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City Council Committees Endorse Plan To Lift Ban On Sports Betting In Chicago

by Todd Feurer, CBS Chicago web producer

CHICAGO (CBS) -- Nearly a week after Mayor Lori Lightfoot's bid to lift the ban on sports betting in Chicago stalled in a joint City Council committee, aldermen on Monday backed an ordinance to allow Chicago's professional sports teams to open sportsbooks in or near their stadiums.

The ordinance, approved by a 19-7 vote of the Zoning and License committees, would allow sportsbooks to be set up at the city's five major sports stadiums – Guaranteed Rate Field, Soldier Field, the United Center, Wintrust Arena, and Wrigley Field – or at a permanent location within five blocks of those arenas.

Sportsbooks would be limited to 15 betting windows per facility, and the city would collect a 2% tax on gross revenues from sports betting – on top of the 15% state tax and 2% Cook County tax. City officials estimated sports betting in Chicago would generate approximately $20 million to $25 million in annual revenue for the sports books, meaning $400,000 to $500,000 in tax revenue per year for the city.

The Zoning and License committees originally were set to vote on the ordinance on Dec. 7, but that meeting was recessed when it became clear the proposal faced opposition even from some of the mayor's closest allies.

After days of behind-the-scenes lobbying, and public pleas from the owners of the Blackhawks, Bulls, Cubs, and White Sox, aldermen on Monday paved the way for full City Council approval later this week.

Last week, aldermen balked at approving the sports betting ordinance, raising concerns that sportsbooks would "cannibalize" revenue from a future Chicago casino.

Billionaire casino magnate Neil Bluhm, who owns Rivers Casino in Des Plaines and is among the bidders for a Chicago casino, has warned that allowing sports betting in Chicago would mean the city's casino would lose significant business, costing the city $11 million to $12 million in annual tax revenue, far more than the $400,000 to $500,000 in tax revenue that would be created by the city's proposed 2% tax on sports books.

Bluhm echoed that warning on Monday, telling aldermen "nothing has changed since last week."

"I can assure you as an experienced casino and sportsbook operator, that this ordinance will cost the city of Chicago serious money," Bluhm said, claiming the ordinance would essentially create five "mini-casinos" that would take away visitors and money from a Chicago casino.

Bluhm claimed the proposed 2% tax on sports betting in Chicago would generate "virtually nothing for the city, perhaps even a loss once you factor in expenses."

"Why take a chance like this? There's a big risk with no reward," he said.

However, Bulls and White Sox chairman Jerry Reinsdorf essentially accused Bluhm of hypocrisy, claiming the casino operator previously had met with him and other sports team owners in Chicago in an effort to operate sportsbooks in their stadiums.

"That was long after the casino was approved for Chicago. At that time, he had no assurance he would be chosen to operate a casino in Chicago, but was not concerned that these books would in any way cannibalize whoever was chosen to operate the casino. It makes me wonder, if he had gotten his way back then, would we be having this meeting today?" Reinsdorf said.

Meantime, the Lightfoot administration and other casino groups have rejected Bluhm's argument that allowing sportsbooks in Chicago would cause a significant revenue loss at a future Chicago casino.

City officials have pointed to a study by Las Vegas-based Union Gaming, which disputed Bluhm's warnings about sports betting hurting revenue at a Chicago casino.

Union Gaming co-founder Grant Goverston told aldermen last week that the study analyzed six states that legalized sports betting to determine its impact on traditional casino revenue, and found that some states saw an increase in revenues at casinos, while others saw a decrease.

"There was no rhyme or reason to it," he said.

Goverston said, on average, casino revenues in those states dropped only about 1% after the introduction of sports betting, and he stressed that other factors such as the pandemic also played a role in that small dip in casino revenues.

"Our analysis suggests that there is no discernable … impact on traditional casino revenues when sports betting is introduced. There's no reason to think that Chicago and Illinois should be any different," Goverston said.

Goverston stood by the Union Gaming study on Monday, while a representative for Bally's Corporation, which is also among the bidders for a Chicago casino, said they're in favor of lifting the ban on sports betting in Chicago.

"We welcome the presence of retail sportsbooks at Chicago's legendary professional sports venues, and are confident it will have no impact on our casino revenue expectations," said Wanda Young Wilson, who serves on board of directors of Bally's. "We are strongly in favor of this ordinance."

Ald. Tom Tunney (44th), who chairs the Zoning Committee, also said he's confident the sports betting ordinance would not cause a significant loss of revenue at the city's casino. That money is to be dedicated to shoring up the city's grossly underfunded police and firefighter pension systems.

"This (sports betting) is the future, and we're seeing more and more people of all ages doing sports betting, and good for them if that's the way they choose entertainment," Tunney said.

Tunney noted that approximately 95% of all sports betting is done online, not at sportsbooks, and also pointed out that, while the city will only collect a 2% local tax on sports betting, the 15% state tax will be used to fund infrastructure projects statewide.

Several aldermen had also voiced concerns that the sports betting ordinance does not require companies owned by minorities or women to get a specific share of sportsbook construction and operations contracts.

Rather, the ordinance only requires the city to "actively seek to achieve racial ethnic and geographic diversity when issuing primary sports licenses" and requires sportsbook operators to provide annual reports on all procurement goals and spending by minority- and women-owned partners.

Lightfoot noted the state law allowing for sports betting operations in Illinois gives the city limited control over licensing such facilities, and said critics who want more guarantees for minority- and women-owned business participation should lobby Springfield for changes in state law.

The mayor noted state lawmakers approved sports gambling in Chicago in 2019, just days after she took office, and she said there was "ample opportunity for the critics to weigh in at that point."

"A lot of the people who are complaining now didn't raise a single word of criticism back then," she said.

Ald. Raymond Lopez (15th), one of the mayor's harshest critics, said rather than focusing on the debate about whether to allow sports betting in Chicago, the City Council should be taking steps to lift the ban on video gambling in Chicago, to allow for slot machines at bars, clubs, and other businesses.

"If we are looking at ways to actually have sustainable growth within our city, it is through being able to tax revenue and to expand our tax base through the winnings, and video gaming allowed us to do that," he said. "That immediately can be addressed tomorrow. We can immediately follow the state's guidelines, legalize and license all of these machines … that are in all our neighborhoods already under the guise of illegal sweepstakes, and turn them into something we can license, something we can tax, and something we can build upon tomorrow, but we're not having that conversation."

Lopez said, instead, aldermen have been focusing on fight between wealthy sports team owners and even richer casino owners about if and how they should benefit from expanded gambling in Chicago.

"We have people worth hundreds of millions of dollars – five of them – arguing with another one who's worth billions of dollars over who gets to continue to make more money, while those neighborhood venues throughout all of our communities have been left in a lurch ever since gambling was allowed to expand in the state of Illinois," Lopez said.

With the sports betting ordinance having passed the License and Zoning committees on Monday, the full City Council is now expected to vote on the measure on Wednesday.

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