The Illinois Gaming Board has unanimously passed a resolution recommending legislators amend a law they enacted earlier this year regarding a Chicago casino. The vote was in response to a Union Gaming Analytics study requested by the city and released in August, indicating a Chicago casino would not be achievable given the “onerous tax and fee structure” it requires.
Before the new gambling law passed, Illinois allowed up to 10 riverboat casinos, which pay state taxes 15 percent to 50 percent on adjusted gross receipts. The new bill allows six more land-based casinos including one in Chicago. However, along with the taxes and fees paid by all Illinois casinos, the Chicago venue will be required to pay an additional 33.3 percent “privilege tax,” making its effective tax rate about 72 percent, according to the study.
Union Gaming Analytics’ study stated with an effective tax rate of 72 percent, which directs one-third of revenue to city police and firefighter pensions, atop huge “reconciliation” fees, a developer could not secure financing due to minimal profit margins. However, the study did note the potential 4,000-position Chicago casino could eventually take in more than $1 billion annually—nearly three times as much as Rivers Casino in Des Plaines, the state’s highest grossing property. But that only could be possible in a downtown location, not on the South and West side sites Mayor Lori Lightfoot’s office has suggested.
Lightfoot has said she anticipated the bill’s tax structure would cause concern. In her State of the City speech last month, she said, “We are pursuing a Chicago casino that creates a dedicated revenue stream to pay for our pension costs. If we get the tax structure right, this will create thousands of jobs, help fund the state’s capital plan and stop the flow of over $200 million in gaming revenue to Indiana. If we don’t secure this casino and the revenue it creates we will be forced to make painful choices on find other revenue sources.”
Lawmakers could revisit the Chicago casino issue when they reconvene for the fall veto session October 28. The gaming board’s next scheduled meeting is November 7.
Meanwhile, other communities are moving forward regarding casinos and other gambling. In Rockford, one of the six Chicago suburbs targeted for a new casino, developer Gary Gorman, chief executive officer at Gorman & Company and Rock River West Casino Group, presented his company’s casino vision to a crowd of 100-plus people. It would include a sprawling entertainment district featuring a riverfront aquarium, restaurants, boutique hotel, movie theater, bowling alley and other attractions. The catch is the city council must approve a 2,000-position casino on a 13-acre south near Gorman’s refurbished Embassy Suites hotel.
“These kinds of licenses don’t get issued on a frequent basis. So this is a once-in-a-life time opportunity. How we are hoping to persuade the council to choose the downtown site is to have folks from a wide variety of backgrounds voice their opinion to the council. By law, we can’t. You can,” Gorman said.
Hard Rock International also has proposed a casino-entertainment complex at the old Clock Tower Resort site, and businessmen Kjell Kaashagen and Henry Leong have proposed a casino resort near Mercyhealth’s Javon Bea Hospital-Riverside.
The communities of Rosemont and Tinley Park also are considering offering sports betting, under a provision in the new law granting sports betting licenses to up to seven sports facilities statewide with a capacity of at least 17,000 seats. Rosemont officials believe the 18,500-seatits Allstate Arena, the home of the Chicago Wolves with a capacity of 18,500, is eligible. Mayor Brad Stephens said the village has formed an internal committee to consider proposals from potential operators.
At the same time, Stephens said officials are considering allowing video gambling terminals at venues within the Parkway Bank Park entertainment district and hotel bars. Also, he said several of the village’s 50 liquor license holders are interested in adding the additional video gambling machine allowed under the new law. Currently licensed establishments can offer five machines; the new law allows six.
Rosemont was among the first towns to ban the machines after they became legal a decade ago. Stephens said, “We’re looking at video poker right now only because there really have been no significant problems. There are huge amounts of revenue that are involved in it. With our large group of folks that come through our community on a daily basis, we think there could be a really interesting story here to take a look at that.”
In Tinley Park, officials changed zoning laws to make it easier for a “racino entertainment complex” to be built at the former Tinley Mental Health Center. Playing in the Park LLC applied for a license with the Illinois Racing Board to offer harness racing three nights a week. Plans include a 4,000-seat grandstand and a ⅞-mile track plus gambling facilities.
Meanwhile, the Illinois legislature recently released a report from the bipartisan Commission on Government Forecasting and Accountability, showing revenue from the state’s 10 existing casinos declined more than 3 percent. However, that revenue loss was more than offset by the continued rise in the state’s share of revenue from video gambling machines, the report said.
Overall, in the fiscal year ending June 30, casinos, video gambling, horseracing and the generated more than $1.4 billion in tax revenue, an increase of 3.5 percent from the previous year, according to the report.
The report warned, “Increased competition from video gaming continues to be a major factor for these declines in casino revenue. These declines at the existing casinos may be exacerbated due to the significant increase in competition soon to come from new Illinois casinos, racinos, and from new casinos in nearby states.”
State casino revenue peaked at $699 million in 2005 and has been trending downward ever since, landing at $269 million last year, or a drop of about 62 percent. In comparison, revenue from video gambling, which came online in 2012, surpassed casinos for the first time in 2017 as more than 3,000 new video gaming terminals came online this year, adding $48 million to the state’s treasury.
The lottery reclaimed its position as the number-one source of gambling revenue in 2008, and in 2018 generated $735 million, slightly more than half the tax dollars the state took in from gambling.
Pritzker is counting on revenue from expanded gambling to help pay for his 6-year, $45 billion “Rebuild Illinois” infrastructure plan.
