No, Rockford did not steal Hard Rock Casino from Chicago.
In this article, you will learn about:
1. Bally’s in Casino chosen by Chicago City government
2. Casinos in Illinois
3. Legislation in Chicago on Casino Revenues
4. Reasons behind Chicago awarding Bally’s with the casino project
5. Controversies with the Bally’s in Chicago casino
6. Hard Rock Casino in Rockford
Casinos are lucrative revenue generators. And with Chicago’s severe budget problems, former Chicago City mayors pushed for a casino to operate in the city. And in May 2022, Lightfoot chose Bally’s over Hard Rock. In 2021, Rockford opened its doors to a Hard Rock casino which has generated millions of dollars in revenue since then.
Chicago City Council chose Bally's
Let’s set things straight here: The Chicago City Council, under the then Mayor Lori Lightfoot, picked Bally’s $1.7 billion proposal for a casino at the River West. Lightfoot said that the company’s proposal fits what exactly the project aims to achieve. And her administration wanted to incorporate Bally's $40 million upfront payment to the city in the Fiscal Year 2023 budget.
To understand the casino situation further, we need to look under the lens of the Ilinois casino industry.
Existing Casinos in Illinois
After Nevada, Illinois became the second state in the country to authorize riverboat gambling in February 1990 after the Riverboat Gambling Act was passed. The first riverboat casino opened for business in Alton in September 1991. There are currently ten riverboat casinos in the state.
Currently, there are several casinos operating in Illinois. These include Argosy Casino Alton, Casino Queen and Hotel, Grand Victoria Casino Elgin, Hannah’s Joliet Casino and Hotel, Hollywood Casino Aurora, Hollywood Casino Joliet, Jumer’s Casino and Hotel, River’s Casino, Par-A-Dice Hotel Casino, and Harrah’s Metropolis Casino.
There are 25 casinos and pari-mutuel facilities operating in Illinois, which are dispersed over 21 cities.
And in Chicago city officials’ search for a casino to operate directly in the city itself, they have made legislative changes.
Legislative Changes for Chicago Casino Tax Rate and Fee Payments
The Illinois legislature passed Public Act 101-06481, which, among other gambling-related items, provided a fix to last year's gaming expansion bill that established an incredibly onerous gaming revenue tax on the casino license intended for the City of Chicago, according to Union Gaming White Paper.
The AGR2 tax has been reorganized by Public Act 101-0648 to make it far more appealing to potential developers. The effective tax rate on AGR should be approximately 40%, or lower, as detailed here, based on an AGR mix that, although still slot-centric, has a higher amount of table games income than the peers.
The Chicago casino will be responsible for up to $120 million in upfront per-position payments given that it is qualified for up to 4,000 positions. The reconciliation fee is then determined after the first three years of operations as follows: 75% of the highest AGR for any given rolling 12-month period, less any upfront fees paid. According to the 2019 legislation's initial plans, the Chicago casino license would be subject to the same progressive tax rates as all other casino license holders, as well as an additional 33.3 percent tax on any AGR that was exclusive to the city of Chicago.
Why did the Chicago City Government want a casino in the city?
Chicago city officials wanted a city-based casino for two main reasons: 1) to solve the budget issues of the city government; and 2) to make Chicago a gaming destination.
To stem the gap in the city budget
City authorities said that Lightfoot's selection was a good idea, as it asserted that the procedure was in fact thorough and that it needed to go forward right now in order to support government finances. The $40 million upfront payment from Bally's, according to the city's CFO Jennie Huang Bennett, was required as quickly as possible to close a potential budget gap.
According to estimations by Huang Bennett, Chicago loses around $331 million in revenue to Indiana for each year that a casino is closed. An opportunity that the city should not pass on. To fill the gaps in its public pension funds, the city is counting on the future casino's anticipated $200 million in yearly tax revenue.
Make Chicago a gaming destination
Apart from the fact that such a project will be able to help the government’s budget, this also opens a door for Chicago as a gaming destination. Once the city gets that title, tourists and investors will crowd the city to have a taste of Chicago nights.
Why is the Chicago casino controversial?
Critics say that the approval process was too rushed
Many aldermen who participated during the voting believed that the decision to push through with casinos in the city was too rushed. According to some, the budget could have been used for other matters and not only on casinos. More pressing issues deserve an allotment of the budget rather than casinos. Furthermore, many people are against it but the majority are just keeping their mouth zipped.
Oversaturation in the casino industry
Over the past few decades, the commercial casino business has experienced enormous expansion. Licensed casinos have grown into new markets and produced revenue records. The entire market size for casinos and internet gambling in the world in 2021 was 231 billion US dollars.
According to Hsu in 2006, the number of casinos and their capabilities have rapidly increased throughout the Asia-Pacific area, notably in Australia, New Zealand, South Korea, Cambodia, Myanmar, the Philippines, Macau, and Singapore.
Casino revenue isn't enough to address the city's pension debt
Only the police and fire pensioners will receive money from the new casino. The city will have 9% more than previously, but nothing will be done to address the remaining 91 percent of unfunded pension obligations.
Illinois gambling revenue has historically fallen short of expectations
2nd Ward Alderman Brian Hopkins abstained because he was concerned that the estimate would leave Chicago short on funds. 13,000 gamblers would need to place bets of $1,500 each day for a full year in order to reach the $200 million prediction. Even if there are many residents and visitors in Chicago, this is by no means a guarantee.
Crime could increase, especially gambling addictions
In every gambling, pressing issues such as violence and crime are expected to happen, especially in casinos, money is greatly involved. With the rising number of casinos in the city, the community worries about the probable rise of crime in the city.
Traffic and congestion could worsen
Traffic might also worsen given the probability of having several people driving towards the casino, not only Chicagoans, but also tourists and citizens from nearby states. This might cause congestion and traffic would definitely be an issue, especially in the night.
Did Rockford steal Hard Rock Casino from Chicago?
No, because the Chicago City Council chose Bally's. And this destroys the idea of Rockford stealing Hard Rock Casino from Chicago.
Unlike in Chicago, Rockford City officials and residents fully welcomed Hard Rock Casino. Rockford, as a community, found the HardRock casino a huge positive. Rockford citizens wanted a casino for 30 years and most people who wanted to gamble previously went to Indiana, Wisconsin, and Iowa. The Hard Rock Casino enjoys unwavering support from Rockford leaders and members of the community.
In October 2019, Rockford city leaders approved Hard Rock’s casino plan. And in June 2020, the IGB greenlit the Hard Rock: An Opening Act. This has over 37,000 square feet of gaming space offering Interblock Electronic Games, two restaurants, and a pop-up retail shop. And Hard Rock will open a sportsbook venue and pit with 6 new games here, as requested by customers for large sporting events like the NFL's Super Bowl.
During the opening ceremony in November 2021, Mayor McNamara said: "When you look at this amazing development, you hired local Rockfordians, you followed through, you used local contractors, local minority contractors and you did it so well, I just want to say thank you to your commitment to our community”.
And Hard Rock Casino has borne a lot of fruits. Hard Rock has raked in more than $30 million since it opened in November 2021. And it has also generated about $1.8 million for local governments, according to revenue reports from the Illinois Gaming Board. Hard Rock Casino also increased its employee wages for half of its U.S. workforce, including Rockford - using more than $100 million to raise wages for non-tipped workers.
Rockford gets 70% of the local share which it is dedicating to $1.5 million a year in Rockford Promise Northern Illinois University scholarships. Now hundreds of youth are going to NIU free of charge., mostly first-generation college students.
And the Coronado Performing Arts Center in Rockford, in partnership with Hard Rock Casino, has restored its opera box for Hard Rock Casino VIP members. Hard Rock Casino paid for the new handrails and relocated stairs for more accessible use.
Hard Rock Casino broke ground on its full casino Sep 28, 2022. And it will open to the public at approximately 3:00 p.m on Thursday, August 29, 2024.
The new casino, located immediately off the I-90 State Street exit at 7801 E. State Street in Rockford, boasts more than 175,000 square feet of gaming, entertainment, and hospitality space, featuring a diverse array of attractions including nearly 1,300 slot machines, 50 live table games including a poker room, a state-of-the-art sportsbook, six unique restaurants, and a Rock Shop offering authentic Hard Rock merchandise and more.
Conclusion
Rockford’s success with the Hard Rock casino stems mostly from the rigorous process wherein the government took its time to assess and evaluate the casino proposals. This led them to choose a successful company that generated high revenue and contributed a lot to the Rockford community.
For news and exclusive tips about investing in Chicagoland real estate, subscribe to our newsletter here!
