Recently, Bally’s was in the media. From Illinois to Nevada, New York and Rhode Island. We thought that it was time to look at everything, as the timing of the Chicago casino’s opening is in doubt and the proposed New York casino faces stiff competition.
Bally’s reportedly lacks $800m in funds to construct its permanent Chicago Casino. Moody’s & Fitch downgraded Bally’s’ credit rating in this year. In April, Bally chairman Soo Kim made a poor-received takeover attempt. King and Fetter Growth Capital’s (K&F), wrote that privatizing the company would “hijack the completion of Chicago Project”.
Kim’s hedge funds Standard General and Bally’s own 26% each. He wanted $15 for each share. This is above the current price of the share ($11.22 on 14 June) but lower than the buyout offer made in 2022 at $38 per share. The casino project was awarded to the company shortly after the 2022 buyout offer by then Chicago mayor Lori Lightfoot.
According to K&F’s letter, Bally’s is “overleveraged”, across the nation. Fitch’s downgrade notes the “high leverage”. The company is currently renovating the old Tropicana in Las Vegas. It is one of the three bidders to get a downstate New York casino license. It’s also on the verge of a new rule in Rhode Island that will change what type of debts it can take.
Bally’s explosive, rapid growth
Bally’s as we know it today was launched in 2020. Twin River is a retail casino owner and racetrack that bought the Bally’s brand and rebranded. Kim and Standard General bought their stakes in ownership in 2016. Kim, as Chairman of the Board in 2019, began to rapidly expand the company. Kim went on to supervise the purchase of seven casinos across Colorado, Louisiana and Mississippi in 2020.
Bally’s began an aggressive expansion in the digital gambling market with plans to be an omnichannel supplier. Sinclair Broadcast Group is the biggest partner. Bally’s has rebranded Fox Sports Network’s 19 regional sports channels as part of an agreement lasting 10 years. Sinclair may end up owning a stake of 24.9% in the company.
Bally’s will acquire the free-to play gaming provider SportCaller in 2021. It also plans to purchase Bet.Works, the wagering platform Bet.Works, and Gamesys, a British online gambling company. It spent or committed about $3bn in total.
Bally’s has also acquired the Association of Volleyball Professionals as part of the omnichannel strategy. Volleyball is now just one of the sports that Bally’s broadcasts on its app.
Bally’s has also expanded its portfolio to include other projects and properties, such as the Las Vegas Tropicana.
Bally’s to be impacted by digital gambling?
The land-based project seems to be too large for one entity. Bally’s is partnered with Gaming & Leisure Properties Inc. (GLPI), but it’s on its own elsewhere. K&F suggests that Bally’s look for partners to help with its brick and mortar projects.
Analysts point out that Bally’s entry into online sports betting and casino is also a burden on the company. Penn Entertainment was also criticized in late may. The Donerail Group wrote to Penn shareholders that Penn needed to focus more on its casino core business and offload the ESPN Bet platform.
The analysts in the K&F Letter suggested that Bally’s do the same. They cited the “minimal overlap” between land-based businesses and the digital ones.
What’s the next step for Bally’s? This is a great question. It’s not our business to “pick winners and losers” as politicians say. But here is a snapshot of Bally projects in various parts of the US.
Illinois
Chicago Mayor Brandon Johnson told the Chicago Sun-Times early in the week, “I’m sure our team will work with Bally’s ownership to solve it like we did some other issues that I inherited.” To be honest, I don’t think it will be decided until the end of this week.
This comment was part of a larger drama which has unfolded since Bally’s won the rights to build the Chicago casino in 2022. In September 2023, it opened a temporary location at the Medinah Temple. On 5 July the company will move into the new permanent location at the former Chicago Tribune Printing Center. Bally’s has been mandated to open their new casino resort in September 2026 by the City.
Bally’s “funding gap”, which is the difference between the amount it invested so far and the $1.1bn required to finish the project, was discovered a few months back. Uncertain is where or how Bally’s will raise the $1.1bn needed to complete the project.
Alan Woinski was even more pessimistic last week. He is the CEO and editor-in-chief of Gaming USA Corp. Woinski said to the Chicago Sun-Times, Bally “won’t have this full project completed by the end 2026”. Woinski continued by saying that, even if Bally’s does manage to find the funding for the Chicago project to be completed, high-interest loans will not serve either the company or city long-term.
Bally’s is steadfast. The company has never wavered in its commitment to the project, according to a spokesman.
Johnson did not retract his Sun-Times comment, but he seemed to soften up as the week progressed.
Johnson, in a press release to NBC Chicago, said that the city was pleased with Bally’s highest ever revenue figures and continued to commit to its permanent casino project. It was also the casino’s best month since opening.
NBC Chicago spoke with Alderman Brendan Reilly who cited the budget gap as a cause of concern.
Reilly stated that the biggest issue was whether Bally’s could afford to build the casino. If we listen to what Wall Street is saying, it’s clear that they are short of hundreds of millions in cash for the delivery of the casino.
Chicago’s Board of Aldermen may hold hearings to determine Bally’s ability to finish the project.
Nevada
Bally’s is renovating the former Tropicana, where a Major League Baseball stadium will be built for the Las Vegas A’s. The cost of the park will be $1.5bn. GLPI is contributing $175m. Bally’s rents Tropicana for $10m a month, and GLPI is the owner of the land underneath it. Up to $380m in public funds will be made available to fund the entire project. However, the A’s are responsible for $1.1bn of private funding.
Bally’s received a permit in April to demolish the Tropicana before 20 October. Estimated demolition costs are $15m.
New York
Bally’s digital platform Bally Bet was launched in New York, in July 2022. Bally’s has since signed a contract with New York for a lease on the old Trump Golf Links located in the Bronx. The agreement is set to last 20 years. This lease will cost the company $60m. Bally’s has a plan to turn 17 out of 192.5 acres into a casino.
Bally’s began a free bus service last year to its Bronx store, which could include housing and green spaces.
Bally’s, like Steve Cohen’s proposal for a Queens Casino by Mets owner Steve Cohen, will require a legislative fix to move forward. Legislators must give their approval to turn some property in the Bronx into parking lots. On 25th June, a local public hearing will be held on this issue. Assemblyman Gary Pretlow introduced last month a bill at the state level to rezone land.
The casino project will not be a sure thing, even if Bally’s fixes the problem. For three licenses, there are 11 bidders. The New York legislature passed a bill earlier this month to change the deadline for bidding in New York. It now awaits the signature of Governor Kathy Hochul. New York State Gaming Commission plans to grant licenses before the end of 2025.
NYSGC may have second thoughts about adding a $2.5bn project to Bally’s, given that analysts claim that Bally’s already has a lot on its plate. The company has a 20-year contract for the Bronx land, but it can walk away and invest in a less expensive, controversial project.
Rhode Island
Bally’s, the sole sports betting and gambling operator in this state, works with the lottery in partnership. The digital and land-based products are both operational and making a profit.
Bally’s had asked for permission from the Legislature earlier this year to increase the amount of credit that it could offer to players at casinos to $100,000. The house approved an amended bill on Tuesday, 11 June. It was approved by the senate on 6th June.
According to The Rhode Island Current, the bill also asks Bally’s “to negotiate a new ratio of debt” with the State. Bally’s would be able to “take on net debt vs. gross debt” in the bill, according to The Rhode Island Current.
