Illinois Gaming Board gives preliminary approval to Rockford Hard Rock casino despite investigation of lead developer’s prior deal

David Heinzmann, Chicago Tribune
·4 min read

The Illinois Gaming Board gave preliminary approval Thursday afternoon to a proposed Hard Rock casino in Rockford, despite the agency’s ongoing investigation into the lead developer’s other gambling interests in the state.

In a unanimous vote affirming the “preliminary suitability” of both the project and its backers, gambling regulators did not mention their probe into developer Dan Fischer’s 2018 purchase of a chain of video gambling cafes that investigators previously have said raised “significant concerns.”

Without elaborating, Gaming Board Chairman Charles Schmadeke did raise concerns before the vote, saying he had questions about “current and former relationships” among some of the investors involved in the Rockford project. The concerns, however, did not rise to the level of halting the project without more information, he added.

“Frankly, I have some questions,” Schmadeke said. “But these are questions and not evidence.”

Gaming Board officials declined to comment further on Schmadeke’s remarks. During the meeting, Gaming Board Administrator Marcus Fruchter said evaluations of the participants’ suitability are ongoing. If investigators find problems, investors could be forced out. Hard Rock officials said in that event their company would step in and take over the partnership stakes in question.

Fischer’s company, Illinois Cafe and Service Co., which operates the Dotty’s chain of video poker cafes, purchased Laredo Hospitality Ventures, the parent company of the Stella’s and Shelby’s chains in a deal that concerned gambling regulators. The Tribune detailed the questions surrounding the transaction in a story published Wednesday.

Under the deal, Fischer’s company put up $2 million to buy Laredo’s 57 gambling locations, while a slot machine supplier who works exclusively with Fischer’s cafes put $44 million into the deal, in payments characterized as an equity stake and noncompete clause buyout for Laredo’s chief executive. Gambling regulators said in internal reports at the time that the transaction appeared to be a “scheme” to place Laredo’s cafes under the control of the slot machine supplier, Midwest SRO.

In Illinois, it is illegal for a slot machine supplier to own a gambling cafe. It is also illegal for a slot machine supplier to offer inducements to cafe owners to lease their machines. The Gaming Board revealed in a court filing last summer that they are investigating the deal.

A Fischer spokesman said in a statement that “we look forward to meeting with the staff to address any questions in the days and weeks ahead.”

Before the vote, a letter of support from Rockford city officials for the project, which is incorporated under the name 815 Entertainment LLC, was read into the record. Hard Rock International issued a statement lauding the vote immediately after the brief meeting.

“We are grateful to the state and the Illinois Gaming Board for their support and for allowing this process to get one step closer to reality. We have a lot of work to do to complete this process, and we are excited at what lies ahead, as we know the city of Rockford is as well with respect to the jobs and revenues this project will create,” Hard Rock’s chief operating officer, Jon Lucas, said in a statement.

The state’s push to welcome new casino licenses to an industry already crowded with existing riverboat casinos and thousands of video poker outlets has been hindered over the last year by the COVID-19 pandemic.

The Hard Rock project, which would occupy a former hotel site along Interstate 90 where tens of thousands of cars headed to and from Wisconsin pass by every day, is the first venue to move forward in the Gaming Board approval process since the expansion bill was passed in 2019.

The casino is planned for the former site of the Clock Tower Resort, a sprawling hotel that was a regional landmark in northern Illinois for decades. In addition to a 64,000-square-foot casino, the new project plans a hotel and 1,600-seat music venue. The local partners attached to the project include Rick Nielsen, guitarist for the rock band Cheap Trick, which hailed from Rockford and was one of the most successful groups of the late 1970s and early 1980s.

dheinzmann@chicagotribune.com