The mayor’s office in Chicago released a summary of feedback from 11 respondents Wednesday from its Request For Information as the city continues to explore the feasibility of building a casino in the downtown area.
The downtown area was one of six sites permitted to host a casino as part of a bill Illinois Gov. JB Pritzker signed that expanded gaming and legalized sports betting. The state has 10 casinos overall, with Rivers Casino in Des Plaines — just outside the city limits and near O’Hare International Airport — as the closest Illinois-based casino to the downtown area.
“The many perspectives and insights captured in this RFI are indicative of the excitement and anticipation of this once in a lifetime project,” Chicago Mayor Lori Lightfoot said in a statement. “Thanks to the responses of nearly a dozen RFI respondents, we are not only one step closer to bringing the long-awaited Chicago casino to life, but have the critical information we need to ensure this project will be a success.”
There are also two casinos within an hour’s drive of Chicago in neighboring Indiana: Ameristar Casino in East Chicago and Horseshoe Hammond. Those two venues combined to generate nearly $56 million in drop for table games and just shy of $359 million in electronic gaming devices in October, according to the Indiana Gaming Commission, highlighting the urgency of opening a casino downtown to capture gaming revenue and tax receipts that could stay in state.
Not everyone enamored with downtown casino
The 11 respondents that provided feedback from the RFI released in August came from multiple categories. Four were casino operators, including Rush Street Gaming (part-owner of Rivers Casino), Hard Rock International, MGM Resorts International, and Wynn Resorts. Four real estate developers responded — D3 Realty, Development Management Associates, JDL, and R2 — as did one casino financier (MGM Growth Properties), one casino feasibility consultant (Christiansen Capital Advisors), and one neighborhood group (Chicago Neighborhood Initiatives).
Hard Rock International, which has submitted an application to the Illinois Gaming Board to build a casino in Rockford, Ill., also has broken ground on a casino in Gary, part of Northwest Indiana where Ameristar and Horseshoe are located.
Of the nine respondents who answered the question of where the permanent location of the casino should be located, eight believe it should be downtown or near downtown. The ninth felt it should be located in the Southeast Side Lake Calumet Area by the Harborside International Golf Center — which was one of five locations Mayor Lightfoot publicly mentioned as possible locations in July 2019 shortly after gaming expansion passed.
Christiansen Capital Advisors and MGM Growth Properties opted not to provide feedback on the question. The pair did not offer thoughts on the possibility of operating a temporary casino, which had six respondents in favor and three opposed. One of the four casino operators was not in favor of such a move, along with one real estate developer and Chicago Neighborhood Initiatives. Those groups cited additional costs, taking away from the permanent facility, and adding confusion to the marketplace as reasons not to have one.
Of the six parties in favor of a temporary casino, they were unanimous in wanting it to be located downtown, at a location other than where the permanent site would be, and re-purposing an existing structure to do so. One real estate developer suggested using Navy Pier, a popular tourist attraction that is currently closed due to the COVID-19 pandemic, as the location for the temporary casino.
There was a mixed response among four respondents for who should be choosing the eventual site of the casino. One felt the city should pick the location, one felt the casino operator should get to choose, and two felt there should be a collaborative effort that includes flexibility for both parties. The respondent that felt the city should pick the locale pointed out the importance of site control “to reduce land speculation and massive price increases.”
Go big or go home
The respondents were also in agreement that the casino floor, which includes the gaming area and surrounding amenities, needs to be significantly large and confined to a single floor — they noted vertical casino construction both increases costs and has a negative impact on gaming revenue. The suggested sizes ranged from 100,000 to 200,000 square feet.
They also stressed the importance of a variety of dining options on the casino floor. Respondents who provided a number of options suggested anywhere from six to 20, while others felt floors should have the capacity to seat 1,000 people. All respondents added that a downtown casino should leverage local culinary talent.
For perspective, Rivers Casino is 140,000 square feet with nearly 44,000 square feet devoted to gaming and 30,000 square feet for dining and entertainment venues. It is the second-largest casino in Illinois when it comes to gaming area, but its proximity to downtown helps make it the highest handle and revenue generator in the state.
Rivers generated $30.1 million in drop and EGD adjusted gross revenue in October while operating at 25% capacity per COVID-19 protocols established by the Illinois Gaming Board. That accounted for 38% of the overall AGR for the 10 casinos, and the $8 million in resulting taxes was nearly half the state’s collection of $16.6 million.
In the last detailed report released by the IGC prior to the COVID-19 pandemic, Rivers generated $1,686.60 of AGR per square foot in February, a figure three times higher than seven of the other nine casinos in the state. Its $73.6 million AGR that month was also three times higher than eight of the nine venues despite being one of six with at least 39,000 square feet of gaming space.
The four casino operators suggested the minimum overall size for an urban casino should be 10 acres, with one calling for a building site of 25 acres. A third felt a 15-acre site could accommodate a 350,000-square-foot footprint.
What the city needs to do
Transparency was a common theme among the respondents when it comes to the city’s duties and responsibilities for the eventual Request for Proposal (RFP). They want an open and fair process that also clearly defines operator expectations with criteria available to all participants. Two aspects included stating the RFP should “require the operator to provide evidence of its community engagment/support” and stressing the importance of local community bond-building through hiring and procurement of goods and supplies.
It also stressed for the city and state to provide assurances of a “consistent landscape” when it comes to ordinances and gambling-related legislation. Lightfoot took a huge step forward in that area in May when she helped revise the tax rates for a potential downtown casino as part of the $40 billion budget state lawmakers passed for the fiscal year that started July 1.
Respondents are also hoping for deadline flexibility with the RFP as they navigate the ongoing effects of the COVID-19 pandemic. They estimated a construction timeline for a temporary facility would be 12 months, while construction of a permanent facility would range from 24 to 36 months.