CHICAGO (CN) — Chicago Mayor Lori Lightfoot's office released five proposed plans for the city's first dry-land casino on Friday, each one costing more than $1 billion. The bids represent the latest step in Lightfoot's efforts to bring a major gambling center to the Windy City.
It is a goal she has pursued, with Illinois Governor J.B. Pritzker's help, since she won the mayorship in 2019. The city began accepting the casino bids in April.
"A global gateway city with 9.5 million residents, Chicago welcomed 60 million domestic and 1.5 million international visitors in 2019," a Friday press release on the bids from the mayor's office said. "The selected bidder will be able to incorporate its property into the city’s vibrant cultural scene, robust public transit infrastructure, and highly diversified economy."
The five finalist bids – two from Bally's Corporation, two from partner development firms of Rush Street Gaming LLC, and one from Hard Rock Chicago LLC – each propose a major Vegas-style casino resort. Two of the bids are looking at real estate along the Chicago River, while three hope to plant their neon signs lakeside, adjacent to the famous McCormack Place Convention Center.
Both the cheapest and most expensive plans come Rush Street Gaming's partners. The least costly is a lakeside proposal with a $1.3 billion sticker. The most expensive is a proposed site along the Chicago River that would cost approximately $2 billion to build.
For Lightfoot and many state legislators, this is an acceptable price tag for an establishment that some gaming consultants estimate could bring in over a billion dollars in revenue per year.
The path leading to the finalist bids began in 2018, when the U.S. Supreme Court, in the course of deliberating on the case Murphy v. National Collegiate Athletic Association, repealed the Professional and Amateur Sports Protection Act of 1992 as a violation of the 10th Amendment. The act effectively banned most forms of sports betting nationwide, with a few notable exceptions, and in the aftermath of its repeal multiple states began planning an expansion of their gaming sectors.
In January 2019, several Democratic Illinois lawmakers and one Republican colleague introduced the Illinois Gambling Act, and by the end of June 2019 it had Pritzker's signature.
Prior to the act's passage, off-shore casinos that technically didn't violate PASPA already existed in Illinois and in Chicago. But the Gambling Act opened the doors for dry-land gambling throughout the state, especially in Chicago. The act dedicates pages of legislation to the establishment of a Chicago casino, including mandating the creation of a feasibility report within 45 days of the act's passage to ascertain whether building a casino in the city would even be worth the trouble.
The report Lightfoot's office received from feasibility consultant Union Gaming Analytics in August 2019 concluded that, under Illinois and Chicago tax law at the time, it probably wouldn't.
"The gaming expansion legislation that allows for a casino in the City of Chicago is very onerous from a tax and fee perspective. Our understanding is that on top of the existing tax structure on Adjusted Gross Receipts paid by all Illinois casinos, the City of Chicago casino would also pay an additional 33 1/3% privilege tax on AGR... Ultimately the additional privilege tax on AGR specific to the City of Chicago results in none of the five [proposed] sites being financially feasible. The amount of profit generated relative to total development costs, inclusive of licensing and reconciliation fees, represents at best a 1% or 2% return annually, which is not an acceptable rate of return for a casino developer on a greenfield project," the study found.
Not to be deterred, Lightfoot urged state lawmakers to adjust the existing tax structure to attract gaming profiteers. They obliged with little resistance: by summer 2020, the Legislature and governor had approved an amendment to the Gambling Act lowering taxes significantly on dry-land casinos operating in Chicago.
"After decades of proposals and false-starts, the Chicago casino has now become law, paving the way for a transformative new funding source for Illinois' infrastructure, as well as helping shore up Chicago's own significant pension obligations, in addition to serving as the impetus for a dynamic new entertainment district in our city," Lightfoot said in a June 30, 2020, statement on the issue.
Lightfoot's zeal in seeing a casino brought to Chicago was not without criticism. A 2019 investigation by the Chicago Sun-Times found that she had ties to several wealthy casino operators, including the wealthy Bluhm family whose patriarch Neil Bluhm founded and chairs Rush Street Gaming. Members of the Bluhm family contributed $212,500 to Lightfoot's 2019 mayoral campaign. The mayor said at the time that she would not allow the Bluhm family's contributions to affect her decision making regarding the casino plans.
“I’m always going to look after the best interests of the city . . . I’m going to play by the book,” Lightfoot told the Sun-Times in 2019.
The mayor's office did not immediately respond to a request for comment about Bluhm's firm being behind two of the five viable casino bids.
The next step in the approval process is a public presentation on the five plans, scheduled for Dec. 16. After that, the bids go to the city's Proposal Review Team, which consists of representatives from multiple municipal departments. The team will give the City Council their recommendation, after which Lightfoot and the City Council will make their final determination of the winning bid.
Though no concrete date is set for the completion of the selected casino plan, Union Gaming estimated in a 2020 white paper that it could be ready for guests by 2025.
"Given the complexities of an urban development, and under the assumption that the casino would be more than slots-in-a-box, a three-year development timeline is more likely than not. This implies an opening in early 2025," the paper states.
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