NORTON NOTES: Chicago Put a Casino Downtown
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By Steve Norton
CEO, Norton Management
Beale Pushes Game Plan to Expedite a Chicago Casino
Any Chicago casino should be downtown, near the convention center and the larger hotels.
The 5 locations for the Chicago casino, proposed by Mayor Lightfoot, would attract most of their customers from the resident population, but the greatest tax potential for Chicago is a casino aimed at the city’s 57 million annual visitors, many staying at hotels in the Downtown Chicago area.
These hotels are filled mid-week with convention and trade show attendees along with traveling businessmen serving the area’s businesses. Both visitor types are more affluent and their travel, hotel and meal expenses, covered by their employers, have deeper pockets to spend at a destination casino.
I see the revenue potential from these groups, combined with vacationers on weekends, could produce $1.5 billion, or more, in casino win. If the Chicago tax rate is reduced to something reasonable, it could produce a mega casino resort with a meaningful number of rooms and meeting space, along with a showroom and a dozen or more restaurants.
A destination casino, like those on the Las Vegas Strip, would cost several billion dollars and could not survive or even be considered by a major casino operator under the current legislation.
It doesn't matter whether Chicago selects an operator or depends or advice from a casino consultant familiar with mega casino operations before meeting with the legislature on the tax structure. Because the amount a casino developer will spend will vary based on several legislative issues and different company offerings will change dramatically, based on the negotiations.
A Chicago casino location, away from the downtown hotels, will likely not choose to purchase 4,000 positions, nor build the type of destination resort that Chicago needs if it hopes to improve hotel occupancies and produce substantial tax revenues to the state and city.
Few downtown casino locations, like those in St Louis, Kansas City, New Orleans, Cleveland, Columbus and Cincinnati, all underperform casinos in their neighborhoods. But these cities don't have the number of hotel rooms to compete with Las Vegas and Orlando for major conventions and trade shows where a major casino will increase attendance and the number of exhibitors at existing events and will attract more conventions, that realize attendance grows at a casino destination.
Several other cities would also benefit greatly from a downtown destination casino ¬– like New York, Atlanta, Dallas, and Houston – all with 90 thousand to over 100 thousand hotel rooms, like Chicago.