Waukegan To Place Bets On Best Of 6 Casino Proposals

WAUKEGAN, IL — City officials are preparing to narrow the list proposals from developers hoping to build a casino in Waukegan in the coming week ahead of an October deadline to submit its preferred finalists to state regulators.

Two of the six firms that submitted responses to the city's request for proposals earlier this month are tied to video gambling company that comprised a large majority of contributions in this year's municipal elections, the Lake County News-Sun reported.

That company, Tap Room Gaming, is owned by former state Sen. Michael Bond, had revenues of $24 million last year and is the state's seventh-largest video gambling company, according to ProPublica Illinois.

According to an analysis by the News-Sun, five of every six dollars percent contributed to aldermanic candidates in Waukegan since over the past nine months has come from organizations tied to Tap Room Gaming. The largest donor across all races was the Waukegan Voter Alliance, which is funded primarily through Video Gaming United PAC and Tap Room Gaming.

All but one of the candidates supported by the Waukegan Voter Alliance group were victorious, and its Video Gaming United PAC supplied Mayor Sam Cunningham with $40,000 for his successful 2017 campaign — coming out to about half of all his campaign funds.

Using his connections with Illinois Democrats, Bond tried and failed to convince state lawmakers to insert a clause that would have given Tap Room's owners guaranteed control of the Waukegan casino, ProPublica reported this month.

At its Aug. 19 meeting, the City Council approved a $45,000 contract with consultant C.H. Johnson to evaluate the casino proposals. The real estate and hospitality consultancy was asked to review the financials, revenue projections and business models of each group.

The six development groups to have submitted responses to the city's request for proposals are, according to Waukegan city attorney Robert Long:

• CDI-RSG Waukegan (A joint venture of Churchill Downs Incorporated and Rush Street Gaming, which owns Rivers Casino in Des Plaines)
• Full House Resorts (Dubbed American Place)
• Lakeside Casino LLC (Proposed by a Delaware-based joint venture of Las Vegas-based Warner Gaming and Tap Room Gaming)
• Pottawatomie (Milwaukee-based Potawatomi Hotel & Casino)
• Waukegan Development Associates LLC (Managed by Skokie-based Next Realty LLC, whose CEO is a Tap Room Gaming partner.)
• Waukegan Gaming LLC (Party to 2004 redevelopment agreement but failed to secure license, it is now engaged in lawsuit and counter-suit in Lake County Circuit Court over the validity of the agreement.)

Five of the six development groups had previously announced their proposals — through either a press release or a lawsuit — with Pottawatomie and Lakeside Casino releasing news of their plan shortly after the deadline for submissions in response to the city's request for proposals. (Waukegan Gaming principal Alan Ludwig was on vacation and has not publicly released information about his group's proposal.)

Each of the proposals that have released their planned location would be built on the city-owned Fountain Square parcel, the site of the demolished Lakehurst Mall, southwest of the intersection of Route 41, Route 43 and Route 120. In 2003, the city paid $7 million for 32 acres of land but never built a casino and owed nearly $13 million on the site as of last year.

The joint venture of Rivers Casino owner Rush Street Gaming, which beat out Waukegan for the state's 10th casino license 15 years ago, and Louisville, Kentucky-based Churchill Downs touted its "extensive patron database" generated by its 2.9 million annual visitors to the Des Plaines location, according to a release. It said a Rivers Casino Waukegan would be complementing — rather than cannibalizing" existing local gambling companies. It did not say how large its facility would be and has released only an aerial illustration of its design, but it did promise 1,625 gaming seats and a poker room at the time of opening, as well as an upscale restaurant that would be the first Gibsons Restaurant Group location in Lake County.

The developers behind North Point Casino released a promotional video showing computer generated renderings of the proposed development and touted the "exclusive endorsement" of the Black Chamber of Commerce of Lake County. In an Aug. 15 release, the group said it was "the only development group that is locally focused, experienced, ready to build right away and committed to hiring a workforce that represents the diversity of Waukegan."

The Waukegan Development Associates plan includes an four-building Italian-themed casino and entertainment complex called Casino Fontana. The casino would be 91,000 square feet, while the development would also include a 1,200-seat multi-use facility for hosting events and a 40,000-square-foot amenity center, which could be used for a dine-in movie theater and temporary casino during construction and a five-story luxury hotel with 120 rooms.

The proposal combines the 28-acre, city-owned portion of the Fountain Square site with a 10-acre parcel currently owned by Next Fountain Square LLC and controlled by Next Realty CEO Andy Hochberg, a partner in Tap Room Gaming. The casino would be managed by Chesapeake Gaming Group.

The Full House Resorts proposal for American Place includes a 75,000-square-foot casino, a grand fountain, a 20-room boutique hotel called The Mansion at American Place, a restaurant "that will rival the finest restaurants in Chicago" and a "helipad for high roller guests."

The city has until Oct. 25 to submit a list of finalists to the Illinois Gaming Board. In the release from the North Point Casino developers, Arthur Gass, the president and CEO of the Chamber, called for the Waukegan City Council to select it as the "sole developer" and said submitting "multiple developers to the State for review will only slow construction."

But if the city only selected one developer, city attorney Long told the News-Sun, state gaming authorities could reject the bid and reopen the process themselves — cutting the City Council out of the decision-making process and potentially picking another location for the casino.

According to Senate Bill 690, sponsored by Sen. Terry Link, an Indian Hills Democrat, and signed into law by Gov. JB Pritzker in June, Waukegan is specifically authorized to be the home of one of six new casino. Waukegan itself will see only 3.5 percent of revenue generated by the casino, according to the bill. Local school districts will not receive any of the tax revenue.

[T]he Board may issue one owners license authorizing the conduct of riverboat gambling located in the City of Waukegan. ... an amount equal to 5% of the adjusted gross receipts generated ... shall be divided and remitted monthly, subject to appropriation, as follows: 70% to Waukegan, 10% to Park City, 15% to North Chicago, and 5% to Lake County.

More from ProPublica Illinois, Lake County News-Sun

Earlier:

• Developers Submit Waukegan Casino Project Proposals
• Gambling Expansion Bill Permits Long-Sought Waukegan Casino
• From Truck Stops To Elections, Gambling Money Floods Waukegan
• How A Video Gambling Company Helped Bankroll Local Politicians