Alderperson bypasses mayor to initiate Chicago VGT process.

Chicago Alderperson Anthony Beale has bypassed Mayor Brandon Johnson to initiate the Video Gaming Terminals (VGT) legalization process. Despite opposition, Beale plans to submit the certification letter to the Illinois Gaming Board, marking the start of the application process for VGT licenses in the city.

Chicago Alderperson Anthony Beale has announced his decision to bypass Mayor Brandon Johnson in order to push forward with the legalization process for Video Gaming Terminals (VGTs) in the city. Despite opposition from Mayor Johnson, Beale has confirmed his intention to send the required certification letter to the Illinois Gaming Board (IGB) and state government, effectively beginning the application process for potential VGT licensees. This announcement came on Wednesday.

Beale Takes Action Amid Mayor's Inaction

Beale, a member of the Chicago City Council since 1999, shared his plans during an appearance on WGNs *The Point* on Tuesday night. He revealed that he was prepared to submit the certification letter to the Illinois Gaming Board, officially notifying the state of Chicago’s readiness to open the application process for VGT licenses. Beale further discussed his intentions during a Finance Committee meeting on Wednesday.

"Madam Chairman, I already have a stamp-sealed signature from the Clerk's office that will be filed today," Beale stated. "And I have multiple signatures from my colleagues. So if this administration doesn't want to notify the state that we’re accepting video gaming terminals, then we will take matters into our own hands and we will do the job the Mayor is supposed to do."

Beale’s action serves as an official notification to the Illinois Gaming Commission and Governor J. B. Pritzker that Chicago has lifted its ban on video gambling, allowing VGTs in various venues such as bars and restaurants. This move circumvents the Mayor’s office, which had not yet submitted the certification letter, thus creating tension between Beale and Mayor Johnson.

Mayor Johnson's Response and Political Tensions

In response, Mayor Brandon Johnson addressed the situation during a press conference on Tuesday, stating that he had not yet made a decision regarding the repeal of the ordinance. However, he emphasized the importance of ensuring that the process is handled correctly, noting, "It’s imperative that we get this right." His office had not acted on the certification letter, which led Beale to take matters into his own hands.

Beale has played a significant role in the city’s budget negotiations and was part of a group of alderpeople that took control of the budget process from Johnson in December. This group passed a $16.6 billion budget, which included provisions for the legalization of VGTs. Beale has estimated that the legalization of VGTs could generate $6.8 million in revenue for Chicago in 2026, primarily through licensing and registration fees, as the city works with the IGB to establish the necessary framework.

Concerns and Opposition to VGT Legalization

The push to legalize VGTs has caused division among city officials. Alderman Jason Ervin, a vocal opponent of VGT legalization, has expressed concerns over the long-term financial implications for the city. Ervin questioned whether legalizing VGTs was the best course of action for Chicago, particularly when compared to the revenue potential of Bally’s casino operations.

"I know that many members of this council do not support (legalization)," Ervin said. "I know that many members of this council do not believe that this is the best step for the city of Chicago to take. But it’s part of an overall package of things that were brought together and in some ways accepted."

Ervin highlighted that Bally's, which is set to open a $1.7 billion casino in the River West area in September, could generate more revenue through its slot machines, due to the different tax rates applied to each type of gaming. Additionally, Bally's has raised concerns over the potential impact of VGT legalization on its revenue, particularly due to its delayed casino opening and ongoing legal challenges surrounding its sports betting operations.

Bally's Concerns and Potential Impact on City Revenue

Bally's has expressed concerns that the legalization of VGTs could affect its Host Community Agreement with the city, potentially reducing or eliminating its $4 million annual payment to Chicago. In response to these concerns, Illinois State Representative Kam Buckner has introduced legislation to amend the Illinois Gambling Act, granting Bally's additional time to complete its casino construction. Bally's concerns stem from the fact that the city may receive more revenue from its casino operations than from VGTs, given the varying tax rates on each.

Despite Bally's concerns, Beale and other VGT advocates argue that the legalization of VGTs is essential, especially considering the struggles Bally's has faced in meeting revenue expectations from its temporary casino at Medinah Temple.

Revenue Projections and VGT Rollout Timeline

Beale’s revenue projections account for the possibility that Bally's may not meet its $4 million payment, with the revenue generated from the new VGT system expected to offset this shortfall. Beale anticipates that 80% of Chicago's 3,300 eligible venues will apply for a license to operate VGTs, with each license allowing up to six terminals at a location. The application approval process by the Illinois Gaming Board is expected to take between 6 and 8 months. Once approved, the city will implement its own licensing and registration systems for locations and terminal operators.

However, the uncertainty surrounding Bally’s financial situation and the potential legal challenges to VGTs could complicate the city's revenue expectations. In the past, Johnson’s office projected $35 million in revenue from Bally’s operations in both 2024 and 2025, but actual figures were significantly lower, with only $16.1 million in 2023 and $15.9 million in 2024. For 2025, projections have been raised to $44.5 million, assuming Bally's River West casino becomes operational in the fourth quarter of the year. Nevertheless, original estimates for 2023 had anticipated $244.3 million in revenue for 2026, based on the assumption that Bally’s permanent casino would be open for the entire year.

Conclusion

Despite the challenges and political tensions surrounding the issue, Beale’s actions indicate a continued push for increased gaming revenue in Chicago. As both the city council and Mayor’s office continue to work through the implications of the decision, the future of VGT legalization remains uncertain but promises to play a significant role in shaping the city's financial landscape in the coming years.

Sources:

• Alderperson Going Around Mayor To Start Chicago VGT Process
• Chicago Alderman Bypasses Mayor to Launch Video Gambling
• Ald. Beale is convinced Johnson is buying time to repeal video gambling