Bally's Corp saw its share price drop over 25% during trading on Monday, as market reactions reflected concern over the company’s debt situation outlined in its second-quarter 10-Q filing with the Securities and Exchange Commission on August 14.
In that filing, Bally's reported it does not foresee meeting the liquidity maintenance requirement or the consolidated net leverage ratio covenant in its revolving credit facility in the upcoming year. The firm indicated that the current conditions raise significant doubts about its ability to maintain operations as a going concern.
Bally's is exploring various financing options, including asset monetization, an equity sale, and additional debt financing. In July, the company entered into a non-binding term sheet to secure a loan for its ambitious $4 billion Bronx project, while cautioning that success in these plans was uncertain. At the end of the quarter, the company had $390.1 million in cash against long-term net debt of $4.46 billion, with shares closing at $10.31, marking a 26% daily decline and a 38% fall for the year.
The company has significant projects lined up, such as a $1.7 billion permanent casino in Chicago, a $1.19 billion Las Vegas Strip project, and the Bronx undertaking, which secured one of three coveted New York City licenses last December.
Of these projects, selling the Las Vegas development could be the most viable option as Chicago's construction is underway and New York represents a larger opportunity. Progress on the Strip has been slow, particularly since the former Tropicana was dismantled in October 2024. The company has indicated a preference for developing a retail and entertainment district rather than a traditional casino-resort, which has generated concern among local entities that have urged Bally's to provide a financing plan.
Analyst Jordan Bender from Citizens has expressed skepticism regarding Bally's ability to complete all of its projects without selling an asset or bringing in a partner at its current debt levels, identifying Las Vegas as the most likely candidate for such actions. The company's CEO, Robeson Reeves, has not mentioned a Las Vegas casino in recent communications, focusing instead on potential partnerships for retail and entertainment ventures.
Meanwhile, the situation in Chicago is also complex. Bally's paused construction on the non-gaming components of its Chicago casino after the city legalized video gaming terminals, which could impact revenue significantly. The company has cautioned that this new development could cost it about $70 million annually and lead to job cuts. This latest construction hiatus marks the third delay the project has faced.
Earlier this year, Bally’s secured a license extension for its temporary Chicago operation, avoiding an imminent closure that could have left it without income until early 2027 when the permanent casino is expected to open.
In the Bronx, Bally's has earmarked $615 million for the project this year, spending $500 million on the casino license fee and $115 million to the Trump Organization, following the acquisition of the Bronx site in 2023. The overall cost of the Bronx project exceeds that of Chicago, with a complete build-out planned for 2030. The timeline indicates that construction should commence roughly eight to nine months after receiving the license, meaning work must begin within the next two months to maintain this goal.
Bally’s CEO has noted the company is focused on securing additional funding for the Bronx project, showing interest from potential partners for both debt and equity financing. In July, Bally's signed a non-binding term sheet for a pre-construction loan and entered a letter of intent with a potential equity investor in August.
Despite these challenges, Bally's reported a 20% year-over-year increase in Q2 revenue, totaling $792.2 million, largely driven by acquisitions. Casino revenue grew by 2% to $401 million, while adjusted EBITDAR rose around 3.5% to $109.6 million, buoyed by operations in Baton Rouge and Marquette. Digital revenue also saw increases, particularly from Bally’s Intralot, marking a 22% rise to $243.5 million. Recently, the company announced a $326 million acquisition of the British sports betting operator evoke, reflecting its expansion strategy.
