Bally’s Chicago Halts Hotel Construction Over Video Gambling Dispute

Bally’s Chicago has halted construction on its hotel and entertainment complex, the project freeze stems from an ongoing dispute over video gambling terminals (VGTs) in Illinois, creating uncertainty around the timeline for the highly anticipated casino resort. Bally’s casino Chicago faces mounting pressure as the proliferation of VGTs across the state threatens to impact projected revenue streams. Accordingly, the developer has suspended work on key components of the permanent facility until regulatory clarity emerges.

The casino operator issued a construction reset notice Saturday to the Chicago Community Builders Collective, pausing work on nearly all non-gaming amenities at the USD 1.70 billion River West complex. Bally’s casino Chicago has stopped construction on its hotel tower, restaurants, food hall, and entertainment center while the video gambling terminal dispute with city officials continues.

The decision impacts 1,500 union workers who had been engaged in building the project. Bally’s emphasized the gravity of this move, stating it does not take the decision lightly given the potential effect on union tradespeople working on site. In other words, the construction freeze extends to virtually every component except the casino floor itself.

Despite the pause on ancillary facilities, Bally’s maintains the casino opening remains scheduled for early 2027. The company stated it intends to fully honor its commitments under the Host Community Agreement. Bally’s indicated it will continue assessing options, expressing hope for more productive discussions with Mayor Brandon Johnson’s office and City Council members.

The 34-story hotel tower had already reached full height along the Chicago River before the construction slowdown took effect. Regardless, completion and opening timelines for these non-gaming elements now face uncertainty pending resolution of regulatory conflicts with the city.

Video Gambling Terminal Dispute Triggers Development Freeze

The construction freeze traces back to Chicago’s 2022 Host Community Agreement with Bally’s Chicago, which granted the casino operator a monopoly on slot machines and video gaming terminals within city limits. Specifically, the agreement included provisions requiring good-faith renegotiation if the city later allowed VGTs and Bally’s demonstrated negative operational impact.

The City Council’s 2026 budget, approved over Mayor Brandon Johnson’s objections, legalized video gambling terminals across Chicago and projected $6.80 million in licensing revenue. Bally’s claims this decision breaches the Host Community Agreement and creates harmful uncertainty for the casino’s prospects.

Financial analysis reveals the city earns 4.5 times more per dollar on Bally’s casino Chicago slot machines compared to VGTs, as casino revenue faces a 23.2% tax rate versus 5.15% for terminals. Acting Chief Financial Officer Steven Mahr confirmed tax revenues from video gaming terminals will be offset by casino losses, resulting in negative or marginally positive net revenue.

Bally’s warned the move could eliminate $74 million in annual city revenue and up to 1,050 jobs at its temporary and permanent casinos. The Illinois Gaming Board approved six initial VGT licenses for Chicago establishments, prompting Bally’s to threaten legal action pursuing all available remedies with monetary impacts conservatively estimated in the hundreds of millions of dollars.

How Illinois VGT Growth Threatens Bally’s Casino Chicago

Illinois has installed 48,176 video gambling machines statewide since 2012, creating the equivalent of over 40 full-size casinos. This expansion threatens Bally’s casino Chicago as establishments averaged more than USD 104,000 in annual gross gaming revenue in 2023. The proliferation proves substantial, with 285 additional bars and restaurants having applied for state VGT licenses in Chicago alone.

Christopher Jewett, Bally’s senior vice president, stated the company entered the agreement on the premise that Chicago would adhere to its long-standing prohibition of VGTs. “Had we known that within just a few years this body would reverse course and allow an alternative form of gaming that breaches the agreement, we would never agree to the numerous commitments, all of which we’ve held up,” Jewett said.

In response, Bally’s Chicago retained former Mayor Lori Lightfoot’s law firm to pursue potential litigation against the city for violating the casino host agreement she negotiated as mayor. David Greising of the Better Government Association questioned whether the arrangement creates an appearance of conflict, noting ethics rules prohibit former officials from representing clients regarding contracts over which they exercised substantial managerial responsibility.

State revenue data confirms VGT cannibalization of casino income, with lottery revenues at USD 886 million while video gambling climbed to USD 848 million. Illinois’ nine legacy riverboat casinos have experienced revenue declines for nine consecutive years.