Chicago City Council Pushes For Legalization of VGTs, Which Could Be Bad News for Bally’s and iGaming

Chicago City Council members are reviving efforts to legalize video gaming terminals (VGTs) in the city. However, Mayor Brandon Johnson’s administration argues that the machines are not financially worthwhile as they would cannibalize Bally’s future casino.

VGTs are similar to casino slots, but are available at a variety of retail establishments, including restaurants, bars, and truck stops. The machines were legalized by the Video Gaming Act of 2012.

The Act grants each Illinois municipality the authority to permit or prohibit VGTs. Notably, Chicago is among those that chose not to legalize them.

Aldermen Gilbert Villegas and Anthony Beale propose to change that through two ordinances: one for allowing the machines at Chicago’s O’Hare and Midway Airports, and another citywide.

Council Pushes VGTs as a Tax Generator

Alderman Gilbert Villegas proposed installing up to 400 VGTs past security checkpoints at the two airports. Villegas, chair of the City Council’s Committee on Economic, Capital and Technology Development, calls the proposal an “easier lift” politically.

If each terminal averages $800 per day, the annual revenue would be approximately $116.8 million. Illinois currently taxes the machines 35% with 5.8% going to the local municipality.

That equates to roughly $6.8 million annually in tax revenue for Chicago. Additionally, the city would collect licensing fees of $10,000 per location, plus $1,500 per terminal.

The second ordinance by Ald. Beale would legalize VGTs citywide. The licensing fees would be $500 per location and $1,000 per terminal. However, as thousands more terminals would be allowed, the tax revenue would be higher.

Beale argues that the extra source of income will be essential for Chicago. The city faces a $1.2 billion budget gap and potentially $3 billion less in federal funding.

Chicago CFO Says VGTs Would Cannibalize Bally’s Casino

Last month, Chicago CFO Jill Jaworski revealed that, according to a consulting study, adding VGTs would generate $10 million annually in tax revenue at best. However, they could cost the city a lot more, as they risk cannibalizing slot revenue from the upcoming Bally’s Chicago casino.

Bally’s is currently building its $1.7 billion Chicago casino project, with an anticipated opening in September 2026. As part of the agreement upon winning the bid, Bally’s has already paid the city $40 million. It will also pay $135 million to the Illinois Gaming Board within 30 days of opening the permanent casino.

The estimates suggest that the project will generate $200 million in annual revenue for the state. While Chicago will not receive the entire sum, estimates indicate that slot machines alone would generate nearly four times as much as the VGT projections.

Bally’s opened a temporary casino in September 2023 while construction proceeds on the new property. It produced $14 million in tax revenue in its first year, well short of the $35 million projection, yet still higher more than Jaworski’s estimate for the VGTs.

VGT Expansion Would be Bad News for iGaming

VGT expanding to Chicago would not only threaten Bally’s revenue but also the chances of the state potentially legalizing online casinos.

Illinois is home to over 45,000 VGTs, far more than any other state. As a result, the industry is already a highly influential force in state politics. The widespread presence of the machines in bars, restaurants, and small businesses has made them integral to local economies.

The VGT industry has argued that legalizing iGaming would cannibalize terminal sales, which it claims will negatively impact many small businesses that heavily depend on this income. Online casinos and VGTs occupy a similar niche in the gambling ecosystem due to their convenience. That argument has played a significant role in stalling iGaming legislation in recent years.

Should Chicago embrace VGTs, industry lobbyists would likely gain even more influence in the state and intensify opposition to iGaming.

Additionally, many small businesses across the state are reporting declining VGT sales. Some areas have reported decreases of up to 40%. This means they would likely oppose the legalization of online casinos even harder.