Chicago casino plan craps out in waning hours of veto session

SPRINGFIELD — Mayor Lori Lightfoot’s efforts to get a full house of state lawmakers to agree to lighter taxes on a Chicago casino went bust on Thursday in the waning hours of the veto session.

And Chicago Democrats weren’t happy.

Instead, lawmakers passed a separate, watered down gambling fix bill that beefs up background checks on applicants for casino and sports wagering licenses.

The legislative hiccup represents the latest delay to create a Chicago gambling mecca, while the five other municipalities granted new casinos under the legislation signed in June have already submitted developers’ applications to the Illinois Gaming Board.

Ultimately, Lightfoot and her team couldn’t get enough support to pass the compromise measure — and some lawmakers wanted an extra piece of revenue for their districts.

But bill sponsor State Rep. Bob Rita, D-Blue Island, called the mayor a “great partner, willing to do whatever it takes” to get to the finish line, including calls to members. That also included a rare visit to the House Democratic caucus on Tuesday.

And the setback doesn’t mean the big city casino won’t eventually break ground. The tax structure issue could be brought up again when lawmakers return to session in January.

“While we are disappointed that a much-needed fix to the gaming bill won’t be made during this compressed veto session, the Chicago casino is still very much in the sightline thanks to the progress we’ve made with our state partners,” Lightfoot said in a statement, adding that she looks “forward to continuing our conversations about advancing the casino starting in January.”

The rookie mayor still has the support of Pritzker, who is counting on revenue from the Chicago mega-casino to help fund his signature $45 billion capital projects plan.

“The General Assembly made important technical changes that were needed to ensure the smooth operations of the gaming legislation, but work remains to make sure the Chicago casino opens,” Pritzker’s office said in a statement. “The governor is committed to continuing to work with the city and other stakeholders to finalize this important element.”

In attempting to pass the cleanup measure, Rita said he’s working with the mayor’s office “to try to figure out what we can do to get over the goal line.” Rita later told reporters there were several “sideline issues” — some not even gambling related — among the House caucus, which stalled support.

The cleanup measure vote came a day after the Illinois House passed Gov. J.B. Pritzker’s pension consolidation plan to help downstate fire and police pensions.

And Chicago Democrats who supported that plan argued it’s time for lawmakers from across the state to help the city deal with its pension mess — which the Chicago casino is supposed to do.

“We took a leap of faith, but this body, as somebody said, needs to stop the regionalism and take a leap of faith that will allow Chicago to move forward appropriately and responsibly with a casino that will fund the projects that are going to be built all over this state,” State Rep. Kelly Cassidy, D-Chicago, said during debate of the casino cleanup measure.

There is another avenue ahead of the January session. As some mayoral critics have urged, the city could put the Chicago casino license out for bid anyway — even with the with tax structure that a state-hired consultant deemed too “onerous” for any prospective developer to break even — and see if anyone comes to the table.

But Lightfoot has said all along she knew the tax structure wouldn’t work. She signed off this week on a compromise from Illinois Senate President John Cullerton and Rita which would have thrown out the original 72% effective tax rate on the casino, while also giving the developer more time to pay back a hefty “reconciliation fee.”

The legislation currently in place taxes the Chicago casino along the same graduated system as Illinois’ 10 existing casinos, while slapping on an additional 33.3% privilege tax to locate in the city.

The revised structure would have introduced a new graduated tax system specific to the Chicago casino with a higher overall tax rate compared to existing casinos but with a smaller percentage going to the state, and a relatively bigger chunk earmarked for the city.

For example, an existing casino is taxed at 15% of its gross revenue from slot machines up to $25 million. Under the proposal, the Chicago casino would have been taxed at 22.5% of its gross revenue, with 12% of that going to the state and 10.5% going to the city for its police and firefighter pension funds.

That didn’t sit well with some Republicans who viewed it as a special deal for Chicago. Most existing casino towns get a 5% cut of their casinos’ gross revenue.

The amended bill that fell short Thursday also briefly held out a hope for a new horse racetrack and casino in the south suburbs, weeks after Pritzker tanked a Tinley Park racino proposal led by video gambling magnate Rick Heidner, after Heidner’s name surfaced in federal search warrants.

The amendment would have opened the door to a new harness racetrack in Crete, where Balmoral Park shut down in 2015 — and which Heidner made a failed bid to purchase out of bankruptcy. But the struggling horse racing industry did not net any legislative wins in the fall veto session.

Tina Sfondeles reported from Springfield; Mitchell Armentrout reported from Chicago.