Cash-Strapped Chicago Solicits Operators’ Ideas To Launch A New City Casino Amid Coronavirus Pandemic

With a budget gap looming, Chicago Mayor Lori Lightfoot announced a request for ideas for the new city-based casino, including how operators would address the coronavirus.

Gambling
In this May 14, 2003 file photo, visitors to the Empress Casino crowd the craps table while others play the slot machines in Joliet, Ill. Chicago Mayor Lori Lightfoot is asking for proposals from gaming operators of how a Chicago casino could look and work in the age of the coronavirus. Seth Perlman / Associated Press
Gambling
In this May 14, 2003 file photo, visitors to the Empress Casino crowd the craps table while others play the slot machines in Joliet, Ill. Chicago Mayor Lori Lightfoot is asking for proposals from gaming operators of how a Chicago casino could look and work in the age of the coronavirus. Seth Perlman / Associated Press

Cash-Strapped Chicago Solicits Operators’ Ideas To Launch A New City Casino Amid Coronavirus Pandemic

With a budget gap looming, Chicago Mayor Lori Lightfoot announced a request for ideas for the new city-based casino, including how operators would address the coronavirus.

The city of Chicago is soliciting ideas for a new casino and entertainment district from gaming operators, according to a request for information and a new website released Thursday.

Respondents are being asked to identify a location for the casino, outline the number of gaming positions and other amenities that would make the casino a “world-class” destination for tourists and shore up much needed revenue for Chicago.

“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,” Mayor Lori Lightfoot was quoted in a press release.

The city is marketing itself as one of the “largest untapped gaming opportunity in the country.” It is also asking respondents to explain how they will address coronavirus concerns when designing the space.

Whoever the city picks and is approved by the state gambling board will have to build a temporary casino site while the permanent casino is under construction. Responses to the RFI are due Oct. 21. But the city says offering feedback proposals through this RFI are not required to be eventually considered to run the new casino.

The timing of the announcement comes ahead of what’s expected to be an intense budget season. Last year, Lightfoot’s administration closed a $838 million budget hole. With declining sales tax revenue and the loss of major tourism and hotel revenue due to the coronavirus, the city was already projecting a shortfall of about $700 million in July. On Monday, Lightfoot will share more about the 2021 budget gap.

Earlier this year, the Illinois General Assembly approved a gambling expansion bill that revised what a casino gambling consultant hired by the city called an “onerous tax structure.”

To get the bill across the finishing line, state Sen. Bill Cunningham, D-Chicago, added a provision that would earmark the upfront licensing fee revenue for the state’s capital bill, Rebuild Illinois.

The $145 million dollar licensing fee and $700 million in reconciliation fees replace a tax structure that would have forced the gambling operator to pay an effective tax rate of 72%. The city anticipates a casino will generate about $200 million in tax revenue, all of which will help cover pension payments.

A Chicago-based casino, and all the tax revenue that would come with it, has long been a fantasy of past mayoral administrations, going back to the early years of Mayor Richard M. Daley. Daley sought a casino and entertainment district in the early 1990s to generate new revenue during a recession. Former Mayor Rahm Emanuel tried to get a gambling expansion bill at the end of his first term to cover annual police and fire pension payments. Neither were successful in convincing state lawmakers.

Last year, Lightfoot had identified five potential locations outside of the city’s central business district. An outside consultant hired by the city to complete a feasibility study concluded “only a centrally-located casino that is in close proximity to high-quality hotels and other notable tourist attractions” would generate the kind of revenue the city is projecting. Several aldermen balked at the idea of having a casino in their wards.

Responding to this RFI is not a requirement to be in the selection process for the eventual casino, the city said. This RFI is the city’s first step in understanding what companies might be interested in operating a casino and how a casino could complement the city’s existing cultural landscape. Respondents don’t even have to fill out all of the questions.

Eventually, there will be a lengthy bureaucratic process that will be largely under the control of the Illinois Gaming Board. The operator the city selects will have to go through an extensive background check of its finances and shareholders.

Illinois already has 10 casinos. Indiana has 14 with several clustered near the border it shares with Chicago. Experts in casino business have expressed concern that oversaturation could make it difficult for the city to compete. This is why location and adjacent amenities are key.

Claudia Morell covers city politics for WBEZ. Follow her @ClaudiaMorell.