Casino to be built near Chicago O'Hare

Dec. 23--Illinois gambling regulators on Monday chose the lowest bidder among three finalists for the state's only unused casino license, saying the company that plans to build in Des Plaines didn't raise the ethical concerns posed by finalists for Waukegan and Rosemont.

Midwest Gaming and Entertainment LLC beat out its competitors on a 3-1 vote of the five-member Illinois Gaming Board. Panel member Eugene Winkler refused to vote because he said he was not convinced that any of the finalists deserved permission to operate slot machines and betting tables.

"We have become accustomed to the stench of gambling and its effects in Illinois," said Winkler, a Methodist minister. "That's the problem we have grown used to. Corruption in government, pay-to-play, headline grabbers and behind-the-scenes operators, but real moral and ethical issues are at stake."

The recent corruption arrest of Gov. Rod Blagojevich cast a new pall over a selection process that has been mired in controversy for more than a decade, when the license was last used. Questions about ties between the Waukegan bidder and Blagojevich fundraisers helped sink that plan, and investors in Rosemont could not overcome concerns about mob influence in the village that helped derail two previous attempts to open there.

Once viewed as a cash cow that could fetch more than half a billion dollars, the license will tentatively go to a company that offered a total of $125 million once the doors open and an additional $300 million to be paid over the course of 30 years.

But the question of when Midwest Gaming would open the casino is far from certain. The company still faces another six months to a year of vetting by regulators before construction would begin, with the casino and parking garage slated for completion 15 months after that.

Chairman Aaron Jaffe said Midwest got his vote because it was the most reputable company and would best share revenue with economically depressed communities. Board members also cited the proximity to O'Hare International Airport and nearby convention centers in Rosemont.

"We're just very happy and we're very excited," said Midwest Chairman Neil Bluhm. "We'll build something the state of Illinois and the city of Des Plaines can be proud of."

While Trilliant Gaming partnered with Rosemont to offer a high bid of $435 million for the license, Jaffe and other board members said they could not ignore the village's past problems. Rosemont was slated to receive the license until it was revoked in 2005 amid concerns about former Mayor Donald Stephens' relationship with mob figures.

"All you have to do is pick up a paper in the city of Chicago and read it, and I think you come to the conclusion that there are doubts about Rosemont," Jaffe said.

Mayor Bradley Stephens, the late mayor's son, dismissed the board's concerns.

"The village of Rosemont's name keeps getting dragged through the mud on certain issues," Stephens said. "We're aboveboard. I hold my head high."

Jaffe and other board members also questioned the background of some investors in Waukegan Gaming LLC, who touted their proposal as a way to revitalize the struggling lakefront community. The company offered $225 million upfront for the license and received the backing of one board member.

Jaffe would not elaborate, but the board previously questioned the company's dealings with Springfield power broker William Cellini, who held an ownership stake in the company that later became Waukegan Gaming.

Although Cellini sold off his interest more than 18 months ago, he and others with Blagojevich ties have connections to the businessman he sold it to: Michael Pizzuto, a Hinsdale real estate developer who was once director of finance for Cellini's New Frontier Development.

Cellini was indicted this year on charges that he extorted campaign contributions to Blagojevich from a Hollywood producer whose investment firm was seeking state business.

Blagojevich appointed Pizzuto to the State Universities Retirement System in 2004, and a "clout list" released in the trial of convicted Blagojevich fundraiser Antoin "Tony" Rezko suggested that he was sponsored by fellow fundraiser Chris Kelly.

An analysis of the casino proposals conducted by board staff also raised concerns about campaign donations to Waukegan Mayor Richard Hyde from people connected to Waukegan Gaming. Campaign contribution records show that Pizzuto and casino developer Richard Stein, another longtime Cellini business partner, each donated $1,000 to Hyde in March.

Ed Duffy, a managing partner in Waukegan Gaming, said he was disappointed but could not speculate on what concerned regulators.

The 10th license has not been in use since July 1997, when the Silver Eagle Casino located on the Mississippi River in Jo Daviess County closed. The casino's owners moved to Rosemont, but their bid to open as the Emerald Casino fell through in 2001.

Rosemont made its second bid in 2004 with Isle of Capri Casinos, but a year later the state revoked the license completely and restarted the application process.

Jaffe has estimated that the state has lost more than $1 billion in revenue since the license became inactive, and board members cited the need to generate revenue for the state as a reason for moving forward despite Blagojevich's arrest.

Tribune reporter Jeff Long contributed to this report.

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