Bally's Corp saw its shares crash by over 25% on Monday, following the release of troubling debt information in the company's second-quarter 10-Q filing with the Securities and Exchange Commission on August 14.
In the filing, Bally's indicated that, according to its current forecasts, it "does not project that it would satisfy the liquidity maintenance requirement" or the "consolidated net leverage ratio covenant" expected in its revolving credit facility for the upcoming year.
The filing further noted, "As described below, while the company is actively engaged in discussions on several financing alternatives, the conditions and events raise substantial doubt about the company's ability to continue as a going concern."
To address these financial concerns, Bally's is considering options such as "asset monetisation, an equity sale and debt financings." In July, the company entered into a non-binding term sheet for a loan intended to further the development of its $4 billion Bally's Bronx project. However, it cautioned that "there can be no assurance that the plans will be successfully implemented."
As the quarter concluded, Bally's reported cash and equivalents totaling $390.1 million, juxtaposed against long-term net debt of $4.46 billion. By the end of trading on Monday, shares were down 26%, closing at $10.31, which brings its year-to-date decline to 38%.
Bally's has three major projects in the works: a $1.7 billion permanent casino in Chicago, a $1.19 billion development on the Las Vegas Strip, and the Bronx project, which was awarded one of three coveted New York City licenses last December.
Among these, the Las Vegas site may offer the easiest exit for the company, especially since construction on Chicago is ongoing and New York presents greater potential. The site formerly occupied by the Tropicana was demolished in October 2024, yet since then, Bally's has made little headway on its Strip project. The company has revealed just one official rendering of the mixed-use development, showing a shift in focus toward a retail-entertainment district rather than a traditional casino-resort.
This strategy has raised concerns among local stakeholders. The MLB's Oakland Athletics are reportedly formulating contingency plans to invest up to $100 million in infrastructure at the same location while Bally's lags in progress. A report from The Athletic revealed that the Las Vegas Convention and Visitors Authority had urged Bally's to present a financing plan by August, but neither the LVCVA nor Bally's commented on this matter last week.
In a note to investors, Citizens analyst Jordan Bender expressed skepticism about Bally's ability to realize all its projects without selling assets or securing a partner to alleviate its debt burden. He suggested that the Las Vegas development would be the most likely candidate for such a move, based on the vague language the company is employing.
In the company's Q2 release, CEO Robeson Reeves did not mention the Las Vegas casino project. Instead, he indicated that Bally's is engaged in "advanced negotiations with potential partners for exciting retail and entertainment offerings."
Meanwhile, Bally's challenges are not limited to Las Vegas. The company recently paused construction on the non-gaming elements of its Chicago casino due to the city's legalization of video gaming terminals, which could potentially siphon approximately $70 million annually from Bally's revenues and put hundreds of jobs at risk. This halt marks the third shutdown of the Chicago project.
Earlier this year, Bally's secured a temporary license extension through provisions in Illinois' omnibus revenue bill, as the company would have had to shutdown its temporary casino on September 9 without it. Given that the permanent casino is not anticipated to be ready until early 2027, such a closure would have resulted in a significant loss of income.
However, it's still unclear how halting non-gaming construction will impact the overall timeline. Only a brief mention was made in Bally's Q2 release regarding the Chicago project: "Construction of Bally's Chicago continues as we target opening of the permanent casino in early 2027."
Regarding the Bronx, Bally's has committed $615 million to the project this year even before construction kicks off. Of that amount, $500 million went toward the New York license fee, and $115 million was paid to the Trump Organization. Terms of the deal included a $115 million payment if a casino license were granted.
At $4 billion, Bally's Bronx venture is significantly more expensive than the Chicago project. The plan involves a single-phase rollout to be completed by 2030, with a timeline indicating that construction should begin about eight to nine months after the license was issued. Since the license was granted in December, work will need to start soon to meet the targeted completion date.
Time is critical for the Bronx project as competitor Resorts World New York City is already operational, and Hard Rock Metropolitan Park, the other licensee, aims for a 2030 opening as well, backed by wealthy investor Steve Cohen. Presently, Bally's appears more focused on securing funding rather than commencing construction.
Reeves stated, "We are actively raising additional capital for the further development and construction of the project and have substantial interest from potential partners for both project debt and equity financings. In July, we signed a nonbinding term sheet for a pre-construction loan for Bally's Bronx, and in August we entered into a letter of intent with a potential equity investor."
The backdrop of Bally's financial troubles somewhat overshadowed its Q2 performance, which was again released late. The company reported a 20% year-over-year increase in group revenue, totaling $792.2 million, largely driven by acquisitions.
Bally's casino revenue saw a slight increase of 2% year-over-year, amounting to $401 million, while adjusted EBITDAR for the segment increased by 3.5% to $109.6 million, aided by positive results from operations in Baton Rouge and Marquette. On the digital front, revenue from Bally's Intralot grew by 22% year-over-year to $243.5 million, with digital revenue across North America climbing 17% to $66.1 million. Furthermore, Bally's announced a $326 million acquisition for British sports betting and igaming operator evoke during the quarter.
Reeves summarized the company's direction by saying, "Our strategic initiatives are creating a highly scaled, growing, global omni-channel provider of retail and online experiences and we are aggressively pursuing and executing on the many growth opportunities before us."
