The hope of having a potential operator for the city of Chicago to present to the Illinois Gaming Board for its coveted downtown casino license this spring gave way to a pragmatic and slower-paced decision-making process from Mayor Lori Lightfoot’s office that reduced the number of potential locations from five to three.
The number of operators, though, remained three, as Rush Street Gaming and Bally’s each had one of their two respective proposals nixed. Hard Rock is the other finalist, as its proposal connected to the ONE Central project survived the cut. The new timeline is for the city to successfully conduct negotiations to be able to present one operator for approval to the city council and then to the IGB this summer.
Next week, the city will hold community listening sessions for all three proposals in the respective local neighborhoods that would host these casinos. There are expected to be multiple pointed questions and potentially some raw emotions both for and against the billion-dollar projects.
For decades prior to Lightfoot taking office, Chicago mayors have talked about the game-changing potential of a casino in terms of what the revenue can do for a city consistently challenged when it comes to funding the police and fire department pensions. Lightfoot, who is running for reelection in February 2023, could get a boost from moving the process forward to where ground is broken before ballots are cast.
All three proposals carry positives and negatives in terms of projected revenue for Chicago, neighborhood transformation, and the gaming industry in the state of Illinois, which has expanded its footprint notably since Gov. JB Pritzker — himself up for reelection this November — signed a massive gaming expansion bill in June 2019 that also legalized sports wagering.
Without any inside information from the mayor’s office, this looks to be the pecking order of the three finalists as they have entered a period where they can negotiate with the city.
The frontrunner: Bally’s Tribune
Urgent call to Residents: Register and Attend Community Meeting on Proposed Bally’s Casino at Tribune Publishing Site!
— River North Residents Assoc (@RNRA_Chicago) March 24, 2022
Bally’s Tribune proposal in the River West neighborhood on the north side of the city offered the highest potential annual revenue at maturity with $191.6 million. That figure comes with the caveat that a 500-room hotel would also be part of the project. That number dips to $176.9 million if the hotel is downsized to 100 rooms.
In contrast to the Bally’s McCormick proposal, which envisioned a revenue percentage split of 82-18 when it came to locals versus tourists, the Tribune proposal is 78-22, which led to Bally’s offering a lower revenue projection versus its original one submitted. As the lone finalist not currently operating a casino in the regional area, Bally’s believes it can drive tourist traffic to Chicago by making the Tribune location its gaming hub.
To that end, Bally’s and the city have proposed various infrastructure improvements when it comes to car and pedestrian traffic, as well as a revamped riverwalk area. That contributes to the expectation Bally’s has of offering more than 12,000 construction positions in both phases of development, in addition to 2,000 permanent jobs at the casino once it’s open.
Bally’s also has negotiating upside when it comes to the city. It has already pledged a $25 million up-front payment to the city should the Tribune site be chosen, but given that it pledged $50 million for the McCormick site, it stands to the reason that the eventual figure Bally’s would put forth as a sweetener will range closer to that latter amount.
Lastly, there is currently no local animosity toward Bally’s as an organization because it is an outsider in Chicago. Additionally, Alderman Walter Burnett, whose 27th Ward is where Bally’s Tribune is proposed to be built, is arguably as gaming-friendly an alderman as Bally’s could find. Burnett authored the original ordinance that the city council eventually approved in December to lift the home rule ban on sports wagering in the city.
There may be some grousing over moving the physical plant of the city’s newspapers of record, considering they have been in existence for more than a century. Utilizing the space as a temporary casino projected to open in the second quarter of 2023 while the permanent one is built, however, offers a potential quick return on investment for the city while it waits to see those full annual revenue projections met.
The contender: Rivers 78 from Rush Street
The Community Advisory Council (CAC) for The 78 is gathering community input about the proposal to have a casino in The 78. Please give your input by filling out this survey below. The survey is in English, Spanish, and Chinese. https://t.co/giCZzS5gpl
— Grace Chan McKibben (@GraceChanMcK) February 10, 2022
When originally presented in the group of five proposals, Rush Street Gaming’s Rivers 78 proposal for the South Loop appeared to stand out because of its boldness. The idea of building a new neighborhood in a city sounds like the stuff of an urban developer’s dreams.
Rivers 78 has offered that promise plus a transformation to the skyline in the form of a 1,000-foot observational tower the company likens to Paris’ Eiffel Tower. In terms of casino revenue, Rivers 78 projected $174 million annually at full maturity, a figure that included both the observational tower and hotel, and was more bullish on its potential than Union Gaming Analytics. Rush Street Gaming cited its internal statistics of successful business at its other gaming properties for an expected 82-18 split in local versus tourist revenue percentage.
The biggest strength of the Rivers 78 proposal is Rush Street’s gaming operations, as the 3,425 projected casino-specific jobs are the most of any finalist. Rivers Casino in Des Plaines is a literal stone’s throw from the city to the northwest, and it is the bell cow of casino gaming in Illinois, generating more than half the table games revenue in the state and approximately one-third of the overall tax receipts generated from casino gaming. Rush Street is confident the two venues can coexist less than 20 miles apart, as the downtown location would go more toward repatriating Indiana casino revenue that the city and state are desperate to claim.
While Rivers 78 did not publicly commit to an up-front payment to the city like Bally’s in its original proposal, its negotiating position includes the forgoing of $23 million in reimbursement of TIF funds since the land being used for the casino project was part of a pre-existing redevelopment area. Rush Street has also pledged an additional forgoing of $27 million in reimbursement funds, which puts its known sweeteners for the city on nearly equal terms with Bally’s.
There has been publicly voiced opposition to Rivers 78, however. Earlier this month, The 78 Community Advisory Council released the results of a survey that showed 74% of more than 380 people asked were “highly unsupportive” of the casino part of the 78’s development, with respondents citing higher crime, lower home values, and increased traffic among their reasons.
The dark horse: Hard Rock ONE Central
No matter where it goes, someone is not going to like it. Hard Rock is the one of the three that the developer wants $6.5B of our tax dollars for One Central.
A Casino on the River Is No Better Than on the Lake, Some Chicago Environmentalists Say https://t.co/VaykA5dGHJ
— Anthony Hipp (@AnthonyHipp) March 30, 2022
It is difficult to put Hard Rock’s ONE Central proposal anywhere but third on this list because of its many unknowns. In the city’s evaluation report was a list of multiple department approvals Hard Rock needed to complete for its project to take launch, the most notable being a “P3” agreement with the state for the public financing required to make ONE Central a transformational transportation hub for the city.
Befitting its reputation as a company able to drive tourists to gaming destinations, Hard Rock’s projected revenue local-tourist split of 75-25 is the most balanced among the three finalists. Hard Rock was also bullish on its prospects, offering a revenue figure of $908 million by year six — 11.3% above the Union Gaming Analytics study — that would result in $195 million in tax revenue to the city.
The devil in the Hard Rock proposal is in the paucity of the details. It has not publicly committed to any up-front payments to the city. And in the evaluation report, the city stressed that it needs more information regarding proposed construction costs. The city also did not receive what it called “a sufficient traffic study” from Hard Rock, making it difficult to ascertain what kind of infrastructure improvements need to be made independent of the $3.8 billion in state aid for the ONE Central transportation logistics.
But the potential Hard Rock offers as a global brand that can create an international-level entertainment district with a casino anchor is clearly something the city finds alluring, with or without the transportation hub. Additionally, coming to the negotiating table with 50% minority ownership at the partnership level goes well above and beyond the standards the city has set for the finalists.
The Hard Rock proposal also brings the most time-honored tradition of Chicago politics into play: bare-knuckle negotiating, albeit indirectly related to the casino. Given the casino’s proposed lakefront location near Soldier Field, Lightfoot is also sending a warning shot to the Chicago Bears that the city will not simply roll over in negotiations with the NFL team as it threatens to move to the north suburb of Arlington Heights unless improvements are made to its current venue.