High tax rate, competition thwart Chicago’s casino plan

If everything had gone according to plan, we would each beryllium buzzing this week astir which institution would person the champion accidental to physique a casino edifice successful Chicago.

But it hasn’t gone according to plan.

When Chicago started proceeding crickets successful effect to its petition for proposals, the city’s enactment deed the brakes and pushed backmost the deadline for responses. Proposals present indispensable beryllium submitted to the metropolis by Oct. 29.

Back successful April, erstwhile the original Aug. 23 deadline was set, Chicago Mayor Lori Lightfoot said she was hopeful that casino proposals would travel from companies with Las Vegas addresses.

“It’s not conscionable gathering a box, but gathering a existent world-class amusement destination,” Lightfoot said astatine the time. “We privation to marque definite that who we spouse with is superior astir Chicago and understands the unsocial opportunities that are here. As I said before, we’re excited that we’ve attracted the involvement of precise superior and accomplished gaming interests from Las Vegas. Come one, travel all.”

But immoderate companies person stated that they won’t beryllium bidding. Four of the largest Strip operators — MGM Resorts International, Las Vegas Sands Corp., Wynn Resorts Ltd. and Caesars Entertainment Inc. — person indicated they person nary plans to bid connected Chicago.

Some analysts surmised that Caesars wouldn’t beryllium successful the hunt due to the fact that it already has properties it either owns oregon leases successful Elgin, Joliet and Metropolis successful Illinois and successful Anderson, Shelbyville, Elizabeth and Hammond successful Indiana.

There’s besides much contention connected the horizon. The metropolis of Waukegan, Illinois, immoderate 35 miles from downtown Chicago, is considering bids for its ain casino, acknowledgment to gaming enlargement authorities approved successful 2019.

The Waukegan competitors see North Point Casino, a radical assembled by erstwhile Illinois authorities Sen. Michael Bond, CEO of Tap Room Gaming, teaming with Warner Gaming, a onetime relation of the Hard Rock Hotel hotel-casino successful Las Vegas; Midwest Gaming & Entertainment of Des Plaines, Iowa; and Las Vegas-based Full House Resorts, which operates properties successful agrarian Nevada and successful Cripple Creek, Colorado, and is headed by CEO Dan Lee.

Big taxation rate

The biggest contented for Las Vegas operators looking astatine Chicago is the taxation complaint Illinois would enforce connected gross gaming gross from the Chicago edifice — 40 percent. By comparison, the maximum complaint successful Nevada is 6.75 percent

MGM, Sands and Wynn tolerate the astir 39 percent taxation complaint successful Macao due to the fact that the measurement is truthful great.

At 1 time, Illinois floated a taxation complaint of astir 70 percent, but gaming companies persuaded the Illinois Legislature to modify that.

“They’ve adjusted the taxation complaint truthful it’s much manageable due to the fact that erstwhile they archetypal passed this successful 2019 it was a implicit nonstarter with a taxation complaint fundamentally totaling 70 percent,” said Brendan Bussmann, manager of authorities affairs for Las Vegas-based Global Market Advisors. “So you’ve made the taxation complaint chokeable, but that’s it. It’s chokeable. You conscionable can’t run array games astatine a 40 percent taxation rate, it doesn’t marque sense.”

With the precocious taxation rate, Chicago has a precocious level of concern required for the project. The metropolis is decidedly looking for a showcase resort with normal amenities and high-profile restaurants.

Those factors combined look to beryllium keeping Las Vegas companies away.

“It’s a marketplace with a batch of uncertainty for what merchandise is going to beryllium to the northbound and southbound of you,” Bussmann said. “A precocious taxation complaint and a precocious threshold for concern makes it truly hard to person immoderate large relation funny due to the fact that they privation to maximize resources for their investors and their shareholders.

“Chicago would beryllium a large spot for a casino,” Bussman added, “if you could set immoderate of those factors.”

Another adjustment?

But would Chicago marque adjustments again? Bussmann doesn’t deliberation so.

“It’ll ne'er hap successful Illinois due to the fact that Illinois is 1 of those states that a batch of their gaming authorities is driven by however we capable the budget, not what’s champion for the market,” helium said.

There are different companies, including immoderate successful Las Vegas, that could beryllium interested, particularly if they cognize they won’t beryllium competing with MGM, Sands, Wynn and Caesars.

The Seminole Tribe’s Hard Rock International successful Florida could bid. So could Las Vegas-based Boyd Gaming Corp.; fast-growing Bally’s Corp., which precocious announced it is buying the Tropicana successful Las Vegas; Malaysia’s Genting Group, which opened Resorts World Las Vegas successful June; Mohegan Gaming and Entertainment, which operates the casino astatine Virgin Hotels Las Vegas; Tilman Fertitta’s Landry’s Inc., which owns a concatenation of Golden Nugget casinos nationwide; and the Chicago hometown favorite, Rush Street Gaming.

Lightfoot insisted that Rush Street “won’t person a home-court advantage” erstwhile it comes clip to determine who gets the contract.

The Review-Journal is owned by the household of Dr. Miriam Adelson, the bulk shareholder of Las Vegas Sands Corp.

Contact Richard N. Velotta astatine rvelotta@reviewjournal.com oregon 702-477-3893. Follow @RickVelotta connected Twitter.