Isle of Capri Casinos (NASDAQ:ISLE) looks like a big winner today after the Illinois Gaming Board selected the company for the state's tenth gaming license. The firm's victory was somewhat against the odds, since its $518 million bid was lower than rival Harrah's Entertainment (NYSE:HET) $520 million offer. In the end, though, the gaming board decided that Isle of Capri's plan to build a casino in the community of Rosemont was more attractive than Harrah's proposal to open a facility in Waukegan.

Rosemont is just west of Chicago and near O'Hare International Airport, the city's main air hub. The casino's proximity to the city will allow it to easily tap into the huge Chicago market. In addition, the gambling site will likely enjoy a captive supply of out-of-town customers streaming in from Rosemont's convention center. According to the Chicago Tribune, the property should generate $2.6 billion in revenue over its first five years. For Isle of Capri, it looks like a major coup.

The deal is not without its pitfalls, however. Isle of Capri has promised to have the site up and running in just eight months. For each day beyond that deadline, the casino operator will pay the state a per-day penalty of $500,000, up to a total of $105 million. As of Jan. 25, Isle of Capri had negative working capital of $41.5 million and more than $1 billion in long-term debt, so not meeting its own tight schedule could have serious consequences. It's worth pointing out that another company, Emerald Casino, won the right to build a casino in Rosemont in 1999, but was blocked from opening the facility by the gaming board, which alleged the project was open to infiltration from organized crime. Emerald filed for bankruptcy in 2002.

The casino also may not be as profitable as gambling centers elsewhere in the country, primarily due to Illinois' heavy tax burden. The state, which has increased graduated taxes for gaming facilities twice in the past two years and now has a top rate of 70%, expects to pull in $1.1 billion over five years from the Isle of Capri site.

Harrah's, Argosy Gaming (NYSE:AGY), Penn National Gaming (NASDAQ:PENN), Mandalay Resort Group (NYSE:MBG), and Boyd Gaming (NYSE:BYD), all of which operate casinos elsewhere in Illinois, have been squeezed by the hikes. With the state's ongoing budget woes, there is no guarantee it won't impose more fees.

There's no doubt that Isle of Capri deserves to savor its victory for now. The site promises to be big a boost, especially if the company can deliver on its plan for a quick opening. Given the risks involved, though, Isle of Capri stock remains somewhat of a gamble.

How did Harrah's lose out on the Chicago bid when it was the lowest bidder? Where is most of the gambling action these days? Talk it out with other Fools on the Harrah's discussion board.

Fool contributor Brian Gorman is a freelance writer in Chicago, Ill. He does not own shares of any companies mentioned in this article.