Chicago Officials Eager for Bally’s $1.7 Billion Casino Project to Proceed
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Posted on: May 12, 2022, 09:31h.
Last updated on: May 12, 2022, 04:59h.
When Chicago Mayor Lori Lightfoot announced last week the city had selected Bally’s Corp. as the company it wanted to build a casino in the city, she recalled the effort then-Mayor Richard M. Daley initiated 30 years earlier.
She was just starting out in her career as a lawyer, and the chair of the firm where she was a junior attorney served as the point person for Daley’s casino committee. Because of that connection, Lightfoot told the crowd at last Thursday’s announcement, she became involved in the push to get a casino in the city.
There would be other starts and stops. And even after the Illinois legislature acquiesced and opened the door for Chicago in 2019, the bill state lawmakers passed created an effective tax rate that would make it nearly impossible to operate a casino in the city. So, state lawmakers went back to fix the tax issue.
But even after all that, Lightfoot’s administration still found few interested parties after the city released its request for proposals (RFP) last year. The effective tax rate, which had been reduced from more than 70% to about 40%, was still keeping some of the bidders from engaging.
That led Lightfoot to extend the deadline by more than a couple of months, and with that, only three gaming companies submitted a total of five proposals. But, eventually, Lightfoot said the city found the company it wanted in Bally’s, which plans to build a $1.7 billion casino on the site of the Chicago Tribune’s publishing facility.
“The times have changed,” Lightfoot told the crowd last week. “And so, 30 years and two mayors later, I’m pleased to announce that in 2022, we got this done.”
But the ball hasn’t crossed the goal line just yet. Before the city and Bally’s can go before the Illinois Gaming Board (IGB) to get the license approved, the Chicago City Council still must pass the agreement Bally’s leaders and city officials reached.
On Thursday evening, residents will get a chance to be heard on the subject.
City Ready to Generate Revenue
After waiting 30 years to get a casino, Chicago leaders are anxious to get the host community agreement with Bally’s approved and signed, and then go to the IGB.
Some on the council, though, are asking, “Why the hurry?”
On Monday, the council’s special committee on the casino project held a five-and-a-half-hour meeting. Councilmembers got the chance to ask Bally’s and city officials about their plans, and the councilmembers were also told an ordinance was filed regarding the agreement.
No vote was taken at Monday’s meeting, as it was just a “subject matter” discussion. However, the ordinance is expected to come up for a vote sooner rather than later.
As part of the agreement reached between Bally’s and the city, the Rhode Island-based gaming company will give Chicago $40 million in an upfront payment once it’s signed. City CFO Jennie Bennett said it’s important to have that money in hand as Chicago officials begin planning for the upcoming budget.
It’s also important to keep the project on time because Bally’s will also provide the city with a $4 million annual payment once the temporary casino is operational. Those payments will continue once the permanent facility opens in 2026.
We need to get going on the Illinois Gaming Board process, because it takes a fair bit of time to do,” Bennett said. “And aside from next year’s budget, we need to ensure that we stay on track related to the time line that’s been provided by Bally’s, so that then those out-year revenues become realistic. That it’s not a one-time bump of the $40 million, and then we fall off a cliff because we don’t have those revenues in place.”
In addition to reaping the $40 million, the city stands to gain $4 million from Bally’s annually. In addition, the tax money from the casino is expected to cover about 9% of the city’s pension costs for its police officers and firefighters. Bennett said that will allow the city to spend more of its money on other services and projects.
Those figures also do not even factor in the jobs created or other economic benefits created by the project, she added.
“This casino is a critical part of the financial plan for structural balance,” Bennett said.
Council Members Concerned About Rush to Vote
But a few councilmembers pushed back on the Lightfoot administration. Alderman Brendan Reilly said the tactics reminded him of a deal the city made years ago to lease parking meters in 2009. At that time, the city received nearly $1.2 billion from private investors, which took control of the meters for 75 years.
Those investors earned their $1.2 billion back within a decade.
Alderwoman Michele Smith said she and her colleagues have a “fiduciary duty” to thoroughly review the deal.
“None of us are soothsayers,” she said. “None of us can be sure of what is going to happen. The city is seeking extraordinary flexibility in their ability to negotiate agreements in the ordinance that’s ahead of me. I think we have to be able to do our job.”
Questions About Casino Site
Another concern for some council members has been the change in locations for the temporary casino. Bally’s proposed putting it closer to the permanent venue. But at last week’s announcement, that had changed to the Medinah Temple, a former auditorium that served as retail space until Bloomingdale’s closed its furniture store there nearly two years ago.
City leaders made the recommendation to Bally’s to house their temporary casino there. Samir Mayekar, Chicago’s deputy mayor for economic and neighborhood development, said Bally’s original location would not have worked because of planned infrastructure improvements the city planned in that area. Those were projects, he said, Bally’s would not have known about when they made their proposal.
The city had also worked to identify other downtown sites in the spirit of economic recovery,” Mayekar said. “We’ve been getting pressed, as you can imagine, by a number of stakeholders about supporting economic recovery in the central city.”
Bally’s and the city hope to have a temporary casino operational by the spring of 2023.
The switch to the Medinah Temple was just one of the concerns the River North Residents Association (RNRA) had with the Bally’s proposal. The group, which represents the neighborhood that sits adjacent to the proposed casino site, said it fears increases in crime and traffic. Any tax gains coming from the casino would likely be mitigated by reduced property values and other economic factors, the association said.
Because of that, the group is calling for the City Council to reject the agreement between Chicago officials and Bally’s. It said the Council should not be considered a “rubber stamp” by the Lightfoot Administration.
“Like most Chicagoans, we had been under the impression that there would be more opportunity for public input and analysis of the proposals prior to a recommendation in early summer,” RNRA President Brian Israel said in a statement last week. “This is an unfortunate example of how the legislative branch of city government, which should play a central role in an issue as consequential as a Chicago casino, has instead been disrespected and marginalized by the administration.”
Chicago Casino Town Hall Meeting Thursday
Residents will get a chance to share their comments as well as listen to Bally’s leaders and city leaders during a town hall meeting at the University of Illinois at Chicago on Thursday night.
For those unable to attend the forum, which is scheduled to run from 7 to 9 pm CT, it will also be available online.
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