Chicago is going to get a casino, eventually. The process of selecting a bidder, granting a license, and building the project is in its early stages; a grand opening is not likely before 2025.
A casino in Chicago was part of legislation to expand gaming that became law in 2019. The act authorized six new land-based casinos, including one in Chicago, plus additional gaming positions in existing casinos, racinos, an increase in the number of VLTs, and sports betting. The new law dramatically increased the potential size of the gaming industry in Illinois. Its early effects can be seen most clearly in VLTs and sports betting. The number of VLTs has increased by 35 percent since 2019 and the revenue has grown by 56 percent, while sportsbook operators started taking bets in June 2020 and have booked nearly $10 billion in bets, won $712 million, and paid $114 million in taxes since.
The existing casinos have not done as well. In February, casino revenue was down 4 percent; admissions to the riverboats were down 18 percent. Only one of the newly authorized casinos is open: Hard Rock Rockford is operating a temporary casino. The other new casinos are working toward opening either a temporary or permanent casino as soon as possible. Chicago is behind the other locations, because it has followed a separate and uniquely Chicagoan path.
When the bill authorizing a casino in Chicago first passed, the tax rate was 72 percent. When asked if they were interested in building a casino in the Windy City, the major national casino companies said no. The tax was simply too high. Thus, Chicago Mayor Lori Lightfoot asked the legislature to revisit the law and reduce the rate. The legislature complied and dropped the effective rate to 40 percent. With the new tax rate in hand, the mayor reached out to the industry to solicit interest. She said she hoped to get bidders with a strong balance sheet, a successful operational history, and an address on the Las Vegas Strip. In April 2021, Mayor Lightfoot put out a request for proposals. In October 2021, the city announced it had five viable bids, though there were really only three bidders, as two of them put forth two separate proposals. None had a Strip return address on their proposals.
The mayor put a good face on the issue. Lightfoot said she was thrilled with five high-caliber proposals. She set her staff and Union Gaming to analyze them. This month, she announced the three bids and promised a final decision sometime this summer. The mayor and City Council are taking the process very seriously. Lightfoot told her fellow Council members that the choice will be the most important decision of their tenure and it might be the most important decision by a City Council in Chicago’s history. The mayor proposed establishing a special committee to oversee the process. The City Council overwhelmingly approved.
This is Chicago, where emotions and politics run high. The committee got immediate pushback from dissident Council members. Lightfoot was accused of “stacking the deck” on the committee by her opponents on the Council. They asked about the “light” and transparency she had promised during her campaign.
In any case, the new casino oversight committee exists and is reviewing the proposals and the Union Gaming report. They will interview the finalists: Bally’s, Hard Rock, and Rush Street/Rivers. The prospective cost will not be an issue; each bid includes an investment in the range of $1.7 billion. Each contains a hotel; Bally’s and Hard Rock’s have 500 rooms and the Rush Street/Rivers project has 300 rooms.
The city is looking for a number of things. First, it wants architecture that will add to Chicago’s iconic array. It also wants to add significantly to the entertainment and convention offerings without in any way harming or canalizing the existing industry. That was the reason for rejecting the other two bids, both of which were to be located near McCormick Place, the city’s convention center, which construction and competing activities might have threatened. Lightfoot and the Council want a resort that attracts new visitors to Chicago and generates significant revenue for the city.
Bally’s comes out on top, with an estimated $816 million a year in adjusted gaming revenue, but it also projects that highest percentage of local players generating 80 percent of the AGR. Hard Rock comes in second in both AGR and local play, while Rush Street arrives with the least. On the other hand, Rush Street is in the unique position of having a casino, Rivers, 17 miles away in Des Plaines. Each of the bidders will be expected to have 25 percent of the equity in the company owned by minorities and to use minority-owned construction companies. Each of the companies will also be judged on their financial strength.
That is a long list of criteria and satisfying all of it will be challenging. And therein hangs the tale. There will be sufficient reason to disagree, denigrate, and claim foul. It is Chicago, after all, where finding the corruption and favoritism will be half the fun.
