Chicagoans now have a lot more information about a proposed casino resort that will help fund the city’s nearly-bankrupt police and firefighter pension funds.
Last Friday, Mayor Lori Lightfoot’s office released details of five development plans from three bidders received through the city’s request for proposals. The RFP initially went out in April, with proposals due by the end of August. But it had to be extended to October 29 due to an initial lack of interest.
From the start, Lightfoot has described the Chicago casino as a “once-in-a-lifetime opportunity” for bidders, citing the city’s stature as a tourism destination; its lively arts and cultural scene; and its strong public transit system. In 2019, 60 million domestic and 1.5 million international visitors came to the Windy City, and more than 9.5 million people live there. In April, the mayor said the city had “attracted the interest of very serious and accomplished gaming interests from Las Vegas. Come one, come all.”
But major operators—those with Vegas addresses—ultimately took a pass. Caesars CEO Tim Reeg said early on he had “no interest in Chicago.” The Las Vegas Sands Corp. and Wynn Resorts Ltd. did not participate, and MGM Resorts CFO Jonathan Halkyard said the “tax and the notion of integrated resort at scale don’t necessarily marry up.”
And that was the rub—an effective tax rate of 40 percent, which itself was trimmed down from about 72 percent. One analyst, Brendan Bussmann of Global Market Advisors, said even the reduced rate was “chokeable. You just can’t operate table games at a 40 percent tax rate,” he said. “It doesn’t make sense.”
But regional companies apparently see dollar signs in that toddlin’ town. Rhode Island-based Bally’s Corp. submitted two proposals. Two other bids are backed by a local contender, billionaire Neil Bluhm’s Rush Street Gaming. Hard Rock International of Florida submitted the fifth proposal.
The bids are as follows:
Bally’s Corp. 1: A $1.8 billion property in the Chicago Tribune Publishing Center with 500 hotel rooms; six restaurants and a food hall; three bars and lounges; a 3,000-seat, 70,000 square-foot entertainment venue; 20,000 square feet of exhibition space; an outdoor/rooftop green space including bars, lounges and pools; and a casino floor with 3,400 slots and 173 table games. To sweeten the deal, Bally’s has offered a $25 million upfront “incentive payment” to the city if this bid is chosen.
Bally’s Corp. 2: A $1.6 billion property at McCormick Place with 500 hotel rooms; six restaurants and a food hall; three bars and lounges; a 3,000-seat, 70,000-square-foot entertainment venue; 20,000 square feet of exhibition space; an outdoor/rooftop green space including bars, lounges and pools; and a casino with 3,400 slots and 173 table games. Bally’s has pledged “an upfront incentive payment of $50 million” to the city if this bid is selected.
Hard Rock/HR Chicago LLC: $1.7 billion property at ONE Central with up to 500 hotel rooms; eight restaurants and a food hall; six bars and lounges; a 3,500-seat Hard Rock Live venue; a Rock Spa and Hard Rock Music and Entertainment Experience; and a casino with 3,400 slots and 166 table games.
Rush Street 1/Rivers Chicago at McCormick LLC: A $1.3 billion property at Lakeside Center at McCormick Place utilizing 2,900 existing hotel rooms and possibly adding 250 rooms or more; 12 restaurants and a food hall; four bars and lounges in addition to full bars at seven restaurants; a 4,200-seat updated Arie Crown Theater; direct covered access to McCormick Place Convention Center; lakefront outdoor dining and entertainment; and a casino with 2,600 slots and 190 table games.
Rush Street 2/ Rivers 78 Gaming LLC: A $2 billion property in the eight-acre riverfront entertainment district at the northern end of the neighborhood known as The 79. It would include 300 hotel rooms; eight restaurants and a food hall; five bars and lounges; riverfront plaza; observation tower; multi-purpose riverfront venue; and a casino with 2,600 slots and 190 table games.
Until a permanent casino opens, the chosen licensee has the option to run a temporary casino for up to 24 months (subject to a 12-month extension).
One of Bally’s proposed locations has already met with opposition: the 28-acre trucking yard south of McCormick Place, adjacent to the former Michael Reese Hospital site. Alderwoman Sophia King says it “should be immediately eliminated” from consideration. “Since the beginning of this process, the community has been clear in their desire not to see a casino built at the site.”
King said she’s “open to the goals of using this new revenue stream to help Chicago deal with its overwhelming fiscal responsibilities, but it should not be done at the expense of our communities, especially marginalized ones” including those in her mostly black ward.
Bally’s board of directors member Wanda Wilson noted, “We will be talking with the alderman about this, and we’re hoping to find some common ground. … Certainly, I’m not looking to put something in a neighborhood that is not acceptable to the community.”
Bally’s proposed location at the River West plant has gotten better notices. Alderman Walter Burnett Jr. said, “It would be an ideal spot for a venue like that, tourist-wise. It’s right off the expressway. The L station on Grand Avenue brings a lot of tourists into the area on their way to Navy Pier.”
Bally’s Director of Corporate Development Chris Jewett called both “economic sleeping giants.” A Bally’s casino would also include a “Chicago sports museum,” he added. Minority investors would account for 25 percent of the ownership group, including philanthropists, business owners and “a couple of sports stars.” Both Bally’s proposals would place a portion of 4,000 gaming positions at Midway and O’Hare airports, in consultation with the city.
Hard Rock International’s recommended location is a part of the proposed, as-yet-undeveloped ONE Central project, an ambitious mixed-use complex that would be built over the train tracks west of Soldier Field. In its proposal, Hard Rock called its plan “a big, bold vision for the best city in the U.S.” operated by the “most recognized entertainment brand in the world.” A temporary casino could be sited at the Lakeside Center building.
Rush Street Gaming’s first proposal calls for rehabbing McCormick Place’s Lakeside Center, which the company says could be completed sooner than a new structure—inside a year—and would eliminate the need for a temporary casino.
Its second proposal, on the 62-acre vacant South Loop plot known as The 78, would be accessible by boats and water taxis. In both cases, Bluhm is offering a minimum 25 percent ownership share to minorities. While the permanent casino is under construction, Rush Street would operate a riverboat casino docked next to The 78.
What’s Next
Casino operators will present their proposals to the public on December 16, and a review committee with a cross-section of personnel from city departments will recommend a bidder. Lightfoot is expected to choose a finalist and submit it for approval to the Illinois Gaming Board by the first quarter of 2022. She anticipates the casino-resort will open by 2025, and estimates the final product will generate $200 million in annual tax revenues for the city.
Lightfoot said each proposal is “in line with our vision to develop a world-class experience in Chicago that will drive significant economic growth and employment opportunities for our communities. … Our expert review committees are ready to dive into discussions to usher in a new and exciting era for our city.”
