By David Stanzcak
Economic principles often lurk below the surface of political issues, as they do with the push for a casino to be operated in and by the City of Chicago. Leave aside for the moment any concerns you may have about whether the casino could be constructed without the usual suspects getting their fingers in the pie (it can’t) and whether the City of Chicago would operate it without anybody getting a piece of the action that they aren’t entitled to(it wouldn’t). Does the casino make economic sense for the city and the state? It doesn’t.
The City of Chicago has enormous financial problems. It has huge overdue pension contributions to pay and its bonds have been demoted to junk status. So Mayor Rahm goes to Springfield to get the state to underwrite the construction of a casino for the city. The city seeking financial help from the state resembles a person who has fallen out of a plane without a parachute desperately clinging to another person, also without a parachute.
The casino idea depends for its validity upon the dubious presumption that the demand for gambling facilities is inelastic: that no matter how many gambling outlets there are, new ones will generate sufficiently more gambling to more than cover the construction and operating expenses. While the idea may have had some validity years ago, when your gambling options were the racetrack and your local bookie, that was last century. The construction of several casinos in Illinois, the plentiful opportunities to play the lottery and the ubiquitous and rapidly expanding video gaming opportunities suggest that gambling has just about been played out as a revenue source. If so, the revenues needed to cover the huge construction cost of the casino (north of $1 billion) and operating expenses, thereby making the casino a cash cow are either unlikely or will come at the expense of other gambling outlets and the governmental agencies relying on the income from them. Does anyone remember OTB?
Right now, I’d say gambling on gambling is a bad bet.
