Lightfoot’s sports betting ordinance stalls amid surprise opposition from mayoral allies
Council members balked when told the city’s take from the 2% tax on gross revenues from sports betting would be $400,000 to $500,000 a year. Ald. Pat Dowell called that amount “peanuts” from a growing industry.
Mayor Lori Lightfoot’s plan to lift the Chicago ban on sports betting — and impose a 2% tax on gross revenues from it — got stuck in a joint City Council committee Tuesday after a surprise buzz-saw of opposition from mayoral allies.
The trouble started when Connor Brashear, chief of staff to Chief Financial Officer Jennie Huang-Bennett, pegged the city’s annual take from a 2% tax on sports betting in and around Chicago stadiums at $400,000 to $500,000.
That’s based on an estimated $25 million in annual revenue from sports betting in Chicago.
“I just think $400,000-to-$500,000-a-year to the city of Chicago is really paltry—even when you add in the licensing fee that these guys are gonna have to pay. It seems like peanuts for an industry that is growing,” said Budget Committee Chairwoman Pat Dowell (3rd).
“I sort of feel like I did when we licensed shared housing and the … Ubers and the Lyfts and all of those guys. We’re not getting the full financial benefit of these companies, which started out small and then, they grew and we’re sort of locked into an amount. 2% is not satisfactory to me.”
Ald. Greg Mitchell (7th) said he’s not opposed to authorizing sports betting in and around Chicago stadiums at some point. The ordinance would have allowed the sports betting operations at Wrigley Field, Guaranteed Rate Field, the United Center and Wintrust Arena.
But Mitchell said he simply believes the city is moving “too fast” and “too early” before knowing how sports betting will impact a downtown casino.
Even if that impact is negligible — as a city gaming consultant suggested without showing Council members the actual report — Mitchell agreed with Dowell that 2% is “very little” and not a sufficient “reward for the risks we’re taking.”
“We’re moving entirely too fast and the upside is very minimal. $400,000 to $500,000? Hell, we burned that up this morning on lights alone in Chicago. I mean — that’s nothing for us,” Mitchell said.
“We have to be more prudent with not only how we spend our money, but with what … agreements we enter into in order to generate sustainable revenue to the city. We really need to take a step back. ... There are too many unknowns. ... The risk-reward is just not there. It’s too little.”
Even Ald. George Cardenas (12th), Lightfoot’s deputy floor leader, complained 2% was “not enough” and the city was “rushing” a sports betting ordinance with no minority participation — one that threatens to undermine the casino revenue needed to shore up police and fire pensions.
“We’re missing this whole picture on the casino. We already have the permission to build it. We have only a selection process to have and just get going on the casino, which is going to be, really, the best asset for the city in a long time,” Cardenas said.
“I don’t need to disrupt that. We have not moved on video gaming because of the same reasons. Because it would affect the casino and take away potential revenue from that.”
Downtown Ald. Brendan Reilly (42nd) asked whether any of his colleagues had seen the city consultant’s study claiming sports betting would have just a 1% impact on casino revenues.
When nobody answered yes, License Committee Chairman Emma Mitts (37th) halted the proceedings and recessed at the call of the chair.
Earlier this week, Lightfoot renewed her longstanding claim that sports betting would not “cannibalize” revenue from a Chicago casino.
She defended the 2% tax as sufficient to cover city “regulatory” and infrastructure costs and said, “We’re in good shape to move this forward. And I look forward to making sure that we get our fair share of the revenues from this.”
Now, the entire ordinance is up in the air, continuing the political equivalent of a heavyweight boxing match that has pitted sports team owners against clout-heavy developers vying to build a Chicago casino.
Before the abrupt adjournment, John Dunn, who had been director of intergovernmental affairs under Mayor Richard M. Daley and now lobbies for Rivers Casino in Des Plaines, reiterated the arguments made by his client, casino magnate Neil Bluhm.
For every $1 Chicago derives from slapping a 2% tax on gross revenues from sports betting, the city will lose up to $4 in casino revenue — money needed to shore up police and fire pensions funds hovering dangerously close to insolvency.
“Desperate to get this approved quickly, they’ve added a 2% tax to give a little cover. Don’t be fooled. This is a fig leaf that won’t begin to make up for the city’s loss. The city will lose 10 to 12 million dollars per year. ... The Chicago casino … will have a revenue drop of as much as $80 million a year, which jeopardizes the entire feasibility of your casino,” Dunn said.
“Focus on what’s best for Chicago taxpayers. This ordinance is a Big W for sports team owners, but an even bigger loss for Chicago casino tax revenue.”