Rivers Casino's parent company, Midwest Gaming Holdings. Churchill Downs agreed to make a good-faith effort to sell up to 10 percent of Midwest Gaming to women and minorities within 90 days.
With the gaming board's approval in hand, Churchill Downs CEO Bill Carstanjen said the deal for the state's top-performing casino should be finalized Tuesday. The idea of sports betting and online gambling in Illinois are cited as reasons the Louisville-based company wants to expand its Chicago-area presence beyond Arlington Park Racecourse.
"This is one of the most dynamic, successful properties in the United States," Carstanjen said of Rivers at Friday's board session. "This is a real gem."
Gaming board members raised concerns about Rivers' female and minority ownership interests dropping from 17 percent to 2.7 percent because all but 24 female and minority investors are selling their shares to Churchill Downs. Even if Churchill Downs succeeds in boosting the number in the next 90 days, gaming board officials said, it would be below a 20 percent target.
Churchill Downs expects to pay $407 million in cash for the majority stake in Rivers. Churchill Downs originally planned to spend roughly $326 million for a 50.1 percent share, but Carstanjen said additional investors agreed to sell.
Neil Bluhm, who with Greg Carlin co-founded Rush Street Gaming and affiliates that include Midwest Gaming, will remain as Rivers Casino's chairman. Carlin will continue as CEO of Midwest Gaming and Rush Street, which won't veer from its role of managing the casino's daily operations.
Bluhm, whose net worth is estimated at $4 billion, said if Churchill Downs did not come along and Midwest Gaming had sold its entire interest in Rivers to another casino company, the outcome would not have been good for employees.
"Our team members are important to us," Bluhm said at the gaming board meeting. "The transaction will not result in any change for our team members. As I said earlier, if we had to sell it at 100 percent, the transaction would have resulted in significant job terminations."
Some drama developed when gaming board Chairman Don Tracy suggested delaying a vote until April so Midwest Gaming and Churchill Downs could find more female and minority investors. Carstanjen responded that a postponed vote would threaten the deal.
"I encourage you to strongly consider not attempting to delay this, because nothing good is going to come of the delay," Carstanjen said.
For years, Churchill Downs has argued its inability to get state permission for slots and other gambling options at Arlington Park in Arlington Heights hurts the racecourse's competitiveness.
In Rivers Casino, Churchill Downs will get the biggest stake in a 44,000-square-foot, single-level gambling floor with 983 slot machines and 58 table games. Rivers also has seven dining and entertainment options and a multifunctional event center.
Bluhm said a lunch he had with Craig Duchossois, the son of Richard Duchossois, led him to Carstanjen and the eventual deal with Churchill Downs. He said he called Carstanjen with his Rivers proposal at Duchossois' urging.
Richard Duchossois, 97, has been on the Churchill Downs board since he merged his Arlington Park with the company in 2000, but he won't run for re-election and will retire in April. Craig, his 74-year-old son, retired from the board last year.
Gov. J.B. Pritzker said last week he supports legal sports betting. Carstanjen said Churchill Downs likes states that appear willing to approve sports wagering and online gambling as the company expands beyond horse racing.