Chicago Video Gaming Terminals Could Violate Bally’s Casino Contract

Chicago Video Gaming Terminals Could Violate Bally’s Casino Contract

Chicago is contemplating the approval of slot-like video gaming terminals, known as VGTs, which may pose a threat to the existing contract between the city and Bally’s Chicago. The move comes in the backdrop of a staggering $1.5 billion budget deficit faced by the Windy City.

Current Scenario

  • VGT Authorization Proposal: Recently, the City of Chicago Committee on License and Consumer Protection voted 8-6 in favour of an ordinance that permits certain businesses to apply for VGTs.
  • Illinois Gaming Law: Under Illinois law, establishments with a valid liquor license can install between 6 to 10 gaming machines. Small businesses are restricted to six VGTs, while truck stops can have up to ten.
  • Geographical Restrictions: All VGTs must be positioned at least 1,000 feet away from casinos or racetracks.

    The Need for VGTs

    With Chicago’s long-standing ban on VGTs under consideration for removal, city officials, facing a grim financial landscape, see poker and gaming as potential revenue streams. Alderman Anthony Beale highlighted the importance of seeking additional funds that would not heavily impact local taxpayers.

    “Are we going to turn a blind eye on $60 million to $100 million? Or are we going to be creative to do something different, something the city has never done before?” – Alderman Anthony Beale.

    Potential Financial Gains

    A study commissioned by the city estimates that approving VGTs could yield over $67.2 million annually. Illinois charges a hefty 35% tax on the gross revenue of VGTs, of which a portion is sent back to local government.

    But What About Bally’s Casino?

    Notably, introducing VGTs may compromise revenue sources, particularly from the Bally’s Casino operating in Chicago. The city is amidst constructing a permanent $2 billion resort that seeks to enhance local economic growth.

    Opposition from City Officials

    Chicago Mayor Brandon Johnson initially expressed tentative support for VGTs but has since voiced opposition, citing that the city isn’t simply encountering a spending issue; rather, it’s a revenue challenge. As he stated,
    “We do not have a spending problem in Chicago. We have a revenue challenge in Chicago.”

    The Legal Implications of VGTs

    Contractual challenges loom large if VGTs are approved, as it could breach the Host Community Agreement with Bally’s, which stipulates that the city would not endorse any additional lawful gaming methods. This would reinforce perceptions that Chicago may not be a dependable partner in the gaming business.

    Industry Expert Opinions

    Carl Gutierrez, from the Chicagoland Chamber of Commerce, articulated serious concerns that the introduction of VGTs would unequivocally violate Bally’s contract and could tarnish the reputation of Chicago as a reliable business collaborator.

    Summary

    In conclusion, as Chicago grapples with significant budgetary challenges, the consideration of slot-like video gaming terminals raises crucial questions about its impact on the city’s existing contract with Bally’s. The proposed VGTs try to present a solution to the financial issues at hand but come with legal and reputational repercussions that could reshape the city’s future in the gaming landscape.