Gary's Majestic Star casinos docked in Buffington Harbor. (Carole Carlson / Post-Tribune)
When Spectacle Entertainment decided to pursue the purchase of Majestic Star Casinos’ two Gary licenses, company officials didn’t anticipate Illinois would pass a massive gambling expansion bill that includes new casinos in the neighboring south suburbs and City of Chicago.
“The market will be considerably different than we had anticipated,” said Jahnae Erpenbach, general manager of the two Gary casinos. “It’s definitely not what we had hoped for.”
Erpenbach said they may need to make some adaptations according to the significant competitive changes they’re expecting. Northwest Indiana’s five casinos draw a large number of their clients from the Chicago area, including the south suburbs and southern portion of the city. They’ve already been hit by new casinos in Illinois and the addition of video gaming terminals in bars, restaurants and other businesses in the state.
Indiana gaming analyst Ed Feigenbaum said the addition of casinos in the south suburbs could add to the damage.
“I’m much more concerned about casinos in the south suburbs. People will have to pass by them before they get to Hammond, East Chicago and Gary,” said Feigenbaum, referring to Majestic Star Casinos in Gary, Horseshoe in Hammond and Ameristar Casino in East Chicago.
The Illinois gambling bill would allow for a Chicago casino with up to 4,000 gambling positions while other existing casinos could increase their gambling positions from 1,200 to 2,000. It would permit legal sports betting, slot machines at both city airports and “smaller” casinos in the south suburbs, Waukegan, Rockford, Danville and Williamson County. Slot machines could be installed at horse racetracks and tracks could host sports betting.
Jeff Morris, a spokesman for Penn National, parent company of Ameristar Casino in East Chicago, called the Illinois gaming legislation “the most massive gaming expansion package we’ve ever seen, all happening in a state that is already saturated from a gaming standpoint.”
Morris said he couldn’t comment on specifics in terms of potential impact the new casinos would have on Ameristar at this point.
“We’re still analyzing the 1,100-page bill,” he said.
An official with Horseshoe Hammond was not available for comment and a spokesman for Blue Chip Casino in Michigan City did not respond to a request for comment over several days.
Erpenbach, meanwhile, said Spectacle Entertainment remains cautiously optimistic about its future in Gary and is moving forward with its plans to move to a new land-based site near Interstate 80/94.
She said there may need to be some changes as a result of the new expected competition, but didn’t elaborate on what kind of changes those would be.
Feigenbaum said there are still a lot of uncertainties surrounding the Illinois expansion, such as where the Chicago and south suburban casinos will be built, whether any investors have come forward for those operations and whether two communities could come together on one casino.
“I don’t think Illinois knows how it will handle all of this,” Feigenbaum said.
He said Chicago officials have mentioned the old post office building, older McCormick Place building and the former Michael Reese Hospital complex as possible sites for their casino.
“It’s obviously a push to make the Loop bigger by extending it further south. It would be part of the entertainment district, and would be directed more toward conventions and tourists,” Feigenbaum said.
He said the sports wagering portion of the bill should have no effect on Indiana casinos, which will also be able to offer sports betting under newly enacted legislation.
While the extent of Illinois’ gambling expansion took some by surprise, Feigenbaum said the Indiana Legislature took action in this last session with the understanding that Illinois wasn’t going to stand still when it came to gaming.
In addition to allowing sports betting, the Indiana Legislature approved the move of one Gary casino to a land-based site in the city and moving the other Gary casino license to another Indiana city, Terri Haute.
“We kept hearing Illinois is not going to wait. Chicago will get its casino,” Feigenbaum said.
Feigenbaum wondered if Illinois’ bet on widespread expansion of gambling to raise money was pie in the sky.
“They may be banking too much on the expansion of the number of machines in a given property to make a difference,” Feigenbaum said.
As for what Indiana casino operators can do to fend off the expected competition, Feigenbaum said: “They need to offer the best customer experience.”
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