While facing challenges at its temporary gaming venue, Bally’s is reportedly seeking a property tax reduction for its permanent casino hotel in Chicago.
The city of Chicago applies a property tax rate of 25% to commercial buildings, but Bally’s is seeking a 12-year rate of 10%, the same rate at which the city taxes residential properties. After those 12 years, Bally’s would gradually transition to the standard 25% property tax rate on its $1.7 billion integrated resort in the River West neighborhood.
Bally’s argues that the tax break is necessary to help its Chicago casino achieve financial viability, ensuring the gaming venue generates the expected revenue for the cash-strapped city. However, this proposal comes as Bally’s temporary casino at Medinah Temple struggles. In 2024, that venue generated only $16 million in receipts for the city, significantly less than the $35 million forecast in Mayor Brandon Johnson’s budget.
The temporary gaming venue is also lagging in other key metrics. Its 2024 foot traffic and revenue per person admitted fell short of expectations. Despite being the only gaming venue in Chicago, Bally’s temporary casino placed second in Illinois in 2024 gross gaming revenue (GGR).
Bally’s Leverage in Negotiations
Bally’s may have some leverage to obtain the property tax reduction due to Chicago’s ongoing challenges with underfunded public pension obligations and a declining credit rating. The city is relying on gaming revenue to help address these issues.
On Tuesday, Standard & Poor’s (S&P) downgraded Chicago’s credit rating to “BBB”, one notch above junk territory, from “BBB+.” City officials contested the downgrade, asserting that the city’s fundamentals remain strong.
> “Despite the public budget negotiations over the last couple of months, the City’s credit fundamentals have not changed, … and the rating does not accurately reflect the strength of the City’s credit or ability to meet its debt and pension obligations,” according to a press release from city hall.
The permanent casino hotel is projected to generate $200 million annually for Chicago when fully operational, including gaming, income, property, and sales taxes. It was initially expected that the operator would pay $67.6 million in property taxes to the city in 2027, a forecast that was recently removed from the mayor’s website.
Challenges Ahead
While Bally’s casino has been promoted as a potential solution for pension funding and job creation in Chicago, the effort to secure a property tax reduction is fraught with challenges. Alderman Gilbert Villegas proposed the incentive, but many city council members have longstanding reservations about Chicago’s relationship with Bally’s.
Political insiders in the city indicate that neither Mayor Johnson nor Alderman Walter Burnett support extending a tax break to Bally’s, suggesting there may not be immediate momentum for assisting the gaming company.
Chicago’s most recent budget did not include a $300 million property tax hike sought by the mayor, indicating limited appetite among city politicians to increase taxes on businesses and residents.
