Chicago Aldermen Consider Video Gambling in Bars, Airports to Boost Revenue

If Ald. William Hall, 6th, gets his way, the gambling machines will be broadly legalized across the city next year, popping up in places like bars and restaurants to help address the city’s budget woes.

But the freshman alderman’s push for widespread legalization faces two challenges: a competing ordinance to legalize the machines only at the city’s airports and apprehension from Mayor Brandon Johnson’s administration.

Johnson’s top finance leaders shared with aldermen a study analyzing how legalizing the machines would affect city finances Monday during a Revenue Subcommittee meeting. Under the state’s current tax structure, the payout would be underwhelming, Chief Financial Officer Jill Jaworski said.

“We don’t expect it to make a big impact,” she said. “Maybe we make $10 million one year and lose $5 million another.”

The study by gambling consulting firm Christiansen Capitol Advisors LLC determined legalization would likely neither make nor cost the city money. While the machines would generate

That would mean a likely end to Bally’s annual $4 million payments to the city, as many as 400 lost jobs at the casino and less slot machine revenue, Christiansen consultant Sebastian Sinclair said.

“When you take all of that into consideration, you end up just slightly positive on what the city collects, to just slightly negative,” Sinclair said.

Even though slot machines and gambling machines are “close substitutes,” Chicago would collect just 5.15% from video gambling machine terminal revenue, far below the around 20% it collects from slot machine revenue, Sinclair added.

Jaworski hinted that Chicago should push for a greater share, noting legalization in the city is “highly in the state’s interest.”

“If we had a different percentage … then we’re going to see we are making more money,” she said.

The argument has raged for years in Chicago about whether legalizing more decentralized gambling would help the city’s bottom line or simply cannibalize tax revenue that would otherwise come in from the casino.

Aldermen clamored for more answers on the negotiations and how a larger share would affect Chicago, but grew frustrated as they got few clear responses.

“We’re here to talk about revenue, and you guys don’t have numbers. This is crazy,” said Ald. Jason Ervin, 28th, Johnson’s handpicked Budget Committee chair. “We’ve got to figure out a way to make this work.”

Asked if the mayor is negotiating the tax split with state leaders, Johnson spokesperson Cassio Mendoza said the mayor’s team “will continue to engage with stakeholders in both the City Council and the state legislature” on the subject, but did not directly answer.

“The Mayor’s office welcomes their ideas and feedback, including any related to taxing structures or other considerations,” Mendoza said in the statement.

Aldermen also acknowledged that whether they like it or not, gambling machines are already in their neighborhoods’ bars, restaurants and gas stations via so-called “sweepstakes” machines, the slots-like terminals that operate in a legal gray area by offering noncash payouts.

If the city legalizes video gambling terminals, it could also outlaw those machines, Ald. Felix Cardon, 31st, said.

“We’re losing a lot of money off sweepstakes and I think we as a council should look at drafting an ordinance on that,” Cardona said.

Compared with the tepid estimates from Johnson’s team, Hall last week shared a far rosier financial prediction on what video gambling machines would add. Legalization could bring in as much as $48 million in tax revenue, plus another $291 million for the state, he said.

The measure — championed by the Hospitality Business Association of Chicago, a lobbying arm for bars and restaurants — would also help struggling local businesses make more money, added Hall, who chairs the Revenue Subcommittee.

“How can we walk away from that type of money,” he said. “We have to Trump-proof our state, and right now we are playing a dangerous game.”

Ald. Gilbert Villegas, 36th, proposed a more limited legalization push that would only allow video gambling terminals at O’Hare International Airport and Midway Airport. He described his ordinance Monday as the “low-hanging fruit” amid the thornier citywide discussions and said it would not affect casino revenue.

“It’s not a billion-dollar solution, but it’s moving in the right direction,” Villegas said. “We’re talking about the majority of the money being generated by people who are from outside the city.”

Aldermen also discussed during the Monday meeting other generating ideas, including expanding where rideshare users face added per-trip fees and hiking the city’s liquor tax.