Appeal from the Circuit Court of Cook County. No. 01 CH 05694 The Honorable John K. Madden, Judge Presiding.
The opinion of the court was delivered by: Presiding Justice Theis
Plaintiffs, Balmoral Racing Club, Inc., Ogden Fairmount, Inc., Hawthorne Race Course, Inc., and Maywood Park Trotting Association, Inc. (plaintiffs), appeal from the circuit court's dismissal under sections 2-615 and 2-619 of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619 (West 2000)) of their amended complaint for declaratory relief. On appeal, plaintiffs argue: (1) that the complaint was not barred by sovereign immunity; (2) that they adequately stated a cause of action in that they were entitled under a 1999 amendment to the Illinois Horse Racing Act of 1975 (Racing Act) (230 ILCS 5/1 through 55 (West Supp. 1999)) to reimbursement of certain taxes paid to the Illinois Racing Board (Board); and (3) that the voluntary payment doctrine is not a bar to their requested relief. For the following reasons, we reverse the judgment of the circuit court.
Plaintiffs are horse tracks that have conducted off-track wagering pursuant to inter-track wagering licenses received from the Board. Plaintiffs had been paying a tax on 1% of the total bets, otherwise called the "pari-mutuel handle," on inter-track and simulcast wagering into the "Horse Racing Tax Allocation Fund" (HRTA Fund) pursuant to the Racing Act. 230 ILCS 5/26(h)(11)(B)(iii), (h)(11)(C) (West 1998).
Amounts in the fund were to be allocated by appropriation to various governmental entities including the Illinois Department of Agriculture, park districts, and municipalities. 230 ILCS 5/26(h)(11)(C) (West 1998). The Racing Act further provided that the total amount of the HRTA Fund in any calendar year should not exceed the amount collected and distributed to the HRTA Fund in 1994. 230 ILCS 5/26(h)(11)(B)(iii) (West 1998). Any monies exceeding 1994 levels were to be redistributed to the licensed horse tracks according to the amount they paid into the HRTA Fund and to race purses at the horse tracks. 230 ILCS 5/26(h)(11)(B)(iii) (West 1998).
Prior to 1999, plaintiffs allege that when they had paid an amount of tax equal to the 1994 HRTA Fund level, the Board directed plaintiffs to withhold further payment. At the end of each year, the Board issued a determination of the proportion of tax owed by each plaintiff, along with other licensed horse tracks, and directed them to balance the accounts between themselves. For example, an exhibit to the complaint, a 1998 letter written by the director of the Board to the licensees, stated:
"As of Sunday, November 15, 1998, total Horse Race Tax Allocation Funds ('HRTA') generated under section 26 of the Horse Racing Act (230 ILCS 5/26) since January 1, 1998, exceeded the total HRTA collected in the calendar year 1994. Pursuant to section 26(h)(11)(B) of the Act, HRTA funds generated on or after November 16, 1998 through and including December 31, 1998 must be re-allocated in calendar year 1999 among licensees and purse accounts in the manner set forth in the statute."
The letter then directed the licensees to "cease making HRTA payments for race dates November 16, 1998 through December 31, 1998."
The Racing Act was amended in 1999 by Public Act 91-40 which was signed into law on June 25, 1999, and was to be effective on that date. Pub. Act 91-40, eff. June 25, 1999 (1999 Ill. Laws 1184-1257). Amendments included the addition of section 27(a)(5), which imposed a flat 1.5% "pari-mutuel tax" on the daily pari-mutuel handle from all monies bet at the race track from all sources. Pub. Act. 91-40, eff. June 25, 1999 (1999 Ill. Laws 1219-20). This tax, beginning on January 1, 2000, replaced a "privilege tax." Pub. Act. 91-40, eff. June 25, 1999 (1999 Ill. Laws 1219-20). The "privilege tax," ending December 31, 1999, was a base 2% tax on the daily pari-mutuel handle with additional graduated privilege taxes on multiple wagers. Pub. Act. 91-40, eff. June 25, 1999 (1999 Ill. Laws 1219-20). The amendments also included a "current year" and "immediate" "pari-mutuel tax credit" in section 32.1 that was available directly after the effective date of the statute. Balmoral Racing Club, Inc. v. Topinka, 334 Ill. App. 3d 454, 460, 778 N.E.2d 239, 244 (2002) (construing Pub. Act 91-40, eff. June 25, 1999 (1999 Ill. Laws 1234-35) (adding 230 ILCS 5/32.1)).
The Racing Act also retained language pertaining to the 1% tax on the pari-mutuel handle on inter-track and simulcast wagering and the accompanying redistribution language, but added the words "until January 1, 2000," to the provision. Thus, the amendment provided:
"From the sums permitted to be retained pursuant to this Act each inter-track wagering location licensee shall pay * * * (iii) until January 1, 2000, except as provided in subsection (g) of Section 27 of this Act, 1% of the pari-mutuel handle wagered on inter-track wagering and simulcast wagering at each inter-track wagering location licensed facility to the Horse Racing Tax Allocation Fund, provided that, to the extent the total amount collected and distributed to the Horse Racing Tax Allocation Fund under this subsection (h) during any calendar year exceeds the amount collected and distributed to the Horse Racing Tax Allocation Fund during calendar year 1994, that excess amount shall be redistributed (I) to all inter-track wagering location licensees, based on each licensee's pro-rata share of the total handle from inter-track wagering and simulcast wagering for all inter-track wagering location licensees during the calendar year in which this provision is applicable[.]" (Emphasis indicates added language) Pub. Act 91-40 (1999 Ill.Laws 1184-1257) 230 ILCS 5/26(h)(11)(B) (West 2000).
Public Act 91-40 also abolished the HRTA Fund, providing:
"(C) There is hereby created the Horse Racing Tax Allocation Fund which shall remain in existence until December 31, 1999. Moneys remaining in the Fund after December 31, 1999 shall be paid into the General Revenue Fund. Until January 1, 2000, all monies paid into the Horse Racing Tax Allocation Fund pursuant to this paragraph (11) by inter-track wagering location licensees * * * shall be allocated by appropriation as follows[.]" (emphasis indicates added language) Pub. Act 91-40, eff. June 25, 1999 (1999 Ill.Laws 1184-1257). 230 ILCS 5/26(h)(11)(C) (West 2000).
This section retained the previous Act's allocation scheme of the HRTA Fund to various governmental entities. This section also set forth "[t]his subparagraph (C) shall be inoperative and of no force and effect on and ...