Chicago’s play for a casino authorized by a new state law may be a bust because of its onerous tax and fee setup.
Legislation signed into law in June by Illinois Gov. J.B. Pritzker (D) authorized a Chicago casino, which was sought by local officials hoping to shore up the Windy City’s pension funds.
But a feasibility study commissioned and released this week by the Illinois Gaming Board concluded the law’s tax and fee structure was so onerous that the project is “generally not financially feasible,” because private investors and casino operators wouldn’t be able to make enough money. The study was done for the gaming board by Union Gaming Analytics.
The law would require a $250,000 fee just to apply to be the operator and a $15 million fee when issued a license. The city would get one-third of post-payout revenue from the casino for Chicago’s beleaguered police and firefighter pension funds, which the report notes would create an effective tax rate of 78 percent. A casino operator would be looking at returns of “a few pennies on the dollar,” the report said. Chicago police pensions were 23.8 percent funded last year; firefighter pensions were just 18.4 percent funded.
Chicago Mayor Lori Lightfoot, a supporter of the casino, said she wasn’t surprised at all by the findings – and had pushed for the independent study believing it would back up what experts had warned as the law was being crafted.
“These were issues that we flagged during the (legislative) process,” Lightfoot said. “You don’t need to look further than page four to see that it is not financeable.”
Lightfoot has called for the law to be changed to make the project more attractive to private investors.
“We have to get the tax structure right because otherwise we’re talking about something that can’t be done,” Lightfoot said. “We look forward to rolling up our sleeves with the governor and legislative leaders and work on a bill that gets it right.”
Officials in Pritzker’s office also have said they’re interested in trying to tweak the law to make a Chicago casino more attractive to investors. (CURBED CHICAGO, REUTERS, ASSOCIATED PRESS, NBC CHICAGO)