Chicago is considering lifting the ban on video gambling terminals (VGTs), allowing 700 bars and taverns to install gambling devices, a proposal that has sparked intense debate. Bally's, which is building the city's first casino, warns that lifting the ban could reduce its annual revenue by $260 million and cost Chicago $70 million in annual tax revenue, as well as potentially causing the loss of 750-1050 high-paying jobs. City Council member Anthony Beale, who supports the proposal, believes that video gambling could bring in much-needed revenue in the face of a $1.15 billion budget shortfall, noting that there are already more than 3000 illegal gambling machines in operation. City government analysis shows that video gambling could net up to $10 million a year, but it could result in a net loss due to a shift in casino revenue.
Proposal Background and Core Controversy
Chicago is considering a proposal to lift the ban on video gambling terminals (VGTs), allowing 700 bars and taverns to install gambling devices. This move could significantly alter the gambling landscape in Chicago, sparking intense debate between supporters and opponents.
The core controversy revolves around how to balance potential fiscal revenue against the impact on existing casino operations, and how to address Chicago's massive budget shortfall.
Bally's Warning and Economic Impact Forecast
Bally's, which is building Chicago's first casino, strongly opposes the proposal, warning of severe consequences. Elizabeth Suever, Vice President of Government Relations at Bally's, stated that lifting the ban could cost Chicago $70 million in annual tax revenue and reduce Bally's casino revenue by $260 million.
Bally's also predicts that lifting the ban could lead to the loss of 750-1050 jobs, primarily high-paying positions offered by the casino, directly impacting local residents.
Supporter's Viewpoint and Financial Pressure
City Council member Anthony Beale is a major supporter of the proposal, believing that Chicago cannot overlook the revenue opportunities presented by video gambling. Facing a $1.15 billion budget shortfall, Beale sees video gambling as a potential solution to fill the financial gap.
Beale noted, "Chicago already has over 3000 illegal video gambling machines operating unregulated, causing the city to lose potential tax revenue."
Tax Rate Differences and Revenue Shift Risks
The tax rate difference between video gambling terminals and traditional slot machines is a key issue. The lower tax rate on video terminals could lead to a shift in revenue from higher-taxed slot machines to lower-taxed video terminals.
City government analysis indicates that while video gambling could generate some revenue, it could ultimately result in a long-term net loss for the city due to reduced casino income.
City Council Divisions and Differing Views
City council members are divided over Bally's warning, with some expressing skepticism about its predictions. 42nd Ward City Council member Brendan Reilly believes Bally's is exaggerating and noted that the casino's temporary operating income is far below expectations.
Reilly emphasized that proposed tax reforms are crucial for the city's financial health, especially in terms of paying for police and firefighter pensions.
Local Government Analysis and Business Support
Research commissioned by the city government shows mixed impacts of legalizing video gambling. The net revenue from video gambling terminals is estimated at up to $10 million per year, but this could result in a net loss when considering the shift in casino revenue.
Local business owners, especially in the hospitality industry, support the proposal, believing that video gambling could provide much-needed financial support to bars and restaurants struggling post-pandemic.
Border Competition and Market Realities
Pat Doerr, Managing Director of the Chicago Hotel Association, pointed out that venues in border communities face fierce competition from interstate businesses already offering video gambling services. Legalizing video gambling could help these businesses remain competitive.
Many local business owners support legalizing video gambling, seeing it as a necessary means to increase revenue and compete with neighboring areas.
Employment Impact and Social Costs
Bally's warning of job losses focuses mainly on high-paying positions provided by the casino, and the reduction of these positions would directly affect Chicago residents. The risk of job losses is particularly concerning during a period of significant budget pressure in Chicago.
Supporters believe that video gambling could create job opportunities in other areas, but the specific numbers and quality are yet to be clarified.
Illegal Market Status and Regulatory Challenges
Council member Beale pointed out that Chicago currently has over 3000 illegal video gambling machines operating unregulated. This situation indicates that a complete ban has not effectively prevented video gambling but has driven it underground.
Proponents of legalization believe that regulating these activities is more realistic than attempting to ban them, and could bring urgently needed revenue to the city.
Decision-Making Process and Future Outlook
The city council will continue to discuss the proposal over the coming weeks, needing to balance the economic interests of the city, businesses, and workers. The final decision will depend on assessing the feasibility of coexistence between video gambling and existing casino operations.
Although the debate is far from over, Chicago must decide whether the potential benefits of legalization outweigh the financial and unemployment risks, a decision that will have a lasting impact on the city's gambling industry.
