Shares of Bally's Corp fell dramatically, plunging by over 25% during trading on Monday. This drop was likely influenced by troubling debt disclosures in the operator's second-quarter 10-Q filing with the Securities and Exchange Commission on August 14.
In the filing, Bally's indicated that its current forecasts did not suggest it would meet the liquidity maintenance requirement or the consolidated net leverage ratio covenant outlined in its revolving credit facility for the coming year.
The filing stated, "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."
The potential financing options outlined by Bally’s include asset monetization, an equity sale, and various debt financings. The company noted that it had entered into a non-binding term sheet in July for a loan to advance the $4 billion Bally's Bronx project but cautioned against guarantees of success in implementing these plans.
As of the end of the quarter, Bally's reported cash and equivalents totaling $390.1 million, against long-term net debt of $4.46 billion. Following the decline, shares closed at $10.31, reflecting a 26% drop that pushed the year-to-date performance down to -38%.
In the pipeline, Bally's has three significant U.S. projects: a $1.7 billion permanent casino in Chicago, a $1.19 billion project on the Las Vegas Strip, and the Bally's Bronx project, which secured one of three coveted casino licenses in New York City last December.
Of the three developments, the Las Vegas project might become the easiest to divest, particularly since construction is already underway in Chicago while New York holds greater promise. Since the Tropicana was demolished in October 2024, Bally’s has made minimal headway on the Strip, revealing only one official rendering related to the mixed-use project. The firm has indicated a preference for developing a retail and entertainment district rather than a traditional casino-resort, which has sparked concern in Las Vegas. The MLB's Athletics franchise is reportedly preparing to invest up to $100 million in infrastructure at the site due to Bally’s delay.
Reports suggest that the Las Vegas Convention and Visitors Authority urged Bally’s to present a financing plan by August, but neither entity commented on this demand to iGB last week. Analyst Jordan Bender from Citizens believed that Bally’s might struggle to complete all its projects without offloading assets or securing a development partner, making Las Vegas the likely candidate for either a sale or partnership.
Interestingly, Bally’s CEO Robeson Reeves did not mention a Las Vegas casino in the Q2 release, instead noting that "the company is in advanced negotiations with potential partners for exciting retail and entertainment offerings."
While Las Vegas faces uncertainty, challenges are present in Chicago and New York as well. Earlier this month, Bally's paused the construction of non-gaming elements at the Chicago casino due to the city legalizing video gaming terminals, which could cost the operator approximately $70 million in annual revenue and lead to job losses. This recent construction halt marks the third time the project has been paused.
Bally's secured an extension to its temporary Chicago license earlier this year through Illinois’ omnibus revenue bill, averting the closure of its temporary casino set for September 9. However, the permanent casino is not expected to open until early 2027, creating a potential financial gap without income in the interim. The company’s Q2 report only briefly mentioned the project: "Construction of Bally’s Chicago continues as we target opening of the permanent casino in early 2027."
In the Bronx, even before any construction begins, Bally's allocated $615 million this year, which includes $500 million for the New York license fee and $115 million paid to the Trump Organization as part of the site acquisition in 2023. This substantial investment underscores the financial stakes in the $4 billion project, which aims for completion by 2030.
The timeline shows that considerable urgency lies in initiating construction, as work must start within eight to nine months post-licensure to maintain the targeted 2030 opening. Competitors like Resorts World New York City are already operational, and Hard Rock Metropolitan Park is also aiming for a 2030 start date. This heightens the pressure on Bally’s as it seeks to secure funding rather than focusing on construction at this juncture.
“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,” said Reeves.
While these financial concerns loom large, Bally's Q2 results showcased some positives. Group revenue, significantly boosted by acquisitions, increased by 20% year-over-year to $792.2 million.
Casino revenue climbed 2% year-over-year to $401 million, and adjusted EBITDAR grew approximately 3.5% to $109.6 million, largely due to gains in Baton Rouge and Marquette. Digital businesses saw B2C revenue from Bally's Intralot rise 22% year-over-year to $243.5 million, while North American digital revenue grew 17% to $66.1 million. During the quarter, Bally's announced a $326 million acquisition of British sports betting and igaming operator Evoke.
Robeson Reeves remarked, “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.”
