Illinois House clears Chicago casino measure in waning hours of special session

Saturday 23rd May 2020

With major budget bills still pending, the Illinois House on Saturday passed a measure that would change the tax structure to allow for a Chicago casino that legislators hope will pump revenue toward the state's capital projects and the city's desperately underfunded police and fire pensions.

The measure cleared 77-32 with some bipartisan support. It must still clear the Illinois Senate.

There were several amendments flying around Saturday morning, but ultimately, bill sponsor state Rep. Bob Rita, D-Blue Island, was able to round up enough support. The measure was pushed by Mayor Lori Lightfoot, who has called it essential to helping the pension funds.

Rita credited Lightfoot's "tenacity" in pushing for the measure, in his closing remarks.

The measure restructures the Chicago casino tax rate structure that a feasibility study last year called "onerous. It also changes the reconciliation fee payments for all casinos from two years to six years, and it allows for new gaming applications to have more time to pay licenses if the Illinois Gaming Board grants them. That would be switched from July 2020 to July 2021. The delay is intended to help casinos that are currently closed due to the pandemic.

"By moving this up, this could be helpful to them and the people they employ," Rita said. "We still don't know what that looks like. When they will be reopened and how they will be able to reopen, whether it will be able to fill the blackjack table with six players or three or with social distancing. There's going to have to be changes in how they operate. This just moves that date forward for them, which will be able to help them help their employees and help these areas where these current casinos are at."

The legislation also included a technical changes for the Danville casino, and it addresses a procurement issue for video poker machines at the Illinois State Fair in Springfield and the DuQuoin State Fair.

State Rep, Keith Wheeler, R-Oswego, called it a "major accomplishment" for lawmakers to pass two major gaming measures within a year.

"This piece of legislation is vitally important for several reasons, the least of which is the Chicago casino is a tremendously important part for this entire state, when it comes to our capital bill that many of us supported last year," Wheeler said. "Districts across the state will be benefitting from the dollars that will come out of the gaming expansion that we have in Illinois and a very major part of that is the Chicago casino and I recognize that as someone who's a downstater of the importance of the Chicago casino moving forward."

After a Chicago casino that eluded previous mayors became a reality last spring, Lightfoot said she knew the hefty tax structure baked into the state's massive gambling expansion would be a non-starter for any potential gaming developers to break ground in the city.

An independent consultant said as much in a feasibility study released last summer that called the 72% effective tax rate on a potential 4,000-position Chicago mega-casino too "onerous" for anyone to turn a profit -- even if it could rake in upwards of $1 billion annually.

The legislation currently in place taxes the Chicago casino along the same graduated system as Illinois' 10 existing casinos, while slapping on an additional 33.3% privilege tax to locate in the city.

Lightfoot's office pushed a revised gaming bill last fall that failed for the same reasons so many other gaming bills have: some legislators seeking a cut of the pie for their own districts -- and others disdainful of what they perceived as a special deal for Chicago.

But the mayor's team returned to Springfield this time around with a largely similar plan, including a new graduated tax system specific to the Chicago casino with a higher overall tax rate compared to existing casinos, but with a smaller percentage going to the state and a relatively bigger chunk earmarked for the city.