Let's chalk his reaction up to civic pride. I know I mentally went through a similar response when I read your post, but I see that the focus is more on deriding Antoinette Giancana as being a money-grubbing idiot than anything derogatory to Chicago.

Chicago and New York both have plenty of stories of Mob brutality. LCN members were/are no angels in either town.

Chicago has always had a gritty reputation which stems from the rough and tumble beginnings as a prairie town. Then it continued with the Stockyards and the brutality of the slaughterhouses as it not only decimated livestock, but also broke the wills of many immigrants who worked in them. I think this toughness may have spilled out into the city's character and even moreso in the underworld.

It's interesting that Luciano said that about Chicago, because at the time Chicago was probably being run by Capone, who was originally from... yup you guessed it... New York.