The city of Chicago announced Wednesday it will issue its Request for Proposal (RFP) for a downtown casino at some point in early April.
The downtown area of the third-largest city in the United States was one of six locations in Illinois permitted to construct a new casino as part of the gaming expansion bill Gov. JB Pritzker signed into law in June 2019 that also legalized sports betting. The closest casino inside the state to “The Loop” is Rivers Casino in Des Plaines near O’Hare International Airport just outside the city limits and 17 miles from downtown.
O’Hare is an integral part of the city’s casino plan, with the $8.7 billion expansion that began in 2019 slated to be finished by 2028. According to a press release from the city, Chicago welcomed 60 million domestic visitors and more than 1.5 million international visitors in 2019.
“Chicago is ready to become the home of a major casino-resort which will enhance our thriving entertainment and cultural scene,” Mayor Lori Lightfoot said in a statement. “We’re excited to head into discussions with companies and partners who will help us develop the premier gaming and entertainment destination in our city and drive our economy in a transparent and equitable way.”
An August 2019 study by Union Gaming Analytics noted that per capita income spent by Chicago residents on gaming is 0.6%, which lags behind fellow Midwestern cities St. Louis and Detroit. While the Windy City may be considered an underserved market for gaming options, a downtown casino will not lack for challenges even beyond Rivers — which recently announced an $87 million expansion plan to reach its maximum allotted 2,000 gaming positions — should the project come to fruition.
A third casino in the Northwest Indiana area — run by Hard Rock in Gary — just over the state line will open this year, and another of the six sites in Illinois also in its first steps of the process is Waukegan, which is located less than an hour’s drive from downtown and near the Wisconsin border.
Incremental steps of progress to this point
The announcement to issue an RFP continues a deliberate process that started last May when Lightfoot successfully revised the gaming tax rates from Pritzker’s bill as part of the state budget that was passed for the fiscal year starting July 1.
The 2019 study by Union Gaming Analytics had noted the 33.3% operator tax on adjusted gross revenue paid to the city would result in an effective tax rate of 72%, which would not have appealed to prospective license owners.
The city released a Request for Information (RFI) last August and released a summary of information from 11 respondents in December. Of the nine who chose to answer the question about where the casino should be located, all but one said it should be in the downtown area or near downtown. Based on the press release, the city appears to want a destination casino, noting that the license owner will have “the option to launch a fully integrated resort with amenities ranging from a hotel tower, restaurants, and spa facilities to parking structures and entertainment venues.”
Also important is the ability to have a temporary casino while the permanent one is being built. The license holder will be able to own and operate the temporary casino for up to 36 months ahead of the opening of the permanent casino.
“The single Chicago license is among the best casino-resort development opportunities right now,” said Grant Govertsen, principal, of Union Gaming. “COVID-19 casino shutdowns, financings to bolster balance sheets, and industry teams putting development plans on ice resulted in the Chicago casino opportunity largely flying under the radar last year. Now, the combination of available capital and attractive Chicago market metrics make the opportunity prime for a Las Vegas-style integrated resort.”