Hawthorne’s former online sports betting partner is track’s top unsecured creditor
Documents filed in a federal bankruptcy court Friday by the owners of Hawthorne Race Course show the Chicago-area track owes Fanatics nearly $9 million, making Hawthorne’s former online sports betting partner the largest unsecured creditor.
After much speculation, Hawthorne officials finally moved forward voluntarily with plans to reorganize by filing for Chapter 11 in U.S. Bankruptcy Court for the Northern District of Illinois. The filing showed Hawthorne holding assets worth between $50 million and $100 million. It also indicated debts between $100 million and $500 million.
In a statement, track officials said they hope “to attract a buyer or investor willing to recapitalize Hawthorne and restart operations of the racecourse while maximizing recovery to the company’s creditors.”
Relationships with Creditors Soured
Filing for Chapter 11 became necessary when the track’s relationship with its lender and other creditors “materially eroded.” That forced Hawthorne to cancel its harness racing cards, starting in January when horsemen complained their checks for purses bounced.
On Jan. 27, the Illinois Racing Board suspended Hawthorne’s harness racing license, citing financial difficulties. The board’s move did not affect the track’s license to offer thoroughbred racing.
That same day, Fanatics notified its Illinois customers that it changed its online sports betting partnership to the Argosy Casino in Alton. Fanatics still maintained brick-and-mortar sportsbooks at Hawthorne’s track in Cicero and its four off-track-betting parlors, located in the Chicago area.
According to the filing, Fanatics has an unsecured claim of $8.75 million. The contact listed for Fanatics is Andrea Ellis, who serves as the CFO for Fanatics Betting & Gaming. The filing did not include details explaining why the track owed the money.
Hawthorne owing money to its one-time mobile sports betting partner seems, on its face, a bit unusual. When Illinois lawmakers legalized sports betting in 2019, they required sportsbooks seeking immediate access to the state to partner with a casino, racetrack, or professional sports venue in order to get a license. Typically, in those kinds of partnerships, it’s the sports betting operator that agrees to provide a share of its revenue in order for access.
Fanatics became Hawthorne’s partner in April 2024. It was part of a deal the Florida-based sports retailer giant made in 2023 to purchase the U.S. assets of PointsBet. The Australian-based sportsbook served as the track’s initial partner.
A message to a Fanatics spokesperson seeking comment sent early Friday evening was not immediately returned.
Casino Problems Derailed Hawthorne
Earlier Friday, Hawthorne President and General Manager Tim Carey met with representatives of both the Illinois harness and thoroughbred horsemen’s associations and the state’s racing and gaming boards to go over the track’s reorganization plans.
Hawthorne is one of the country’s oldest race tracks. It’s also the only one known in the U.S. to run both harness and thoroughbred racing. It was tasked with being the primary track for both sectors after Arlington International Racecourse shuttered in September 2021.
Seven years ago, Illinois lawmakers opened the door for tracks in the state to operate casinos in order to help them fund purses and bolster the state’s racing product. Hawthorne applied for and received a license from the Illinois Gaming Board in 2020.
However, there are no slot machines or table games yet at the Cicero track, as Hawthorne’s owners have struggled to get the project off the ground. Unfortunately, while Hawthorne faced problems, additional casinos opened up in the Chicago area. Those venues chipped away at the track’s already declining customer base.
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,” Carey said in the Hawthorne statement. “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.”
Further complicating matters have been liens filed by contractors for the casino project. Those issues led to the financial problems the track faced, eventually forcing owners to file for reorganization.
Two lien holders are among the 20 largest unsecured creditors listed in Hawthorne’s filing. Aria Group Architects has a claim for more than $5.6 million, and W.E. O’Neil Construction has one listed for nearly $5.1 million. Track officials, though, dispute that claim.
Hawthorne Hearing Scheduled for Monday
The track is also in arrears with both harness and thoroughbred horsemen, but Hawthorne has a plan to pay the owners, trainers, and jockeys the money owed to them, as well as the track’s employees, regulatory fees, utilities, and other expenses needed to reopen. Court documents show Hawthorne has negotiated $16 million in debtor-in-possession financing with Chicago-based JDI Loans, a private-equity lender.
Hawthorne’s proposed budget calls for the track to cover $1.4 million in returned checks to horsemen and another $2.4 million in purse money that has yet to be paid. Track officials expect to pay those during the first week the DIP financing is available.
“Actual payment subject to negotiated settlement with” the Illinois Racing Board, the budget states.
The proposed budget is among various items that will be discussed at a hearing set for Monday before U.S. District Judge Deborah L. Thorne in Chicago.
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