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Lightfoot again worries publicly that potential casino owner profits aren’t high enough

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Illinois

Mayor Lori Lightfoot says she will seek public input on possible locations for a Chicago casino in a survey her office plans to release Friday.

“This is going to be a robust survey that is really the first step in thinking about where a casino should be in Chicago,” Lightfoot said during an appearance Thursday on “Chicago Tonight.” “That’s part of what the feasibility study is going to study: where is the best location.”

Last week, the mayor named five potential sites on the South and West sides for an outside group to study, but two aldermen have already nixed sites in their wards. Lightfoot said those sites aren’t the only possibilities – a casino could ultimately land elsewhere in the city. But she says a casino might not even be financially viable, with a structure that calls for a private operator to keep only a third of the revenue, with a third going to the city and a third to the state.

“But really, can we finance a casino based upon this tax structure that the General Assembly has put in place so far. We’re concerned about it. We think it takes too much money out of the pockets of a potential casino operator before the doors would even open. So that’s what we’re concerned about: Can we even finance this deal in the first instance,” she said.

She has mentioned the topic of potential Chicago casino profits, or the lack thereof, several times, going back to when the bill was still being drafted. The revenues will be divided three ways, with the city, the state and the owner all getting a third.

* From the new state law…

Within 45 days after the effective date of this amendatory Act of the 101st General Assembly, the consultant shall prepare and deliver to the Board a study concerning the feasibility of, and the ability to finance, a casino in the City of Chicago.

I asked Sen. Terry Link, the bill’s co-sponsor, about a similar statement from Mayor Lightfoot late last month. His reply…

I think the mayor, with all due respect, is getting a little ahead of herself. Let’s see what the report comes back in… it may say ‘This is a great investment, you’re gonna make a lot of money,’ it may say something else. We don’t know.

If that study finds that the casino wouldn’t make enough money, legislators have pledged to alter the law during the veto session.

* Some casino interests have also expressed doubt about the profit split and up-front fees…

Tim Wilmott, chief executive officer of Penn National Gaming Inc., said a high tax rate and other conditions laid down by Illinois legislators could make a casino project in downtown Chicago a bad bet. […]

[W]hichever operator builds the sole Chicago project, including the airport rights, will have to pay $120 million for licensing and fees, and hand over up to two-thirds of the revenue to the city and state, according to Wilmott. Slot machines in airports are less profitable, making those a tougher proposition, he said. […]

A spokesman for Las Vegas Sands Corp. said his company, which specializes in large, convention-oriented resorts, isn’t interested in Chicago. Caesars Entertainment Corp., another Illinois operator, hasn’t taken a public position. Matt Maddox, the CEO of Wynn Resorts Ltd., which this month opened a $2.6 billion resort near Boston, said that property could serve as a model for other big-city casinos. […]

“I’ve always had the mindset that if I had a choice of a great suburban location or a great urban, city location, I would always take the suburban location first,” Wilmott said.

posted by Rich Miller
Friday, Jul 26, 19 @ 10:58 am

Comments

As I recall, she is very close friends with a company that is expected to bid on the casino?

Just a suggestion: if she is worried it won’t be profitable enough, maybe stop suggesting the least profitable locations.

Also, tell us how much you would like to reduce the city’s cut by, and we will split it between the operator and the state.

Comment by Charlie Brown Friday, Jul 26, 19 @ 11:06 am
Can we please use the word “profit” if that’s the correct concept.

If the state and city are taking 2/3s of “revenue,” as compared to 2/3s of profit, it surely can’t be viable for a casino to operate on 1/3 of revenue.

Hopefully these terms are carefully defined in the new law.

Comment by omniscient skeptic Friday, Jul 26, 19 @ 11:10 am
Less profitable locations chosen because they are politically correct will not lead the Windy City to the fiscal promised land.

A serious reconsideration of poor geographic choices needs to happen ASAP. The notion that the General Assembly is willing to take less cash for the State because Chicago is unwilling to locate its’ casino in the most attractive site is likely to be met with significant skepticism.

If you are going to sign up for the unholy conduit for cash . . . . .at least put it where the cash is . . . . .

Comment by All In Friday, Jul 26, 19 @ 11:22 am
Please make sure you talk to Lori Healey and Jack Lavin. It’s not just about location. some of the proposed locations are so ridiculous that it’s odd they were proposed.

Comment by Amalia Friday, Jul 26, 19 @ 11:28 am
Amalia- I think some of those locations were designed to fail to set up a more central downtown location without resistance from the Governor who said he wants it in the South or West sides.

Disappointed that Sands are out. Hopefully, MGM, Wynn, Ceasars or someone with a broad international client base play ball.

Penn Gaming has Aurora, Joliet and East Chicago so I can’t imagine that they’re thrilled. Obviously, Casino’s like being in suburb or contained environment where they can get dining, entertainment money from their customers too without nearby competition. But, thats not the goal here ideally a surrounding neighborhood would benefit in the city. Also, he may want to reconsider his long-term strategy and suburban stance when he takes a look at the aging population of the McMansion crowd that surround his company’s properties.

Comment by Anon Friday, Jul 26, 19 @ 11:52 am
From the looks and sounds of things; the best option is for the city to Incorporate some acreage in Rosemont by Eminent Domain and get on with it. /s

Comment by A guy Friday, Jul 26, 19 @ 12:27 pm
==a high tax rate and other conditions laid down by Illinois legislators could make a casino project in downtown Chicago a bad bet.===

Corporation thinks high taxes are bad. In other news, the sun rose in the east.

Comment by Jibba Friday, Jul 26, 19 @ 1:03 pm
The City’s split goes to the underfunded police and fire pensions by statute, maybe a 1/3 is too much for those underfunded funds.

Comment by Just a thought Friday, Jul 26, 19 @ 1:14 pm
The Mayor should be more concerned about the Illinois citizens who will lose money at the casinos not the casino owners who will make millions.

Casino owners profits are taxed at a much higher rate in many European countries. If anything the Chicago casino should be taxed at a much higher rate than the current proposal.

Comment by Enviro Friday, Jul 26, 19 @ 1:31 pm
I don’t exactly feel sorry for the owners of casinos. If they’re not interested in raking in money we can find someone else.

Comment by Just Me Friday, Jul 26, 19 @ 3:00 pm
Hhhmmm who would have thought Mayor Lightfoot cared so much for corporate profits?

Comment by Dupage Bard Friday, Jul 26, 19 @ 3:40 pm