On a brief conference call held on Monday, Bally's Corp officials provided an update regarding their Chicago casino project, emphasizing their ongoing commitment to the city amidst controversy surrounding video gaming terminals (VGTs). Chairman Soo Kim and Wanda Wilson, chair of the Bally's Chicago board, spoke during the eight-minute call, which came shortly after Bally's announced a shift in construction for the non-gaming aspects of the project due to the city's recent legalization of VGTs.
Kim took the opportunity to clarify that construction on the permanent Bally's Chicago resort is progressing daily, with around 1,000 skilled tradespeople currently on-site. He reassured stakeholders that the casino is still set for an early 2027 opening, though Bally's is adjusting the sequence of various project elements. Kim described this adjustment as a strategy to better align their efforts with the Host Community Agreement. The company also plans to conduct construction site tours for investors and shareholders soon.
"Investors should view our actions through a straightforward lens: We are protecting the value of significant investments we’re making in Chicago while faithfully executing our contractual obligations," Kim stated. He reiterated Bally's commitment to the city, emphasizing, "We remain fully committed to Chicago."
Kim's statements were briefer compared to comments made by the company’s president and interim CFO, George Papanier, at a recent Chicago City Council meeting. Papanier detailed that Bally's will complete an event center, a 100-room hotel, and essential food and beverage options by early 2027. However, the company is currently reassessing about 12% of the project's planned amenities, citing potential revenue cannibalization from the newly authorized VGTs. The hotel ultimately aims to feature 500 rooms.
The Chicago City Council legalized VGTs in their latest budget, effective January, despite opposition from Mayor Brandon Johnson, who was outvoted. Johnson has expressed concerns about VGTs and their implications for Bally’s Chicago, but has also committed to projects that promote economic growth and job creation across various neighborhoods. In a social media update, he acknowledged the importance of Bally's commitment and the construction workforce involved in the casino’s development.
Earlier this year, the Illinois Gaming Board approved 65 VGT licenses in the city. VGTs represent the most lucrative gaming vertical in Illinois, generating significantly higher revenue and tax contributions than traditional land-based casinos. Papanier noted that the aspects of Bally's Chicago under reconsideration are due to the expansion of VGTs, warning that a widespread rollout could result in a 30% to 50% decline in top-line revenue for the casino. He indicated that it would be premature to continue construction until there is clearer insight regarding the market situation.
On Monday, Bally's shares rose by 7%, reaching $9.84, though they had previously dropped by 30% over the past month amidst uncertainties in Chicago and concerns about the company’s long-term viability. This turmoil follows the resignation of former CFO Mira Mircheva on September 4, which led to Papanier stepping into the role on an interim basis.
The ongoing VGT debate and construction adjustments are the latest developments in Bally's journey since securing Chicago’s sole casino license in 2022. The company has encountered numerous challenges, including work stoppages and a significant $800 million funding gap that was addressed through a financing deal with Gaming and Leisure Properties. Environmental concerns related to city water lines have also necessitated redesigns of the hotel.
Reports of organized crime connections with an unapproved dumpster service prompted a temporary work stoppage ordered by the IGB. Bally's has received two years’ worth of extensions for the permanent project, with the Illinois Gaming Board approving an extension from two to three years in 2023. The deadline was extended to this September, and another year's extension was secured through provisions in a state revenue bill passed in June. Without this latest extension, Bally's would have been compelled to close its temporary casino at Medinah Temple until the permanent venue was finished, risking months without market revenue; however, Kim suggested that such a closure wouldn’t be catastrophic.
In a parallel development, Bally’s is progressing with its ambitious $4 billion Bally’s Bronx resort project in New York City. The company emerged as one of three license winners for this project last year, alongside Resorts World New York City and Hard Rock’s Metropolitan Park. Recently, Bally's announced it has secured $560 million in financing from WhiteHawk Capital Partners for the Bronx project and for general corporate purposes, with expectations for the funding to finalize within the quarter.
Kim acknowledged that this financing is vital for advancing pre-construction planning, intending to complete further capital raising activities on schedule. WhiteHawk’s managing partner, Bob Louzan, remarked that this financing reflects their capability to offer flexible capital solutions for complex projects at critical stages. According to Bally's plans, construction is slated to begin eight to nine months after securing licensing, potentially ushering in a single-phase opening in 2030 if the timeline proceeds as anticipated.
