Bally's has recently been in the spotlight, with news emerging from Illinois, Nevada, New York, and Rhode Island. With the opening of its Chicago casino facing uncertainty and its proposed New York casino encountering stiff competition, it's timely to examine Bally's current landscape.
Bally’s is reportedly $800 million short of the funds needed to build its permanent Chicago casino. Moody’s and Fitch have downgraded the company’s credit rating this year. In April, Bally’s chairman, Soo Kim, attempted a takeover bid that was poorly received. King and Fetter’s Growth Capital (K&F) wrote that taking the company private would “jeopardize the completion of the Chicago project.”
Kim’s hedge fund, Standard General, owns 26% of Bally’s. He offered $15 per share, which is above the current share price ($11.22 as of June 14) but below the $38-per-share buyout offered in 2022. Just after that 2022 offer, then-Chicago mayor Lori Lightfoot awarded the company the casino project.
Bally’s, according to the K&F letter, is “overleveraged” across the country. The Fitch downgrade also noted “high leverage.” Bally’s is currently redeveloping the former Tropicana site in Las Vegas and is among the bidders for one of three downstate casino licenses in New York. Additionally, it is close to getting a change in what kind of debt it can carry in Rhode Island.
Bally’s Intense Growth and Financial Strain
The current iteration of Bally’s began in 2020 when Twin River, a brick-and-mortar casino and horse track owner, bought the rights to the Bally’s name and rebranded. Kim and Standard General purchased their ownership stake in 2016. In 2019, Kim, as chairman of the board, began rapidly expanding the company, overseeing the acquisition of seven casinos in Colorado, Louisiana, Mississippi, and Missouri in 2020.
That same year, Bally’s aggressively expanded into the digital gambling space with plans to become an omnichannel provider. The biggest deal was a partnership with Sinclair Broadcast Group, rebranding 19 Fox Sports Network regional sports networks as part of a 10-year deal. Sinclair could end up with a 24.9% ownership stake in the company.
In 2021, Bally’s acquired free-to-play gaming company SportCaller, daily fantasy provider Monkey Knife Fight, wagering platform Bet.Works, and British online gambling group Gamesys, spending or committing to spend about $3 billion in total. Bally’s also purchased the Association of Volleyball Professionals to stream sports on its video app.
Bally’s added other properties and projects, including the Las Vegas Tropicana, to its portfolio.
Digital Gambling and Financial Challenges
Analysts have pointed to Bally’s foray into digital sports betting and online casinos as a financial drag on the company. Another regional casino company, Penn Entertainment, faced similar concerns in late May when shareholders recommended focusing on core casino business and offloading digital platforms.
The K&F letter suggested Bally’s consider a similar approach, citing “minimal” overlap between land-based and digital businesses.
State of Bally’s Projects Across the US
Illinois Chicago Mayor Brandon Johnson recently commented on the uncertainty surrounding Bally’s Chicago project, which has been unfolding since the company won the right to build the casino in 2022. Bally’s opened a temporary space at the Medinah Temple site in September 2023 and will take over the permanent site at the old Chicago Tribune Printing Center on July 5. The city has mandated Bally’s to open its new casino resort by September 2026, but the company faces an $800 million funding gap.
Nevada Bally’s is redeveloping the old Tropicana site, which will also house a new Major League Baseball park for the soon-to-be Las Vegas A’s. The park is expected to cost $1.5 billion, with GLPI contributing $175 million. Public funds of up to $380 million will be available, but $1.1 billion in private funding is still needed.
New York Bally’s launched its Bally Bet digital platform in New York in July 2022 and signed a 20-year agreement to lease the former Trump Golf Links in the Bronx. The company plans to dedicate 17 of the 192.5 acres to a casino project. However, the Bronx land is designated as parkland, requiring legislative approval to turn part of it into a parking lot. There are 11 bidders for three casino licenses, and the New York State Gaming Commission plans to issue licenses by the end of 2025.
Rhode Island Bally’s is the sole sports betting and casino operator in Rhode Island, in partnership with the state lottery. Both land-based and digital products are operational and profitable. Bally’s has requested the legislature to allow it to double the credit it can extend to casino players to $100,000. The House passed an amended version of the bill on June 11, and the Senate approved it on June 6.
Source:
Bally’s has a lot going on. Is it all too much?, igamingbusiness.com, June 17, 2024.