Plan to allow sports betting at Chicago arenas stumbles amid concerns about casino competition

Chicago aldermen balked Tuesday at a plan to allow sports betting at Wrigley Field, the United Center and elsewhere, despite Mayor Lori Lightfoot’s hope that adding a 2% city tax to the gambling returns would blunt criticism that the sportsbooks would cut into tax money collected from a planned city-run casino.

A joint city council committee — which Lightfoot predicted Monday would advance the sportsbook plan — instead held it amid ongoing questions about whether the books would hurt the casino.

Aldermen said they want to see a city-commissioned report that Lightfoot administration officials said shows the two types of gambling have co-existed elsewhere without harming casino tax bottom line.

And council members asked for clarification on what the mayor meant when she told reporters earlier this week that the city would be on the hook for “infrastructure work” tied to the sports betting facilities. License Committee Chair Ald. Emma Mitts recessed the meeting so officials could get the information.

Council Budget Committee Chair Ald. Pat Dowell, 3rd, called city estimates of $400,000 to $500,000 per year from the proposed city sportsbook tax “paltry” compared to the millions in tax money casino groups have said could be lost if the sports team owners are allowed to open their own locations before the planned casino is up and running.

The developments indicate the mayor has work to do to get the stadium sports betting ordinance through the council.

An earlier version without the 2% for the city faced fierce pushback from potential city casino operator Neil Bluhm and from aldermen who wondered why they should endorse a plan to allow professional team owners to set up their own sports betting facilities when Chicago would see so much higher tax return from gambling in the planned casino.

Even with the change, the casino effective tax rate of 40% is well above the combined 19% tax rate the city, Cook County and the state would collect from the stadium books.

The casino tax revenue is earmarked to help cover the huge shortfalls in Chicago’s public pensions.

But pressure has mounted to pass the stadium sportsbook deal.

In 2009, after the Illinois Legislature approved stadium sportsbooks, Lightfoot said they had “the potential to undermine the viability of any Chicago-based casino. But Lightfoot pivoted to support the idea, saying recently that the books won’t cannibalize the casino and she expected to work with aldermen to adopt the measure.

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Sportsbook sponsor Ald. Walter Burnett Jr., whose 27th Ward includes the United Center, said the 2% the sportsbooks would bring in is a case of “a bird in the hand is better than two in the bush.” Money will start to come in to city coffers while the planned casino is still being chosen from five bids and then built, he said.

And the sportsbook money will help pay for Illinois Gov. J.B. Pritzker’s state infrastructure bill, Burnett said.

But lobbyist John Dunne — representing the Rivers Casino in Des Plaines that’s owned by Bluhm, who’s also bidding on the Chicago casino — called the 2% amendment “a decoy and a distraction that doesn’t begin to make the taxpayers whole.”

The city stands to lose $10 million to $12 million annually in tax revenue from a Chicago casino if stadiums sportsbooks are allowed, Dunne said.

Wrigleyville Ald. Tom Tunney countered that “the jury is still out” on the impact the stadium books would have on casino returns.

Tunney said the vast majority of sports betting happens online rather than on-site, and the book will bring economic activity to the Wrigley Field area on the many days each year when the Cubs don’t have home games.

The ordinance would allow sports gambling facilities to be set up within Wrigley Field, Guaranteed Rate Field, Soldier Field, the United Center and Wintrust Arena, or at sites within five blocks of those stadiums. Two off-track betting businesses licensed in Illinois could also opt to set up sports books in Chicago. And one would be allowed in the casino, when it’s built.

City officials Tuesday pegged the annual take for the city from the 2% tax at between $400,000 and $500,000. And they said that in studying states with casinos where sports betting was introduced, they found no clear evidence that casino spending went down.

South Side Ald. David Moore, 17th, said the city should have done a more thorough study of the impact the sportsbook would have on the casino before asking aldermen to support it.