Illinois: Not so fast!; Adelson pursues world domination

It really looked like the fix was in, the deal was done and existing casino operators in Illinois were about to thrown to the slaughter by legislators hungry for licensing fees. But the wheels of the grand plan are coming off. The horsey set’s man in Springfield, Rep. Lou Lang (D, right) had to withdraw from further negotiations, due to an obscure conflict involving his law firm. It appeared more cosmetic than substantive, but Mr. Racino suddenly found himself sidelined. In the meantime, his dearly beloved gambling-expansion bill began blowing one gasket after another. If a deal can’t get done in the next 24 hours or so, it’s Game (Temporarily) Over. Late yesterday, Lang’s allies were already waving the surrender flag.

To soften the economic blow upon existing casinos, Lang’s surrogate, state Rep. Robert Rita (D) backed a state Senate move lowering their tax rate to 40% (if they annually gross between $200 million and $300 million) with the top-tier rate of 50% only imposed on those casinos that exceed $800 million in annual revenues. Given the history of the Illinois market, it’s highly unlikely anyone would also have to pay that rate, post-expansion. He also proposed scratching the two airport slot routes written into the bill. Some of Rita’s colleagues, however, seem to have balked at the idea that casinos which are on the cusp of suddenly making much less money should have to pay less in taxes, too. Why miss a chance to stick it to them coming and going, right?

Then, Illinois Gaming Control Board Chairman Aaron Jaffe blew a gasket of his own over a sweetheart provision that would remove Chicago‘s promised casino from state oversight, “giving that control to a board of mayoral appointees [which] leaves the door open for corruption.” Jaffe wanted the Chicago casino cleft from the rest of the bill … a wish he won’t see granted, at least during this Lege. (Unlike all other casinos in the state, the Chicago one would be city-owned.)

With Gov. Pat Quinn (D) now making pension reform his Priority #1, the gambling bill’s chances get slimmer by the day. And, some of the bill’s loudest backers are opponents of Quinn’s reelection, so he’s not in a giving vein. Those chances got leaner still when Cook County suddenly decided it wanted a cut of the action from new, suburban casinos. (The county already gets a slice from Neil Bluhm‘s Rivers Casino, above.) With so many fingers in the legislative pie, it redounds to the benefit of Illinois’ casino industry.

Every day lawmakers can’t get their act together is another day owners like Bluhm, Penn National Gaming and others get to keep doing business as usual. And for Rita, Lang, et. al. to bank on the veto session may be a sucker bet. A lame-duck Quinn faces no consequences from nixing the bill and, if he’s the party’s nominee, his bargaining position is that much better.

Sheldon Adelson has a knack for pulling off the seemingly impossible, it’s true. But … if there were an appetite for 36,000 hotel rooms (over five times as many as Adelson has on the Strip) and a dozen casinos just outside Madrid, might not someone else have gotten started on it by now? Thumbing his nose at Las Vegas, the CEO of Las Vegas Sands prophesied a future in which Madrid might become “the convention center of the world.” Adelson brandished his wallet and Sands COO Michael Leven rattled his tin cup, cadging for lower tax rates.

No wonder. Sands has faced skepticism on Wall Street regarding whether it could raise the $22 billion needed for EuroVegas. Now there’s a South Korea project on the drawing board and Adelson has at least one resort apiece in Japan, Vietnam, Taiwan and Thailand also on his wish list. For a guy who never does anything small (or cheap) that’s a mind-blowing amount of potential leverage … especially for a company that already has billions of dollars earmarked for additional Macao construction. Judging by the size of his European gamble, I’d say Adelson’s appetite for risk is gluttonous.