Penn National Gaming, Inc. (NASDAQ:PENN) probably won t be among the casino operators vying to land a gaming license in Chicago.
Penn National CEO Tim Wilmott doesn t envision his company entering Chicago. (Image: Getty Images)Earlier this month, Illinois passed , approving sports betting and slot machines at Chicago s Midway and O Hare International airports while paving the way for six new casinos to be opened across the state.
Like other states, cash-strapped Illinois is turning to gambling to bolster revenue, but for Penn National CEO Tim Wilmott, the state s financial needs make Chicago unappealing for his company.
An already saturated market is going to get a lot more supply,” Wilmott said in an interview with Bloomberg. “It’s going to make the Chicago casino a very difficult investment to make.”
Wilmott added that whichever gaming company decides Chicago is its kind of town will be faced with high taxes, doling out $120 million for licensing and associated fees and the specter of forking over two-thirds of revenue to the city and the state, according to Bloomberg.
Not The Only OnePenn National isn t the only casino operator to indicate a preference to steer clear of the Windy City. A spokesman for Las Vegas Sands Corp. (NYSE: LVS), the largest US gaming company by market value, told the Las Vegas Review-Journal last week that the owner of the Palazzo and Venetian is“not currently exploring or considering any opportunities in Illinois.”
MGM Resorts International s (NYSE: MGM) President of Global Gaming Brian Sandoval, formerly governor of Nevada, told the Review-Journal his company is reviewing the Illinois legislation and will “certainly consider our options there.”
MGM s consists of the MGM Grand in Detroit and MGM Northfield Park in Northfield, Ohio.
Currently, the Land of Lincoln is home to 10 casinos. In addition to Penn National, operators there include Boyd Gaming Corp. (NASDAQ:BYD), Caesars Entertainment Corp. (NASDAQ:CZR) and Eldorado Resorts, Inc. (NASDAQ:ERI).
On Monday, Eldorado unveiled for Caesars and it is widely believed the combined company with some gaming properties in markets where both operators currently have venues.
In Illinois, Caesars has the Harrah s Joliet and Harrah s Metropolis Hotel and Casino in the southern part of the state. Eldorado s Prairie State property is the Grand Victoria in Elgin. Neither company has commented publicly on potentially selling an Illinois casino.
Penn National is the largest operator in Illinois with the Hollywood casinos in Aurora and Joliet and the Argosy in Alton.
Tax Man Cometh
Illinois is already one of the most heavily taxed states in the US, a theme that extends to the state s gaming industry.
In 2018, the 10 existing casino s there paid an effective tax rate of 33.8 percent, according to the Review-Journal. That is five times the highest tax rate Nevada applies to gross gaming revenue (GGR), but Chicago is looking to go above and beyond that 33.8 percent.
As Wilmott said in the Bloomberg interview, the operator that decides to run a casino in the third-largest US city will be faced with a 66 percent tax rate that will be split between the city and the state. Like other states, Illinois taxes slot machines and table games at different percentages, but the state also lobs on an additional city fee.
