Real Estate

Contractors' $6.7M Liens Jeopardize Carey Family's $400M Racino Project

Hawthorne Race Course faces $6.7 million in unpaid liens, jeopardizing $400 million racino project.

By Tal Alexander

5/23, 17:16 EDT

Key Takeaway

  • Contractors have filed $6.7 million in liens against Hawthorne Race Course, jeopardizing the Carey family's racino project.
  • Lawmakers may revoke Hawthorne's exclusive racino rights due to financial instability, opening opportunities for other developers.
  • A $400 million financing deal is in progress but skepticism remains high given past unfulfilled promises and ongoing legal disputes.

Financial Turmoil at Hawthorne Race Course

The ambitious plan to develop a casino at the south suburban Hawthorne Race Course has spiraled into a legal and financial quagmire for the property’s owners, the Carey family. Contractors have filed at least four liens totaling $6.7 million against the owners, alleging unpaid construction work, according to the Chicago Tribune. This financial distress casts significant doubt on Hawthorne’s ability to secure the necessary funding for the racetrack and casino development, known as a “racino,” which has been in the works for nearly five years.

Unpaid Liens and Legal Battles

The financial woes at Hawthorne are underscored by a series of liens and lawsuits. W.E. O’Neil Construction, the general contractor hired in 2020, has filed a breach of contract lawsuit, claiming that Hawthorne owes $5 million for completed work. Other contractors, including Milburn Demolition and Gurtz Electric Company, have also filed liens for unpaid services, amounting to $430,000 and $1.1 million, respectively. These legal battles highlight the severe financial mismanagement and the precarious position of the racino project.

Legislative and Financial Hurdles

The financial instability has prompted lawmakers to reconsider Hawthorne’s exclusive rights to build racinos within a 35-mile radius, a monopoly granted by state law. State Rep. Marty Moylan expressed frustration, suggesting that the Carey family should relinquish their hold on the project to allow other developers to step in. Despite being in the “advanced execution phase” of a $400 million financing deal, skepticism remains high due to the track’s history of unfulfilled financial promises.

Broader Implications for Illinois’ Horse Racing Industry

The planned racino at Hawthorne was expected to rejuvenate Illinois’ struggling horse racing industry by generating significant gambling revenues. However, the financial turmoil and potential revocation of Hawthorne’s monopoly could open the door for other developers. Greenway Entertainment has already proposed a $300 million racino project, and Roy Arnold, CEO of Endeavor Hotel Group, has shown interest. Dick Simpson, professor emeritus at the University of Illinois at Chicago, advocates for competitive opportunities, suggesting that diverse participation would yield better outcomes for the industry.

A Critical Perspective on Hawthorne’s Strategy

The financial strategy employed by Hawthorne involved taking out multi-million-dollar mortgages from 2016 to 2020, including a $9 million loan from Signature Bank. These credit facilities were intended to support both horse racing and the racino project, with the expectation that all debts would be settled upon securing the impending financing. However, the mounting unpaid debts and legal challenges indicate a significant miscalculation. The Carey family’s inability to manage the project effectively has not only jeopardized their own financial standing but also stalled a potentially lucrative development for the region.

Street Views

  • Marty Moylan, State Representative (Bearish on Hawthorne Race Course):

    "If they ain’t got the money, let’s move on. The Carey family is screwing it up for everybody. They should let it go and let surrounding communities open a racino."

  • Dick Simpson, University of Illinois at Chicago (Bullish on competitive opportunities in the racino industry):

    "Diverse participation would yield better outcomes."