Daley's Casino Royale
By Doug Dobmeyer
Editor's Note: Doug Dobmeyer is the spokesperson for the Task Force to Oppose Gambling in Chicago. He sent this along this morning.
House Hearing on a Chicago Casino
(October 18, 2007, Chicago, IL . . . ) The House Gaming Committee held a six-and-a-half hour hearing on a proposed Chicago casino.
Paul Volpe, Chicago's Chief Financial Officer, pled the case for Mayor Daley. Volpe claimed that thousands of jobs would be created (1,800 construction and 1,900 casino jobs) in addition to 6,700 jobs at the services that work with the casino. Volpe made it sound fantastic. He did not tell how many of the construction and non-casino jobs would exist anyway.
Volpe asserted the city would only take on a casino if it was "profitable." The meaning of profitable remained undisclosed all day. He did state that the estimated $800 million license fee would not make the venture profitable. Later he stated that even one dollar was too much. That extreme statement left people feeling Chicago was being arrogant. Later it was thought a private operator might pay $ 2 billion for a license to operate a Chicago casino.
Volpe also said the 50 percent tax was not feasible for Chicago to make a profit. (This is the level of taxation when the adjusted gross revenues exceed $200 million) When asked what level of AGR would be needed, Volpe left people gasping. He claimed a Chicago casino would yield one billion a year in AGR. This would be a very tall order.
Illinois in 2005 with nine riverboats yielded $1.7 billion in AGR. By 2006 that number climbed to $1.9 billion. Riverboats varied between $39 million in Rock Island and $430 million in Elgin. Chicago is slotted for 4,000 gambling positions (slot machines or spaces at card games such as 21).
Volpe once again stated that Chicago would only have a world-class casino. Later in news media interviews he stated that Chicago is now a world-class city. One pitch point of the Daley Administration is a casino will make Chicago a world-class city. It is unclear how much more of a world-class city Chicago wants to be.
The issue of eminent domain came up. Eminent domain exists to allow government to acquire property for the common good - such as roads. It was not specified how much power of eminent domain the city may have in building a casino and ancillary services.
The City would not rule out future property tax increases to Chicago homeowners because a casino existed.
Volpe weighed in on casino AGR leveraging other funds. He contended that each $100 million in AGR can launch a one-billion dollar capitol plan.
The city said they did not have anyone in mind to manage the casino. They expect to pay 30 percent of the AGR for a management fee.
A number of horse racing owners (tracks and horses) testified. They said taxes on slot machines at tracks could yield $180 million in taxes to Illinois.
Tom Swoik of the Casino Operators Association, representing eight of the nine existing riverboats in Illinois said there was no consensus among owners on approval of a Chicago casino. Chicago would become the giant among Illinois casinos and siphon off business from area suburban boats.
Swoik also raised the possibility of a Chicago casino over-saturating the Chicago market.
Unanswered Questions: There are many, too numerous for this list. Several include:
1. Is Chicago getting a sweetheart deal at a lower cost than a private operator?
2. Does Chicago have the management capacity to protect the integrity of the investment?
3. Will the state provide the funds to the Illinois Gaming Board to do its job of policing and regulating a Chicago casino along with the other ten in Illinois?
4. Have the proponents (the city) oversold the product?
5. Will the resulting income be worth the social costs?
6. Will a referendum be held to let the people of Chicago have a say on locating a casino in the city?
These and other complex questions will take more than a hearing to unravel.
As The Casino Turns: