Emanuel’s casino gamble a sure bet?

September 16, 2011

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(Photo courtesy of Horseshoe Casino Hammond)
Horseshoe Casino Hammond has invested hundreds of millions of dollars into its operation.
(WBEZ/Michael Puente)
Chicago resident Robert Plant boards a bus bound for the Horseshoe Casino in Hammond, Indiana.

Chicago doesn’t have a casino, but it sure has a lot of gamblers. They just go to the suburbs, or Wisconsin, or, more often, to Northwest Indiana. Ill. Gov. Pat Quinn is considering a bill that would allow Chicago to have a gaming operation of its own. In the meantime, Chicago officials talk as though they can easily pluck business from the Hoosier state. But are Chicago's hopes realistic?

Mayor Rahm Emanuel hopes to grab a share of the 6 million people that visited Hammond’s Horseshoe Casino last year.

EMANUEL: I can’t continue to afford Chicago to have gambling or a casino in Hammond, Indiana and lose 20 to 25 million dollars a month. They can go to Hammond, Indiana. The question is: Will Chicago have one that hands us an opportunity to invest in its future?

But there’s an even bigger question. Let’s assume Chicago does get a casino: Is it a shoo-in that it would swipe business from Horseshoe and Northwest Indiana’s four other casinos?

To find the answer I talk to the kind of gamblers Emanuel hopes to keep in Chicago. In the city’s Uptown neighborhood, there’s a free bus that runs directly from Chicago’s North Side and drops gamblers right at Horseshoe. Robert Plant is a 71-year old retired bus driver. How often does Plant take the bus to go to Horseshoe?

PLANT: About six days a week. I’m not driving out to Joliet, Aurora or Elgin every day. Forget about that. This casino is what, 30 minutes away? It’s right there.

But if Chicago gets its own casino, it’s not clear Plant would skip out on Hammond.

PLANT: It depends on how the build it and how they treat people because Chicago politicians are the worst in the world. They have limit the space that casino can be built. You don’t do that. Like Daniel Burnham said, you build it big, you build it grand and they will come. If it’s not built on the line of a Horseshoe Casino, forget about it. We’ll still go to Horseshoe.

When customers like Plant arrive at Horseshoe, they get a taste of Vegas-style glitz and glam and some concert shows. That's all alongside free buffets where retirees eat to their hearts’ content.

NITA: There’s a lot of different attractiveness tools and elements that different casinos definitely offer up to convince guests to be as loyal to them as possible.

That’s Dan Nita, general manager at Horseshoe, the largest and most profitable casino in Indiana. Nita’s operation has honed its business strategy for ten years and he says the company’s not dwelling on whether Chicago lands a casino. Three years ago the company spent $500 million on upgrades.

NITA: The investment that we’ve made is a long term investment. The 6 million people that came through our door last year are hopefully folks we’ve developed enough of a relationship with in the past that they’ll continue find a great experience every time they make their way through our doors.

Nita isn’t just being smug. Gaming operations like the Horseshoe have been planning for more and more competition, both within states and between them. Right now there are gambling turf wars in California, down South and out East.

THOMPSON: Delaware has three or four casinos and they’re fighting new ones in Maryland. When Pennsylvania opened, Atlantic City suffered.

That’s Bill Thompson, a professor at the University of Nevada Las Vegas. He’s been studying gambling for the last 30 years. Thompson says a new Chicago casino would swipe business from other gambling operations near and far. That’s already happened with the new Rivers Casino in Des Plaines, for example. Thompson says Chicago should not expect a windfall.

THOMPSON: The market is only so big and every new casino just chops the pie up. The economy is not going to grow. You’re not going to see an infusion of money coming into Chicagoland. Everybody gambling is going to be a person within 50 miles of the casino.

In other words, Chicago’s making a bet it will attract at least some gambling business. Thompson says the only thing that’s certain is that some other casino operation in Indiana, Illinois or elsewhere, will get hurt, or, as they say, come up snake eyes.

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