Chicago casino feasibility study finds 'onerous' tax structure would impede profits

CHICAGO (WLS) -- A study on where to build a new Chicago casino determined that none of the five locations under consideration would be financially feasible because of high taxes and fees.

Mayor Lori Lightfoot said she was not surprised by the study. She previously raised one of the very concerns cited in the report. Now she says she'll work with the governor and lawmakers to make things right and make a Chicago casino a reality.

Casino gambling in Chicago was authorized this year by the General Assembly. Under the law, a Chicago casino operator would have to pay a $250,000 application fee upfront, a $15 million "reconciliation" fee when the license is issued and up to $120 million in gambling position fees.

A Chicago casino has the potential to be the highest-grossing casino in the state, according to the feasibility study. But the current onerous tax structure, particularly the 33 percent privilege tax enacted by the General Assembly, will make it nearly impossible for any of the current proposed sites to turn a profit.

"First and foremost, we've got to get this tax structure right because otherwise we're talking about something that can't be done," Lightfoot said.

Lightfoot requested that five sites be evaluated, one on the West Side and four on the South Side.

The report listed the old Michael Reese Hospital site as having the highest potential revenue, but it would only turn about a three percent profit, which is well below the average 23 percent profit margin of other casinos in the region.

"I think they listened, but I think that they had to be shown what we were saying and I think that the truth is abundantly clear now," Lightfoot said.

But state Senator Terry Link, the gaming bill's chief sponsor, said another feasibility study should be done with locations that might actually be viable before Lightfoot asks legislators to rewrite the bill.

Governor JB Pritzker has pledged to work with the mayor and lawmakers to get things done.

"I'm very confident we'll get there," Pritzker said. "I think everyone has the right mindset about it and all of us want the city and the state as well as the jobs that will come with the casino. We all want it to succeed."

The Illinois Gaming Board now has 90 days to make recommendations on what to do next.

The mayor's office also released the results of a community input survey on Tuesday. The 10,000 responses indicated that downtown was the most favored location for a casino, but increased traffic and congestion were big concerns.
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