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High taxes could kill any Chicago casino Pols are planning to tax the proposed city casino so heavily that it probably isn't financeable, a consultant reports. The location hardly matters.

Crain's Chicago Business

Tuesday, August 13, 2019  |  Article  |  Greg Hinz

Gambling, Gaming

The former Michael Reese Hospital property would pull in the most revenue for the city of five sites Mayor Lori Lightfoot has suggested as the home of the proposed Chicago casino—but none of the sites may be financially viable.

That's the conclusion of a new analysis by an outside consultant retained by the Illinois Gaming Board to review Chicago's options under state law.

The consultant, Union Gaming Analytics, generally agreed and went even further than Lightfoot, who has complained that new taxes on the proposed facility would be so high as to make it impossible to finance it.

Though the Reese site would pull in more than $800 million a year in gross gambling revenue, more than any of the other four sites Lightfoot asked the consultant to review, it faces a tax rate of about 72 percent of the gross, not counting certain operating expenses, the report said.

With a casino operator expected to make an upfront payment to the state above and beyond regular taxes, even a modest 1 or 2 percent operating margin likely would be wiped out "for many years, if not decades," the report said. 

As a result, the firm said, the five sites, including Reese, are "generally not financially feasible" for any casino operator.

It added that the tax structure overall "shuts the door on the ability of the developer to obtain financing."

The report is likely to spark efforts in Springfield to get lawmakers to reconsider the tax structure for the proposed Chicago casino and several other casinos authorized for other parts of the state.

Crain's plans to update this story.