The city of Chicago recently issued a Request for Information (RFI) for suggestions and strategies “to develop and operate a world-class casino in Chicago.” The casino is a real possibility since Illinois lawmakers passed a $40 billion budget for the fiscal year, which included a significant lowering of tax rates for a downtown casino to make such a venue more attractive to potential developers.
Mayor Lori Lightfoot said, “After securing favorable legislation that had eluded us for decades, Chicago can finally pursue a once-in-a-generation opportunity to bring a casino to our city, generating hundreds of millions in new gaming revenues to shore up the city’s pension obligations and drive huge levels of infrastructure funding in Illinois as well as creating thousands of new and much-needed jobs for local residents. This is the right time to begin having these discussions as we continue to lay the foundation to make a strong recovery from the impacts of the Covid-19 pandemic.”
In August 2019, a study by Union Gaming Analytics indicated a casino facing the legislature’s original tax rates would “not be feasible due to the onerous tax and fee structure.” The report said the effective tax rate could be as high as 72 percent. After the legislature changed the rates to 40 percent or lower, Union Gaming Analytics said that was “an attractive-enough effective tax rate to result in a successful Request For Proposals process.” Union Gaming Analytics recommended delaying the RFP until 2021 “to allow more-financially viable gaming developers enough time to work through the ongoing Covid-19 disruptions and more properly assess their growth strategies and participation in the Chicago casino RFP.”
Union Gaming Analytics also approved a provision in the bill extending the period for paying a reconciliation fee. New casino licenses in Cook County would require an upfront payment of $30,000 per gaming position; that’s potentially a $120 million payment if a downtown Chicago casino uses the total of 4,000 positions allowed in the gambling expansion bill. The new version of the bill allows for a 6-year payment without interest.
Also in the new bill, free play is no longer taxed. According to Union Gaming Analytics, this will allow Illinois casinos “to more effectively compete with border casinos in Indiana, Iowa, and Missouri.”
The RFI includes nine questions for the gaming industry’s input. One question asks responders about the potential impact of Covid-19 on developing a new casino. Others ask how big the venue should be, what amenities should be offered and how a casino could coexist with Chicago’s existing attractions.
Another asks what are the main factors in considering a casino location. Samir Mayekar, Lightfoot’s deputy mayor for economic and neighborhood development, said “the slate is clean” for developers to recommend a location. “We are very interested in what developers will come back with, the acreage they envision, the entertainment district possibilities, all of those factors,” Mayekar said.
A related question asks, “What do you believe is the minimum number of acres needed to achieve a world-class casino and entertainment complex in an urban setting like Chicago? Please provide a separate figure for the casino facility, related amenities and entertainment complex.”
Lightfoot has promised “a robust community engagement process,” including a series of public meetings. Mayekar said after receiving feedback through the RFI, the Request for Proposals would be released in the first or second quarter of 2021.
