Mayor Lori Lightfoot recorded a historic victory Wednesday when the Chicago City Council voted to approve Bally’s as its chosen operator to apply to the Illinois Gaming Board for a downtown casino license.
Lightfoot, who has all but formally announced her intentions to run for reelection next year, was able to navigate Bally’s $1.7 billion proposal for a casino in the River West neighborhood through city government with a speed that many aldermen — including those who voted for the casino — expressed concern about. She tabbed Bally’s as the city’s preferred operator on May 5, setting off a sprint capped with Wednesday’s 41-7 vote. The Special Committee on the Chicago Casino, created by Lightfoot in March, met just three times before moving the proposal forward Monday by a 27-3 vote.
“We would like to thank Mayor Lightfoot and the entire city of Chicago for choosing Bally’s to develop a $1.7 billion world-class gaming and entertainment destination,” Bally’s Chairman Soo Kim said in a statement. “This destination property will be built, owned, and operated by Chicagoans, with a focus on minority and women investors, contractors, suppliers, consultants, and employees. It will generate tax revenue, create good-paying jobs, and attract international, national, and local visitors for generations to come. We are extremely excited to develop this project with the people, by the people, and for the people of Chicago.”
Aldermen Brendan Reilly, Brian Hopkins, and Michelle Smith, who all voted no in Monday’s committee vote, were joined by Byron Sigcho-Lopez, Anthony Beale, Edward Burke and Raymond Lopez — who has announced he is running for mayor — in the full vote. Alderwoman Sophia King recused herself from the vote, since her husband works at a law firm that has or is representing a casino operator, while Alderman Daniel La Spata was absent.
In his closing remarks, Alderman Tom Tunney, who was the chairman of the select committee, pointed out that “Bally’s set the tone for the other candidates to follow.” He added that Bally’s is “motivated to generate the most amount of money” with Chicago being its sole casino in the region.
Tunney, whose 44th Ward will soon feature a DraftKings retail sportsbook at Wrigley Field, said the city “is not selling anything,” but rather is “equity partners at 40%” — which makes this arrangement different than the much-maligned parking meter deal the city signed in 2008.
The full city council vote came after a screaming match between Lightfoot and Sigcho-Lopez during debate. Sigcho-Lopez, who had already been gaveled down once and declared “out of order” by Lightfoot earlier on a separate subject, criticized the speed of the selection process and also specifically called out the mayor for the lack of information regarding predatory gaming and responsible gaming. The two were particularly heated, with Lightfoot shouting down the 25th Ward alderman and repeatedly calling him a “liar” who was “besmirching” her reputation.
Mayor Lori Lightfoot is shouting at the top of her lungs at Ald. Byron Sigcho-Lopez: "You are a liar! You are a liar here! I sit here and I will not tolerate you besmirching the hard work of so many people who have worked on this!"
— Gregory Pratt (@royalpratt) May 25, 2022
Speed was of the essence for Lightfoot, with the goal of having Bally’s sign the Host Community Agreement before the end of the month in order to put Bally’s $40 million upfront payment to the city into the Fiscal Year 2023 budget. That money will go directly to the city’s underfunded police and fire pension fund, one of a series of edits gained by aldermen in give-and-take with the mayor’s office during the special committee hearings as the Host Community Agreement was drafted and amended.
Casino tax revenues targeted for city pensions
City officials expect the downtown casino to generate $200 million annually in tax revenue by Fiscal Year 2027. Should Bally’s be approved by the IGB, it hopes to open a temporary casino at Medinah Temple in the River North portion of the city by the second quarter of next year, and the permanent casino at the Tribune Publishing Plant in early 2026.
The city repeatedly stressed the importance of moving quickly, as it believes it can, at full market maturity, repatriate $190 million of the $331 million the state loses in annual gaming revenue to neighboring Indiana. Illinois’ 11 casinos generated $122 million in gaming revenue in April, resulting in $21 million in state taxes. The state, though, is the nation’s leader in video gaming terminal play, which has generated an additional $258 million in taxes through the first four months of the year.
Bringing a casino to Chicago has been the goal of previous mayors going back more than 30 years to the Richard M. Daley administration. The city was one of six locations granted a casino license in 2019, when Illinois Gov. JB Pritzker signed a massive gaming expansion bill that also legalized sports wagering.
The prospects of finding an operator brightened in May 2020, when Lightfoot’s office was able to successfully revise the tax rate downward after an initial study by Union Gaming Analytics said the effective rate from the original structure — which included a 33.3% privilege tax to operate in Chicago — was 72%. The process formally kicked off in August 2020 when the city released an RFI for strategic purposes. After feedback from the RFI was disclosed in December 2020, the city submitted its Request for Proposals in April 2021 and announced five competing bids last October.
Bally’s, which submitted two of the five proposals considered by the city, beat out bids from Rush Street Gaming and Hard Rock after its Tribune proposal was advanced as one of three finalists.
What’s next for Bally’s
On Wednesday, the city council approved Mayor Lightfoot's casino proposal. But former residents of Cabrini-Green are left out of the plan. | @_ToniaHill reports for @TheTRiiBE & @Chicago_Reader https://t.co/EpYR93nczI
— Jim Daley (@jimdaleywrites) May 25, 2022
It is unknown how long it will take the IGB to perform its due diligence on Bally’s downtown casino application and whether the city can or will request an expedited process. Some portions will be streamlined, since Bally’s is already licensed as a casino operator in Illinois via Bally’s Quad Cities near the Iowa border, but the stated goal of opening Medinah Temple in the second quarter of next year creates a runway of at least 11 months.
One part of the application expected to be closely scrutinized by the state agency is Bally’s crowdfunding proposal as part of its goal to reach 25% minority ownership. Kim previously stated it would cost as little as $250 to purchase a stake in the casino, but it is unclear if Bally’s — which has had initial discussions with the IGB on this subject — will have to do additional securities-related work regarding its full legality.
“I believe the way the city and Bally’s has structured this deal will be a national model going forward,” said Alderman Jason Ervin, “whereby individuals in communities that have been marginalized for years will have an opportunity to transfer wealth in ways they never imagined. And believe me, when you have something to pass to your children or your children’s children, that inspires change, that inspires hope that we would like to see not only with these individuals but those in their respective communities.”
Additionally, Bally’s still has work to do winning over a skeptical River West neighborhood that does not seem overly enamored of having a casino. Many expressed concerns about crime, traffic, and declining property values during sometimes tense public meetings throughout the process.
Hopkins called the Bally’s Tribune proposal “by far the least desirable of the three finalists” while voicing his opposition during debate Wednesday. Furthermore, the alderman decried the speed of the process, as well as potential conflicts of interest involving the Union Gaming Analytics study that provided revenue projections for the city in reviewing proposals and Taft Law, which has provided counsel to the city during the casino bidding process.
Reilly, the most vocal critic, said that “all of us have been put in this pressure cooker artificially” when it came to the speed of the process. He said Monday’s reconvening of the special committee for the vote following a recess of the city council to set up this vote was unprecedented, and found it to be a “red flag.”
Reilly again expressed reservations about the wide latitude of powers the city’s chief financial officer has as part of the Host Community Agreement, though some of those were amended over the course the last week. Reilly, whose 42nd Ward includes Medinah Temple, again expressed concerns about traffic and potential crime in the area and cited parallels to the city’s parking meter deal, which Tunney later rebutted.
Bally’s has committed $75 million to infrastructure improvements around the Tribune publishing plant as part of the casino construction, and noted the venue will take up less physical space in the parcel of land than what was originally called for in the planned development. Tunney, though, said the city will revisit that specific planned development and engage the community in that process. Bally’s is also making $4 million in annual payments to communities where the temporary and permanent venues will be located, most of which is expected to go towards security.
Key highlights of Bally’s proposal
Boom! This casino project will create hundreds of jobs for our members. Thanks to @chicagosmayor and all the Aldermen who supported this 100% Union project that will provide much needed revenue for Chicago. #UnionStrong #twill https://t.co/WS3pILRt4j
— Mid-America Regional Council of Carpenters (@MidAmCarpenters) May 25, 2022
Bally’s $1.7 billion proposal hopes to create more than 6,000 jobs, including 3,000 on the construction side. Bally’s was able to broker a peace labor agreement with key unions in the city, the primary reason it became the frontrunner during the mayor’s office’s consideration of the final three proposals.
Unions quickly jumped on Bally’s bandwagon after the agreement was reached and have been vocally supportive during the public-comment period. Wednesday was no different, as multiple Spanish-speaking members of UNITE HERE Local 1 spoke in support of the casino at the outset.
The initial $1 billion buildout calls for 2,700 slots and 95 table games, while allowing space for expansion if needed. It would also include a 100-suite luxury hotel; an outdoor music venue with seating capacity ranging from 500 to 1,000; green space; and dining options curated by One Off Hospitality, which is run by James Beard award winner and Chicago native Paul Kahan.
The second phase, with a price tag of at least $600 million, would begin after a 20% return on investment is established, which is expected to be the first year the permanent facility is in operation. It would add 700 slot machines and 78 more table games, while the space would incorporate six dining venues. Bally’s would also build a 400-room hotel tower with a rooftop pool and bar, a 3,000-seat entertainment venue, and a 20,000-square-foot exhibition center that would include a Chicago-themed sports museum.
Bally’s also hopes to notably exceed the city’s requirements for Minority Business Enterprise (MBE) and Women-Owned Business Enterprise (WBE) representation, looking to make commitments of 36% for MBE and 10% for WBE. (The city is requiring 26% and 6% as its respective thresholds to reach.) Bally’s also has goals of 45% for both minority and women hiring goals, as well as 5% for both veterans and persons with disabilities. Furthermore, Bally’s has committed to city residents comprising 50% of its workforce, with at least 15.5% coming from low-income areas.