Bally’s Reportedly Facing Multiple Investigations, Including Feds, Over Chicago Casino

Posted on: December 3, 2023, 01:44h. 

Last updated on: December 3, 2023, 01:44h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Bally’s efforts to bring a casino hotel to Chicago — the city’s first such venue — could be marred by multiple investigations, potentially including one by the US Attorney’s Office, into the process by which the company won the bidding competition.

Bally's Chicago gross gaming revenue
Bally’s temporary Chicago casino at Medinah Temple. Reports surfaced that there may be multiple investigations into how the company won the Chicago bidding process. (Image: Axios Chicago)

Crain’s Chicago Business reported the US Attorney’s Office is looking into complaints from other gaming operators that lost in the Chicago casino competition. The federal agency didn’t confirm the inquiry to the media outlet, but Ald. Brian Hopkins (D-Ward 2) said the investigation is happening. Hopkins has previously vocally criticized former Mayor Lori Lightfoot’s (D-Chicago) handling of the casino bidding race. Earlier this month, the alderman said the $1.7 billion project is now in jeopardy.

Unidentified sources told Crain’s that Chicago Inspector General Deborah Witzburg is also looking into the matter. Her office’s policy is to not comment on possible investigations. A spokeswoman for Bally’s told Crain’s the regional casino operator isn’t aware of any investigations, but there is speculation that both the federal and local inquiries have been ongoing for several months.

The Rhode Island-based gaming company has been operating a temporary casino at Medinah Temple in the River North section of Chicago for over two months. It is aiming to open a permanent casino hotel at the Freedom Center, a 30-acre riverfront property that Tribune Publishing has occupied, in 2026.

Rivals That Could Be Upset About Bally’s Chicago Casino

Lightfoot selected Bally’s as the winning bidder for the Chicago casino license in May 2022 over Hard Rock International — the gaming arm of the Seminole Tribe of Florida — and Chicago-based Rush Street Gaming.

While the Windy City is the third-largest in the US, just four operators submitted proposals to even participate in the competition and the process failed to lure big-name Las Vegas gaming companies, such as MGM Resorts International and Wynn Resorts, due to the onerous tax rates Illinois and the city set for the gaming venue.

Between Hard Rock and Rush Street, it’s not clear which one feels more jilted by Bally’s being crowned the victor in Chicago, but reports have surfaced that Rush Street was charged twice as much as Bally’s to file bids for various potential casino locations.

Additionally and in the tradition of Chicago’s notorious history of political corruption, it’s believed a city consultant that examined the financial health of the bidders raised money for Bally’s and that wasn’t disclosed to aldermen prior to the vote. At the end of the third quarter, the gaming company had $3.44 billion in debt, which is well excess of its current market capitalization of $525.57 million.

‘Worst Decision’

Hopkins previously characterized Lightfoot’s selection of Bally’s as one of her worst decisions, which is saying something given that she was swept out of office after just one term and that her approval ratings were dismal.

He was among seven members of the city council that voted against the choice of Bally’s. The gaming company has drawn the ire of Chicago policymakers on other fronts. For example, Ald. Brendan Reilly (D-Ward 42) in October 2022 lambasted a traffic study conducted by Bally’s for the Medinah Temple casino, bashing the claim that 40% of visitors to the temporary casino will bike, walk, or use public transportation.

Potentially adding to the brewing controversy is the point that the city allowed Bally’s to alter the terms of an agreement with minority that would allow the gaming company to buy those shareholders out of the Chicago project at a price that cannot be negotiated, according to Crain’s.