CHICAGO—The iconic Admiral Theatre, which has served as a gentlemen’s club since a redo in the late 1980s, has filed a federal lawsuit against the city of Chicago and Cook County over millions of dollars said to be owed in back amusement taxes.
The Admiral’s lawsuit is challenging the nine percent city and three percent county amusement taxes after the adult venue was hit with $3 million in assessment for underpayments over a seven-year span.
According to Luke Lirot, an industry attorney representing the Admiral, the lawsuit’s central question is whether requiring adult entertainment venues to pay the amusement taxes while exempting other smaller theaters is a violation of free speech.
Exempting some theaters from the tax based on the content of the performances makes it unconstitutional, Lirot told the Chicago Tribune.
“I don’t know if it was designed to be an additional burden to gentlemen’s clubs,” Lirot said. “It certainly appears to be that way.”
Admiral’s dispute came about after an annual city audit found that the adult venue had not collected the amusement tax for fees paid by customers to its exotic dancers, who are independent contractors.
The payments amount to about $500,000 a year, Admiral owner Sam Cecola told the Tribune.
Cecola said he had been negotiating for about a year to reduce the back taxes owed, but discussions fell off during the onset of the COVID-19 pandemic.
“The city and county only advised us we were responsible for collecting from the entertainers seven years later, and sent us a bill, ” Cecola said. “We should be exempted from this tax as are all other small theater venues.”
The Admiral’s lawsuit seeks a refund of taxes paid, fees and costs associated with the lawsuit and a permanent injunction against the city and county from enforcing the amusement tax ordinances against the club.
About 60 dancers have returned to work at the venue after the pandemic’s lockdown, said Cecola, who noted that everyone is required to wear masks inside the club, including the dancers.
Seating capacity has been reduced to about 45 customers, and dancers required to keep at least six feet of social distancing, he said.
Lirot noted that the Admiral recently was successful in a lawsuit waged against the Small Business Administration after it was excluded from obtaining loans through the federal Payroll Protection Program.
That suit was settled and the SBA approved a nearly $400,000 PPP funding, he said. Lirot worked on the case, along with the late industry lawyer Joe Obenberger, who died in June.
