In April, the city of Chicago issued a request for proposals from companies to develop a mega-casino resort downtown by 2025. City officials hope a casino could generate $200 million in tax revenue to help fund its troubled pension program. However, the RFP’s requirements add up to an investment of at least $1 billion, observers said.
Specifically, the request includes a 500-room, five-star hotel; an “iconic outdoor public space”; 60,000 square feet of meeting space; plus, restaurants, entertainment, shops and museums designed with innovative architecture. Proposals are due August 23; developers would present plans to the public in late September. The applicants also are asked to propose the site for the project. Casino revenue would be taxed at an effective rate of 40 percent.
Mayor Lori Lightfoot said, “We expect to have a very unique entertainment and gaming experience that you’re not going to find anywhere else in the region. That is certainly our expectation. We’re going to be driving toward that.”
Last year, four gambling operators responded to Chicago’s initial request for information from interested companies. Those included Las Vegas’s MGM Resorts International and Wynn Resorts Ltd., Hard Rock International and Chicago-based Rush Street Gaming, owner of the Rivers Casino in Des Plaines. MGM Resorts and Wynn Resorts have since dropped out. Hard Rock declined to comment.
But Rush Street Gaming officials, working with Chicago real-estate development firm Related Midwest, said the companies “are long-term believers in the promise of Chicago’s future” and “are working together to evaluate this unique opportunity.”
Lightfoot said the envisioned entertainment district would have a mix of public and private investment, and the city would also have “skin in the game,” including new infrastructure. She said, “We want to make sure that we’re setting up whoever the operator is for maximum success.”
Under the 2019 gambling expansion law, the chosen developer would have to pay state fees of $30,000 per slot and seat and table games gaming positions. If the casino chose to offer the total 4,000 positions allowed under the law, that would equal fees of $120 million, based on an analysis by Union Gaming Analytics. In addition, the developer would have to pay fees of up to $480 million based on annual gross revenue in the first three years of casino operation.
In a statement, city officials said even with the fees, the Chicago casino would be “the biggest and most compelling liberalization of gaming in the U.S. today,” and an opportunity for a company to create a profitable property.
Illinois’s gambling expansion law also allows five more new casinos, including two in the Chicago area plus expanded gambling at existing locations. But the tax rate in Chicago is challenging, said Brendan Bussmann, partner and director of government affairs at Global Market Advisors. “The challenge with Chicago is, the sun and the moon and the stars really have to align to make it work,” he said.
In addition, besides the tax rate, a recent proposal to bring sports betting to Chicago stadiums also could scare off a mega casino. Woinski said sportsbooks are not significant moneymakers for casinos, but they attract players. “If the action happens elsewhere, that’s one less reason for people to physically go to the casino,” he said.
However, Chicago City Alderman Walter Burnett believes sports betting is essential for the city’s gaming mix. He recently introduced an ordinance to remove Chicago’s home-rule ban on sports betting and set up sports wagering license requirements. Under the ordinance, sports betting would be authorized either at Wrigley Field, Guaranteed Rate Field, Soldier Field, the United Center and Wintrust Arena or in a “permanent building or structure located within a five-block radius” of those stadiums.
“Wrigley and the United Center have both been talking about setting up a spot for it. So, this ordinance needs to be passed in order for that to happen. We’ll see where the council wants to go with it. In my community, it’ll bring more people to the United Center. They may spend more money. It helps with the sales tax and also the amusement tax that these guys pay. So, there is some upside. There’s more benefits for the state, but there’s some auxiliary benefits for the city,” Burnett said.
He noted the city would issue two types of sports wagering licenses. Primary sports licenses would start at $50,000 a year with an annual renewal fee of $25,000. Secondary sports licenses would start at $10,000, with an annual renewal fee of $5,000.
Burnett acknowledged his ordinance is sure to lead to debate about those who can least afford to wager on sports. However, Burnett noted sports betting already has been legalized in Illinois. “The only downside would be that folks who do it anyway may get addicted to it,” Burnett said.
Meanwhile, the Cubs have agreed to a $100 million partnership with DraftKings that could lead to the first stadium sportsbook in Major League Baseball at Wrigley Field. But it can’t happen unless the Chicago city council lifts the ban on sports betting in the city.
Councilman Walter Burnett said, “But I can take you to every office in this City Hall building. Everybody’s doing squares, pools and all kind of other things in regard to sports betting. And a lot of people are doing sports betting on their telephones. That’s a conversation we can have once we get it introduced. I’m just bringing it to the table so we can all talk about it.”
Lightfoot has vowed to impose “tight restrictions” on sports betting to avoid turning Chicago neighborhoods into, as she put it, “the Las Vegas strip.”
Asked if she feels sports betting would cut into revenues at a Chicago casino, the mayor said, “First of all, sportsbook is the law of our state. That got passed by the General Assembly in 2019. I support that law. No, I do not believe that it will undercut our efforts on a future casino and we’re gonna make sure that it doesn’t.”
A new building or renovation of an existing building would require a change to the planned development under which the Cubs renovated Wrigley and developed the land around it. So would sports betting of any kind, since gambling is outlawed in Chicago.
Alderman Tom Tunney, whose ward includes Wrigley, has acknowledged sports betting is a “reality across the country” and, more recently, in Illinois. “In one way, shape or form, it’s coming to major league sports and to all of the stadiums,” Tunney said.
Cubs spokesman Julian Green has said the partners hope to build an addition to the $1 billion Wrigley campus that could be a year-round attraction. “DraftKings says this would be their largest sportsbook in the country with a food and beverage option and betting. In the winter months, you have Super Bowl. You have March Madness. Having a facility where groups may want to come in and watch the Super Bowl or March Madness’, that’s something we could accommodate.”
Currently all 10 of Illinois riverboat casinos have sportsbooks, as well as two racetracks. At the moment, Chicago bettors have to drive to one of those physical locations outside the city to place a wager or register for a mobile betting application.
Meanwhile, thousands of Chicagoans already place bets on their phones with mobile sports gambling operators, legal and illegal. In fact, since the first legal sports bet was placed in Illinois in March, bettors statewide have wagered more than $4.6 billion. Observers said black market wagers probably are close to that figure, too.
