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* The Tribune has the best story I’ve yet seen on what’s ahead for the state’s new gaming laws…
After years of failed efforts, a Chicago casino seemed within reach this spring when Illinois lawmakers approved massive gambling expansion.
But after a report raised questions about whether a city casino would be profitable because of the heavy tax burden exacted by the city and state, the players may need to go back to the table.
Moving ahead, and striking a new deal if necessary, figures to be a major test for rookie Mayor Lori Lightfoot, who came into office just as casino bill negotiations were nearing a conclusion in Springfield, as well as for first-year Gov. J.B. Pritzker.
The proposal’s future could hinge on whether the city or the state — or both — is willing to take a smaller cut of tax revenue, and whether supporters can round up the votes to alter the gambling legislation that was frantically put together as the General Assembly’s spring session went into overtime.
* One of the reporters…
State Sen. Terry Link, D-Vernon Hills, a sponsor of the gambling expansion measure, said of Chicago, “If they want to give more of their money to the developer, I don’t know why they would want to do it, but if they want to do it, fine.” City’s 1/3 share is pegged for pensions. https://t.co/CvpWqN1xZz
— Dan Petrella (@PetrellaReports) August 19, 2019
* Related…
* First Chicago-area sports book coming soon — to Indiana
* Five takeaways from the Chicago casino feasibility study
posted by Rich Miller
Monday, Aug 19, 19 @ 9:54 am
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“If they want to give more of their money to the developer, I don’t know why they would do that? ” Talk about tone deaf
There will be no developers interested in the project if Cook County Democrats insist they pay a 72% tax rate and high up front costs.
Comment by Lucky Pierre Monday, Aug 19, 19 @ 10:00 am
One third of nothing is still nothing. Chicago and Illinois should compromise and cut their share down to one quarter each. Perhaps the city and state could revaluate those percentages after 10 years to see if they could get a larger share when the casino is well established.
Comment by A Jack Monday, Aug 19, 19 @ 10:06 am
Right. What’s the pitch right now Sen. Link?
“Hey we’ve got this golden thing. You pay for everything; construction, operations, etc. Then we get a cut equal to yours for the privilege of doing business and absorbing all of the expenses. And, rest assured, we’ll regulate the heck out of you”.
Yep, that’s a winner.
Comment by A guy Monday, Aug 19, 19 @ 10:15 am
First let the casino corporations bid on the Chicago casino then negotiate the tax issue if necessary.
Comment by Enviro Monday, Aug 19, 19 @ 10:19 am
I know the Democrats run this state by virtue of winning it all but perhaps their label should be the gang that couldn’t shoot straight. Even when they’re in charge they keep screwing things up. Whether it is greed or desperation it doesn’t bode well for the cash cows, taxpayers that is.
Comment by NeverPoliticallyCorrect Monday, Aug 19, 19 @ 10:22 am
Not to sound like I’m wearing a tin foil hat, but this kind of sounds like a set up. Did no-one actually do the legwork to determine if this taxing structure would be profitable for the operator? I suspect that there will be a new call for higher taxes due to the “lack of interest” in Chicago’s “valuable” casino license.
Comment by Just Another Anon Monday, Aug 19, 19 @ 10:23 am
I agree with Enviro. The current law already allows a municipality to share their revenues with an operator. Just look at Des Plaines.
Comment by Been There Monday, Aug 19, 19 @ 10:24 am
Agree with Enviro.
Balancing the tax dollars against the harm gambling does to families, it actually may be better for the city to just forget the whole casino idea.
Comment by Back to the Future Monday, Aug 19, 19 @ 10:36 am
You(casino) take all the risk, do all the work and pay a lot of cash and for that, you need to pay us huge sums of taxes for that opportunity.
Gee, what a swell deal.
Comment by Pick a Name Monday, Aug 19, 19 @ 10:45 am
Tried to research what casinos pay in taxes in Vegas but I only find what winning gamblers (hahh!) pay.I don’t know why the city is working against itself, put a site out to bid and see what interest there is at the current rate structure. Share some taxes if you so choose.
Comment by James the Intolerant Monday, Aug 19, 19 @ 11:22 am
@A Guy…
“Then we get a cut equal to yours”….
Its actually worse than that. The article states:
“Combined with the state’s cut, the tax rate would total roughly 72%. ”
Now of course that is on profit. But its for sure not an equal cut. And pretty much 3/4 of every dollar of profit going to the state? How could they NOT see this as an issue.
Comment by Ron - In Texas Monday, Aug 19, 19 @ 11:23 am
Sorry. Above I use “Going to the STATE” and I meant that in a general sense… “going to the government” but as a business owner it really doesnt matter where it goes, its just going.
Unlike Property tax or gas, or sales tax. not just a line item. This is a huge percentage after you figure out all your costs. If you do 1 million more in profit, by having 10 million more in sales/revenue… You get 250K and the “state” gets 750k.
insane.
Comment by Ron - In Texas Monday, Aug 19, 19 @ 11:25 am
===Now of course that is on profit.===
Actually it is on adjusted gross income which is bets made minus winnings paid out. They still have to pay all their expenses out of the balance after taxes.
Comment by Been There Monday, Aug 19, 19 @ 11:47 am
@Been There
so even worse…
Comment by Ron - In Texas Monday, Aug 19, 19 @ 11:56 am
“Link said the city might have seen different results if Lightfoot hadn’t offered five “undesirable locations” for the study.
“The last thing I’m ever going to do is to tell the city of Chicago what to do in their location,” he said. “But I think if you were putting it in a survey — and you don’t have to specify the exact location, but if you put Navy Pier, McCormick Place, the Loop — you know, just throw some of those areas in and then did a study on it, I think you’d see different results.””
This has been the confusing part for me. No surprise that the five stinker sites yielded stinky results. Let’s see a study of how an actual downtown casino would fare.
Comment by LakeviewJ Monday, Aug 19, 19 @ 12:24 pm
LakeviewJ - The proposed Reese Hospital site is basically McCormick Place.
Comment by City Zen Monday, Aug 19, 19 @ 1:14 pm
How did the Governor not see this coming? He is supposed to have staff that review legislation.
Comment by Say no to big government Monday, Aug 19, 19 @ 1:28 pm
“This has been the confusing part for me. No surprise that the five stinker sites yielded stinky results. Let’s see a study of how an actual downtown casino would fare.”
An effective tax rate of 72% is an effective tax rate of 72% regardless of where a casino would be located. Doesn’t work. This is a math problem. Not a policy problem.
Comment by placeyourbets Monday, Aug 19, 19 @ 1:29 pm
Amateur hour.
Comment by Awful Monday, Aug 19, 19 @ 2:37 pm
IMHO, the gaming legislation was considered on a whole other spectrum of what is often described as ‘the art of the possible’. It was what could be politically accomplished at the time it was considered (in this case, with gas tax increases, capitol construction program, constitutional amendment, etc). It’s no wonder that the details were left a little fungible.
If Chicago wants to offer only selected sites (again, rhetorically being desirable to communities that could ideally be helped with the influx of dollars and jobs), then Chicago’s political leaders will have to choose…bend to the market place about their share of the revenue pie, or take less revenue and site it to the benefit of local communities that need it. If and when private development doesn’t magically appear, or produce the revenue the City expected and desires, then that’s the political (and economic) football for the Mayor to figure out. Either way, it’s an economic decision based on what can be POLITICALLY accomplished. What’s possible.
Also, if someone who speaks with knowledge about such things knows the answer….when was the last time a State, ANY State, offered up a new casino license/franchise/opening (in a top-tier international destination city like Chicago), and that offer WASN’T taken up/developed by a well know casino operator? Seems to me that the someone in the gaming world would be able to find a way to make it work??
Very curious….
Comment by northerwatersports Monday, Aug 19, 19 @ 2:45 pm
Crystallizes the Democrats feelings about taxing businesses for the priviledge of doing business in Cook County perfectly.
Before the Golden Goose has even hatched, all of the feathers have already been plucked.
Comment by Anonymous Monday, Aug 19, 19 @ 6:25 pm
===Crystallizes the Democrats feelings about taxing businesses for the priviledge of doing business in Cook County perfectly.===
It will be a privilege to own this casino. No one is forced to bid. If the numbers are as bad as they were first indicated, and/or a trailer bill *and* changes need to be be made
Comment by Oswego Willy Monday, Aug 19, 19 @ 6:33 pm
Put out a RFP on those terms & with Michael Reese (for permanent location) and see what you get. Why negotiate against yourself before listing your house?
Comment by ChicagoBars Monday, Aug 19, 19 @ 10:32 pm