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Chicago City Council Lifts Sports Betting Ban, Sportsbooks to Operate at or Near Stadiums
By Jeff Osienya Dec 16, 2021 LegalityProfessional sports venues in Chicago have received approval to operate retail sportsbooks, following the lifting of a ban on in-city sports betting despite some opposition. The activity will be taxed at 2% of the gross wagering receipts.On Wednesday, the Chicago City Council ushered in a new era of in-city regulated sports betting after lifting the ban that it had on the activity. The home rule sports betting veto was eased by a substitute ordinance sponsored by Alderman Walter Burnett. Part of the language of this substitute measure also permitted sports venues in Chicago to apply for sports betting operation licenses through Illinois. Thanks to the approval, sportsbooks can now be opened within a five-block radius of the following five pro sports teams’ facilities in the Chicago City:
- Wintrust Arena – Sky
- United Center – Blackhawks, Bulls
- Guaranteed Rate Field – White Sox
- Wrigley Field – Cubs
- Soldier Field – Bears
On Monday, Alderman Burnett’s substitute ordinance received the green light from a joint committee and moved to the city council Joint Committee where it was quickly okayed without debate. However, Emma Mitts, the Chairperson of the Joint Committee, pointed out that the measure had received objections from several council members during her presentation. Burnett first filed the original home rule sports betting ordinance earlier in July. It was then redirected to the Joint Committee by Anthony Beale, one of the seven Alderman who objected to the measure’s passing on Wednesday.
Besides the five professional sports venues, two more off-track betting (OTB) facilities operating under an Illinois license could also be allowed to operate sportsbooks in the city. One of the OTBs would be set up in the casino when its construction is completed. Chicago plans to issue two types of licenses for sports betting, the primary and secondary license. The annual fee for primary sports wagering licenses will start at $50,000, with another yearly renewal cost of $25,000. For a secondary sports wagering license, licensees will pay from $10,000 and part with $5,000 every year for renewal.
A total of 15 kiosks or betting windows will be permitted at each sportsbook location unless customers can also purchase food and drinks. There will also be a limit on the opening hours for the sportsbook. From 10 a.m. to midnight on Monday to Thursday, whereas on Friday, Saturday, and Sunday, the facilities will be allowed to open business an hour early at 9 a.m. Additionally, the sportsbooks will be permitted to extend their operations until 1 a.m. instead of midnight on Saturday and Sunday. Finally, as excepted, the age limit for sports betting will be 21 years old.
2% Taxation on Gross Sports Betting Receipts, but is it Worth it?
On top of lifting the ban and allowing pro sports venues to seek sports betting licenses, the ordinance also places a 2% city tax on the in-city sports betting activity. This city taxation rate was included in a bid to appease critics who feared that the stadium sportsbooks venues would eat into tax income that would be generated from Chicago’s planned casino.
From the 2% tax rate, Chicago’s Business Affairs and Consumer Protection Department expects that the city will collect up to about half a million dollars every year, from annual in-city sports betting revenue projected to hit about $25 million. Funds collected from taxing the activity in Chicago will be channeled towards the city’s public pensions.
Still, some aldermen pointed out that the amount of in-city tax revenue collected from sports betting is just but a shadow of the millions of dollars in taxable income that casino proponents would lose. Huge volumes of casino income will go down the drain should the city allow owners of professional sports teams to “cannibalize” the casino establishment with their betting facilities.
According to a report by the Chicago Sun-Times, Neil Bluhm, the co-founder of Rush Street Gaming, opposed the ordinance at the Monday Council Committee meeting, saying:
Quote“The city could lose $10 million to $12 million per year and potentially make the new Chicago casino less successful if we are right. Why take a chance like this? There’s a big risk with no reward. I urge you to vote no for this ordinance...I can assure you, as an experienced casino and sportsbook operator, that this ordinance will cost the city of Chicago serious money.”
In his opposing statement, Bluhm, the billionaire casino magnate, also claimed that the in-city sports betting measure would basically lead to the creation of five ‘mini-casinos.’ These sports betting facilities would, in turn, end up driving visitors, and of course, revenue from the casino in Chicago.
The Rush Street Gaming co-founder owns a minority stake in the White Sox baseball team and the Bulls basketball team. Additionally, Bluhm also has a stake in two of the five casinos recently proposed in downtown Chicago. Rush Street Gaming itself, on the other hand, owns a significant chunk of a minority stake in the Rivers Casinos at Des Plaines, right on the outskirts of Chicago.
Meanwhile, the Rivers gaming brand is the leader of casino gaming revenue and retail sports betting in Illinois. Rivers is also the operator behind the BetRivers mobile sportsbook, and both its casino and sports betting brands are the official exclusive gaming partners of the Chicago Bears NFL team.
Supporters of the In-City Sports Betting in Chicago Push Back
In the same Committee meeting on Monday, supporters of the ordinance called Bluhm’s bluff, given that his stance has seemingly taken an about-face. For instance, Jerry Reinsdorf, the Bulls, and the White Sox chairperson went ahead and disclosed that Bluhm had tried to woo team owners in favor of opening sportsbooks at their arenas. Reinsdorf said in the Monday meeting:
Quote“What is perplexing is that Neil Bluhm, who does not want our buildings to have sportsbooks, met with us on several occasions seeking to operate sportsbooks in our buildings. And 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 and 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?”
Mayor Lory Lightfoot of Chicago, along with her top advisors, also disputed the claims of the Rush Street Gaming co-founder. The mayor and her top aides backed their sentiments with research conducted by Sin City-based Union Gaming, which cited that in-city sportsbooks would only cost the Chicago casino $4.3 million at most!
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