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The truth about a Chicago casino. New legislation spells out that Gaming Board regulates same as any other casino

cullerton-020811br0231-041411-75x75In a letter published in today's Chicago Tribune, Illinois Senate President John Cullerton seeks to set the record straight on a gaming expansion plan being considered by lawmakers.

The letter, appearing under the title "Gaming expansion plan", can be found here:
http://www.chicagotribune.com/news/opinion/ct-vp-1128voicelettersbriefs-20111128,0,4839499,full.story

Gaming expansion plan

Lately a lot has been written and said about gaming expansion, so much so that it's often hard to keep track of what's really in the pending legislation.

There's nothing secret. It's available to the public at the General Assembly's website: http://www.ilga.gov. The Senate plan is
SB-747.

Back in May, the General Assembly supported a similar plan. But Gov. Pat Quinn made it clear he'd veto it. So the Senate didn't send it to him.
Instead we listened to the governor, the editorial writers and others who feared it lacked accountability and oversight.

The result is the legislation (SB-747) now before the General Assembly.

This plan strengthens ethical provisions and spells out that a Chicago casino faces the same regulation by the Illinois Gaming Board as existing casinos. The Gaming Board chairman has stated the opposite, but if you review the legislation, you will see he is mistaken. An overview is available at our Website that spells this out: http://www.illinoissenatedemocrats.com. (click here to read the overview)

As for the rest of the package, no, the governor doesn't get everything he wants. The proposal still includes slot machines at horse tracks, whereas the governor prefers they get a subsidy from casinos.

But the expansion supporters don't get everything they want either. Per the governor's wish, there would be no slot machines at the State Fairgrounds' horse track. Also out are slot machines at O'Hare and Midway airports. Overall there's a 26 percent reduction in the number of new positions compared to the initial plan.

I understand the contentious nature of legalized gaming. But the decision was made long ago to have gaming, so now we find ourselves setting policy for a multibillion-dollar business in heated competition with surrounding states.

While we've wrung our hands over politics, Indiana puts casinos just across the border so the parking lots can fill with Illinois gamblers while
Wisconsin interests hire lobbyists to try to kill off Illinois competition.

It is time that we act, but we must act responsibly. The input we've received resulted in better legislation.

Being opposed to gaming is a perfectly legitimate position, and one I can respect. This is an issue that divides members in both parties. But let's put the personal political rhetoric aside and debate the pros and cons of the actual legislation.

I hope that in the days ahead we find the common-sense, common ground and compromise needed.

— John J. Cullerton, Illinois Senate president, Springfield


The gaming legislation filed in the Senate contains numerous safeguards and oversight provisions intended to  ensure a proposed Chicago casino is treated no differently than any existing casino when it comes to state regulation by the Illinois Gaming Board.

The following is an overview of those provisions:

I.  Duties of the Chicago Casino Development Authority.  The bill creates a Chicago Casino Development Authority ("Authority") with the following duties:

"Section 1-13. Duties of the Authority. It shall be the duty of the Authority, as a casino licensee under the Illinois Gambling Act, to promote and maintain a casino in the City. The Authority shall construct, equip, and maintain grounds, buildings, and facilities for that purpose. The Authority shall contract with a casino operator licensee to manage and operate the casino and in no event shall the Authority or City manage or operate the casino. The Authority may contract with other third parties in order to fulfill its purpose. The Authority is responsible for the payment of any fees required of a casino operator under subsection (a) of Section 7.8 of the Illinois Gambling Act if the casino operator licensee is late in paying any such fees. The Authority is granted all rights and powers necessary to perform such duties." (emphasis added)

This provision makes it clear that the Authority is the owner of the casino and that the Authority cannot be involved in the day to day affairs of the casino, which are functions for the casino manager/operator.  The Authority also has strict ethics provisions.  The addition of an Authority to control ownership of the Chicago casino operates to keep the Chicago casino free from influence from alderman and others.

II.  Power of the Illinois Gaming Board to Regulate the Chicago Casino Operator. There are many provisions that clearly establish the role of the Illinois Gaming Board over the Chicago casino operator (called the "casino operator licensee" in the bill):

  • Section 1-5 contains the definition of a "casino operator licensee", which makes it clear that the casino operator must be licensed by the Illinois Gaming Board.  This definition states that "'[c]asino operator licensee' means any person or entity selected by the [Chicago Casino Development] Authority and approved and licensed by the [Illinois] Gaming Board to manage and operate a casino within the City of Chicago pursuant to a casino management contract." 
  • Section 1-13 provides that "[t]he Authority and casino operator licensee are subject to the Illinois Gambling Act and all of the rules of the [Illinois] Gaming Board."
  • Section 1-45 provides that the Illinois Gaming Board has the power to grant a casino operator license. 
  • Specifically, Section 1-45(c) provides that "[i]f the Gaming Board approves the contract and grants a casino operator license, the Board [of the Chicago Authority] shall transmit a copy of the executed casino management contract to the [Illinois] Gaming Board."
  • Additionally, Section 1-45(d) further clarifies that the Gaming Board has the power to issue a casino operator license by stating that "[a]fter the Authority has been issued a casino license, the Gaming Board has issued a casino operator license, and the Gaming Board has approved the location of a temporary facility, the Authority may conduct gaming operations at a temporary facility for no longer than 24 months after gaming operations begin."
  • Section 1-45(a) and (b) requires the Board of the Chicago Authority to develop and administer a sealed bid process for awarding a casino operator license.  All bids and proposals are subject to disclosure in accordance with the Freedom of Information Act.
  • 230 ILCS 10/7.8(a) is amended to authorize the Gaming Board to revoke the casino operator’s license for (i) violating any provision of the Illinois Gambling Act; (ii) violating any rules of the Illinois Gaming Board; (iii) any cause which, if known to the Illinois Gaming Board, would have disqualified the applicant from receiving the license; or (iv) any other just cause.  
  • 230 ILCS 10/5(c) is amended to remove any ambiguity regarding the Gaming Board's power over the Chicago casino.
  • Specifically, 10/5(c)(22) provides that the Illinois Gaming Board has "the same jurisdiction and supervision over casinos and electronic gaming facilities as the Board has over riverboats, including, but not limited to, the power to (i) investigate, review, and approve contracts as that
    power is applied to riverboats, (ii) promulgate rules and regulations for administering the provisions of this Act, (iii) adopt standards for the licensing of all persons involved with a casino or electronic gaming facility, (iv) investigate alleged violations of this Act by any person  involved with a casino or electronic gaming facility, and (v) require that records, including financial or other statements of any casino or electronic gaming facility, shall be kept in such manner as prescribed by the Board."
  • Section 10/5(c)(23) permits the Gaming Board to "supervise and regulate the Chicago Casino Development Authority in accordance with the Chicago Casino Development Authority Act and the provisions of [the Illinois Gambling] Act.

III.  Power of the Illinois Gaming Board to Regulate the Authority. There are many provisions that clearly establish the role of the Illinois Gaming Board over the Authority:

  • Section 1-15(a) provides that the Authority is governed by a 5-member board (“Chicago Casino Development Board”) that is appointed by the Mayor.  All appointees are subject to background investigation and approval by the Gaming Board. 
  • Section 1-20(c) permits the Gaming Board to remove any member of the Board for (i) any violation of the Illinois Gambling Act or the rules and regulations of the Gaming Board, (ii) any upon a finding of incompetence, neglect of duty, or misfeasance/malfeasance in office, or (iii) any violation of the Chicago Casino Development Authority Act.
  • Section 1-30 requires the Board of the Chicago Casino Development Authority to appoint an executive director to serve as chief executive officer of the Authority, subject to a background investigation and approval by the Illinois Gaming Board.
  • Section 1-31 makes it clear that the Chicago Authority must follow the Gaming Board’s rules regarding any contracts.  Specifically, Section 1-31 provides that the Chicago Authority may "(10) [e]nter into, revoke, and modify contracts in accordance with the rules of the Gaming Board."

IV. Contracting.  SB 747 contains strict contracting requirements for the Authority.  For instance, any bidder, respondent, offeror, or contractor for contracts with an annual value of $10,000 or more or for a period to exceed one year is required to disclose all of his or her political contributions, including the contributions of any affiliated person or entity.  Section 1-112(b).  The Gaming Board may direct the Authority or a casino operator licensee to void a contract if such reporting does not occur.  Section 1-112(d).

Regarding the casino operators, such operator will be responsible for entering into liquor and janitorial contracts.  The Gaming Board has the power to regulate the casino's contracts similar to what is currently being done to regulate the contracts of the 10 existing riverboats.  230 ILCS 10/5(c)(22).

V.  Purchasing.  SB 747 requires, in most instances, that all construction contracts and contracts for supplies, materials, equipment, and services, when the cost thereof to the Chicago Authority exceeds $25,000, shall be let to the lowest responsible bidder, after advertising for bids.  Section 1-115(a).

All contracts involving less than $25,000 shall be let by competitive selection process whenever possible, and in any event in a manner calculated to ensure the best interests of the public.  Section 1-115(b).

If the Chicago Authority is not able to find a responsible and satisfactory proposal, they may award such contract without competitive selection, provided that the Gaming Board must approve the contract prior to its execution.  Section 1-115(d).

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