On Tuesday, April 20, Chicago officially issued a request for proposals (RFP) inviting applicants to bid on the city’s sole casino license.
Efforts to bring casino gambling to the Windy City date back to the 1990s. In a virtual press conference announcing the RFP, Mayor Lori Lightfoot called it “30 years of futility finally coming to fruition.”
“We want to move forward as expeditiously as we can, obviously, because of the pandemic,” she said. “We needed to wait until the moment was right, and when we saw the rest of the industry opening up … I told my team, ‘Full speed ahead. We’ve gotta get it done.’”
Bidders must submit their proposals by the end of September. The city will select an operator in early 2022, and the new resort is scheduled to open by 2025. A temporary casino will generate more immediate revenues.
At the discretion of the operator, the plan may also include slot machines at Midway and O’Hare airports (a total of 4,000 slots are permitted). Only two other airports in the U.S. offer freestanding slots inside terminals, and both are in Nevada: McCarran International in Las Vegas and Reno-Tahoe International. Asked if airport slots would siphon off some of the casino business, Lightfoot said, “The main show obviously has to be the land-based casino itself. The airport is another option if they want to take advantage of that for additional revenue.”
McCarran offers about 1,400 slot machines operated by Michael Gaughan’s Airport Slot Concession Inc.; in 2019, the concession generated $37.4 million in gaming revenue.
The mayor told reporters the nation’s third largest metro area is looking for “a real world-class entertainment destination.”
“We just want somebody who sees a vision for this opportunity that builds upon the great strengths that we already have here in Chicago, in tourism and leisure travel—I think the sky’s the limit, and the possibilities are really exciting.”
Chief Financial Officer Jennie Bennett added, “There aren’t other opportunities this large where gaming was previously prohibited but now has been authorized.” A study showed that residents spend just 6 percent of per-capita income on gaming, “which is very low as compared to benchmarks across the country and in other states.
“We know there’s untapped demand,” Bennett said.
According to a 2019 report from 247WallSt.com, Illinois ranks 21st among U.S. states for gambling spend, with adults spending an average of $246 per year on gambling, with $143 spent on casinos and $103 on lottery. Lightfoot pointed out that across the state line, at casinos in Indiana, most of the cars have Illinois license plates.
‘Come One, Come All’
Last month, a number of operators responded to the city’s request for information (RFI), including big-name Vegas operators (MGM Resorts International, Wynn Resorts), as well as Florida- based Hard Rock International and Chicago’s Rush Street Gaming. The latter runs Rivers-branded casinos in Philadelphia, Pittsburgh, Des Plaines, Illinois and Schenectady, New York. But Lightfoot said Rush Street has no “home-court advantage.”
“We’re excited that we’ve attracted the interest of very serious and accomplished gaming interests from Las Vegas,” she said. “So come one, come all.”
The Windy City is home to 9.5 million people, and in a survey, about 53 percent of respondents said they would be likely to visit a hometown casino at least several times a year. In 2019, before Covid-19, Chicago welcomed 60 million domestic and 1.5 million international visitors. It’s a ripe market for the right operator, Lightfoot indicated.
But there will be lots of competition. Last summer, Illinois Governor J.B. Pritzker signed a massive gambling expansion bill authorizing six casinos in the state, including one close by, in south suburban Cook County. Asked if she’s concerned about market saturation, Lightfoot said, “I’m really not. There is no place else in the Midwest that offers what we do.
“I would put us on par with any city across the globe. We have world-class transportation—it’s easy to get here, fly or drive. Our cultural life here is second to none, with theatre, restaurants and sports—but don’t talk about my Bears right now. When you think of the combination of things that really excite people about cities, we have all that and more.”
She said the casino will “add more jet fuel to people’s hope and optimism about what the recovery looks like in Chicago.”
One previous sticking point—an effective tax rate of 72 percent—has been whittled down to about 40 percent. The selected operator will be at liberty to choose the casino site, with the city’s approval. Required elements include a casino resort with meeting space, restaurants, bars, entertainment venues and a hotel with 500 rooms or less.
Downtown Edge
Compared to the sprawling resorts of Las Vegas, 500 rooms is rather modest; Lightfoot indicated that existing hotels “in the downtown area and other parts of the city” will take up the excess. “We want to complement the existing tourism and hotel infrastructure,” she said.
Most survey respondents—36 percent—said the casino should be “near downtown,” to take advantage of the tourist trade. Consultant Union Gaming, which authored a 2020 white paper on the casino plan, said “only a centrally-located casino that is in close proximity to high-quality hotels and other notable tourist attractions” would be able to “meaningfully penetrate the robust tourism trends” in Chicago.
Thirty-two percent of respondents want the casino in a location that needs new development, but some expressed concerns about placing a massive enterprise in an economically disadvantaged neighborhood.
And according to Union Gaming, “Tourists generally will not patronize a casino in an area that is inconvenient relative to where they are staying or perceived as unsafe. Nor will tourists be eager to book a room at a casino’s hotel if there are no other easily accessible attractions nearby.” That seems to point downtown, though large tracts of land in the region would be hard to come by.
Overall, according to the survey, the site should “maximize tax benefits while minimizing disruption to the natural environment and local culture.”
Lightfoot wouldn’t name her preferred location, but prospective sites include Soldier Field, home of the Chicago Bears, and near McCormick Place, the largest convention center in North America.
‘Gaming-Plus’
The mayor also declined to speculate on the total investment or expected gaming revenues, but suggested the integrated-resort model is the ideal.
“The market has shifted for gaming over time. In Las Vegas, it’s not just gaming revenues that are driving business, it’s ‘gaming-plus’—it’s restaurants, entertainment and other amenities that are leading the revenue generation for casinos. That’s why we keep talking about it as an entertainment center and resort. It’s all those other ancillary things.”
Per the RFP, the city expects proposed projects to meet the following “core goals”:
- Maximizes gaming tax revenues to the city (which revenues are dedicated to city’s police and fire pension obligations)
- Creates well-paying jobs and new employment opportunities as well as apprenticeships and/or training programs for city residents and supports utilization and participation of Chicago-based businesses, including minority-owned business, women-owned businesses, veteran-owned businesses, and businesses owned by persons with a disability
- Integrates well into the surrounding communities
- Is of superb quality and architecturally significant design and layout
- Is a catalyst for additional economic development in the city;
- Meets LEED development standards
- Provides a first-class standard of service
During the construction phase, the operator is expected to ensure 26 percent participation by minority businesses and 6 percent women-owned businesses enterprise participation.
Lightfoot said she wants to hit the ground running. “For better or worse, I’m impatient by nature. I like to get things done and done quickly. … The Illinois Gaming Board’s got to speed up. We will work with governor and his team to expedite this, but we can’t have unnecessary regulatory delays slowing us down.
“The bottom line is to make sure we are getting revenue as quickly as possible.”
