Chicago Officials Mull Extension for Casino Proposals
Posted on: August 4, 2021, 11:50h.
Last updated on: August 5, 2021, 07:49h.
Chicago officials may push back the deadline for proposals to operate a casino in hopes of drawing more interest in the opportunity.
Crain’s Chicago Business reported that the current Aug. 23 deadline for submissions could be extended by two months, and that move could be officially announced later this week. The primary driver for the extension is concern that only one proposal – coming from Chicago-based Rush Street Gaming and its development partner, Related Midwest – may be submitted.
Such a scenario could raise suspicions, the article continued, as the daughter of Rush Street Gaming Chairman Neil Bluhm has been a prominent fundraiser and supporter for Chicago Mayor Lori Lightfoot.
Sources told the business publication that there’s likely one more unnamed company that will submit a proposal and that three other entities are considering the opportunity, but would need additional time.
But without knowing the (identity) of that prospect and the three new firms, it’s impossible to know how real the competition is, or whether a delay is just designed to provide political cover for an eventual Bluhm/Related pick,” Crain’s political blogger Greg Hinz wrote.
If Rush Street ends up landing the casino, Hinz reported that it would be built on land currently being developed by Related Midwest at the intersection of West Roosevelt Road and South Clark Street, less than a mile due west from the Field Museum, Shedd Aquarium, and Soldier Field.
The city published the RFP on April 22. The city got the opportunity to pursue a casino as part of the expanded gaming bill Illinois lawmakers passed in 2019,
Two Already Out for Chicago Casino
Rush Street was one of four gaming operators who responded to the city’s request for information solicitation last year. However, two of the other three companies have already stated publicly they will not submit a casino proposal to Chicago officials.
A week after the city released the formal solicitation, MGM Resorts International announced it would not pursue the opportunity. At that time, company CFO Jonathan Halkyard told analysts on the first-quarter earnings call that the process was “just complicated” in Chicago for the Las Vegas-based casino operator.
Last month, a Wynn Resorts spokesperson told the Wall Street Journal that the company also would not submit a bid, though they would not elaborate further.
Hard Rock International was the fourth company that submitted information. The company, owned by the Seminole Tribe of Florida, has not indicated whether it will submit a bid. However, Hard Rock has already established a presence in the region, thanks to the recently opened Hard Rock Northern Indiana, just across the state line in Gary. In addition, the company’s Hard Rock Casino Rockford will open a temporary venue in the northern Illinois town in October.
Submitting a response to last year’s RFI was not a prerequisite to bidding.
Tax Issue Already Pushed Back Casino Project
So, why is Chicago’s casino process – to borrow a word from Halkyard – complicated? Taxes.
A feasibility study found that the effective tax rate for a casino would be a whopping 72 percent. That’s due to a 38.7 percent privilege tax to fund first responder pensions that was tacked on top of a 33.3 percent levy on gross gaming revenue.
Last year, city officials successfully got lawmakers in Springfield to fix the issue. The new tax structure now reduces the effective rate to around 40 percent.
Beyond that, Lightfoot and city officials have been adamant that whatever is built in Chicago should be something significant. By that, officials want a casino that complements the city’s architecture and meets, if not exceeds, standards set by the city’s other high-end entertainment venues.
Those qualities will likely necessitate a significant investment. That, combined with a still high tax rate and an already saturated gaming market in the Chicago-Northern Indiana region, is likely leading to the lack of interest.
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