An effort to legalize video gambling terminals in Chicago took a major step forward Tuesday, but now faces opposition from Mayor Brandon Johnson.
The City Council’s Licensing Committee advanced a proposal by mayoral opponent Ald. Anthony Beale that would clear the way for the gambling terminals to pop up across the city’s neighborhoods.
But the 8-6 committee vote signaled a divide among aldermen on the measure that could foretell difficulty in the full City Council. Some opponents argued the city needs a better cut of the tax revenue generated by the machines that’s now unevenly split with the state, a stance Johnson took himself.
“We can’t leave millions of dollars on the table,” Johnson said during an unrelated news conference. “Whatever comes from the City Council, if it doesn’t maximize the full benefit of what this opportunity could bring to the revenue structure of our city, then I’m not going to be supportive of it.”
Debate over legalizing the machines has simmered for years in the City Council, though a July presentation to aldermen by the city’s top finance leaders cooled a recent push led by a progressive Johnson ally.
The lack of consensus stems in large part from the modest 5.15% of terminal revenue the city would receive, an amount far smaller than the around 30% the state would earn.
The mayor’s chief financial officer, Jill Jaworski, argued in July the meager revenue would do little to offset severe harm the terminals would do to higher-taxed revenue from Bally’s Casino. Legalization would also likely end a $4 million annual payment Bally’s makes to the city, she said.
“We don’t expect it to make a big impact,” she said. “Maybe we make $10 million one year and lose $5 million another.”
But Beale said Tuesday the casino’s so far underwhelming returns and slow construction of its permanent home had brought in too little to shore up the city’s police and fire pensions. Gambling terminals allowed citywide would fare better, he argued.
“This will help kind of plug that hole,” Beale told his colleagues. “At what point do we roll it out? At what point do we look to see what’s best for the taxpayers of the city of Chicago?”
Beale told the Tribune Monday his proposal would generate as much as $60 million in tax revenue each year, but added that number came from a gambling industry group and did not explain how it was calculated.
He also argued Jaworski’s tepid predictions were “total B.S.” and criticized the city finance team’s ability to make reliable projections.
“I know this is a good idea and it’s a revenue generator. If the rest of the state is doing it, why not Chicago,” he said. “This is cut and dry. This is a revenue generator and the city needs revenue,”
Downtown Ald. Brendan Reilly, a staunch Bally’s opponent, said Tuesday the casino project has been an “unmitigated disaster” so far. He called for the city to negotiate with the state for a better cut.
“It has not produced nearly the rosy revenues that we were promised by the previous administration,” Reilly said. “We are in a unique set of circumstances here. We’re in a fiscal crisis.”
Beale’s ordinance would apply to restaurants, performance venues, bowling alleys, hotels, theaters and other venues where the primary function is not alcohol consumption. It would currently exclude bars and taverns, a factor some aldermen signaled a willingness to change that a bar lobbyist said later Tuesday would need to be amended.
Ald. William Hall, a progressive tapped by Johnson to lead efforts identifying new forms of revenue, has previously championed the video gambling terminal push. But Hall criticized Beale Monday for being “anti-collaboratory.”
Beale’s proposal does not do enough to outlaw the already-prolific “sweepstakes” machines, slots-like terminals that operate in a legal gray area by offering noncash payouts, Hall argued. He blasted the proposal as a rushed, “quick grab-and-go solution.”
Beale said Tuesday he has spoken with state leaders who are open to negotiating over the tax revenue split between the city and state.
“But they say the city has refused to come down and even ask for a bigger share,” he said.
Johnson, however, signaled that he would push for a better split. He criticized efforts by state government to take large shares of other tax revenue needed by the city.
“We have seen firsthand when the state of Illinois works to capture more dollars than would have otherwise gone into the local economy,” he said.