The city of Chicago issued a request for information (RFI) on Aug. 27 to seek creative ideas for its coveted downtown casino project.
Mayor Lori Lightfoot wants to hear strategies from casino operators and real estate developers.
However, there is plenty to figure out.
According to Lightfoot, a downtown casino could be a massively profitable endeavor for the city.
“After securing favorable legislation that had eluded us for decades, Chicago can finally pursue a once-in-a-generation opportunity to bring a casino to our city, generating hundreds of millions in new gaming revenues to shore up the city’s pension obligations and drive huge levels of infrastructure funding in Illinois as well as creating thousands of new and much-needed jobs for local residents.
This is the right time to begin having these discussions as we continue to lay the foundation to make a strong recovery from the impacts of the COVID-19 pandemic.”
The biggest question to start with is where the casino should be located.
The official RFI, which you can read in full here, also solicits the community for comment on the following:
- Requirements for operating a temporary casino.
- Recommendations on the size and scope of a gaming complex.
- Amenities that would help to enhance revenue.
- How to address COVID-19 as part of the development.
- Best approaches toward community engagement.
Responses from the public must be emailed to the city of Chicago by Oct. 21.
Lightfoot suggested five casino locations in January. They were:
- Michael Reese
- Pershing and State
- Roosevelt and Kostner
- US Steel
All five locations are on the south or west sides of the city. Lightfoot insists the list is not definitive, but Illinois Gov.J.B. Pritzker supports those locations to spur economic development.
Industry experts, however, believe these will be the least profitable areas. They’ve advocated for a location close to or in the heart of downtown.
The thinking is that it would be more easily accessible to tourists and close to high-quality hotels. Last summer, a state-mandated consultant said that a centrally located casino could rake in $1.2 billion per year, nearly triple Illinois‘ most profitable casino at the moment.
Expect location to be a central part of this process, because it will directly impact revenue. There may be competing agendas at play here. However, it’s notable that Lightfoot explicitly mentions Chicago’s pension obligations in the statement.
Lightfoot has helped make Chicago casino project feasible
Originally, the Illinois gaming bill imposed an effective tax rate of 72% for a Chicago casino.
A feasibility study conducted by Union Gaming Analytics deemed it “impossible” to develop a profitable casino with that burden.
As a result, Lightfoot’s team pushed for a legislative fix in Springfield. Here are the new tax rates on slot revenue:
- Up to and including $25 million: 12% to the state and 10.5% to the city of Chicago
- $25,000,001 to $50,000,000: 16% to IL and 14% to Chicago
- $50,000,001 to $75,000,000: 20.1% to IL and 17.4% to Chicago
- $75,000,001 to $100,000,000: 21.4% to IL and 18.6% to Chicago
- $100,000,001 to $150,000,000: 22.7% to IL and 19.8% to Chicago
- $150,000,001 to $225,000,000: 24.1% to IL and 20.9% to Chicago
- $225,000,001 to $1 billion: 26.8% to IL and 23.2% to Chicago
- Over $1 billion: 40% to IL and 34.7% to Chicago
The tax rates themselves didn’t change much, but the tier thresholds did.
Previously, there was a gaudy 74.7% tax on revenue from slots above $200 million. Now, that threshold is $1 billion.
Current list of Illinois casinos
The closest casino to downtown Chicago at the moment is Rivers Casino in Des Plaines. Here are the additional nine Illinois casinos:
- Argosy Casino Alton
- DraftKings at Casino Queen
- Grand Victoria Casino Elgin
- Harrah’s Joliet
- Harrah’s Metropolis
- Hollywood Casino Aurora
- Hollywood Casino Joliet
- Jumer’s Casino & Hotel
- Par-A-Dice Casino
Six new casinos were approved in the 2019 bill, including the Chicago location.
For what it’s worth, a Chicago casino is likely a long way off. The press release refers to the RFI as “a first step.”
A least it’s a step, nonetheless.