Bally’s Warns Chicago of Massive Revenue Losses if Video Gambling Comes to Bars, Taverns

^{Pictured above is the temporary Bally’s Chicago casino, housed in Medinah Temple, that could face revenue setbacks and layoffs if video gaming terminals are allowed to be installed at restaurants and bars across the city. (Photo: Chris Sweda/Chicago Tribune via ZUMA Press Wire)}

Bally’s has warned that Chicago could see major losses in gaming revenue and job creation if city legislators go forward with a proposal to bring video gambling terminals (VGTs) to bars and restaurants.

Bally’s told city officials on Thursday that the city could lose out on $74 million in annual tax revenue and over 1,000 jobs at its temporary and coming permanent casino in Chicago if the plan passes, allowing small businesses across the city to install VGTs.

Multiple Studies Predict Mixed Results, Casino Losses

Some city Aldermen have called for VGTs to grab more revenue for the cash-strapped city. But Bally’s has said that such a move would actually end up costing Chicago money in the long run by driving business away from the casino.

“We estimate that the legalization of VGTs in Chicago could result in a yearly total tax loss of $260 million from Bally’s Chicago Casino,” Elizabeth Suever, vice president of government relations for Bally’s, told local officials. “Of that, the City of Chicago stands to lose roughly $70 million in tax revenue yearly.”

Suever also added that such a move would require a change in the host city agreement between Bally’s and Chicago, likely ending a $4 million annual payment to the city.

Other studies have found similar impacts, if not ones that are quite as starkly bad for the city. 

A July report by Christiansen Capitol Advisors, LLL – a firm commissioned by Chicago Mayor Brandon Johnson's office – offered some nuance on the proposal. They found that adding machines to bars and restaurants could potentially earn the city up to $10 million in revenue some years but might actually lead to overall losses and up to fewer 400 jobs at Bally’s Chicago.

Supporters of VGT legalization throughout the city have questioned these findings, saying that they ignore the fact that casinos like Rivers Casino in Des Plaines have continued to increase their revenues even after nearby municipalities introduced video gambling.

Differing Tax Rates Make VGT Math Challenging

The financial debate largely stems from issues with Illinois tax law. Under state law, Chicago can only keep 5.15% of revenue from VGTs, compared to 20% from casino slot machines– nearly four times that rate.

Some City Council members have urged city Chief Financial Officer Jill Jaworski and others to pressure state officials to change those laws so that Chicago could keep more revenue from VGTs. But Jaworski told members of the City Council’s Subcommittee on Revenue that it was unlikely that the state would change the formula, as the state itself is seeking new revenue sources.

That hasn’t deterred supporters, and neither did Bally’s warning on Oct. 9. Instead, Alderman Anthony Beale (9^th Ward) vowed that he would amend his previous proposal to allow VGTs throughout the city to include 700 more bars and taverns. According to Beale, if the city won’t shut down illegal machines and doesn’t want to raise money via taxes, then something has to give.

“We have over 3,000 illegal machines in the city of Chicago that we’re not getting anything from – not a dime,” Beale said. “We’re allowing these machines to operate illegally, and our great city is not doing anything to shut them down. We can’t have it both ways.”