It was a dog-and-pony show in Chicago last week when the groups interested in building a casino in the city gave their pitches. The five proposed projects all would cost in excess of $1 billion and create at least 2,000 permanent jobs. All but one would also utilize temporary casinos until their permanent projects were ready in three or four years. Two companies, Bally’s and Rush Street Gaming each offered two proposals, and a third company, Hard Rock International, presented the most expensive one. Each project estimates it will deliver at least $200 million every year to the city to alleviate the massive multi-billion pension liabilities the city has pledged to the fire and police unions. Each project included much community involvement and support, including pledges to involve women- and minority-owned businesses in a big way.
The projects are:
- Rivers McCormick, Lakeside Center, McCormick Place. The $1.2 billion Rush Street Gaming, Farpoint Development, and McClaurin Development project would transform the Lakeside Center, a huge building adjacent to McCormick Place, Chicago’s convention center. Renovations would take 12 months and would not require a temporary casino and create 2,800 permanent jobs. Rush Street Gaming Chairman Neil Bluhm is a Chicago native. He stressed his company’s ability to build and develop casinos, saying Chicago needs an experienced developer, not on-the-job training.” Rivers McCormick is the only project that would not be built in phases. The project does not include a hotel, but there are many adjacent hotels that Rush Street says they will utilize.
- Hard Rock One Central. The Hard Rock International, Landmark Development and Loop Capital project would go on the southern portion of the One Central project, 32 acres on railyards adjacent to the McCormick Center and Soldier Field, the home of the NFL Chicago Bears. Phase one of the project is expected to cost $1.7 billion. The casino would be just part of a mixed use development proposed by developer Bob Dunn with an estimated price tag of at least $6 billion. Dunn has requested billions in subsidies. The Hard Rock casino would not depend on such subsidies and would be fully funded once it is approved. But observers see the looming subsidies as a negative since the Hard Rock facility would become a magnet for further investment.
- Rivers 78. The second Rush Street proposal, this time with developer Related Midwest, is envisioned as being the heart of an entertainment district in the 78 neighborhood. The $1.6 billion project would include 300-room hotel and a Riverfront Plaza with a 1,000-foot observation tower, which the local media are calling Chicago’s “Eiffel Tower.” The project boasts 200 minority investors and 7,000 construction jobs. The downtown location is a drawback as traffic is already congested and would require some infrastructure improvements.
- Bally’s Chicago. Bally’s has designed two locations for similar designs—either McCormick Place marshalling yard or the former Chicago Tribune publishing center on Grand Ave. The project would cost $1 billion for phase one and another $600 million for a second phase. A temporary casino in an older warehouse would cost $70 million. The permanent casino would take three years to build. Bally’s Chairman Soo Kim emphasized that Bally’s has no competitive conflicts unlike his competitors. Hard Rock has casinos in Gary, Indiana and Rockport, Illinois, while Rush Street owns, along with Churchill Downs, Rivers Des Plaines, the most successful casino in Illinois. The property promises a state-of-the-art sports book, a Chicago sports museums and rotating art exhibitions.
Bally’s proposal for the marshalling yards, which Bally VP Chris Jewett called the “best location,” was immediately called into question since the company does not own the yards, which are under contract to another company. Chicago-based GRIT Chicago LLC was awarded a request for proposal that runs until May 2023 to redevelop the property. A spokeswoman for the Metropolitan Pier and Exposition Authority, which owns the land, said it was not for sale.
Four of the five locations are near ethnic neighborhoods and various politicians and community leaders have voiced objections to having a casino so close to their locations.
Chicago Mayor Lori Lightfoot will pick the winner sometime in early 2022 and send it to City Council. After consideration, council will then forward the bid to the Illinois Gaming Control Board, which will then proceed with licensing approvals. Following the presentations, she tried to dampen the enthusiasm of proponents.
“They look beautiful, and they’re saying a lot of things that really, I think, speak to our values, but as you all know, the devil’s in the details, and my financial team is going to do a deep scrub to make sure that we understand: are these projects really viable?” Lightfoot said.
Also last week, after a surprise rejection of Lightfoot’s desired sports betting ordinance, the Chicago city council came around and passed Alderman Walter Burnett’s substitute ordinance allowing sports venues in the city to apply to the Illinois Gaming Board for sports betting licenses. New language added to the original ordinance Includes a “2 percent tax on the adjusted gross sports wagering receipts from sports wagers that are placed within the city at, or within a 5-block radius of, any of the following: a casino facility, race track facility or sports facility where sports wagering is allowed.”
Currently, adjusted gross revenue from sports wagering is taxed by the state at 15 percent and all betting is taxed by Cook County at 2 percent. The city’s Business Affairs and Consumer Protection Department estimated the annual tax receipts from the new tax would range from $400,000 to $500,000 annually.
Under the ordinance, the Illinois Gaming Board could grant sports wagering licenses to Wrigley Field, Guaranteed Rate Field, Soldier Field and the United Center. Wintrust Arena does not meet the seating capacity in the Sports Wagering Act signed into law in June 2019 legalizing sports betting legal in the state; however, it could become eligible if Governor JB Pritzker signs HB 3136 into law, which is expected.
The city council passed Burnett’s ordinance without debate after it was approved by a joint committee. However, Joint Committee Chairwoman Emma Mitts noted seven aldermen protested the ordinance.
Last month, the joint committee heard from Neil Bluhm, owner of Rush Street Gaming, which has a large minority stake in Rivers Casino in Des Plaines and which has proposed two of the five downtown casino plans. Bluhm said sports betting at a downtown casino would cost between $10 million to $12 million in tax revenue per year. Rivers leads Illinois casinos in casino gaming revenue and retail sports betting and also operates mobile sports wagering through BetRivers, which, along with the Rivers sportsbook are the official exclusive partners with the Chicago Bears.
Bulls and White Sox owner Jerry Reinsdorf, Cubs owner Tom Ricketts and Blackhawks owner Rocky Wirtz all support sports betting at the stadiums. Reinsdorf said, “What is perplexing is that Neil Bluhm, who does not want our buildings to have sportsbooks, met with us on several occasions seeking to operate sportsbooks in our buildings. And that was long after the casino was approved for Chicago. At that time, he had no assurance he would be chosen to operate a casino in Chicago and was not concerned that these books would, in any way, cannibalize whoever was chosen to operate the casino. It makes me wonder if he had gotten his way back then, would we be having this meeting today?”
Ricketts said his team is “ready to go today” on its $100 million partnership with DraftKings, allowing Wrigley Field to house the first stadium sportsbook in Major League Baseball.
“With your approval of this ordinance, construction would begin immediately with the aim of opening a restaurant with a sportsbook in time for the 2023 season,” he said. “This will create construction jobs and revenues now and permanent jobs in just over a year. This ordinance will provide additional resources to the city’s professional sports teams that will help them compete.”
Following the vote, Burnett said he felt “like an ant in between elephants with all of these billionaires fighting over this stuff.” Previously, Alderman Greg Mitchell argued the city was moving “too fast” and that 2 percent is “not a sufficient reward for the risks we’re taking.”
Under the plan, no more than 15 kiosks or wagering windows would be allowed at each location unless bettors can also buy food and beverages there. No one under age 21 would be allowed to place a bet. Sports wagering would be prohibited from midnight to 10 a.m. Monday through Thursday; midnight Friday to 9 a.m. Saturday; and 1 to 9 a.m. on Saturday and Sunday. The city would issue two types of sports wagering licenses: Primary sports licenses would start at $50,000 a year and cost $25,000 for annual renewal; secondary sports licenses would start at $10,000, with an annual renewal fee of $5,000.
The ordinance also includes the city’s pledge to “actively seek to achieve racial, ethnic, and geographic diversity when issuing primary sports licenses” and “encourage” minority and women-owned businesses to apply. Still, Budget Committee Chair Pat Dowell said the revised ordinance includes “zero benefits that I can see for minority ownership or involvement or community benefits.” She said she’s still concerned about the potential impact on casino revenue and that the 2 percent city tax on sports betting would deliver “peanuts” for Chicago.
