Faced with the pressing question of just where exactly the city of Chicago should place the proposed new mega-casino made possible by Illinois passing a historic casino expansion and sports gambling law in June, the Illinois Gaming Board commissioned a study by Union Gaming Analytics.
The goal of the study was to see which of five proposed sites was feasible under the state’s newly enacted casino expansion bill. The result? None of the five casino sites in the South and West sides of the city were found feasible because of the “very onerous” tax structure handed down by the Illinois General Assembly.
Before the report was released by the Illinois Gaming Board on Tuesday morning, Mayor Lori Lightfoot had already expressed concern over the tax structure of the bill.
Under the law in its current form, any casino operator interested in investing in the Chicago market would have to pay a $250,000 application fee, a $15 million reconciliation fee upon licensure and up to $120 million in gambling position fees.
According to the Associated Press, Lightfoot had already conferred with financial experts before the report was released, and those experts believed the upfront tax payments embedded in the state’s casino law were just too steep for a casino operator to turn a profit anywhere in the city.
The Las Vegas-based consultants at Union Gaming Analytics appear to agree with that assessment. According to their report, any casino operator moving forward at any of the five proposed locations in Chicago could only expect single-digit profit margins at the very best.
In fact, the report suggests it might be hard to find any investor at all because of the dismal returns expected.
The feasibility study was just the first step in what might turn out to be a long process in garnering the right conditions for the proposed mega-casino in Chicago. Lightfoot said in July that the five casino sites listed for the study weren’t even really the definitive list of possibilities, the Chicago Sun-Times reported.
She said she expected to work with all constituents in every neighborhood to collaborate and find the best possible locations for everyone involved, but that these five sites would help determine the next step.
Lightfoot anticipated the tax structure might not be conducive to building a casino anywhere in the city, so the commissioned study was, in reality, a data finding mission that could be used to help open a discussion with Illinois state lawmakers on potentially modifying the law.
“If the feasibility study comes back and tells us no matter where you are, you can’t fund and finance this casino because the economics don’t work, then we go again to the General Assembly and work on getting that right first,” Lightfoot said, according to the Chicago Tribune. “We have to get the economics right before we talk about specific sites."