Shares of Bally's Corp fell sharply by over 25% during trading on Monday, a decline attributed to concerning debt disclosures made in the company’s second-quarter 10-Q filing with the Securities and Exchange Commission on August 14. In this filing, Bally’s indicated that its current forecasts suggest it will not meet the liquidity maintenance requirement or the consolidated net leverage ratio covenant associated with its revolving credit facility in the coming year.
The filing underscored the gravity of the situation, stating, "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." These financing alternatives mentioned include asset monetization, equity sales, and further debt financing. Bally’s had previously entered a non-binding term sheet in July for a loan aimed at advancing its $4 billion Bronx project. However, the company cautioned that successfully implementing these plans is not guaranteed.
As of the end of the quarter, Bally's reported cash and equivalents of $390.1 million against a long-term net debt of $4.46 billion. The company's shares closed at $10.31 on Monday, reflecting a 26% drop for the day and marking a 38% decrease year-to-date.
Bally's has three significant projects underway in the U.S.: a $1.7 billion permanent casino in Chicago, a $1.19 billion project on the Las Vegas Strip, and the Bronx project, which received one of three coveted New York City licenses last December. Given the current circumstances, Las Vegas may emerge as the most viable asset for sale, particularly as plans for Chicago and New York have their complications.
After the demolition of the Tropicana in October 2024, progress on the Las Vegas Strip project has halted, with Bally’s releasing only one official rendering since the year began. The company has hinted at a desire to develop a retail-entertainment district rather than a traditional casino-resort, causing friction, especially since the MLB’s Athletics are exploring infrastructure investments on that site due to Bally's delays. The Las Vegas Convention and Visitors Authority had reportedly urged Bally's to present a financing plan by August, but both parties refrained from commenting on the matter to iGB last week.
Citizens analyst Jordan Bender expressed skepticism regarding Bally's ability to complete all of its projects without divesting assets or securing a development partner, with Las Vegas being the most likely candidate for such actions.
Bally’s CEO Robeson Reeves did not mention the Las Vegas casino in the Q2 report, instead highlighting ongoing negotiations with potential partners focused on retail and entertainment offerings.
Meanwhile, Bally's Chicago project is grappling with its own challenges. The company recently halted construction on the non-gaming elements of the casino due to Chicago's legalization of video gaming terminals—a move the operator fears could cost it $70 million annually and lead to job losses. This construction pause marks the third interruption faced by the project.
Earlier this year, Bally's secured an extension for its temporary Chicago license due to language included in Illinois’ omnibus revenue bill; without this extension, the temporary casino would have been forced to close on September 9. However, the timeline for completing the permanent casino, projected for early 2027, remains uncertain given the recent halt.
In the Bronx, Bally's has already earmarked $615 million for this year's project expenditures, which includes a $500 million payment for the New York license fee and $115 million to the Trump Organization as part of the site acquisition terms. Bally's plans for the Bronx project surpass the budget for Chicago, aiming for completion by 2030. Although details are largely redacted, available information suggests construction should commence approximately eight to nine months post-licensure. The license was granted last December, indicating construction must start soon to meet the timeline.
Competitor Resorts World New York City is already operational, while Hard Rock Metropolitan Park, the third licensee, is also targeting a 2030 opening and boasts a financially stable backer in New York Mets owner Steve Cohen.
As Bally’s focuses on securing funding for the Bronx project, 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."
Despite these challenges, Bally’s Q2 results showed continued growth, albeit overshadowed by the company’s financial concerns. Group revenue climbed 20% year-over-year to $792.2 million, driven mainly by acquisitions. Casino revenue increased by 2% to $401 million, while adjusted EBITDAR rose 3.5% to $109.6 million, predominantly due to performances in Baton Rouge and Marquette. The digital segment presented a 22% year-on-year rise in B2C revenue to $243.5 million, with North America's digital revenue up 17% to $66.1 million. During the quarter, Bally's also announced a $326 million acquisition of British sports betting and iGaming operator Evoke.
