Alderman has the answer to financial crisis posed by coronavirus: legalize video gaming

Two years ago, Mayor Lori Lightfoot’s floor leader, Ald. Gilbert Villegas, tried and failed to legalize “sweepstakes” machines; those lobbying efforts are part of the federal case against now-indicted former state Rep. Luis Arroyo.

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Video gambling machines like these are banned in Chicago, but so-called “sweepstakes” machines, which look similar, can be found in the city.

Video gambling machines like these are banned in Chicago, but so-called “sweepstakes” machines, which look similar, can be found in the city.

Sun-Times file photo

Chicago should legalize video gambling to plug a giant hole in the city’s $11.6 billion budget caused by the coronavirus, Mayor Lori Lightfoot’s City council floor leader said Thursday.

With conventions and concerts cancelling, professional sports leagues on hiatus and more and more employees working from home, city revenues are dropping like a rock.

A budget based on a bunch of shaky assumptions even before the crisis will now hemorrhage revenue from taxes on everything from amusements, retail sales, hotel rooms and restaurant meals to parking and gasoline — not to mention lost congestion fees. CTA fares are also certain to take a hit.

At the risk of re-opening an old wound, Ald. Gilbert Villegas (36th), the mayor’s floor leader, suggested a possible life raft.

“Video gaming,” he said with a nervous laugh.

“Video gaming,” he repeated. “If you look across the state, it’s generating a ton of money. And we haven’t been involved. I think there’s an opportunity to capture some revenue there.”

The nervous laugh is tied to the burgeoning corruption scandal that has spread from Chicago’s City Hall to the south suburbs and Springfield.

Two years ago, Villegas introduced an ordinance that went nowhere that would have legalized sweepstakes machines in Chicago after being lobbied by James T. Weiss, a son-in law of former Cook County Assessor and Democratic Party Chairman Joe Berrios.

Weiss owns and operates sweepstakes machines. His lobbying efforts are part of the federal criminal case against now indicted former state Rep. Luis Arroyo.

In October, Commonwealth Edison cut ties with a lobbying firm co-owned by Villegas.

Villegas has insisted he never lobbied anybody, did no work for ComEd and started “making moves to divest” himself from Stratagem, the company he formed with Elgin City Council member Baldemar Lopez, when the City Council voted in July to impose new restrictions on outside employment by aldermen.

The fact that Villegas is willing to bring up the touchy subject again shows how dire the financial crisis tied to the coronavirus is likely to be.

Lightfoot’s options are even more limited by her decision last summer to save $22 million by terminating a $1.4 billion line of credit negotiated by former Mayor Rahm Emanuel to serve as a back-stop in the event of a crisis like the one the city finds itself in right now.

“It was a savvy move to save $22 million. There’s no indication that they won’t be able, if they need, to renew the line of credit. ... Interest rates are lower now than when they got rid of it,” said Civic Federation President Laurence Msall.

“What’s gonna be more important than the line of credit is what the plan is to deal with the declining revenues that are clearly starting to be impacted. ... It’s going to be significant. The biggest challenge is, just as their revenues are likely to take a hit, the expectation and demand for city services — especially health care” will increase.

Matt Fabian, a partner at Municipal Market Analytics, agreed the city “should still be able to get a line of credit if it comes to that.”

“While the city’s particulars are, maybe, a little more vulnerable than before, the lending environment is still pretty strong overall. The state budget giving more money to Chicago schools doesn’t hurt either,”  Fabian wrote in an email to the Sun-Times.

But, Fabian noted, the city “did the big scoop-and-toss with the sales tax bonds and hadn’t made much progress in paying down its pensions when times were good.”

“If the economy is going to get softer now, it will be even harder for Lightfoot to use sound, recurring budget fixes versus more gimmicks. That investment losses in the pension will make the budget gap wider doesn’t help,” Fabian said.

Kristen Cabanban, a spokesperson for the city’s Office of Budget and Management, said the situation is not as dire as it seems.

She noted the city had “more than $3 billion in cash on hand” on Dec. 21 and “locked in more than $100 million” in windfall savings following a bond refinancing deal completed before the pandemic.

That provided City Hall with “additional cushion in the event of a possible economic slowdown,” Cabanban wrote in an email to the Sun-Times.

“Calling up lines of credit that were terminated last year is not something that the city is looking at right now,” she said. “Even though we haven’t seen the fiscal impact of coronavirus at this point, we are closely monitoring our expenses and will make spending adjustments if needed.”

Emanuel was dead-set against video gambling for fear that Chicago would become saturated with video machines in bars and restaurants in already challenged neighborhoods.

But his floor leader, too, argued that now that unregulated “sweepstakes” devices that look and work almost exactly like video poker machines are in bars, gas stations, convenience stores and laundromats all over the city, it’s depriving the city of sorely-needed tax revenue.

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