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Daley to state: Give Chicago a break on casino fee

Posted October 16, 2007 11:00 pm

Mike Ramsey

Chicago Mayor Richard Daley's administration urged an Illinois House panel Wednesday to waive or reduce a proposed $800 million fee the city would have to pay for a casino license.

An unprecedented city-owned casino is included in a gambling-expansion bill the Senate approved last month. But Chicago's chief financial officer, Paul Volpe, said the city could not turn enough of a profit if it were required to fork over nearly $1 billion for the gaming license, given the debt the local government would have to assume.

After paying a 50 percent gaming tax to the state, he said, cash-strapped Chicago hopes to use much of its share of proceeds for local capital projects such as schools, libraries, parks and police and fire stations.

"For every one dollar paid to the state of Illinois for a license fee, it's less funding available for what we envision as a substantial capital program to improve our city," Volpe said during a packed hearing at the James R. Thompson Center that lasted six hours.

Some members of the House Gaming Committee were skeptical of the city's qualms, given what a Chicago casino license could bring in the private marketplace. State Rep. John Fritchey, D-Chicago, pressed Volpe on what the city could afford, but the budget expert held back.

"Zero works, I'm here to report that today," Volpe said, eliciting laughter. "Eight hundred (million) does not."

Volpe's remarks represented the most vocal support the Daley administration has made for a Chicago casino in recent memory. The Democratic mayor has long advocated a city-owned, privately managed casino that would funnel most profits to government coffers, but he has been cautious about endorsing particular bills.

Volpe said a Chicago casino of 4,000 "positions" could create 1,900 permanent jobs and generate as much as $1 billion in annual revenues, provided lawmakers do not saturate the Illinois gaming market.

Legislation for the land-based casino in Chicago (HB2035) also would create two more riverboat casinos in Illinois, plus increase capacity at existing gaming sites.

The gambling expansion is central to a $13 billion capital construction program the Senate approved. The bill is considered a starting point for negotiations among legislative leaders.

The momentum for new casinos has drawn opposition from anti-gambling activists. Earlier this week, the Chicago Crime Commission and the Better Government Association said Chicago city government should not be entrusted with casino ownership because of its history of corruption scandals.

A five-person authority - with three mayoral appointees and two state appointees - would oversee the casino. Volpe said that panel would be subordinate to the Illinois Gaming Board, which regulates the state's nine private riverboat casinos.

The Chicago authority is a legal "vehicle" to hold the casino license, a Daley representative said.

Critics have complained that HB2035 would allow the city to hold the license forever, even if public misconduct occurred. Gaming Board Chairman Aaron Jaffe said that provision should be reversed to allow for potential revocation.

"If we don't have that, we lose one of our great tools," he said.

Jaffe said his agency's staffing levels are a concern, too. The gambling expansion sent to the House would more than double the number of gaming positions statewide, from 11,000 to more than 23,000. Jaffe said the Gaming Board's staff would need to increase by up to 200 people or "you compromise the integrity of gaming."

The Gaming Board currently has 140 employees and an annual budget of $18.3 million, administrator Mark Ostrowski said.

Wednesday's hearing also helped shine light on some of the deal-sweeteners that may emerge in a final gaming bill. Potential perks include financial incentives or racetrack slot machines for the state's horseracing industry and a cut of gambling revenue for Cook County government.

Meanwhile, Chicago State University stands to get a share of revenue from Illinois' 10th casino license, if the permit emerges from a long-running legal dispute, said Sen. Rickey Hendon, a Chicago Democrat who shepherded HB2035 through his chamber.

He said he originally wanted all state universities to share in the revenue stream but was told by Senate President Emil Jones, D-Chicago, to single out Chicago State. Jones has been a patron of the college.

"I do have a president who I serve diligently, and that was his desire," Hendon said.

Mike Ramsey can be reached at (312) 857-2323 or ghns-ramsey@sbcglobal.net.

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