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BY DAVID BERNSTEIN | Wednesday, December 25, 2002 | (No comments posted.)
Medill News Service
CHICAGO -- When Mayor Richard M. Daley said recently that he is rethinking his opposition to casino gambling in Chicago, he reshuffled the deck and upped the ante in the high-stakes political game that may determine the future of gambling in Illinois.
Daley said in October that he was "in the thinking stages" about casino gambling to help solve the city's looming budget crisis, but only if the city of Chicago or the state of Illinois could own the license.
The mayor's announcement surprised many who follow the unfolding Illinois casino situation, coming only three months after he declared that casino gambling is "not the right thing to do" for Chicago.
After years of going back and forth on the issue of casino gaming, Daley is now looking at the lucrative industry to solve the Chicago's looming budget crisis and avoid raising taxes. The city is $116 million in the red, and City Hall has been forced to lay off hundreds of employees and eliminate 1,000 vacant positions.
The mayor would also like to boost the city's ailing convention, tourism and hospitality industries, still struggling since the terrorist attacks of Sept. 11 of last year. A "mega-casino" -- one with many more gambling positions than the 1,200 positions now allowed by state law -- could potentially bring in tens of millions of dollars annually to the city's treasury.
But, while the mayor is talking publicly about bringing a land-based casino to Chicago, he is also wearing his poker face -- not revealing anything specific about what kind of plans are in the cards.
"I mentioned it. I didn't mention that we want one. I didn't mention a location or anything like that," Daley said at an October news conference. "I have not talked to anyone. I have not talked to anybody on my staff. I just said, 'I think it's a good concept, and I think the state should look at it.' "
Under the concept that Daley said is only in the exploratory process, casino licenses would be government-owned, not privately owned, to ensure that taxpayers receive the majority of the gambling profits. Such a model is based on the existing city-province ownership arrangement in Canada and would be the first-of-its-kind in Illinois, let alone in the United Sates. "It's very successful outside of Detroit in Ontario (Canada)," Daley said.
"Why is it you're giving the licenses out to for-profit organizations?" he asked. "You're giving the money away to somebody else. It's as simple as that, and that's ridiculous. I believe the money belongs to the public."
The mayor also said he will not seek the state's up-for-grabs 10th license, which once belonged to the now-defunct Emerald Casino. The 10th license had been headed to suburban Rosemont until July when the Illinois Gaming Board voted to sell off Emerald's license -- before it ever opened -- because of allegations of wrongdoing.
"Whether we have one in Chicago or not, I believe government should own the license," Daley said. "They should get 100 percent return on their profits."
Daley has refused to say where he would locate a Chicago land-based casino, although speculation has centered on a South Loop location near McCormick Place because of its easy access to convention visitors and tourists. Whether such a location would pull patrons from suburban and Indiana casinos is debatable.
The mayor's caginess on his casino plans has been a hot topic among casino insiders and in the nine communities that have existing riverboat casinos, including those in neighboring Northwest Indiana.
Ironically, the strongest roadblock to Daley's casino plans could come from gambling supporters -- those representing the casino industry and the slew of suburban mayors and state legislators whose communities currently benefit from casino tax revenue.
"We're not sure exactly what he wants to do," said Thomas Swoik, executive director of the Illinois Casino Gaming Association, which represents the state's riverboat casinos. "It makes everybody nervous when Mayor Daley says things that would have that type of impact on the industry."
The village of Rosemont, located only 17 miles from downtown Chicago, might have the most to lose from a new Chicago casino. Rosemont no longer has the inside track on the state's only unused license, even though the village and Emerald Casino investors have spent about $70 million on the project. A partially built structure with a $45 million parking garage on the casino site is already in place, along with the infrastructure to link it to O'Hare International Airport.
Gary Mack, a consultant to the village of Rosemont, said the community still wants a casino. The issue of Emerald's coveted license is currently being settled in bankruptcy court, and Mack said he expects a ruling sometime in December.
In the meantime, Mack contended that Daley's recent change of heart on a Chicago casino would not deter Rosemont from finishing its casino project -- that is, if the bankruptcy judge rules in its favor.
"Rosemont complements McCormick Place," Mack said. "The big fallacy ... is that a Chicago casino hurts other casinos. The Rosemont Convention Center does not compete with McCormick Place right now. We're drawing different groups of people."
Gene O'Shea, a spokesman for the Illinois Gaming Board, declined to comment directly on Daley's proposal. "We're just the regulators," he said. "It's up to the legislature."
But O'Shea said for Daley's plan to be implemented, the Illinois General Assembly would have to radically amend the state's gambling laws in at least three ways: one, allow a municipality to own and operate a casino; two, expand the number of gaming positions authorized at each casino, currently set at 1,200; and three, add an 11th license to the state's current limit of 10.
Even opponents to a Chicago casino said they would not bet against Daley winning approval in Springfield. After the Democratic sweep of the governorship and the Illinois House and Senate in the November elections -- and with the state desperately needing new revenue to close its $2.5 billion deficit -- Daley will have a more favorable political environment in which to roll the dice.
Gov.-elect Rod Blagojevich recently backpedaled on his campaign pledge to resist expanding Illinois casino gambling. "I'm against the expansion of gambling," Blagojevich said at a November news conference in Chicago. "But I am interested in creative ways to enhance revenues that are not tax increases. So I think we have to explore all kinds of options."
Illinois gambling interests are already lobbying to get the General Assembly to make significant reforms to the state's casino gambling laws, including removing the statutory limits on the number of gaming tables and games and lowering the gambling taxes, currently at about 50 percent, the highest in the nation. Changing the law to allow a land-based mega-casino near downtown Chicago could be part of the larger gambling overhaul effort if Daley puts his full weight behind his project.
The mayor has other allies he can turn to, including his friend Elzie Higginbottom, chairman of the Illinois Gaming Board, and aldermen William Beavers (7th), Bernard Stone (50th) and Burton F. Natarus (42nd), key members of the City Council who months ago urged the mayor to enter the bidding war for the Emerald casino license.
Although many of the moral concerns of lawmakers about gambling have been trumped by the potential revenue windfalls from casino gaming, strong opposition will likely come from predictable sides, including religious and community groups concerned about the negative social side effects of casinos: gambling addiction and organized crime.
Casino gambling has been a pot of gold for states and local communities all across the country. In Illinois, riverboat casinos have generated billions in tax revenue for the state and local governments, according to the Illinois Casino Gaming Association.
In 2002 alone, the ICGA estimated state and municipalities will realize more than $700 million from riverboat gambling tax revenues, about $550 million of which will be applied to the state's Education Assistance Fund. The industry also employs more than 11,000 people, with a total payroll of $327 million.
In addition to tax revenues, jobs and other capital investments, Swoik claimed the state's casinos generated roughly $185 million worth of business last year for Illinois companies, mainly in goods and services to the industry.
Casino gambling is also big business in the United States. Naomi Greer, a spokeswoman for the American Gaming Association, the national trade association that represents the gambling interests, said the U.S. casino industry is growing substantially, despite the sluggish national economy. Greer said the industry's overall revenue grew last year by an average of 5 percent in the roughly 400 casinos in 11 states across the country.
William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno, said the casino industry in Illinois still has a lot of room to grow because demand for gambling exceeds supply, due to the state's statutory limits on gaming positions.
"The (Illinois) Riverboat Gaming Act is a foolish law," Eadington said. "It has created an undersupply very similar to taxi licenses in New York City."
Maybe that is why officials from the state's nine casino operators -- even from the four Chicago area casino operators in Elgin, Aurora and the two in Joliet -- and the Northwest Indiana riverboats are downplaying the impact a Chicago casino would have on their businesses.
According to one published report, an official at Trump Casino in Gary admitted that insiders are watching the casino situation in Chicago very cautiously.
Daley's words also sent shockwaves across the country to the gambling capital of the United States: Las Vegas. Only days after his announcement, an article in the Las Vegas Review-Journal speculated that Chicago was "fast-tracking legislation to legalize casino gambling" and the Windy City could eventually be a competitive threat to Las Vegas.
But before Chicago becomes the Las Vegas of the Midwest, the mayor has to make up his mind whether to put his chips on the table.
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