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‘Tough’ new Illinois Gaming Board chairman faced with massive gambling expansion

The aptly nicknamed Charles ‘Chip’ Schmadeke is getting ready for a whirlwind bidding process for six new and highly coveted casino licenses. Ex-bosses say he has the right temperament for the high-stakes, low-glamor job. 

Charles “Chip” Schmadeke.
Charles “Chip” Schmadeke.
Hinshaw & Culbertson LLP

Charles Schmadeke spent nearly two decades working quietly and diligently behind the scenes at the top legal ranks of Illinois government, associates say.

This coming week, the Springfield lawyer becomes the face of one of the state’s most closely watched agencies as it’s tasked with overseeing Illinois’ largest gambling expansion ever.

And as the aptly nicknamed “Chip” Schmadeke prepares for a whirlwind bidding process for six newly authorized — and highly coveted — casino licenses in the months ahead as Gov. J.B. Pritzker’s newly appointed Illinois Gaming Board chairman, Schmadeke’s former bosses say he has the right temperament for the high-stakes, low-glamor job.

”You’ve gotta be smart, you’ve gotta be tough, you’ve gotta be ethical,” former Illinois Attorney General Neil Hartigan said. “And he’s all those things. He’s an excellent lawyer, a rock-solid professional.”

The Northern Illinois University graduate earned his law degree from John Marshall Law School and started working in the state attorney general’s office in 1982.

That was the tail end of the tenure of Republican Attorney General Ty Fahner, who recalls Schmadeke as “a strong legal mind and a hard worker.”

Fahner said, ”He’s got to be a strong fit to lead” the gaming board.

Former Illinois Attorney General Ty Fahner.
Former Illinois Attorney General Ty Fahner.
AP

Schmadeke stayed on through the Democrat Hartigan’s two terms, serving as a top deputy to the attorney general as chief of the state agency’s General Law Bureau. That sprawling department represents the state’s 250-plus commissions, boards and other agencies in court for all manner of lawsuits. Schmadeke oversaw the handling of about 2,000 cases a year, ranging from consumer issues to regulating the transportation of nuclear waste.

”The General Law background really gives you an understanding of all the pieces,” Hartigan said. “I think we had a very strong, aggressive office. And that came from people like Chip, people who were delivering.

“You’ve got to really know what’s going on in all facets of government with General Law. You need a thorough knowledge in how to take the largest division and deploy it in the right way and keep the senior levels informed. He was good at that. He was very ethical, and very highly thought of.”

Former Illinois Attorney General Neil Hartigan.
Former Illinois Attorney General Neil Hartigan.
Sun-Times files

Schmadeke led the General Law Bureau until 1999 under Democrat Attorney General Roland Burris and Republican Jim Ryan.

He moved to then-Comptroller Dan Hynes’ office as general counsel. Hynes is now one of Pritzker’s deputy governors.

”That’s where [Schmadeke] really probably got to understand the revenue side of things: local government supervision,” Hartigan said. “That’s what’s really going to factor into his gaming board leadership.”

Schmadeke left for private practice in 2003, joining the law firm Hinshaw & Culbertson LLP, where he’s now partner-in-charge of the firm’s Springfield office. His specialties include civil rights and constitutional litigation, government affairs, labor and employment, commercial litigation and municipal licensing litigation, according to Hinshaw.

Managing partner Bob Shannon, who has worked with Schmadeke for about a decade, called him one of the Hinshaw’s “go-to guys for very serious and sensitive issues.

”He’s one of the key litigation partners we have in the group on meaty, constitutional matters,” Shannon said. “He has a really deep understanding of the legal workings of government thanks to his past senior positions in the state. He’s a very well-rounded litigator.”

The firm, which has hundreds of lawyers nationwide and in London, also boasts a gaming law division with “an intimate familiarity with the gaming industry, as well the breadth of experience essential to effectively handle the range of legal challenges facing” casino and video gaming operators, manufacturers and suppliers in the gaming industry.

Schmadeke “will not be accepting any matters involving the Illinois Gaming Board or gaming during his tenure as chairman,” according to the firm.

Hinshaw & Culbertson is the firm Illinois House Speaker Mike Madigan has paid $297,349 in legal fees so far this year.

Schmadeke did not respond to interview requests ahead of his first gaming board meeting, which will be held Thursday at the agency’s Loop headquarters.

The agency is responsible for investigating and monitoring businesses that want to run gambling operations in Illinois. The board decides who gets licenses.

”I appreciate the opportunity to work on behalf of the citizens of Illinois to ensure this significant expansion of gaming options in the state is accompanied by a robust regulatory response,” Schmadeke said in a written statement through his law firm. “The gaming board and staff have a lot of work ahead of us, but I’m fully confident that we are up for the challenge.”

That challenge includes:

• Licensing six new casinos, among them a 4,000-gaming position behemoth in Chicago.

• Nearly doubling the maximum number of gaming positions for most of the state’s 10 existing casinos and any new ones to 2,000.

• Introducing as many as 1,200 table games and slots at each of the state’s three existing horse-racing tracks and licensing a new one in the south suburbs.

• Adding more video gambling machines on top of the 32,000-plus now spread across the state.

• And setting up Illinois’ new industry of legal sports wagering.

The five other casino licenses are authorized for Waukegan, Rockford, Danville, Williamson County and an yet-unchosen south suburban Cook County municipality.

And in a state desperate for revenue, the board is facing pressure to establish rules and to push licensing procedures into overdrive. Several gambling operations already have been touting their plans for the expansion, pending the gaming board’s approval.

The unprecedented expansion is being thrown at a gaming board that past chairmen have said has been understaffed and overworked since the state’s first casino opened in 1991. The gaming board had 235 employees at the end of last year. With the massive gambling expansion, Pritzker’s budget sets aside money for 35 new employees and raises the agency’s budget to $162 million.

“Never, ever has the gaming board had adequate staffing,” said former Cook County Circuit Judge Aaron Jaffe, who chaired the gaming board from 2005 to 2015. “We are talking about extensive investigations. There’s always opportunity for the criminal element to creep in someplace.”

Aaron Jaffe, former Illinois Gaming Board chairman.
Aaron Jaffe, former Illinois Gaming Board chairman.
AP

For their efforts, Schmadeke and the four other gaming board members will be paid $300 per monthly meeting.

The rest of the board is relatively green, when it comes to gambling.

Along with Schmadeke’s appointment, Pritzker filled the final seat on the gaming board with Boeing Corp. senior counsel Anthony Garcia.

Altogether, four of the five members have been installed since March, not to mention former Securities and Exchange Commission counsel Marcus Fruchter, hired as the gaming board’s administrator in May.

Pritzker’s other appointees include Chicago police Sgt. Ruben Ramirez Jr., a supervisor in the city’s Organized Crime Bureau, and CNA Insurance corporate attorney Dionne Hayden.

Northbrook accountant Steve Dolins was appointed by former Gov. Bruce Rauner in 2016.

(From left) Illinois Gaming Board members Steve Dolins, Anthony Garcia, Dionne Hayden and Ruben Ramirez.
(From left) Illinois Gaming Board members Steve Dolins, Anthony Garcia, Dionne Hayden and Ruben Ramirez.
Provided photos

Schmadeke has made 15 contributions totaling $3,200 to political campaigns since 1995, mostly to Republicans, according to Illinois Board of Elections records. That includes $1,650 to his then-boss Jim Ryan, $500 to the Sangamon County Republican Foundation, $500 to Democrat Hynes and $100 to former Democratic Attorney General Lisa Madigan.

The new gaming chairman’s newly filed economic interest statement doesn’t list any business interests other than his partner position at Hinshaw & Culbertson.

Garcia, who previously was a federal prosecutor and has worked for the CIA, gave $250 to Mayor Lori Lightfoot’s campaign, during which she spoke in favor of a Chicago casino.

Dolins doesn’t have any personally registered political contributions, but his family’s accounting firm gave $2,050 to Illinois Senate President John Cullerton, D-Chicago, and $400 to former state Sen. James DeLeo, D-Chicago, between 2004 and 2011.

In 2012, Hayden gave $200 to then-state Sen. Kwame Raoul, a Chicago Democrat who is now attorney general.

State law requires that the board include a lawyer, accountant and someone with law enforcement background and that members possess “a reasonable knowledge of the practice, procedure and principles of gambling operations,” a clean criminal record and no financial interest in any gambling operations.

Shortly after the passage of the gaming bill, state Sen. Terry Link, D-Vernon Hills — who has pushed for gambling expansions for more than two decades — raised eyebrows when he suggested Pritzker would appoint members to make the board more “pro-gaming.”

Pritzker’s office has said his administration will “work as a partner with local communities and the board to support them in their efforts to create economic development across the state and that the board members “will all comply with the language contained in SB-690. We look forward to having a skilled and diverse board that will both regulate and effectively support gaming in Illinois.”

At a June 13, 2019, meeting of the Illinois Gaming Board (from left): member Steve Dolins, former chairman Don Tracy and members Ruben Ramirez Jr. and Dionne Hayden. 
At a June 13, 2019, meeting of the Illinois Gaming Board (from left): member Steve Dolins, former chairman Don Tracy and members Ruben Ramirez Jr. and Dionne Hayden.
Mitchell Armentrout / Sun-Times