Value of Casino License is $1B Question

The gaming board had moved to revoke Emerald's license amid questions about ties to organized crime and misleading statements to officials. The proposed settlement would avoid a lengthy and costly journey into the court system, says special assistant attorney general Robert E. Shapiro. Emerald already is in bankruptcy court, where it is expected to file a reorganization plan by July 31.

"The essence of the settlement is a free and open competitive process in which the license will be transferred to new owners and new shareholders," Shapiro says.

Gaming board administrator Philip C. Parenti says he already has received inquiries from three major casino operators—Bally's, MGM Grand and Steve Wynn. Even attorneys for Emerald agree the ante could be as high as $1 billion.

"There's no question this license is the most valuable license between Atlantic City and Las Vegas," says C. Barry Montgomery. "I buy the $1-billion figure."

The state's most profitable riverboat is the 29,850-sf Grand Victoria in Elgin, which reported nearly $37.8 million in revenue last month, 31% more than its closest rival, the 39,000-sf Harrah's casino in Joliet.

However, Montgomery's clients will see a fraction of any proceeds under the proposed settlement, while the lion's share goes to a state treasury that is swimming in so much red ink that some state income tax refund checks still have not been mailed.

The settlement offers a return of investment, but zero return, for shareholders and "no reward for the wrong-doers," Shapiro says. "In today's economy, that's not too bad," Parenti says of the 0% return.

That will mean $63 million coming back to shareholders as well as "legitimate liabilities" pushing the total up to $150 million, Shapiro explains. Anything received above that in the license transfer will be deemed a "voluntary contribution" to the state.

Among the old Emerald investors who could be allowed back into the deal are minority group and women investors, who own less than 20% of the embattled entity now. Among them are Connie Payton, widow of Chicago Bears legend Walter Payton, and retired Bears safety Shaun Gayle.

Although Emerald has built a parking garage in anticipation of a casino at Balmoral Avenue near the Des Plaines River, it is hardly a lock the license will land in Rosemont, gaming board officials claim. However, some deem it the favorite.

"Rosemont should be at the top of the list," opines Montgomery.

Plusses include a location a literal stone's throw from O'Hare International Airport and Chicago Transit Authority Blue Line access. However, municipalities will undergo regulatory scrutiny, Shapiro vows.

The license for the casino that was once docked in East Dubuque, IA has been coveted by two competing Lake County groups, who would put a casino either in the far northwest suburb of Fox Lake or along Lake Michigan in Waukegan, an older, economically challenged city that meets the criteria envisioned in the riverboat gambling law. The south suburbs also could benefit from an economic stimulus a casino could provide, but one there would be competing with two just across the Indiana border.

At stake are millions of dollars in local taxes to the host municipality, as well as the potential for redevelopment around the new casino.

Gaming board members heard the proposed settlement Wednesday but are not expected to vote on it until after a public hearing Monday.

Critics claim the settlement is a "wink and a nod" that fails to punish those who allegedly made false statements to the gaming board, which should have let the regulatory process play out. "Everyone who's lost money at a casino in Illinois should come to the hearing Monday and ask for their money back," says Tom Grey, executive director of the National Coalition Against Legalized Gambling.