CHICAGO | City Casino

[galleyfox]

Originally Posted by Mr Downtown

Yeah, what they'd build at lowest cost in Bokchito, Okla., or Tunica, Miss., or Gary is not really relevant, if you show them they're within a mile of six million existing annual hotel-nights; within 500 feet of four Broadway touring company venues; with six rapid transit lines stopping within the building. Target's facilities team would prefer 30 acres next to an interstate. But their most profitable stores per square foot are places like Clark & Roosevelt—where the customers are.

The most expensive high-profile new flagship casinos are even more land intensive and less reliant on gambling revenue than the Tunica and Gary casinos of the world.

That’s the fundamental problem. Casino gambling by itself is a declining market no matter the location. So they are transitioning into entertainment resorts. The Thompson Center has minimal resort potential. It can only be a casino floor with attached hotel rooms - nothing more.

Nobody is going to invest in an expensive casino and let the surrounding independent businesses make the lion’s share of the entertainment, food, and lodging profit.

[marothisu]

Originally Posted by galleyfox

The most expensive high-profile new flagship casinos are even more land intensive and less reliant on gambling revenue than the Tunica and Gary casinos of the world.

Comparing to Vegas is missing the point of what they're trying to do. Vegas' entire model works off of the fact that these casinos are actually massive (much larger than what a map can indicate when you're there IRL). Chicago is trying to be more like a hybrid of say a Macau and maybe Vegas - in the middle in a way. That is a much more apt comparison. A lot of the same companies who are in Vegas also operate in Macau in a denser environment with a smaller footprint.

[moorhosj1]

Originally Posted by marothisu

Chicago is trying to be more like a hybrid of say a Macau and maybe Vegas - in the middle in a way. That is a much more apt comparison. A lot of the same companies who are in Vegas also operate in Macau in a denser environment with a smaller footprint.

Every bachelor party in the midwest will make it's way to this sportsbook when it gets built. I don't think there is much chance of it being unused.

[galleyfox]

Originally Posted by marothisu

Comparing to Vegas is missing the point of what they're trying to do. Vegas' entire model works off of the fact that these casinos are actually massive (much larger than what a map can indicate when you're there IRL). Chicago is trying to be more like a hybrid of say a Macau and maybe Vegas - in the middle in a way. That is a much more apt comparison. A lot of the same companies who are in Vegas also operate in Macau in a denser environment with a smaller footprint.

Chicago still has to operate in the U.S. market - which is saturated with competition from established casino resorts, sports betting, video gaming, and online gaming.

As a gambling market, casino operators likely see Chicago as similar to old Atlantic City. No space for truly self-contained resorts, but decent potential as a waterfront oriented, family-friendly mid-range trip.

But seeing the decline of Atlantic City, they don’t trust that a Chicago casino will survive from gambling alone. That’s quite obvious from the companies that submitted proposals.

Macau is a very different environment. Gambling is officially illegal in mainland China, which gives land-based Macau casinos an opportunity to reap more gambling revenue regardless of location, size or other amenities.

[marothisu]

Originally Posted by galleyfox

Chicago still has to operate in the U.S. market - which is saturated with competition from established casino resorts, sports betting, video gaming, and online gaming.

As a gambling market, casino operators likely see Chicago as similar to old Atlantic City. No space for truly self-contained resorts, but decent potential as a waterfront oriented, family-friendly mid-range trip.

But seeing the decline of Atlantic City, they don’t trust that a Chicago casino will survive from gambling alone. That’s quite obvious from the companies that submitted proposals.

Macau is a very different environment. Gambling is officially illegal in mainland China, which gives land-based Macau casinos an opportunity to reap more gambling revenue regardless of location, size or other amenities.

You can either go with the status quo or you can be the game changer. Being the game changer is risky but the pay offs are potential very great. That's my opinion at least.

You can't change anything anywhere if you just keep doing the same thing over and over again. And I would argue that even the Vegas Strip, although these properties are huge still has a lot of stuff going on between them. Anybody who has been to the Strip knows that there's a ton of people walking between the resorts and that there's other retail, restaurants, etc in other buildings in between them. It's not like it's some fields in between like we see in the country casinos in America. Technically speaking, the Las Vegas strip is walkable for that reason alone - some more than other places.

• Video Link

[ardecila]

Originally Posted by galleyfox

This is a case of “Stop trying to make the Thompson Center Casino a thing.”

First of all the land is just about a 1/5 of the size at best that MGM, Wynn, etc. prefer. The serious city plans of recent years suggested Pullman and the Port District as a reasonable more location for a casino, but reports showed the Southern location was too far to be profitable.

A Chicago casino is a riskier venture than in 1992 because of hefty gambling taxes at 40% and the 2009 video gaming law allowing gambling in every convenience store. So most of the profit has to come from hotel/entertainment/dining/retail (Modern mega-resort casinos already only get about half their profit from gambling itself.) which makes relying on existing venues a no-go.

There’s no fancy non-profit shenanigans or whatever that can get around that.

https://www.investopedia.com/how-mgm...-money-5204529

Yeah I think the article was kind of missing the point. The "world-class" operators that Mr. Goluska likes took a pass on Chicago, not because of the nerdy details in the RFP, but because the tax rate on the Chicago casino is insane. This is a matter of state law, nothing the city can do will change this unless they can get another bill thru Springfield.

The city already got legislators to change it once, but only because literally zero companies responded to the original. I doubt the Assembly will want to waste time and political capital re-doing the casino bill a 3rd time when Chicago has 5 viable proposals on the table.

So with tax rates as they are, instead of MGM, Wynn or Genting we get smaller operators that are hungry for recognition and want to establish a flagship property because they don't have one yet.

Goluska also complains about how the casinos are too isolated and self-contained, but again, with tax rates as they are, these casino operators are forced to rely on dining, entertainment, and hotel to make their profits. They won't just open up a gambling floor where everyone has to leave the premises to eat, sleep, or see a show. The best we can hope for is something like the Bally's Tribune site, where the casino is at arm's length from River North but local businesses still get some spillover. I also don't want to re-open the Thompson Center debate. We already have a state deal with a developer who is prepared to preserve the building and retool it for future generations. Why throw that out trying to fit a proverbial square casino in a round building?

[TR Devlin]

Mr Downtown and Handro: Your posts were great. Thank you.

Galleyfox compares the Thompson Center to the MGM Las Vegas and finds the Thompson Center to be wanting

Here's a picture of the MGM Las Vegas. I have no idea why anyone would want something like that in Chicago.

Handro says the Thompson Center would be a hyper-urban casino and when I read that, I immediately thought of the Hippodrome in London's West End. Not that the Thompson Center would look like the Hippodrome, but that it would enhance the street scene in what is already a major entertainment district. A Thompson Center casino, together with the theaters on Randolph, the restaurants and hotels in the North Loop and the River Walk would be a unique attraction and a significant boost for the hospitality industry in Chicago.

[galleyfox]

Originally Posted by TR Devlin

Mr Downtown and Handro: Your posts were great. Thank you.

Galleyfox compares the Thompson Center to the MGM Las Vegas and finds the Thompson Center to be wanting

Here's a picture of the MGM Las Vegas. I have no idea why anyone would want something like that in Chicago.

More like unprofitable.

The whole point of this casino is to help pay off some of the pension debt.

If the Chicago casino only made as much revenue as the London Hippodrome, there’d be a couple officials drowning themselves in the lake from despair.

I’m using the Las Vegas resorts as a comparison because those are the casinos that generate the *billions* that Chicago and Illinois are hoping for.

The Hippodrome Casino saw its annual revenue drop 2% year-on-year to £76.5m ($95.8m) for 2018, in what it describes as a challenging year.

The Leicester Square venue reported EBITDA of £5.2m, down 40%, and paid tax of £32.4m, down 2%; its tax burden accounted for 42% of the casino’s turnover.

https://www.gamblinginsider.com/news...ete-experience

Did you see the original estimates for just the Michael Reese site? At the original 72% tax rate, the casino wouldn’t have even been able to begin to pay back the construction costs.

Even with a reduction to a 40% tax rate, these proposals are all relying on internal Hotel/F&B/Entertainment revenue to actually make a profit for the casino operator.

That is assuming total revenue at this one single casino can match 15-20% of the total gaming revenue in Las Vegas. It’s a pipe-dream to think any of these proposals want their clients to patronize neighboring businesses.


https://www.igb.illinois.gov/FilesPr...ty%20Study.pdf

[Randomguy34]

Hmm, this is making me question if Bally's bids will be financially feasible in the long term. Lightfoot hinted in a Crain's interview that at least one casino bid is falling short of expected revenue, and she doesn't want the city to take the burden if it ends up failing. Bally's proposals are barebones casino+hotel, with no wider planning efforts. The other bids envision the casino being a part of a larger entertainment district. It also isn't an encouraging sign that Bally's is offering cash upfront and plans to buyout minority investors after a few years.

[Halsted & Villagio]

Originally Posted by marothisu

You can either go with the status quo or you can be the game changer. Being the game changer is risky but the pay offs are potential very great. That's my opinion at least.

You can't change anything anywhere if you just keep doing the same thing over and over again. And I would argue that even the Vegas Strip, although these properties are huge still has a lot of stuff going on between them. Anybody who has been to the Strip knows that there's a ton of people walking between the resorts and that there's other retail, restaurants, etc in other buildings in between them. It's not like it's some fields in between like we see in the country casinos in America. Technically speaking, the Las Vegas strip is walkable for that reason alone - some more than other places.

• Video Link

Good post

[Halsted & Villagio]

Originally Posted by ardecila

Yeah I think the article was kind of missing the point. The "world-class" operators that Mr. Goluska likes took a pass on Chicago, not because of the nerdy details in the RFP, but because the tax rate on the Chicago casino is insane. This is a matter of state law, nothing the city can do will change this unless they can get another bill thru Springfield.

The city already got legislators to change it once, but only because literally zero companies responded to the original. I doubt the Assembly will want to waste time and political capital re-doing the casino bill a 3rd time when Chicago has 5 viable proposals on the table.

So with tax rates as they are, instead of MGM, Wynn or Genting we get smaller operators that are hungry for recognition and want to establish a flagship property because they don't have one yet.

Goluska also complains about how the casinos are too isolated and self-contained, but again, with tax rates as they are, these casino operators are forced to rely on dining, entertainment, and hotel to make their profits. They won't just open up a gambling floor where everyone has to leave the premises to eat, sleep, or see a show. The best we can hope for is something like the Bally's Tribune site, where the casino is at arm's length from River North but local businesses still get some spillover. I also don't want to re-open the Thompson Center debate. We already have a state deal with a developer who is prepared to preserve the building and retool it for future generations. Why throw that out trying to fit a proverbial square casino in a round building?

Nailed it

[VKChaz]

Originally Posted by marothisu

You can either go with the status quo or you can be the game changer. Being the game changer is risky but the pay offs are potential very great. That's my opinion at least.

You can't change anything anywhere if you just keep doing the same thing over and over again. And I would argue that even the Vegas Strip, although these properties are huge still has a lot of stuff going on between them. Anybody who has been to the Strip knows that there's a ton of people walking between the resorts and that there's other retail, restaurants, etc in other buildings in between them. It's not like it's some fields in between like we see in the country casinos in America. Technically speaking, the Las Vegas strip is walkable for that reason alone - some more than other places.

So what does this ultiimately mean? The proposals are what they are. Unless the idea is in fact to throw them out, but what reason would there be to think anything different would be proposed? And, whatever is proposed, there will always be the problem of opposition from an area around a CBD that is increasingly residential.

[thegoatman]

Do you guys think Chicago could be the vegas of the midwest? We're already the 3rd highest grossing casino market just behind Vegas and Atlantic City. Atlantic City casino market grossed 2.6 billion in 2021 meanwhile Chicago grossed 2 billion. I think we can easily become #2 if we go with the 78 or any other sufficent option.

https://www.google.com/url?sa=t&rct=...FoOoFC_kldcc2i

[VKChaz]

Originally Posted by TR Devlin

Mr Downtown and Handro: Your posts were great. Thank you.

Galleyfox compares the Thompson Center to the MGM Las Vegas and finds the Thompson Center to be wanting

Here's a picture of the MGM Las Vegas. I have no idea why anyone would want something like that in Chicago.

Handro says the Thompson Center would be a hyper-urban casino and when I read that, I immediately thought of the Hippodrome in London's West End. Not that the Thompson Center would look like the Hippodrome, but that it would enhance the street scene in what is already a major entertainment district. A Thompson Center casino, together with the theaters on Randolph, the restaurants and hotels in the North Loop and the River Walk would be a unique attraction and a significant boost for the hospitality industry in Chicago.

I see TC as a bit removed from River North if the idea is to be directly associated with it as an entertainment district. And I could be wrong, but my sense is the area immediately around TC is pretty dead once the theaters empty, on nights when there even is theater, not the vibe of a 24 hr casino. Even the riverwalk is closed at 11, I believe. The area around a Chicago casino will never be the scale or have the feel of Macau or Las Vegas, but I would envision it including more all night activity (e.g., 4am licenses) if the goal is to say it is in the midst of an entertainment district on par with a casino

[Randomguy34]

Hard Rock Chicago's website is back online and includes new info, such as Live Nation supporting their bid: https://www.hardrockchicago.com/

[ardecila]

Jesus Christ. This rendering shows that Hard Rock just doesn't get it. Nobody in Chicago wants this Times Square wannabe looming over Lake Shore Drive.

Originally Posted by Randomguy34

[r18tdi]

Originally Posted by ardecila

Jesus Christ. This rendering shows that Hard Rock just doesn't get it. Nobody in Chicago wants this Times Square wannabe looming over Lake Shore Drive.

And just think of the poor migratory birds...

[Handro]

Originally Posted by ardecila

Jesus Christ. This rendering shows that Hard Rock just doesn't get it. Nobody in Chicago wants this Times Square wannabe looming over Lake Shore Drive.

Which is why it will probably be the winning bid, with some bombshell report of backroom dealings to be released in 3-5 years.


From the site: "in many other downtowns where casinos have been built, such as St. Louis, Cincinnati, and Baltimore..."

I'm sorry to throw shade here, but this is not encouraging company. Chicago really needs to get this right and there is a razor thin margin of error.

[galleyfox]

Separately 2 sources confirmed to me the Casino Finalists are:
The 78
Hard Rock
Bally’s at the Tribune

(Mayor’s office choosing “Select print reporter” briefing … so reminds me when the Archdiocese tried to do that 30 years ago, didn’t work then either)

https://twitter.com/maryannahernnbc/...797326862?s=21

No surprise.

Originally Posted by galleyfox

One of the Bally’s and one of the Rivers proposals are out, I’m guessing. Get rid of the spare proposals, and still leave three companies in the running.

McPier just didn’t seem enthused about dealing with the main casino directly on their property, so Bally’s McCormick and Rivers McCormick seem the easiest to cut on principle.

[CaptainJilliams]

Definitely no surprises there, good to finally get the true contenders.

Honestly at this point, as long as it isn't the Hard Rock at One Central, I'll be cool with the winner. If I had to choose, I am leaning towards The 78 just so that empty land can finally be infilled. But the Tribune site is also a solid choice too, so I wouldn't be mad if they took that proposal.