Bally’s Chicago faces an uncertain future, with key investors resisting a takeover bid to make the parent company private. But its present seems bright.
The Chicago Tribune, reporting on a 12.7% uptick in March to more than $11.1 million in adjusted gross receipts, also noted that “admissions to Bally’s Chicago increased 11.6% to nearly 118,000 visitors, ranking second behind Rivers Casino Des Plaines, the state’s busiest and top-billing casino.”
Soo Kim, chairman of Bally’s, expects the popularity of the casino to continue its upward trend.
“We continue to build momentum month over month, and we expect it to continue.”
Chairman is looking to take over Bally’s and make company private
Bally’s Chicago opened Sept. 9 last year in downtown Chicago. Casino revenue for March at the temporary location in the Medinah Temple Building was fourth among the state’s 16 casino properties. Illinois online casinos remain illegal, but efforts are underway by lawmakers to change that. The soonest iGaming could begin in Illinois is probably 2026.
The success at Bally’s comes as the casino attempts to engineer a planned 2026 move to a permanent Chicago location at an estimated cost of $1.7 billion. Reportedly, Bally’s needs to fill an $800 million funding gap on the project.
One possible way floated recently to raise the capital is to make Bally’s private. Kim and Standard General, the private equity fund Kim recently founded, is offering $15 per share to own the company outright.
That valuation is above Bally’s current stock price. It was trading between $13.30 and $13.64 a share on the New York Stock Exchange last week.
Investors claim Kim is purposely devaluing Bally’s
As CNBC reported, two high-profile investors, Dan Fetters and Edward King of asset management fund K&F Growth Capital, “argue Kim is undervaluing the company.” They are urging other investors not to allow Kim to take Bally’s over. In their letter to the special committee formed to review Kim’s proposal, they contended decisions by Kim have affected the company’s value.
In part, the letter read,
“Moon shot bets on huge, unfunded development projects, failed US online execution, casino resort properties underperforming its regional peers, an over-levered balance sheet with little near-term prospects for de-levering and irresponsible capital allocation decisions have driven the stock and bonds to a point of disinterest from the investing community.”
The CNBC coverage noted that Fetters and King want to bring on Hard Rock International, which had also bid for a casino license in Chicago, to replace Bally’s as a partner.
Their letter also noted:
“Bally’s won [the bid] with a $1.7 billion commitment, which has since been trimmed to a $1.1 billion development.”
Analysts have downgraded Bally’s credit rating
The corporation has suffered recent credit downgrades from ratings agencies. Fitch downgraded it to a B on April 1, joining Moody’s, which gave it a B2 rating on March 25, adding to S&P Global Ratings’ earlier drop to a B- from a B.
That analysis noted:
“Bally’s is also entering the early stages of the development of its permanent casino in downtown Chicago, which it expects to open in late 2026, somewhat later than it anticipated when it initially acquired the site in 2022. Management has not yet secured financing for the development, but we assume it will spend its remaining requirement of $1.1 billion, funded with project financing and cash flow from the currently open temporary casino.”
There is another possible avenue Bally’s has available for generating funds: The land on which the recently-shuttered Tropicana Hotel in Las Vegas currently sits.
The Las Vegas Review-Journal reported that though nine acres of the land is pledged to a $1.5 billion, 33,000-seat Major League Baseball stadium for the incoming Oakland A’s franchise, selling the remaining land at $9 million per acre could generate $300 million.
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. The article also noted, “GLPI is committed to funding up to $175 million, which includes the Tropicana demolition and site prep, and additional rent owed by Bally’s will be 8.5% of what is funded by GLPI.”
Mansfeld added:
“It is a net-negative carrying asset for Bally’s, but the attractiveness and potential value of the site has gone up since the time of purchase, in our opinion.”
Mansfield also forecasted that the takeover bid would not be successful.
