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Friday, July 12, 2024 | Back issues
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‘Pay-to-Play’ Schemer Owes Casinos $78 Million

CHICAGO (CN) - Four Illinois casinos stand to collect $78 million from a racetrack owner accused of bribing former Gov. Rod Blagojevich to sign legislation taxing casinos to subsidize racetracks.

A federal jury found Illinois racetrack owner John Johnston liable on Monday for civil racketeering for participating in a "pay to play" deal with now-disgraced Blagojevich, and awarded four Illinois riverboat casinos $26.3 million in damages.

The RICO laws permit treble damages, so the casinos will receive an award of over $78 million.

U.S. District Judge Matthew Kennelly issued a final judgment in the case on Thursday.

As governor in 2006 and 2008, Blagojevich signed two laws that imposed a 3 percent revenue tax on Illinois casinos earning more than $200 million per year, and placed the money into a trust for the benefit of the horseracing industry.

After the 2006 bill was passed, horseracing executive John Johnston and his colleagues contributed $125,000 to Blagojevich's campaign fund.

Two years later, Blagojevich stalled on signing a renewal until Johnston promised to donate $100,000, a scheme revealed by conversations recorded in a federal investigation of the former governor.

Over the next few months, an intermediary repeatedly needled Johnston about following through on the pledge. In one conversation recorded by federal authorities, court documents say, an exasperated Johnston is heard telling him, "Look, tell the big guy [Blagojevich] I'm good for it. ... I'm just figuring out which accounts to pull the checks from."

Blagojevich signed the bill after he was indicted on corruption charges, although Johnston never delivered the money.

The case went to trial after the 7th Circuit upheld the claims against Johnston last year.

Empress Casino Joliet Corp. was awarded $12.6 million, Des Plaines Development Limited Partnership $21.8 million, Hollywood Casino-Aurora $17.3 million, and Elgin Riverboard Resort-Riverboat Casino $26 million.

In addition, punitive damages of $1 million were awarded to each plaintiff against John Johnston individually, for a total of $4 million.

"Mr. Johnston and Mr. Blagojevich conspired to subsidize Illinois' racetracks on the backs of our shareholders," Eric Schippers, Sr. Vice President of Public Affairs for Penn National Gaming, told the Beacon-News. "Their actions at the time resulted in us having to reduce our workforce, cut back our marketing spend, and defer capital improvements. We are grateful to the jury for seeing through Mr. Johnston's charade and for ordering him to return the money he and Governor Blagojevich improperly took from us."

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