Chicago’s struggles to find a casino for its proposed $1bn downtown resort have intensified after the city extended its deadline for bids in the hope of attracting offers from iconic Las Vegas companies.
The city of Chicago opened up bids for a development project back in April that would see a casino and resort complex hit the downtown area. Chicago is trying to raise funds to ease its pension obligations and city chiefs were hoping the tender would prove greatly attractive to well-established casino brands in Nevada.
However, a disappointing uptake in interested bidders has meant Chicago has now pushed back its original deadline – set for August 23 – to October 29.
As recently as July GambleOnline reported that no-one had come forward with a bid to build the Chicago casino complex, despite exploratory work being carried out on five possible downtown sites.
One of the big issues hanging over the project is the $1bn cost for a relatively small casino. When the city announced its application process this spring, potential developers weren’t exactly overawed by the stipulations that included one casino floor, just 500 hotel rooms, restaurants and bars.
In comparison, Resorts World in Las Vegas opened this summer with 3,500 hotel rooms across an 88-acre site, with a casino floor longer than two football fields and scores of entertainment options.
Are Chicago Taxes Too High?
Yet a relatively small size for the high cost of investment is not the only thing deterring bidders for the Chicago casino. According to Brendan Bussmann, director of government affairs for Las Vegas-based Global Market Advisors, Chicago’s 40% casino tax rate is the big sting for potential suitors.
Nevada, in comparison, has a maximum tax rate of 6.75%.
“They’ve adjusted the tax rate so it’s more manageable because when they first passed this in 2019 it was a complete nonstarter with a tax rate basically totaling 70 percent,” Bussmann told the Las Vegas Review Journal. “So you’ve made the tax rate chokeable, but that’s it. It’s chokeable. You just can’t operate table games at a 40 percent tax rate, it doesn’t make sense.
“It’s a market with a lot of uncertainty for what product is going to be to the north and south of you. A high tax rate and a high threshold for investment makes it really difficult to have any major operator interested because they want to maximize resources for their investors and their shareholders.
“Chicago would be a great place for a casino… if you could adjust some of those factors.”
According to Bussman, a casino in downtown Chicago operated by one of the big players in the US gambling sector is unlikely. That’s because Chicago draws up gambling legislation to “fill the budget”, rather than focusing on what’s best for the market.
Which Casino Could Bid For Chicago Resort?
Despite the high tax rate, there may be some casinos willing to enter the market if they feel they can secure a return for investors.
These potential investors include:
- The Seminole Tribe’s Hard Rock International
- Genting Group in Malaysia
- Mohegan Gaming and Entertainment
- Landry’s Inc
- Rush Street Gaming
- Boyd Gaming Corp
- Bally’s Corp
Of these, Rush Street Gaming could well produce an enticing bid as it is already part of the Chicago landscape. However, at this stage there really is no knowing which way city chiefs will turn, especially if they cannot attract the calibre of casino they thought was guaranteed to be interested in this project.
