Major Casino Complex Proposed for Chicago : Gambling: Three resort chains envision a $2-billion rival to Atlantic City. But some Illinois political leaders react coolly to plan, which requires a change in state law.

Hoping to capitalize on the nationwide spread of legalized gambling, three resort chains on Tuesday proposed building a $2-billion gaming and entertainment complex in downtown Chicago that would rival Atlantic City.

But while investors were enthusiastic about the possibility of legal gambling in the midst of one of the nation’s most densely populated areas, some Illinois political leaders were cool to the idea. State law must be changed for the project to go forward.

Executives from Hilton Hotels Corp., Circus Circus Enterprises Inc. and Caesars World Inc. said that the project--which would be financed privately through debt or stock sales--would pump an estimated $5 billion into the city’s economy and generate $400 million in tax revenue.

The 3-million-square-foot facility would also create about 10,000 temporary construction jobs and 15,000 to 20,000 mostly entry-level jobs at the complex, or a permanent payroll of $600 million, said the executives who met Tuesday with Chicago Mayor Richard M. Daley.

“Casinos have come a long way since the days of Bugsy Siegel,” said John Giovenco, president of Hilton’s gaming division, referring to the mobster whose visions of a desert gambling mecca were depicted in the film “Bugsy.”

“The operators of major casinos now are publicly held companies, professionally managed, with a high degree of sophisticated government regulation.”

Daley, who previously has opposed gambling, emerged from the meeting saying he endorsed the concept but called for a study of the plan. But Vince Demuzio, an assistant majority leader in the Illinois Senate, told the Associated Press that he would oppose the idea.

Illinois Gov. Jim Edgar has not publicly addressed the proposal directly. But he said in a television interview Tuesday, “I really think we have enough gambling right now in Illinois. I’m not in favor of . . . becoming another Las Vegas.”

Illinois currently allows gambling on riverboat casinos operating on the Illinois and Mississippi rivers.

But the Chicago proposal would require a modification in state law to allow land-based gaming in the city, as well as a reduction in Illinois’ gaming tax to make the project financially feasible, promoters said.

Despite the hurdles, investors and analysts are enthusiastic about the proposal.

In composite trading on the New York Stock Exchange Tuesday, Caesars World shares rose $0.875 to close at $39.125; Hilton shares gained $2.25 to $49.50; and Circus Circus shares jumped $3.125 to close at $44.125.

Harrison reported from Chicago.