Esports projects in Chicago either dead or fading

Two esports arenas that were to have drawn thousands of video gamers to Downtown Chicago have gone down in virtual flames.

A $30 million gaming arena proposed by developer Scott Greenberg for 2500-48 South Wabash Avenue has been scrapped, the Chicago Sun-Times reported. Prospects also look dim for Urban Resolve’s proposed video gaming center linked to student housing at 400 South LaSalle Street.

The 108,000-square-foot esports arena near McCormick Place that was approved in 2021 has been snuffed out by changing market conditions, its developers say.

Plans had called for a two-story arena with 1,040 seats that would have pioneered a new business niche in Chicago, with huge job prospects and community events.

Greenberg and Chris Lai, co-CEOs at Chicago-based Smash Interactive, had envisioned a large floor for wandering, goggle-wearing contestants and wall-sized LED screens for tournaments, billed as a one-of-a-kind experience for for-profit and community events

To cap the deal, The Illinois Institute of Technology had promised to teach skills in game design.

“This is something that can change the world,” Greenberg declared in 2021.

Then reality struck the virtual economy. The arena’s prime backers — game publishers, the top dogs in a business with complex economics — grew cold feet, Greenberg, who also leads ECD and SMASHotels, said.

“The conditions in the gaming industry are changing. Some of the clients I was courting are backing away,” Greenberg told the Sun-Times. “A lot out there has been hitting the publishers and game usage is down a bit.”

Last year was a “corrective year” for esports, also known as congregate gaming, whose global market fell 4 percent to $184.4 billion from 2021, according to Newzoo, which projected a return in growth.

Playing video games in congregate settings has been a tough business for a pastime normally done at home — for free.

Esports events generally don’t command a high ticket price and merchandise sales are said to be disappointing. Venture capitalists have also grown wary of funding revenue growth without profits and the crypto crash wiped out a source of capital, according to analysts.

Greenberg said there may be a market for congregate gaming someday, “but it’s probably not on the scale I was talking about.”

Across town in the LaSalle Street district, prospects appear to be fading for plans to redevelop the former trading floor of the Chicago Board Options Exchange into a gaming center and student housing complex.

A nonprofit partnership led by Urban Resolve had sought city incentives — including a public takeover by eminent domain — to convert the 1.5 million-square-foot building into a ground-floor esports venue topped by student housing.

Plans called for universities to collaborate on a gaming center as a teaching tool, with student housing revenue to support the gaming.

City officials, however, say it wasn’t eligible for subsidies because it falls outside the tax increment financing district for La Salle improvements.

Urban Resolve Managing Director Erin Lavin Cabonargi said that, without a city subsidy, the project wasn’t viable. She also said she’d like to put it in play elsewhere. “This would be bringing people together not as a for-profit venture but more as a civic attribute,” she said.

Cboe Global Markets said it plans to sell the Chicago Board Options Exchange building, but hasn’t listed it yet, according to a spokeswoman.

The Cook County assessor puts its market value at $58.6 million, but insiders believe it will sell for much less, perhaps to somebody who would build a data center in the Central Loop.

— Dana Bartholomew