Chicago Mayor Johnson Supports Bally’s Amid Brewing Controversies

Posted on: April 4, 2024, 04:25h. 

Last updated on: April 5, 2024, 09:00h.

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

Chicago Mayor Brandon Johnson (D) is supporting Bally’s (NYSE: BALY) even as the regional casino operator contends with headwinds that could jeopardize its $1.1 billion integrated resort project in the third-largest US city.

Brandon Johnson
Chicago Mayor Brandon Johnson (D). He’s supportive of Bally’s efforts to complete a casino hotel in the city. (Image: Chicago Sun-Times)

In a statement to Crain’s Chicago Business, Johnson’s office said it expects Bally’s to follow through on its commitment to build a permanent casino hotel at the former Tribune printing plant in the River West section of the city. The gaming company currently runs a temporary casino at Medinah Temple in River North.

Last month, Bally’s executives told the Nevada Gaming Control Board (NGCB) they’re attempting to close a funding shortfall of $800 million to complete the Chicago project. That endeavor could become more difficult following the spate of recent credit downgrades endured by Bally’s.

“Bally’s has indicated that it is on track to begin construction this year and open the permanent casino in 2026,” according to the statement from the mayor’s office.

Lori Lightfoot (D) was the mayor of Chicago when Bally’s was selected as the winning bidder for the city’s lone casino license.

Takeover Offer Could Cloud Bally’s Chicago Plans

Some Chicagoans, including policymakers, are banking on the permanent Bally’s casino to be a jobs creator and revenue generator for the city, but are concerned that a recent acquisition offer by Standard General, if accepted, could jeopardize the project.

The hedge fund, which is controlled by Bally’s director Soo Kim, has pledged to complete the Chicago casino hotel if it acquires Bally’s, but some investors and local residents are concerned about the fate of the project should the regional casino go private.

In a letter to Bally’s board on Tuesday, California-based money manager K&F Growth Capital, which owns 1% of the gaming company’s shares, said the gaming company has bitten off more than it can chew with “moon shot bets” on large casino projects, including Chicago.

K&F encouraged Bally’s to seek a partner in Chicago to limit its exposure while also telling the board it should sell the operating rights to Tropicana Las Vegas to raise cash and abandon attempts to procure a New York City casino license. Johnson’s office said it’s not getting involved in the K&F/Standard General rift.

“The city doesn’t weigh in on disagreements between investors in any circumstance but looks forward to this project advancing and will continue to monitor its progress,” according to the statement provided to Crain’s.

Chicago Has Options

Bally’s hasn’t said that it’s searching for a partner in Chicago, but such a move could prove practical in terms of minimizing financial exposure at a time when investors are concerned about the operator’s credit profile.

For now, the prevailing speculation among analysts is that Bally’s will reject Standard General’s takeover offer and proceed with completing the Chicago plan — the gaming company’s most expensive to date.

Should that not happen, Chicago has options because Hard Rock International and homegrown Rush Street also pursued the license ultimately won by Bally’s. Still, the more effective and likely more desirable option for the city is for Bally’s to make good on its promises.