Blagojevich, Illinois corruption feature in ruling reinstating casinos' suit

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CHICAGO — A U.S. appeals court took on the issue of Illinois corruption under now-imprisoned former Gov. Rod Blagojevich as it revived a lawsuit alleging that racetrack owners bribed the Democrat to get him to push through legislation that cost casinos $90 million.

In reinstating the case after a lower court had thrown it out, the U.S. 7th Circuit Court of Appeals in Chicago agreed that four casinos could sue to recoup losses under the law that forced them to pay 3 percent of revenues to the financially ailing tracks.

Illinois' history of pay-to-play corruption, the appeals court said, looms over the dispute.

"This case requires us once again to decide whether some shenanigans in the Illinois General Assembly and governor's office crossed the line from the merely unseemly to the unlawful," the ruling from the three-judge panel says.

The answer, it said, isn't always clear-cut.

"Deals are the stuff of legislating," the 22-page ruling says. "Although (political) logrolling may appear unseemly some of the time, it is not, by itself, illegal."

In that context, the court rejected casinos' claim that bribery played a role in the bill's initial passage in 2006, saying alleged threats by Blagojevich to withhold state funds from lawmakers 'districts to garner more support may have qualified as "simple logrolling."

But the way the 2008 extension of the law played out was another matter, the court says.

Blagojevich appeared unabashed about wanting a $100,000 campaign donation from racetrack executive John Johnston before he would sign that extension. He even sent a law school roommate-turned-top aide to squeeze Johnston, the court says.

To justify the payments, racetracks claimed the legalization of riverboat gambling in 1990 made it tougher for them to make money. Casinos shot back that one better-off sector shouldn't be forced to subsidize direct competitors.

The law mandating the payments was phased out by 2011.

Three different judges on the same appeals court broached similar issues about the line between legal and illegal politicking during oral arguments in December on Blagojevich's appeal of his corruption convictions. They haven't yet ruled on Blagojevich's appeal.

Of the 18 corruption convictions that sent Blagojevich to prison to serve 14 years, three dealt with his bid to extort Johnston for a campaign donation. Johnston never paid the $100,000 and he has denied agreeing to pay it.

A telephone message left Monday for Johnston's lawyer, William McKenna, Jr., wasn't immediately returned. McKenna has said previously Johnston did nothing wrong and was a victim of an extortion attempt by Blagojevich.

The four casinos who brought the case were Empress Casino Joliet Corp., Des Plaines Development Ltd., Hollywood Casino-Aurora Inc., and Elgin Riverboat Resort-Riverboat Casino. The defendants include Johnston, Balmoral Racing Club Inc. and Maywood Park Trotting Association Inc.

A lawyer representing the casinos, Robert Andalman, didn't return a message Monday seeking comment.

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