Chicago Mayor Rahm Emanuel is anxious to make a statement in his first couple of months in office and he’s targeted a major casino in his city as his battle. Emanuel worked the phones last week as a massive gaming expansion bill made its way through the state legislature, easily passing the House and narrowly being approved by the Senate. Now it rests on the desk of Illinois Governor Pat Quinn, who had previously said he would not consider such a far-reaching gambling bill. 

Some of the things contained in the bill are giving Quinn, anti-gambling groups and the existing gaming industry pause.

• A major casino in Chicago, owned by the city and operated by a private company, with at least 4,000 positions, which is the principal market for several casinos in Northern Illinois and Indiana.

• Four new riverboat licenses, most likely in Lake County, Rockford, and Danville.

• Slots at six state racetracks.

• Slots at O’Hare and Midway airports.

• Gradually drop the existing tax rate from 50 percent to 30 percent, depending upon annual gross gaming revenues, starting on January 1, 2012.

• Permit existing casinos to expand from 1,200 to 1,500 positions.

In addition, a previous law that allows slots at bars and restaurants, is currently being considered by the Supreme Court after being struck down by a lower court.

Emanuel reportedly used his powers of persuasion—honed during three years as President Barack Obama’s chief of staff prior to running for mayor—to get the bill passed.

“I think he helped swing at least five or six votes Monday in the Assembly,” said Tom Swoik, executive director of the Illinois Casino Gaming Association.

The existing casino industry is opposed to the bill, with some estimating that the present casinos would lose at least 30 percent of their revenue, with a corresponding drop in local payments. Caesars Entertainment, which operates Harrah’s Metropolis in southern Illinois and Harrah’s Joliet near Chicago, as well as the Horseshoe Hammond in northern Indiana, is likely to lobby Quinn to veto the bill.

Quinn, who has in the past said he would veto any bill that expands gaming so dramatically, was being less definitive after the bill was passed by the legislature. He said he still considers the bill to be too much even though he favors a casino in Chicago.

“I have told the legislators over and over again the people of Illinois do not want an excessive gambling bill that’s top heavy, and I think I reflect the public sentiment on that,” Quinn told the Chicago Sun Times. “In Chicago, I have said I can see if it’s properly done, an opportunity for a gambling casino. But once the General Assembly got this subject, both House and Senate, it got more and more top heavy. Well my job is to make sure the people of Illinois come first, not the gamblers, not the insiders.”

The bill is shaping up to be a power play in the rough-and-tumble world of Illinois politics. Quinn, who was re-elected last year, is trying to maintain his prestige, while Emanuel is trying to flex his new wings as leader of the state’s largest city. Quinn says he’s have no part in such a confrontation.

“I’m beholden to the people of Illinois, not to legislators, not to mayors,” he said. “The people of our state, all 13 million good and true, they’re the ones who I get up in the morning every day and say, ‘What’s best for them?’”

But what’s best for the people is to come much closer to a balanced state budget, which is facing a $2 billion shortfall. The governor is facing education and infrastructure cuts unless more revenue can be raised, and gaming is a likely target.

Emanuel, meanwhile, began lobbying the governor to sign the bill. For Chicago, it means 7,000 to 10,000 jobs, as well as additional tax revenues.

“I hope the governor sees this as an opportunity. I understand that he’s evaluating it. In my conversations with him, he sees the strengths,” the mayor told the Sun Times. “My hope is that the governor, when he weighs the equities here, will see the benefit economically, both in job creation as well as revenue we can then use to make further investments in the city’s physical infrastructure and in schools.”

It’s unclear whether the 4,000 positions allocated for the Chicago casino includes slots at the city’s airports, but Emanuel wasn’t ready to discuss that or the location of the casino itself.

“I want to get this signed into law, then we’re going to set up a blue-ribbon group to think through where and what makes the most sense,” he says. “This has been 20 years in the working. I’m glad we’ve accomplished it. But, we’re not done yet. But, at the appropriate time, we’ll deal with those questions.”

The bill has so much benefit for so many different constituencies, the opponents were in danger of being drowned out.

Local communities would be hardest hit. In Joliet, a spokesman estimated that the town would lose another $6 million, after enduring decreased payments to do the recession and a smoking ban in previous years.

“That would take us down to $15 million a year, and that would be down from a high mark of $37 million in 2007,” Joliet City Manager Thomas Thanas told the Joliet Herald News.

The Chicago Crime Commission issued a bruising press release that warned that the image of Chicago would forever change.

“I would caution the governor to think long and hard before he supports this legislation,” said J.R. Davis, chairman and president of the Chicago Crime Commission. “It is beyond my comprehension that the Illinois legislature has passed this bill. I would strongly encourage a sober review by the governor and urge him to reject this dangerous legislation. If signed, this legislation, more than any other in my memory, would change the complexion and perception of the city of Chicago and the state of Illinois… and not in a positive way.”

Davis also predicted an increase in crime and corruption.

“The almost unbelievable number of new gambling activities provided by the bill will enable the always ingenious crime syndicate to seek out myriad ways to enrich itself by getting into the legal gambling business,” said Davis. “It is unclear what regulatory provisions will be put in place to oversee the overwhelming number of new gambling activities.  To date, the crime syndicate has been kept out of legal gambling in Illinois through the unflinching efforts of the current Illinois Gaming Board.”

“Pure and simple, the bill is a set-up for disaster. If passed, law enforcement can expect the entrance of the crime syndicate into legalized gambling through a variety of ruses and deceptions," Davis concluded. “Federal prosecutors should plan for a constant stream of federal corruption indictments against government officials, gambling operators and members of the crime syndicate.”

In Des Plaines, where billionaire Neil Bluhm is building a $445 million Rivers Casino, public officials lobbied against the bill because it would impact the revenue they would get from the casino.

Bluhm, however, feels better about the bill now that the tax reduction for existing casinos has been factored in.

“I can live with it now,” said Bluhm. “Of course, without the new tax rate, they would have bankrupted us.”

Because of the tax rate reduction, some analysts are predicting that the impact will be negligible for existing casinos. Penn National Gaming, which owns three casinos in the state, would likely suffer the worst impact, although Boyd Gaming, with a property in East Peoria and one close by Chicago in Michigan City, Indiana, would also take a hit.

As for the added positions, few would commit to increasing the number of machines.

“You're trying to put this out there that this is an incentive,” Jay Keller, a lobbyist for Penn National Gaming, told the St. Louis Post-Dispatch. “But I will not in this current economic environment buy new positions. That's not an incentive.

But the bill is clearly a positive for the slot machine manufacturers. If fully implemented, the bill would add 27,000 slots to the state, along with 500 tables, with IGT, Bally and WMS the most likely winners for the slots and Shuffle Master for the tables.

Other elements of the bill included $10 million for problem gambling, which goes through the state Department of Human Services; a measure stipulating that the gaming control board consider within 60 days requests by riverboat operators to alter their operating procedures, which now takes much longer; $2 million for a state fund designed to forestall home foreclosures; grants to county fairs; and a fund to spur economic development in depressed communities.

By Staff