Editor’s note: The following represents the views of the author.
Chicago has extended its casino application deadline until Oct. 29 from its previous date of Aug. 23.
In doing so, Chicago Mayor Lori Lightfoot gives prospective bidders more time to assess the project. Lightfoot said in a statement:
“Extending the deadline for interested bidders will allow the city to collect as many robust, impactful and transformative proposals as possible. I look forward to seeing these bids roll in and working very closely with whichever team is ultimately chosen to develop Chicago’s first-ever casino.”
As of now, there is only one known bidder for the Chicago casino project. That’s Rush Street Gaming. However, awarding the project to Rush Street without any other bidders could cause political trouble for Lightfoot.
Neil Bluhm co-founded Rush Street Gaming, and his daughter Leslie Bluhm has donated more than $100,000 to Lightfoot’s political campaigns in the past.
Alderman Brian Hopkins, 2nd ward, told Crain’s Chicago Business:
“For the mayor to approve a deal that would be essentially a sole source contract on something this significant — I think there would be a lot of criticism.”
Gaming leaders Caesars Entertainment, MGM International and Wynn Resorts said they’ll pass on the project.
Caesars CEO Tom Reeg dealt the latest blow on an earnings call with investors:
“I’ve got no interest in Chicago.”
Lightfoot said in June that there would be “no hometown favorites” for the Chicago casino license.
We’ll raise that cliché with another: Sometimes, beggars can’t be choosers.
Why isn’t the Chicago casino license popular?
For starters, the effective tax rate is high. It’s at 40%.
To Lightfoot’s credit, the effective tax rate used to be 72%. The mayor earned one of her biggest legislative wins when she was able to renegotiate the casino tax structure.
Still, 40% is a gaudy number. MGM CEO Bill Hornbuckle referenced the tax rate — among other factors — when explaining why his company isn’t interested.
“Chicago is just complicated. The history there in Chicago, the tax and the notion of integrated resort at scale don’t necessarily marry up.”
In addition to the high tax rate, the resort will likely cost more than $1 billion to develop.
When you hear “complicated” or “the history there in Chicago,” it signals an intangible (negative) quality of sorts working against the city.
Chicago is infamous for its messy politics, and perhaps “messy” is the best word to describe taking on this project. It’s been more than two years since Illinois Gov. JB Pritzker signed the gaming expansion bill into law, including the Chicago casino.
And, after two years, what does the city have to show for its efforts? The best thing you can cite is that the tax rate isn’t as bad as it used to be. The Chicago casino location is entirely up in the air, as is the operator and a whole host of other key factors.
By the way, once Chicago figures everything out, the Illinois Gaming Board (IGB) doesn’t exactly have a reputation of approving casino applicants in a timely manner. Dealing with the IGB also can’t be something operators are jumping at the chance to do.
Lightfoot has already criticized the IGB for its slow process — even though Chicago isn’t close to being ready to submit an application.
What will happen next with the Chicago casino?
Obviously, extending the request for proposal (RFP) deadline signals a lack of interest from gaming operators. But Lightfoot’s office apparently believes there will be more bidders within the added time.
At this point, Rush Street is the clear favorite to land the license. It might not have any competition.
On the other hand, it could. A source in the Crain’s Chicago Business believes there will be at least one more proposal.
Curiously, Hard Rock International has remained quiet on the issue. Hard Rock was one of four gaming companies to respond to Chicago’s Request For Information. The others were Rush Street, MGM and Wynn, and the latter two have already bowed out of the process.
Thus, it’s conceivable that Hard Rock wants more time to evaluate the project. It is also developing a casino in Rockford, which will likely be the next casino to open in Illinois.
One way or another, Chicagoans will get their casino. It won’t be this year, or next year or the year after that. But it will happen.
The process of getting there, however, will be a chore. For some, it already is.
