Bally's Corp faced a sharp decline in its shares, which fell more than 25% during trading on Monday. This drop followed the company's debt disclosures in its second-quarter 10-Q filing with the Securities and Exchange Commission on August 14.
In the filing, Bally's expressed concerns about meeting certain financial commitments, stating it does not expect to satisfy the liquidity maintenance requirement or the consolidated net leverage ratio covenant in its revolving credit facility over the next year. "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," Bally's noted.
The potential financing options include asset monetization, an equity sale, and various debt financings. The company had entered a non-binding term sheet in July for a loan intended to fund the $4 billion Bally's Bronx project but warned that it could not guarantee successful implementation of these plans.
At the close of the quarter, Bally's had cash and equivalents totaling $390.1 million while carrying long-term net debt of $4.46 billion. Shares finished Monday at $10.31—a 26% drop that has brought the year-to-date performance down by 38%.
Among Bally's significant projects, three standing out are the $1.7 billion permanent casino in Chicago, the $1.19 billion Las Vegas Strip project, and the Bally's Bronx, which secured one of three highly sought-after casino licenses last December. The Las Vegas project could be the most viable asset for exit strategies, particularly since construction in Chicago is currently in progress and the New York project presents a potentially larger market opportunity. After demolishing the previous Tropicana in October 2024, Bally's has made little advancement on the Strip project, showing only one official rendering and indicating a preference for a retail-entertainment district rather than a casino-resort.
The city of Las Vegas has reportedly urged Bally's to submit a financing plan for this development. Citizens analyst Jordan Bender conveyed skepticism about Bally's current prospects, stating that the company may not finish its projects without divesting assets or securing a development partner, with Las Vegas most likely in line for such measures.
Bally's CEO Robeson Reeves did not mention the Las Vegas casino in the Q2 release, focusing instead on "advanced negotiations with potential partners for exciting retail and entertainment offerings."
Meanwhile, the Chicago project faces its own challenges. Construction on the non-gaming aspects of this casino was recently halted in response to the city's legalization of video gaming terminals, a move that could cost Bally's approximately $70 million annually in revenue. This marked the third construction stoppage for the project. Earlier this year, Bally's had secured an extension for its temporary Chicago license through Illinois' omnibus revenue bill, avoiding the need to shutter its temporary casino on September 9.
In the Bronx, Bally's has committed $615 million in 2023 before construction even began, allocating $500 million for the New York license fee and another $115 million to the Trump Organization as part of the purchase agreement for the Bronx site. The total projected cost for the Bronx project stands at $4 billion, which is significantly higher than Chicago's. Plans call for completion by 2030, with construction expected to start within eight to nine months of receiving the license granted in December, making it crucial to begin soon.
Bally's is under pressure in New York, as competitor Resorts World New York City is already operational and Hard Rock's Metropolitan Park is also targeting a 2030 launch for a project that is larger and more secured by its connection to wealthy Mets owner Steve Cohen.
"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," Reeves stated.
Despite these hurdles, Bally's Q2 results reported a notable revenue increase. Group revenue surged by 20% year-over-year to $792.2 million, driven mainly through acquisitions. Casino revenue rose by 2% to $401 million, while segment adjusted EBITDAR increased by about 3.5% to $109.6 million. Additionally, B2C revenue from Bally's Intralot rose by 22% to $243.5 million, with digital revenue in North America climbing 17% to $66.1 million. During this quarter, Bally's also announced a $326 million takeover of British sports betting and igaming operator, Evoke.
Bally's continues to assert that its strategic initiatives are creating a significant global provider of both retail and online experiences, and they are aggressively pursuing diverse growth opportunities.
