Bally’s is currently facing credit downgrades from major ratings houses and investor pushback on the ongoing takeover bid by its biggest shareholder. The company is also yet to fill an $800 million funding shortfall for the construction of its proposed $1.7 billion Chicago casino.
Despite these challenges, Bally’s Chicago is seeing steady growth at its temporary casino. The figures released by the Illinois Gaming Board (IGB) showed that both footfall and gaming revenue ramped up at the temporary facility in March.
Visitor traffic jumped nearly 12% in March, making the temporary facility the second most-visited casino in Illinois, just trailing Rivers Casino Des Plaines. Meanwhile, the gross gaming revenue ticked up almost 13% to $11.1 million.
Although it operates a well-stocked gaming floor and retail sportsbook, Bally’s Chicago has yet to join other sports betting and online casino operators in Illinois.
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Surge in Business at Bally’s Casino Temporary Facility in March
According to IGB data, Bally’s Chicago saw impressive performance at its temporary facility in Medinah Temple in March 2024. The casino opened late last year inside the Medinah Temple and, according to CBS News, it plans to operate for the next three years, with 56 gaming tables, 800 slot machines, and a couple of restaurants.
The facility has seen modest business activity since September. However, in March, its adjusted gross receipts surged by an impressive 12.7% compared to the previous month, reaching over $11.1 million. This marked growth positions the temporary facility as the 4th-highest earner among the state’s 16 casino properties.
Admission numbers have also reinforced the casino’s appeal. The facility saw nearly 118,000 visitors passing through its doors in March, an 11.6% increase from February.
This substantial footfall secured the Bally’s Chicago casino the second-highest visitor ranking in the state. It only trailed the ever-popular Rivers Casino Des Plaines.
Soo Kim, the chairman of Bally’s Corporation, expressed confidence in the casino’s ability to sustain this steady growth. He said that the temporary facility is expected to continue to build momentum month over month.
Takeover Bid and Financing Challenges
While the casino’s operations are thriving, Bally’s finds itself at the center of a high-stakes takeover bid initiated by its largest shareholder, Standard General. The private equity firm, founded by Soo Kim himself and Nicholas Singer, has offered $15 per share to acquire the company outright and take it private.
The said valuation represents a premium over Bally’s current stock price, which traded between $13.30 and $13.64 per share on the New York Stock Exchange last week. However, the bid has faced resistance from prominent investors, including Dan Fetters and Edward King of K&F Growth Capital, who argue that Kim is purposely undervaluing the company.
In a letter addressed to the special committee formed to review Kim’s proposal, Fetters and King contended that decisions made by Kim have negatively impacted the company’s value. They cited concerns over “moon shot bets on huge, unfunded development projects, failed US online execution, casino resort properties underperforming its regional peers, an over-leveraged balance sheet with little near-term prospects for de-levering, and irresponsible capital allocation decisions.”
The investors further suggested bringing in Hard Rock International as a replacement partner for the planned $1.7 billion permanent casino development in Chicago, a project they claim has been scaled back to a $1.1 billion commitment.
Credit Rating Downgrades
Compounding Bally’s challenges, the company has recently experienced credit rating downgrades from multiple agencies. Fitch downgraded Bally’s to a B rating on April 1, following Moody’s decision to assign a B2 rating on March 25, and S&P Global Ratings’ earlier downgrade to a B- from a B.
These downgrades mirror concerns over Bally’s financial stability and its ability to secure financing for the permanent casino project in downtown Chicago.
Analysts at S&P Global Ratings noted that while Bally’s expects to open the permanent casino in late 2026, management has not yet secured financing for the development. The ratings agency added that it is assumed that the operator will fill the funding gap of $1.1 billion with cash flow from the temporary facility and project financing.
Potential Revenue Stream from Las Vegas Property
In an effort to address its financing needs, Bally’s may explore monetizing its assets in Las Vegas. The company currently owns the land on which the recently shuttered Tropicana Hotel sits.
Nine acres of the land are pledged for a proposed $1.5 billion, 33,000-seat Major League Baseball stadium for the incoming Oakland A’s franchise. That means selling the remaining land at an estimated value of $9 million per acre could generate approximately $300 million for Bally’s.
Colin Mansfield, vice president of credit research for CBRE Credit Research in Las Vegas, noted that Bally’s is paying $10.5 million in annual rent to real estate investment trust Gaming & Leisure Properties Inc. and weighing available options for the land. Bally Bet also poised to launch, joining the ranks of DraftKings, FanDuel, and other top online sports betting platforms in Illinois.
Wrapping Up: An Uncertain Future
As Bally’s navigates the complexities of the takeover bid, secures funding for its ambitious Chicago project, and addresses concerns raised by investors and credit rating agencies, the future of the company remains uncertain. However, the strong performance of the temporary Bally’s Chicago casino in March serves as a testament to the brand’s appeal and potential in the lucrative Chicago market.
The coming months will be crucial for Bally’s as it seeks to resolve these challenges and chart a course for long-term success. Whether through a successful takeover, strategic partnerships, or alternative financing solutions, the company’s ability to capitalize on its momentum and deliver on its ambitious vision for Chicago will be closely watched by industry observers and stakeholders alike.
As the company navigates the complexities of a potential takeover, secures financing for its permanent casino project, and addresses credit rating concerns, the strong performance of its temporary facility demonstrates the brand’s appeal and potential in the vibrant Chicago market.
