Chicago Casino: Why Such a Chilly Reception?

A casino in Chicago, such as the proposed Bally’s River West project (l.), has the potential to be a financial winner, or at least plug some budget holes. So why is it generating such bad vibes? Lack of communication plays a major part. So does neighborhood opposition—the NIMBY effect.

Chicago Casino: Why Such a Chilly Reception?

“Bet your bottom dollar you’ll lose the blues in Chicago.”

That lyric, from a song made famous by Frank Sinatra, isn’t true in the Windy City today. Plenty of folks are singing the blues about Mayor Lori Lightfoot’s selection of a casino in Chi-town. Last month Lightfoot chose Bally’s Corp. as the operator, and River West at Freedom Center as the location. The riverfront parcel currently houses the Tribune Publishing’s printing plant.

There’s strong opposition to the pick, much of it from neighborhoods that surround the potential site. It’s “the NIMBY factor”—not in my back yard, said Brendan D. Bussmann, managing partner of B Global Advisors in Las Vegas.

NIMBY sentiments “have always played into casino development plans and shoring up local support, and your most immediate area is key to any development,” Bussmann told GGB News. “It’s been a delaying factor in other locations, and it definitely has been a part of the Chicago process. But at this point, it doesn’t appear that it will derail it, but this group is not going away even if council approves”—which it did in a 41-7 vote on May 25.

Lightfoot was not expected to announce her choice until summer, so it came as a surprise when she revealed it last month. Opponents decried the lack of transparency in the selection process, accusing her of meeting with the Bally’s team behind closed doors.

Alderman Brian Hopkins said the 64-page agreement between Bally’s and the city “has so many holes in it, Swiss cheese would be jealous.” He said Bally’s had an “unfair advantage” and the company’s bid was “by far the least desirable” of the three finalists.

Councilman Brendan Reilly added, “This has gone far too quickly at a breakneck speed. All of us have been put in this pressure-cooker artificially.” He continued, “The funding allocation for security for the permanent and temporary sites is totally insufficient. Whomever came up with those numbers pulled them out of thin air. Why? Because a public safety assessment was never prepared for either location, there are no legitimate estimates for what it will truly cost to secure these locations.”

Council member Ray Lopez, who wants to unseat Lightfoot in the mayoral election next February, said, “$40 million is what we’re rushing for. … We’re rushing because we need a positive spin for 2023. That’s what this is about.”

The Back Story

Three proposals made it to the final round of selection: the proposed $1.74 billion Bally’s Tribune; Rush Street Gaming’s Rivers 78 $1.62 billion 78 project in the South Loop; and a $1.74 billion Hard Rock Chicago resort near the South Side.

A Chicago-based casino is estimated to generate approximately $400 million annually in tax revenues for the city and the state of Illinois. The city’s share is projected to be approximately $200 million per year over time. These revenues include non-gaming income from sales, hotel rooms, restaurants, income and property tax revenues for the city as well as property tax revenues for other taxing bodies, such as Chicago public schools. The state’s share of revenues will be allocated toward the Rebuild Illinois Capital Plan.

Bally’s will give the city $25 million upfront plus pay $40 million for the license and $4 million annually. That’s money the city needs, particularly to top up nearly-empty city worker pensions. The tax rate is 40 percent—still high, but better than the original recommendation of 72 percent, which would have been a non-starter for any operator.

“Unfortunately, when the legislature revised the tax in 2020, they still missed the mark by creating an effective tax rate of 40 percent,” Bussmann said. “If you want to maximize revenue, investment and job creation, it comes down to a reasonable tax rate and license fee. You could cut that rate in half and still be looking for a reduction to maximize the opportunity in Chicago.”

Lost in all the revenue projections is this tidbit within the proposal packet from the city: Bally’s is the only bidder that does not already have a property in the Chicagoland market. Therefore, it’s more likely to operate with independence in maximizing revenues for the Chicago casino. Both Hard Rock and Rush Street Gaming operate casinos within 30 miles of each of the three proposed Chicago casinos.

Bally’s also plans to build a temporary casino with 800 slots and table games in the historic Medinah Temple, set to open in 2023. A permanent venue could open in early 2026

Promises, Promises

Deborah Gershbein, president of the Streeterville Organization of Active Residents, said members were “very, very surprised” to hear about the temporary casino plans. “It’s such a congested area already, and I just can’t imagine how it would accommodate the additional traffic. It just doesn’t make any sense at all, frankly, and we do think it would be detrimental to the community and our quality of life.”

The temporary casino is merely a revenue play for the city, Bussmann said. “It’s about the experience Bally’s delivers on day one and transition from the temporary facility to the permanent facility. It needs to build on that experience to make that a smooth transition.”

Bally’s proposal for the permanent resort includes a gaming floor with 3,400 slots and 170 table games; a 3,000-seat theater; Riverwalk extension; a 500-room hotel tower; an outdoor park and music venue; six restaurants and a food hall; fitness center, sun deck and pool spa. Bally’s has committed to 60 percent minority hiring for the 3,000 construction and 3,000 direct permanent jobs the project would create.

Promises made? Or promises made to be broken?

The main complaint, according to numerous attendees at a meeting where the Bally’s choice was announced, is that a casino doesn’t belong in a residential area. One commenter noted her neighborhood near the proposed casino site is “quiet, stable and family-oriented.” Several said they hoped the officials actually listen to them and “that they don’t just do it for lip service.”

Questions were also raised about predatory marketing campaigns and gambling addictions, another popular theme when it comes to casino development.

“Residents near the River West site are up in arms about the casino location, and their representatives are also expressing opposition,” Bussmann said. River North Residents Association participated in a survey where 86 percent rejected the casino. Still, Bussmann said, “It’s a little too late in the process to try and fix this current NIMBY factor for Bally’s.”

Off on the Wrong Foot

It didn’t have to be so contentious, he added. “This is simple Politics 101: understand and play to your strengths and face your challenges head-on. This process has been difficult to watch from the beginning, and now you’re left with more questions than answers about the process. When you start talking process and not proposals, you’ve lost the narrative.”

Bussmann doesn’t know what else Bally’s could do to change its reception at this point, considering how it’s already financially stretched. “There’s little margin for error to execute this project,” he noted, “and making more promises is not necessarily the best answer.”

The Chicago project is Bally’s first test as a regional operator to develop a new property in a difficult tax and business environment. “The success is all on them to make it happen,” Bussmann said. “You have already asked the operator to meet goals in an unfavorable environment, make promises on hiring and other community commitments, put a floor in the property tax equation, and you still are asking for more. I believe that’s called killing the golden goose.”

With city council’s approval, it will be much more challenging to double back on the process, though Bally’s also needs the approval of the Illinois Gaming Board for a license.

“This doesn’t mean that it would be ugly and muddy going forward,” Bussmann said, “but the further this train goes down the track, it makes it more difficult for it to change direction.”

Articles by Author: Bill Sokolic

Bill Sokolic is a veteran journalist who has covered gaming and tourism for more than 25 years as a staff writer and freelancer with various publications and wire services. He's also written stories for news, entertainment, features, and business. He co-authored Atlantic City Revisited, a pictorial history of the resort.