The process to bring a casino to downtown Chicago, which recently completed its first key step, had a little bit of everything.
It can be argued that the process was slow, as evidenced by the city granting a near three-month extension to potential suitors during the RFP process. It can also be argued, however, that it was fast, given Mayor Lori Lightfoot’s whiplash-inducing, three-week sprint from selecting Bally’s $1.7 billion Tribune proposal as the preferred operator to full city council approval.
There were proponents and opponents, some quiet and a few quite vocal. There was the realization that a casino can conceivably do big business in Chicago, but also that the convention industry is still a key economic engine in the “City of Broad Shoulders.” The Metropolitan Pier and Exposition Authority waged a successful fight as two proposals that encroached on its turf failed to make the initial cut, and a third eventually lost out in the final round.
In the gaming industry, where wins and losses are the name of the game, it’s only fitting we look at the winners and losers at this first juncture, as Bally’s consolidates its early gains and refines its River West proposal.
Today, City Council passed the resolution to establish Bally’s Chicago as the city’s first casino. This historic project will create 6,000 jobs & add nearly $200M annually in city revenue. pic.twitter.com/BjSabkVdcQ
— Mayor Lori E. Lightfoot (@chicagosmayor) May 25, 2022
Winner — Chicago Mayor Lori Lightfoot. Even in the best of times, running the third-largest city in the United States is an enormous challenge, and Lightfoot has had practically everything thrown at her during her first term. Getting the casino past the city council in rapid fashion, most notably the $40 million to plug into the Fiscal Year 2023 budget, is a huge boost. The casino also gives her a key plank for her reelection campaign by delivering something that previous Chicago mayors had sought for more than 30 years, addressing the city’s woefully underfunded police and fire pensions in the process.
The approval is a key step, but one of still many to go for the city and Bally’s. Lightfoot still has plenty of other issues on her plate — including the Bears and their threatened move to Arlington Heights. And in what is a growing field of competitors from both city and state government lining up to run against her, there is no guarantee Lightfoot will be around by the end of Bally’s application process to cut the ribbon.
Winner — Bally’s Chairman Soo Kim. An outsider when the process began, Kim and his team were able to land a proactive labor agreement that put Bally’s in the pole position, a spot it did not relinquish throughout the evaluation process. While its $40 million upfront payment to the city was another key differentiator, recall that Bally’s had a $50 million sweetener for its nixed McCormick proposal. That money was always there. Bally’s showed throughout the process it wanted to be in Chicago, and put its money where its mouth was on more than one occasion.
Kim could become an even bigger winner than Lightfoot if Bally’s crowdfunding method to achieve the 25% minority ownership threshold is permitted and works. Though the term “generational wealth” gets casually tossed about at times, the concept of a buy-in as low as $250 for residents offers a unique opportunity to change lives, especially in a still-challenging and post-pandemic economic environment. Something to watch going forward is how Bally’s will promote this idea to the River West community in terms of hitting its commitment goals should the method receive approval from the Illinois Gaming Board.
Winner — Alderman Walter Burnett. It is still bemusing that Burnett seemed as surprised as anyone that Lightfoot tabbed Bally’s Tribune proposal as the one to move forward. Burnett was a general supporter of the casino in the sense that he viewed it as a better alternative than raising property taxes in the city, and he looks to be taking a glass half-full approach to the impending drastic alterations to his 27th Ward.
Bally’s has pledged to make at least $75 million in infrastructure improvements to the area around the casino, and the city also has plans to begin work replacing the Chicago Avenue Bridge — a key reason the city asked Bally’s to move its temporary site out of the Tribune plant area. How Burnett is able to spin these plates and keep residents happy in River West will go a long way to determining whether Bally’s gets a warmer reception from local residents as the process continues.
Winners — DraftKings and FanDuel. Though sports betting provides a low percentage of the overall revenue a casino generates (estimated to be less than 5%), Bally’s has no sports wagering presence in Illinois. Its Quad Cities venue is not taking retail bets, and the most recent update of the IGB website shows no application for a Management Services Provider license required to launch Bally Bet.
As the casino process has proceeded, both mobile sportsbook titans have been moving full speed in constructing retail sportsbooks at Wrigley Field and the United Center, respectively, with both expected to be open no later than next April. FanDuel and DraftKings already combine for two-thirds of the online market share in Illinois, so they are not hurting for revenue, but having retail books at iconic venues while Bally’s builds its casino — versus Rush Street building one — is a net positive.
Taxpayers: you will be hosed (again). Lets rush this through?? Financial analysis by the company that helped raise $696 million for Bally’s in 2021 endorses the deal & the casino contract work was done for Chicago by the same law firm that represents Bally’s elsewhere? https://t.co/XWrjC6nfB1 pic.twitter.com/74rch1wOiU
— Brendan Reilly (@AldReilly) May 25, 2022
Loser — Alderman Brendan Reilly, though in his defense, it’s a narrow loss. Someone on the city council had to step in front of the hurtling train Lightfoot guided down the track after naming Bally’s the city’s preferred operator in early May, and Reilly took on the unenviable task. The 42nd Ward alderman tried everything to make Lightfoot hit the brakes and apply some pressure to make sure the city was getting what it should have received from Bally’s.
He was up to the task as much as was allowed, given the few meetings (three) the Select Casino Committee had before voting Bally’s proposal forward to the full city council. Reilly was also correct in the sense that each of the three marathon sessions the committee contributed to resulted in amended terms in the Host Community Agreement that benefited the city.
Don’t be surprised if Reilly is heard from again at some point, given his ire over the late switch that made Medinah Temple the temporary casino venue in his ward. That may include making sure Bally’s $4 million annual payments that are largely expected to go toward security are earmarked in a very specific fashion.
Loser — Neil Bluhm. Considered the odds-on favorite to be the city’s preferred bidder when the Request for Proposals was formally released, the gambling magnate was stunningly shut out of his home city, as Rush Street Gaming had its Rivers 78 bid come up short and a second proposal rejected in the first round. It has been a rough eight months for Bluhm, who testified against lifting the home-rule ban for sports wagering in the city in November and was bodied by White Sox and Bulls owner Jerry Reinsdorf in the process.
Weep not for Bluhm, however, as Rivers will still be the biggest generator of casino revenue in the state for the next few years while Bally’s sets its foundation in the city. But the question is whether Wrigley Field and the United Center will pick away at Rivers’ retail sportsbook supremacy when DraftKings and FanDuel open their respective shops on the north and west sides of the city.
Losers — Commuters in the city in the short to medium term. When ground is broken at the Tribune plant and Medinah Temple opens in River North, an already congested traffic scene is going to border on nightmarish. River West is already a well-traveled area, and the combination of scheduled city construction work on the Chicago Avenue Bridge, demolition and construction at the Tribune publishing plant, and the infrastructure work Bally’s will need to do around the Tribune plant in 2023 and beyond will create logistical headaches.
There are many city commissions and private companies that must work in lockstep for years — plural — to make this project run as smoothly as possible, all with the common end goal of having the casino open by the first quarter of 2026. Meanwhile, start getting ready to leave extra time for where you’re going in Chicago.