* The Reader’s Deanna Isaacs looks at the state of a Chicago casino…
To be successful, the consultants concluded, a Chicago casino would have to be located downtown, where tourists would be likely to visit it. And even then, they said, given the “onerous” tax burden the legislature had stipulated, it was unlikely to be profitable enough to get financed.
But they had a suggestion: drop the city’s one-third revenue share, and a downtown casino could be in the hefty 20-plus percent range of annual profit that’s typical of the industry.
So here’s where we stand now: locked into private ownership, but without a feasible neighborhood location and minus the city’s one-third slice of the anticipated revenue pie. In other words, suckered into giving up the exact selling points that made the deal seem worth doing. And what are the long-term effects? Bigger profits and a prime location for the private casino owner, while the city gets some low-paying jobs likely to be offset by the social costs of a hugely expanded predatory industry.
Lightfoot, who has personal and former business connections to people in the gambling industry, says the city will go back to the legislature this fall to “fine-tune” the law (even though the expansion has already cost her all her Springfield leverage). The Illinois Gaming Board has 90 days from the time it received the study to come up with recommendations for those changes, and Union Gaming Analytics has suggested one: If the law were changed, the city could, in fact, be the casino owner, trading its one-third tax on adjusted gross revenue for any possible profits; financing the casino development with municipal bonds (thereby transferring all the risk to the public); and hiring a professional gaming company to run the operation.
* Greg Hinz also takes a look…
For instance, the chief Senate sponsor of the casino bill, Lake County Democrat Terry Link, argues that if Chicago thinks the taxes are too high to finance a casino it can take less or offer its own inducements, maybe free land or a big tax increment financing grant.
“There’s ways they have to help developers without going to the General Assembly,” Link told me. And there’s good reason to think that the consultant’s report overstated the risk that high taxes could kill any Chicago casino, Link added. “I don’t think there’s a shortage of developers willing to go in there.”
One idea I’ve heard discussed is to cut that special [33 percent] Chicago tax. Slashing it by, say, half could increase that 3 percent operating margin to around 20 percent, making the casino financially viable, one government insider told me. […]
Revenues from the Chicago casino now are targeted to pay debt service on the governor’s vaunted new $45 billion capital program. With other revenues sources from legal sports gaming and cannabis a little shaky and possibly running short of what was projected, Pritzker will have reason to compromise, says one insider. “He’s already spent the money” on the capital program, says that source. And even if the state has to cut its taxes a bit on the Chicago casino, “He’ll still be able to tell people that the state is getting more money overall than it would have otherwise.” […]
Another wrinkle: The deadline in the law for new casinos authorized in other portions of the state to apply for state licenses is Oct. 15. But it’s possible not all of the locations will be ready by then. Which means that the legislature may have to reopen the gambling bill in its November veto session.
After settling for a deal she said she knew was bad in the first round of casino negotiations, Lightfoot will be under a brighter spotlight and be working with less leverage as she tries to revamp the agreement to Chicago’s advantage during the the legislature’s two-week veto session this fall. […]
Aside from lowering the city’s 33.3% share of the revenue, any changes to make a Chicago casino more financially feasible likely could mean creating a unique set of rules. Other casino towns get only 5% and in some cases have to split that with nearby localities.
In addition to city’s share, the Chicago casino operator also would have to pay a $250,000 application fee upfront, a $15 million “reconciliation” fee when the license is issued and up to $120 million in gambling position fees — which cost $30,000 each. The casino is authorized to have up to 4,000 gambling positions — such as slot machines and blackjack tables — with some slot machines possibly going to O’Hare International and Midway airports.
After three years, the casino would have to pay a fee equal to 75% of its post-payout revenue from its most lucrative 12-month period, minus the fees paid upfront per gaming position.
* ‘Not a done deal’: Waukegan residents push back against casino while supporters push for proposal backed by business that fueled local elections: Like several opponents, Verratti raised concerns about the level of spending tied to Bond and Tap Room Gaming in the recent aldermanic elections and pointed to the ongoing campaign promoting a North Point Casino proposal backed by Bond and Warner Gaming. Of the nearly $400,000 donated to aldermanic candidates across Waukegan’s nine wards since December 2018, 85% came from four organizations tied to Bond or the video gambling industry, according to a News-Sun analysis of state-mandated campaign disclosure forms. Of the six candidates that received money from these groups, four won.