Bally’s warned Thursday that lifting the Chicago ban on video gambling would cost the cash-strapped city $74 million in annual revenue and as many as 1,050 jobs at its temporary and permanent casinos.
Undaunted by the casino giant’s caution, 9th Ward Ald. Anthony Beale vowed to add 700 bars and taverns to the ordinance he muscled through the City Council’s License Committee last month over Mayor Brandon Johnson’s strenuous objections.
The License Committee did not vote on the proposed expansion during Thursday’s meeting.
Instead, Beale vowed to amend his ordinance on the Council floor after persuading legislative leaders to give Chicago a greater share of video gambling revenues. Currently, the tax on slot machine revenue is nearly four times higher than it is on video gambling terminals.
But the warning given Thursday by Bally’s — which operates a temporary casino at Medinah Temple and is building a $1.7 billion permanent casino and entertainment complex in River West — could give Council members pause.
Elizabeth Suever, vice president of government relations for Bally’s, said lifting the long-standing Chicago ban on video gambling would force Mayor Brandon Johnson’s administration to renegotiate “critical elements” of its host agreement with Bally’s. It would wipe out a yearly $4 million lump-sum payment from Bally’s and shrink the jackpot needed to save police and fire pension funds.
“We estimate that the legalization of VGTs in Chicago could result in a yearly total tax loss of $260 million from Bally’s Chicago Casino. Of that, the city of Chicago stands to lose roughly $70 million in tax revenue yearly — not including the $4 million” annual payment required by the host agreement between Bally’s and the city, Suever said.
Bally’s has “committed to creating and maintaining 3,000 jobs” at its permanent casino site, which must be completed and opened next year. But lifting the Chicago ban on video gambling would “pose a direct threat” to that promise, Suever said.
“Based on the 37% revenue reduction seen at other casinos with the legalization of , we project a staggering reduction of 750 to 1,050 positions,” Suever said. “The jobs lost would be good-paying jobs with benefits that would no longer be available to your constituents.”
Beale responded like a poker player prepared to call Bally’s bluff.
At a time when Chicago is struggling to close a $1.15 billion budget shortfall after two straight years of deficit spending, Beale said the Council cannot afford to stand pat.
“If we turn a blind eye to almost $100 million, but then we want to turn around and raise taxes, fines and fees on the backs of the people, that’s a choice this body would have to make,” Beale said Thursday.
“We have over 3,000 illegal machines in the city of Chicago that we’re not getting anything from — not a dime,” Beale added. “We’re allowing these machines to operate illegally, and our great city is not doing anything to shut them down. … We can’t have it both ways.”
A recent study commissioned by the city concluded that video gambling revenue would be $10 million a year at best and could actually end up costing the city money because of the impact it would have on slot machines at the permanent casino. That’s in part because the tax on slot machine revenue would be nearly four times higher than it is on video gambling terminals.
But Beale said he’s still hoping to persuade the Illinois General Assembly to level the playing field.
“There’s a huge appetite to try and work this issue out,” he said.
Downtown Ald. Brendan Reilly (42nd) was unmoved by Bally’s warning about job and revenue losses.
“After Bally’s rosy and overinflated revenue projections for their temporary casino in River North fell embarrassingly and predictably short by millions, it’s hard to take any of their projections seriously,” Reilly texted in a message to the Sun-Times.
After skipping the License Committee meeting on the day Beale’s original ordinance advanced, Reilly said he is “glad the City Council finally has Bally’s attention,” and he remains hopeful that the tax structure will be changed.
“Our police and fire pensions are depending on it,” he said.
Pat Doerr, managing director of the Hospitality Business Association of Chicago, said Beale’s promise to allow 700 bars and taverns to install legal video gambling terminals would throw a financial lifeline to businesses that were “shut down for the better part of two years” during the pandemic and “still haven’t recovered to 2019 numbers.”
Video gambling “would help that — especially in border wards where your businesses have to compete with video gaming-enabled locations right over the border, with lower wages mandated and lower tax rates,” Doerr said.