Mayor Lori Lightfoot has signaled that Springfield lawmakers may have to go back to the drawing board on a Chicago casino after a consultant’s report concluded that none of the five sites the city put forward would be financially viable.
According to the report by Las Vegas-based Union Analytics Gaming, the proposed tax structure crafted by lawmakers in Springfield is too “onerous” for potential casino operators, who would pay rates as high as 72% of gross revenues.
But Michael Wenz, an economics professor at Northeastern Illinois University questions why Union Analytics is trying to evaluate the potential profitability of casinos at the five sites.
“The financiers, banks and developers will ultimately have a say in whether or not they think they can make a go of the project.” said Wenz. “When it comes to feasibility it makes more sense to look at: does the site have enough infrastructure? Does it have the right labor market? Can it be successful from the point of view of a community rather than from the point of view of a developer? I’m not sure what a consultant has to add vis-à-vis someone who has skin in the game. If they open up the bidding (for a casino license) and nobody shows up then I suppose you can agree with the conclusions of the report.”
According to Wenz, there are two reasons why a city might want to build a casino: tax revenue and economic development. And the decision on where a casino should be located is going to depend on how you prioritize one over the other.
Wenz said that the sites that were evaluated in the report were primarily chosen because they are all located outside of the downtown area and could benefit from job creation and new economic activity.
“If you want to do something that will create the most tax revenue then put it downtown. Put it at Navy Pier. I don’t suggest that this is a good idea, it’s just those would be the places that would generate the most tax revenue,” said Wenz. “But there’s a trade-off and from a public policy standpoint, from a taxpayer standpoint, we should care about the economic development part rather than simply asking the isolated question of is the casino going to be successful? Downtown doesn’t need a new business generating engine, Lawndale might.”
Wenz added that in the rush to bring in new revenue, Chicagoans should not lose sight of the fact that a new casino will also have negative consequences for some.
“Wherever you put a casino it is going to take some dollars out of the hands of vulnerable people,” said Wenz. “Increased availability of gambling does create more pathological and problem gambling. So the gain in terms of bringing more money into public finances has to be at least somewhat set-off against the social harms and social consequence.”
Wenz joins us in discussion, along with Assistant Majority Leader in the Senate, state Sen. Terry Link; and Ald. Gilbert Villegas, 36th Ward, who is Lightfoot’s floor leader in the City Council.