Chicago’s Casino Lifeline: Financial Hope or Idle Dream?

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Chicago stands on the brink of a financial precipice teetering on an unstable underbelly of underfunded public pension commitments. This dire situation highlights the urgent need for a financial lifeline from Bally’s highly anticipated permanent casino hotel— a project that, unfortunately, is currently viewed as being on life-support by local politicians and esteemed members of the community.

Bally’s temporary casino has been decking the streets of Chicago while the city impatiently awaits the establishment of a stable, revenue-generating permanent venue purposed with easing off the weight of the city’s mammoth public pension debts. According to the 2023 annual financial report, audited by the well-respected accounting firm Deloitte & Touche, the city’s unfunded public pension liabilities machine gunned ahead by a whopping 5.2% last year, totaling at $37.2 billion, up from $35.4 billion. This bleak trend marks a back-to-back year where the pension obligations of the Windy City have spiked by over 5%. More disheartening is the fact that this growth comes despite a rally in stocks last year, with the S&P 500 hitting a 26.2% gain—a frontrunner among the asset classes that pension plans invest the most heavily in.

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In 2019, Illinois Governor J.B. Pritzker (D) signed Senate Bill 516, which authorized the development of a single integrated resort in Chicago. The beacon of hope was that this establishment would act as a financial pillar, providing much-needed aid to the city’s public employee retirement plans. To achieve the utmost revenue, the development of the integrated resort into a permanent casino needs to transpire efficiently and effectively.

As it stands now, Bally’s operates a temporary gaming hub stationed at Medinah Temple in the River North locale and lacks the full permissions required to set off the wrecking balls at the Freedom Center—the proposed heart of the permanent casino. Despite all these hurdles, the gaming giant remains optimistic about opening the casino hotel in the third quarter of 2026.

Chicago’s public pensions urgently need the financial bolstering that Bally’s can offer. Funding levels for Chicago firefighters and police pensions are staggering at less than 22%. The plight for municipal employees isn’t much different with the fund at a measly 22.2%. By comparison, the laborer’s pension soars too high at 38.55%.

In Illinois, new casinos have shown potential in propping up local pension schemes in smaller municipalities. However, Chicago, with its monstrous employee retirement obligations, is leagues apart. Moody’s Investors Service, in 2020, issued fair warning, emphasizing that while Bally’s casino project could help strengthen Chicago’s pension funding, it’s far from being a complete remedy.

Should Chicago’s pension plans collapse, the burden of these obligations will land heavily on the taxpayers’ shoulders in an already tax-strangled state. Options such as reducing benefits pledged to retired public workers have generated little relief. Such attempts have repeatedly been thwarted by courts ruling in favor of retired public workers.

Notably, states with large public pension obligations are also battling demographic challenges. Interestingly, some employees contributing to the pension pot for 25 to 30 years outlive their projections and end up drawing more from their retirement benefits than they initially paid in.

Adding to the grim tableau is Bally’s apparent battle with its own financial hurdles. The regional gaming company is under pressure to secure $800 million of financing to bring its Chicago dream to life. However, its low credit ratings make sourcing for this capital both expensive and challenging.

Recently, Mayor Brandon Johnson (D) expressed his guarded expectations about Bally’s ambitious Chicago project. On the other hand, more outspoken individuals have demured from being diplomatically silent. For instance, Civic Federation President Joe Ferguson confided to the Sun-Times that Bally’s permanent venue in the city is “hanging by a thread” and growing “more remote by the day.” If his observations hold true, Chicago must hasten its search for viable channels through which public pensions can be salvaged. However grave the current situation, the city continues to hope and dream that somehow a solution will present itself before the proverbial ticking time bomb detonates.