Urban Roulette

Urban Roulette

New Orleans is one of a string of cities to turn to legalized gambling as a new source of revenue. Chicago may be next. Credit: Flickr user vxla

Earlier today, the Chicago Sun-Times reported that Illinois Gov. Pat Quinn had vetoed a controversial bill that would have brought gambling to that state’s largest urban center. Chicago Mayor Rahm Emanuel vowed to rally support in the legislature for expanded gambling, stopping short of threatening to seek votes to override the veto.

Both men are Chicago Democrats, and both nominally support casino expansion in a state that introduced gambling in 1991 and now has nine riverboat casinos. The new bill would increase that number to 13, create a single brick-and-mortar casino in Chicago, and allow for video slots at existing racetracks. Quinn believes the bill is too lax, and would open “loopholes for mobsters,” harkening Chicago’s past as a center for organized crime. Emanuel insists that a downtown casino is so lucrative an economic development tool that any delay in construction is depriving the city of valuable tourist dollars and a new source of educational funds.

The debate is just the latest in a decades-long controversy over what role, if any, casinos can play in the revival of America’s cities. The economic downturn has given states an impetus to open up new sources of revenue, with gambling often viewed as low-hanging fruit. Twelve states have expanded gambling options in the last three years, 22 now permit commercial casinos (up from two in 1974), and Hawaii’s legislature is currently considering plans that would leave Utah as the sole state without some form of legalized gambling.

Depending on the outcome of the political struggle, Chicago could supersede Philadelphia as the largest American city with legalized gambling. The Quinn-Emanuel conflict is a sharp juxtaposition to Pennsylvania’s experience, which saw Philadelphia Mayor Michael Nutter offer at least token resistance to a governor who had effectively banked a portion of the state’s economic future on urban casinos. However, the variables within the debate are much the same as they have been in the past with lawmakers again weighing fears of criminality and gambling addiction against the uncertain promises of wealth and the ever sought after “spillover effect.”

The reality in Philadelphia has fallen somewhere in between the charged language used by gambling opponents and advocates, who frequently invoke religious principles or deliberately overestimated casino profits to further their case. Pennsylvania’s gambling industry increased revenue 21 percent last year to around $3 billion, about $1.5 billion of which went to state coffers. The state taxes slot revenue at 55 percent and table games at 16 percent, and collects more money from gambling than any other, including Nevada. Sugarhouse, Philadelphia’s only casino due to protests and mismanagement that have delayed the citing of a second, was ranked eighth out of the state’s 10 casinos in terms of revenue and has consistently underperformed since its opening. However, the city still received $86 million from the overall state proceeds, in addition to $1 million Sugarhouse directly awards to community groups in adjacent neighborhoods.

But while Pennsylvania has ridden high on the wave of new found gaming profits from previously untapped markets, New Jersey has suffered with the competition from its neighbor with revenues from its famous gambling industry dropping by seven percent in the last year.

Back on the Philly waterfront, Sugartown’s impact on economic development in the area remains in flux. Casino proponents predicted a massive spike in the value of land surrounding the casino, while opponents predicted total devaluation and the disintegration of the nearby, tightly-knit Fishtown neighborhood. Just about two years after the Sugarhouse opened its doors, the neighborhood has seen a relatively moderate amount residential development; while plans indicate that close to 2,000 new housing units could soon rise on the blocks south of the casino, only about two-thirds of the 192-unit Waterfront Grande project has been completed at this time.

Whether the new construction or proposed developments are directly correlated with the construction of the casino or are a natural part of Philadelphia’s waterfront growth is difficult to measure, but even the fact that so much new housing has been proposed in the area since the construction of Sugarhouse seems to refute the argument that casinos deter growth.

What certainly hasn’t encouraged development have been several high-profile crimes directly connected with casino operations. Last week, a Delaware couple who claim they were assaulted by a group of intoxicated individuals in the Sugarhouse parking lot filed suit against the casino, citing lax security. Although Police Commissioner Charles Ramsey has said that there have been “no increase” in crimes in the vicinity of Sugarhouse, a City Paper investigation from April of last year found that there had been 170 reported crimes reported at the casino since its opening day.

As Illinois power players mull the future of a single casino for Chicago, Pennsylvania is three months away from closing the bidding process for Philadelphia’s long-awaited second gaming license. While Sugarhouse’s somewhat underwhelming impact on the city as a whole seems to have softened fears over a second casino, early proposals by local developers like Bart Blatstein have focused on glitzy, large-scale projects.

Blatstein has suggested converting the recently purchased Inquirer building into a casino with an attached hotel, a massive retail and dining complex and rooftop “urban village”, saying that he wants to gear a second casino more towards the city’s burgeoning population of urban professionals. At the same time, Atlantic City’s most recent casino, the $2.4 billion luxury complex called “Revel”, which sought a similar, more upscale demographic, has faltered since its opening and is on the verge of bankruptcy.

Ryan Briggs is an investigative reporter based in Philadelphia. He has contributed to the Philadelphia Inquirer, WHYY, the Philadelphia City Paper, Philadelphia Magazine and Hidden City.

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Tags: philadelphiaeconomic developmentchicagoreal estatenew orleanscrimerahm emanuelmichael nuttercasinos

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