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Entrance to Rivers Casino in Des Plaines off Devon Avenue. (Journal file photo)

What would a new casino in Waukegan mean for revenue earned by Rivers Casino, located approximately 26 miles south in Des Plaines?

While a new establishment in the far North suburb could have a negative impact on the Des Plaines gambling destination, it remains unclear if it would be built any time soon. High fees imposed by the state and a pending lawsuit could threaten progress, said gaming lobbyist and Des Plaines Ald. Malcolm Chester (6th).

When Rivers Casino was granted the state’s 10th casino license a decade ago, it was intended to be the last one allowed in Illinois. Currently, it is the highest grossing casino in the state and the closest to downtown Chicago.

The most recent records from the Illinois Gaming Board show that Rivers pulled in over $37.5 million in adjusted gross receipts this August, compared to nearly $15 million at Harrah’s in Joliet, the second most profitable casino in the state.

Legislation allowing six new casino licenses to be issued in Waukegan, Rockford, Danville, Williamson County and Chicago was passed and signed by Gov. J.B. Pritzker in June. 

Since the legislation passed, Waukegan — the largest city in Lake County — has received six proposals for casinos at a vacant site called Fountain Square Plaza near Route 120 and Route 43. They include proposals from Lakeside Casino, Full House Resorts, Potawatomi Hotel & Casino and Waukegan Development Association as well as one from Churchill Downs, Inc. and another from Churchill Downs-owned Waukegan Gaming, LLC.

Churchill Downs plans to work with its Rivers Casino partner, Rush Street Gaming, to build a 1,625-position casino in Waukegan with a poker room along with Luxbar and Gibson’s dining options. It is expected to create over 1,200 permanent jobs, 900 union construction jobs and add $150 million annually to the local economy, the company says.

Based in Kentucky — the location of its namesake Churchill Downs Racetrack where the Kentucky Derby is held — Churchill Downs also owns Arlington International Racecourse in Arlington Heights as well as several other gaming establishments. The Illinois Gaming Board approved Churchill Downs’ majority purchase of Midwest Gaming, the parent company of Rivers Casino, earlier this year.

Last month, the company announced it plans to expand Rivers and will not pursue a casino license for Arlington, even though it was made possible through the new legislation.

“The economic terms under which Arlington would be granted a casino gaming license do not provide an acceptable financial return and we cannot responsibly proceed,” said Bill Carstanjen, CEO of Churchill Downs.

“It’s very confusing and very expensive,” said Chester of the process to establish a new casino under Senate Bill 690, the legislation that allows for new gambling establishments in the state. “The numbers are problematic.”

For example, Chester said fees included in the bill for the establishment of a downtown Chicago casino would exceed projected revenues. He said the bill will most likely be re-written to sort out a number of such issues.

As the owner of Midwest Gaming, Churchill Downs is also the owner of Waukegan Gaming, an entity that was involved in bidding for the 10th Illinois casino license in 2004. This license first went to Emerald Casino for a proposed Harrah’s Casino. Following years of litigation related to Emerald, the board eventually granted it to Midwest Gaming for Rivers Casino at River Road and Devon Avenue in Des Plaines.

Waukegan Gaming was the bidder for the Emerald license in 2004, Waukegan City Attorney Robert Long told the Journal & Topics. “After the Emerald license was issued to Rivers, this all went dormant.”

However, “Alan Ludwig, Waukegan Gaming’s principal, surfaced and claimed that they had the sole right to a casino in Waukegan,” after the recent gaming legislation passed, Long said. 

A complaint for declaratory judgement was filed in the Circuit Court of Lake County June 28 to settle the dispute.

According to the complaint, “any claim by Waukegan Gaming that it presently has the exclusive right to develop and operate a casino in Waukegan is baseless,” and Senate Bill 690 obligates the city to engage in an open bidding process for a potential casino.

Chester said the lawsuit would have to be resolved and the community would have to weigh in on any proposals for a Waukegan casino before they could be sent to the Illinois Gaming Board. Then, any potential casino developers would still face high fees and high taxes in addition to buildout costs, he added.

“What will happen is not altogether clear,” Chester told the Journal & Topics. Even if plans for the casino eventually move forward, he questioned whether the market would be big enough to sustain the casino as more gaming options, including video gaming machines, continue to spread.

“When you hit a saturation point, you don’t get a lot of incremental gamers,” said Chester. 

In the new state legislation, Rivers Casino was granted additional gaming positions, increasing the total number of possible seats from 1,200 to 2,000. Churchill Downs intends to expand the casino to take advantage of the new positions.

Local lawmakers have also been working to reduce the 40 percent cut of Rivers’ revenue Des Plaines shares with south suburban communities per the initial license agreement, as the new legislation allows for more casinos in that area.

So far, Chester said they have not had much luck, though revenue distribution issues have also made progress for establishing new casinos in the South suburbs slow.

“It will take years to sort it out,” he said.