Saturday, September 24, 2022
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Chicago Casino Down to Three Sites, One Each from Bally’s, Hard Rock, and Rush Street

And then there were three. On Tuesday, Chicago officials announced they had pared down the proposals under consideration for its casino resort project. In doing so, they eliminated two projects that were tied to the city’s McCormick Place convention center.

Left in the running are Bally Corp.’s $1.76 billion proposal for the Chicago Tribune publishing plant, Hard Rock Chicago’s $1.73 billion plan for ONE Central, and Rush Street Gaming’s joint partnership with developer Related Midwest and a group of minority investors to build a $1.68 billion casino at “The 78,” a planned development on the near-South Side.

Each proposal offers economic, employment, and equity-focused opportunities for Chicago, while simultaneously enhancing the City’s cultural, entertainment and architectural scenes with world-class amenities and design,” Chicago Mayor Lori Lightfoot said in a statement. “Our teams look forward to heading into discussions with the finalists and getting one step closer to bringing this decades-long project to fruition.”

Bally’s project includes a 3,000-seat theater and a 500-room hotel among its amenities. Hard Rock proposed a 3,500-seat concert venue and a 500-room hotel. Rivers wants to build an observation tower, an amphitheater, and a 300-room hotel.

Rivers expects its casino to operate with 2,600 slot machines and 190 table games. Hard Rock proposes 3,000 slots and 166 table games, while Bally’s would offer 3,400 slots and 173 table games.

All three are expected to reserve all 4,000 gaming positions held for the casino.

McCormick Place Sites Out

The proposals not moving forward are Rush Street’s $984 million plan to overhaul McCormick Place’s Lakeside Center and Bally’s $1.65 billion proposal for the McCormick Place marshaling yards. The latter Bally’s project ran into some opposition among local officials who did not want a casino in their neighborhood.

One factor that may have deterred city leaders from moving forward with either Rush Street’s or Bally’s McCormick Place sites was the report stating a Chicago casino would generate between 75 to 85%  of its revenues from local customers.

However, Chicago Chief Financial Officers Jennie Bennett said Tuesday that there were several others factors that undermined the McCormick Place-tied bids. That included the Lakeside Center being used for several of the convention center’s largest events, and using the marshaling yards would require officials to design a new facility to accommodate the trucks used to transport convention equipment and displays.

Scott Goodman, a founding principal of Farpoint Development, which worked with Rush Street on the McCormick Place proposal, said the team was disappointed it was not selected. That’s especially since it offered taxpayers value by bringing private investment into a public space.

“We wish the eventual winner and the city at large great success, as Chicago’s first casino will be a destination for all to enjoy and a revenue generator for local governments,” Goodman said.

The remaining proposals, coincidentally or not, also happened to have the estimated largest annual economic impacts, according to a report the city released Tuesday afternoon. That review of gaming tax revenues, other taxes, and payments to other city agencies determined a Bally’s Tribune casino with a 500-room hotel would have an annual impact of $191.7 million. Hard Rock would provide a $185.3 million boost, while Rivers 78 would offer a $174.2 million impact with a planned observation tower and hotel.

The selection of the three finalists come after the casino developers submitted proposals last fall and presented their visions to the city in December. The proposals were then evaluated by Mayor Lori Lightfoot’s office, as well as by leaders in the city’s aviation, transportation, fire, police, finance, law, and planning and development offices.

Is There a Leading Candidate?

If any of the remaining candidates have a leg up, it’s likely Bally’s. Even over locally owned Rush Street.

The report noted that both Hard Rock and Rush Street operate large casinos already in the Chicago area.

Bally’s is the only bidder that does not already have a property in the Chicagoland market and, therefore, is more likely to operate with independence in maximizing revenues for the Chicago casino,” the report stated.

Hard Rock owns Hard Rock Northern Indiana in Gary, which would be about 29 miles from its Chicago casino. Rivers 78 would be about 16 miles from Rivers Des Plaines

Based on the tax rates, the evaluation report states that Hard Rock would likely be more inclined to promote slots players to its Indiana casino, while touting a Chicago casino for table gamers. Hard Rock Northern Indiana opened last May and has quickly become the top-grossing casino in the state.

The city’s report indicates that a Chicago casino would reclaim at least $190 million in revenue that’s currently generated by Indiana’s northern casinos.

Temp Casinos Could Open Mid-2023

Of the three, Rivers 78’s proposal would include the most equity upfront, as it would only finance 67 percent of its development costs through debt. Both Hard Rock and Bally’s plan to use debt for about 75 percent of their financing.

Hard Rock’s proposal states it generates the most casino jobs at 3,140. Rivers 78 would hire 3,068, while Bally’s would need 2,002.

Hard Rock’s proposal estimated a need for more than 16,600 construction workers, possibly alluding to the number of workers for the entire ONE Chicago development. Bally’s said 9,750 construction workers would be needed for phase one of its project, and 2,500 would be hired for the second phase.

Rivers would hire between 3,410 and 4,375 construction workers.

All three would open temporary facilities, with Bally’s and Hard Rock’s slated to open in the second quarter of next year. Rivers 78 would open in the second quarter of 2024.

Chicago Questions Hard Rock’s Timetable

In a statement, the Hard Rock Chicago team said it was excited about the opportunity to build a new entertainment destination for the third-largest city in the US.

“We look forward to a robust dialogue with city leaders about Hard Rock Chicago and what we bring to the table. Chicago is a global city that deserves a global operator,” the company said in a statement.

Hard Rock says it would be the quickest to open its permanent venue, doing so by the third quarter of 2025 – although the city questioned that as “unrealistic” in a footnote, pointing out the site needs foundation work and would require “significant” intergovernmental approvals.

Rivers 78 plans to be open by the fourth-quarter of 2025, while Bally’s Tribune would open its permanent venue in the first quarter of 2026.

The report notes that the 78 and Tribune sites would require fewer governmental approvals.

“Speed to opening is extremely important in maximizing near-term City and State revenues,” the report stated. “Each year that a Chicago-based casino is not open means approximately $200 million in lost annual revenues to the city.”

What’s Next?

Next, the city plans to hold community engagement sessions from April 5-7, with Hard Rock going on the first day, followed by Bally’s, and then Rivers on subsequent days. A virtual session will also take place early next month.

As those presentations will take place, city leaders will negotiate a “host community agreement” and make its final selection.

After Chicago makes its selection, the Illinois Gaming Board will then begin its vetting process.

Bennett said the city hopes to have a proposal selected by early summer.

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