Mayor taking a gamble on casino revenue

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The state of Illinois and the city of Chicago currently suffer under leaders who embrace — even foment — fiscal crisis, which they view as “opportunity.”

For Governor Rauner, an unresolved state budget is an opportunity to push for the elimination of unions in Illinois.  For Mayor Emanuel, whose One Big Idea for addressing the city’s fiscal challenges is a Chicago casino, the trifecta of state budget crisis, CPS insolvency, and the city’s pension obligations offers a shot at his elusive goal

Emanuel has pushed for a casino since he was elected, first as a source of funding for school modernization, then as a tool for economic development, now as way to meet payments on police and fire pensions.

The state legislature’s forecasters predict a city-owned casino would bring in $100 million a year for the city and twice that for the state, after management fees of at least $150 million. (The Illinois Casino and Gaming Association maintains yearly management fees would be closer to $250 million.) Emanuel is pushing for a deal in which all proceeds go to the city for seven years, though that’s probably unlikely.

But there’s reason to be skeptical about those projections, dependent as they are on attracting new tourists and conventions, along with local and regional gamblers, in a metropolitan area that already has ten casinos.  And, opponents say, the revenue projections are incomplete without taking into account the costs associated with casino gambling.

Casinos drew tourists three decades ago when they existed only in Las Vegas and Atlantic City, but with an estimated 1,500 scattered across the country today, most people now live within an hour or two’s drive of a gambling facility, said Paul Sajovek, a former hospitality industry consultant who’s now chief of staff for Ald. Scott Waguespack (32nd). Even Atlantic City has seen casino revenue fall by nearly half since 2006 as new casinos spring up across the East Coast.

The Chicagoland Chamber of Commerce has backed a downtown casino since 1991, arguing that it would have “a positive economic ripple effect” on the city’s “tourism, restaurants, hotels, shopping, conventions, and cultural institutions,” as vice president Michael Reever testified before a legislative committee in May.

Not everyone agrees.  Economists at Northern Illinois University say a casino is not likely to boost tourism, and that any casino spending will be diverted from the city’s restaurants, theaters, nightclubs, and museums. (That will produce more revenue, since casino wagering is taxed at a higher rate than other spending.) Job creation would likely be offset by job loss elsewhere in the city’s entertainment industry, they say.

Sajovek says putting a casino in or near McCormick Place would be “very, very detrimental” to the city’s convention business.  “Convention people hate [casinos],” he said.  “If you’re a trade show operator, you make your money selling booths and you want your attendees on the floor. They’re not there if they’re spending all day at a casino.”

And today’s casinos are precision-engineered to keep patrons playing until they run out of money, according to Natasha Schull, an MIT cultural anthropologist who studies technology and addiction. That leaves little for dinner and a show.

It’s not even clear that the Chicago area can support an additional casino. Casino revenues in the metropolitan area have been declining for three years, according to a report from the legislative forecasting commission. Outside the city, Cook County has the largest number of non-casino video gambling terminals in the state — 2,500, a number that is likely to grow.

And while poaching patrons from Indiana is one justification given for a Chicago casino, that prospect is limited: Hammond will remain more accessible than downtown Chicago to a wide swath of the South Side.

But Chicago is a huge market, and a new casino is certain to divert business from other casinos and inspire more Chicagoans to try their hands at getting rich quick. Few will succeed, however, and many will become poorer.

“We would not attract the high rollers,” said Rev. Myron McCoy of the Chicago Temple, who’s active with the Task Force to Oppose Gambling in Chicago. “The customers would be the persons in the neighborhoods, who can ill afford it.”

McCoy adds: “It demonstrates a lack of creativity and leadership on the part of our elected officials, instead of looking for businesses that would have a positive impact. … It’s like putting a cancer in the heart of the city.”

The presence of a new casino doubles the rate of gambling addiction within the immediate area, said Anita Bedell of Illinois Church Action on Alcohol and Addiction Problems.  More than half of casino revenues are attributable to problem and pathological gamblers, experts say.

Bedell cites a National Academy of Sciences study: “Clinical evidence suggests that pathological gamblers engage in destructive behaviors: they commit crimes, they run up large debts, they damage relationships with family and friends, and they kill themselves. With the increased availability of gambling and new gambling technologies, pathological gambling has the potential to become even more widespread.”

Bankruptcies go up — they increased by 50 percent in Alton after a casino was built there. Crime increases, with troubled gamblers embezzling from work and steal from relatives, and family breakups rise along with domestic violence, child neglect and substance abuse.

Those human tragedies — which statistics show disproportionately afflict communities of color — also have dollar-amount costs to society, and Bedell believes those far outweigh any economic benefits a casino might bring.

According to economist Richard Florida: “Virtually every serious study that has ever been done of the economic impacts of casinos shows that their costs far exceed their benefits and that they are a poor use of precious downtown land.”

“Gamblers might fool themselves into thinking that they can get something for nothing,’ Florida writes, “but cities and governments should know better.”

Illustration: Roulette wheel/Shutterstock image

  • observer

    But we already have a huge casino – the Chicago Mercantile Exchange, a gambling den for the rich. Let’s just tax the one we have!