A Gamble for Growth: Chicago’s Casino Proposal Can Teach Us About Growing the City
Through its diverse offerings and antique splendor, the 1893 Columbian World’s Exhibition introduced the young city of Chicago to the world. Although most were enamored with the splendor of the recently resurrected city’s white palaces, some were displeased. Before dying on the Titanic on one of his many trips between Britain and the United States, British journalist William T. Stead in 1894 wrote If Christ Came to Chicago, a scathing account of the corruption and decadence of the jeeringly nicknamed Windy City. The moralistic text came complete with a map of the Near South Side pointing out exactly where the saloons and brothels were located, which makes one wonder about its potential unintended consequences. His pamphlet was an early part of a tradition portraying Chicago as politically corrupt, morally bankrupt, and altogether uncontrollable.
One can only imagine Stead’s reaction to hearing Chicago’s newest plan to build fiscal stability and economic wealth: the construction of a casino. On June 28, 2019, the Illinois Gambling Act was signed into law by Governor J. B. Pritzker, liberalizing gambling laws throughout the state, including a license for a 4,000 gambling position mega-casino in Chicago. Other licenses for casinos in suburban Cook County and other down-state cities only allow for 2,000 and 1,200 positions respectively, making Chicago’s casino by far the state’s largest.
Three companies had their final proposals revealed by Mayor Lori Lightfoot in October 2021:Rhode Island-based Bally’s, Florida’s Hard Rock International, and a Chicago casino magnate and billionaire Neil Bluhm’s Rush Street Gaming. All three have a proposal for McCormick Place, with Bally’s and Rush Street Gaming submitting additional proposals for the Chicago Tribune Publishing Center and a vacant lot between the South Loop and Chinatown, respectively.
In contrast to the sinful Chicago Stead portrayed, gaming companies are pitching themselves to the city as stewards of classy entertainment, culinary and fine arts, and social justice. Each company pridefully details its commitments to MBE/WBE (Minority Business Enterprise/Woman Business Enterprise) and other means of ensuring that disadvantaged groups profit from the enterprise. Rivers’ commits itself to 25% minority/women ownership, while Bally’s boasts about its 45% minority hiring goal. These gaming companies understand that they’re selling the city more than a new addition to Chicago’s storied skyline: they are promising economic revitalization, especially for the City’s disadvantaged communities.
Mayor Lightfoot has hailed the casino venture as “a once in a generation” opportunity both for the sake of economic revitalization and the gaming companies’ profits; however, it should be noted that these opportunities also come with a once in a generation risk. Additionally, industry leaders, such as MGM Resorts International and Caesars Entertainment, choose to not submit any proposals and are staying out of the process. The companies that have opted to participate are smaller and more risk tolerant firms. Further, the original due date for proposals to be submitted to the city was pushed back from its original deadline of August 23, 2021 due to a lack of proposals.
The first issue casinos should be wary of are the four competitors that already exist in northwestern Indiana, which could drain, or in the case of Hard Rock, cannibalize the Chicago market share. There are also other casinos already established throughout Illinois, including Rivers’ casino in Des Plaines near O’Hare airport. Second, Chicago is asking for a much bigger slice of the pie than most other cities hosting casinos. Originally, the tax bill would have come out to 72% of revenue going to the municipal and State governments. An independent consultant had to tell Mayor Lightfoot that this would be far too onerous for the average developers, and the Mayor had to go to Springfield to reduce the tax burden to a still above-average 40%. MGM CEO Bill Hornbuckle summed up developer concerns succinctly, staying, “Chicago is just complicated. The history there in Chicago, the tax and the notion of integrated resort at scale don’t necessarily marry up.”
For these reasons, small and medium-sized entertainment companies are the only ones pursuing this potential slot. Further, companies that are already tied into the Chicago market and its problems are the ones buying into the project, with Bally’s being the only one of the three that does not already have a resort somewhere in the Greater Chicago area. That being said, the gamble these companies are making are well worth it for the city.
Although each plan has its own unique aspects and design, when one takes a step back and evaluates the project based on what it brings to Chicago, they all offer the same set of benefits: increased revenue for the municipality and increased employment for the population. This is certainly a plus for any city. In Chicago’s case, the funding from the project has already been earmarked to fund the deficit in police and fire departments pensions. Although this is certainly better than incurring further debts, in a city with as many systematic problems as Chicago, it is disappointing to see. However, one should not resort to despair as the promise shown by the model of the casino holds further promise for a growth-oriented Chicago and State of Illinois more broadly in the twenty-first century.
In order to start growing in the right direction, the first thing Chicago needs to do is grow. As it stands, Chicago is shrinking. From 2010 to 2019, Illinois lost almost 200,000, approximately 1.3% of its population. Just last year, from July of 2020 to July of 2021, the State of Illinois lost 113,776 residents, marking the State’s eighth consecutive year of population decline. As a percentage of population lost during the pandemic, Illinois is only outmatched by New York. The Illinois Issues Survey of 2018, a poll conducted by the Center for State Policy and Leadership found that 53% of Illinois had considered leaving the state within the past year. More concerningly, 67% of Illinois age 18 to 34 expressed a desire to leave, indicating that Illinois' youth doesn’t see a future in the State.
This issue is further exacerbated by international migration. Chicago has always been a city of immigrants, but less and less are coming to the city. In 2005, 38,000 international migrants came to the City, compared to 25,000 in 2018 and only 5,000 from July 2020 to July 2021. This is particularly distressing when considering that Illinois ranks sixth in the nation in terms of foreign-born residents as a percentage of the population, with 1.8 million foreign-born residents making up 14% of its population. Further, another 14% of the population of native-born Americans within the State have at least one immigrant parent. These statistics illustrate how much the state has relied on immigration compared to the rest of the United States.
Even if the radical downturn in immigration during the COVID-19 pandemic is a short-term issue and not indicative of long-term nativist trends across the country, Chicago is not attracting the immigration it traditionally has. However, affordable quality of life, good public amenities, low crime, and plenty of economic opportunities would attract both foreign-born immigrants and native-born Americans. Of course, Chicago will have to overcome a number of large-scale problems to ensure the accessibility of these objectives.
First, Chicago has to improve the lives of its residents to prevent further migration and ensure economic vibrancy. Chicago’s greatest challenge is finding a way to elevate its poorest neighborhoods and provide opportunities for the residents of these communities. Unfortunately, the city is stuck in a Catch-22. It cannot improve its finances for the long-term until it invests in its residents but cannot invest in its residents until it has the finances to do so. The only thing that has the potential to break this loop would be a sudden windfall of cash from the federal government. Coincidentally, this happened with the passing of the American Rescue Act of 2021, which provided the city with $1.89 billion in funding, compared to a city budget of $16.7 billion in the 2022 fiscal year.
2022’s budget promises aspire to be transformative. One of its most notable aspects is investing $85 million into violence prevention in hopes to reach at-risk youth before they turn to crime, with the aim of reversing the 55% increase in murders from 2019 to 2020. Further, the city will be investing $65 million into youth opportunities, hoping to connect youths to employers offering honest jobs to help them get on track to have productive, economically stable careers. Although these and other programs included in the plan offer long-term promise, they need to be followed up with easy access to employers to ensure that as many residents as possible have access to them. The average unemployment rate in Chicago is 5.9%, but its most impoverished communities have much higher rates, with the highest being West Englewood at 35.9%. Many of these residents are lacking a high school degree, and even fewer have a college education. Chicago’s government has attempted to help develop small businesses, which helps in the short-term, but ultimately the economic status of residents requires more ambition.
Within the recovery plan, the City of Chicago has invested $20 million in its 2022 budget to advertise the city to tourists and business investment. One city they cited as wanting to emulate was Columbus, Ohio, which has seen a large influx of businesses moving to the city, including Intel establishing a chip factory that will employ 3,000 people. One major reason why Chicago’s South and West sides are suffering is that these communities relied on capital from manufacturing, and no suitable alternative was found during deindustrialization. With the trade war and enmity between the United States and China continuing for the foreseeable future and distribution of global supply chains due to the pandemic, many companies are looking to ‘onshore’ their new factories to North America to ensure that products can reach customers. This phenomenon will undoubtedly further increase with overseas investors becoming more anxious after the sweeping sanctions laid out against Russia. Chicago would be wise to get ahead of this trend while it is still developing.
This part of the package connects to another growth industry for Chicago: tourism. Despite being the third-largest city in the United States, it is only the nation’s tenth most visited city, falling behind many sunnier spots, such as Honolulu and Miami. Naturally, it will always be difficult with these regions during Chicago’s cold winters, but there is still room during the rest of the year to attract more tourists. The Illinois Technology and Research Corridor is a suburban industrial area located to the city’s west. It developed around the Argonne National Laboratory and now hosts many large companies, universities, and research institutions. Although outside of city boundaries, Chicago and Illinois should try to capitalize on this dearth of skill and look into investing in emerging technologies that could attract more growth opportunities to the city.
No matter what casino proposal is passed back to Springfield’s Board on Gaming, Chicago will continue to wrestle with how to make itself more livable and attractive to its current residents, the country writ-large, and immigrants coming from around the world. Undoubtedly, focusing on improving the lives of its citizens while attracting more is no easy feat, but it is a gamble Chicago cannot afford to ignore if it wishes to thrive and provide Chicagoans with prosperous lives.
The image featured in this article is licensed for reuse under the Creative Commons Attribution 2.0 Generic license. No changes were made to the original image, which was taken by Kym Koch Thompson and can be found here.
