Struggling Finances and Intense Competition Cause Bally's Credit Rating to Decline in Chicago Casino Scene
Rewritten Article:
Financial Struggles Plague Bally's Corp and Its Chicago Casino Project
Troubling financial times loom for gambling operator Bally's Corp. Fitch Ratings recently downgraded the company from "B" to "B-", indicative of mounting debt and execution risks, most notably with its $1.7 billion Chicago casino development.
Fitch points to Bally's EBITDAR leverage peaking at 7.0x in 2024, potentially shooting up to 8.0x-9.0x due to fresh debt issuance and lease commitments. The company's efforts to raise $940 million in private capital fall short by $250 million, a gap that can be bridged only through an initial public offering (IPO) aimed at women and minority investors, yet to receive SEC approval. Even as Bally's sells $195 million in private shares, Fitch cautions that liquidity is tightening due to ongoing financial obligations.
The company's balance sheet shows a promising $620 million available on its revolving credit facility and no major debt maturities until 2028, but Fitch warns against complacency.
Competition and Market Threats
The permanent Chicago casino at 777 W. Chicago Ave. is set to open in September 2026, but it's poised to encounter fierce competition in an already saturated market. High gaming tax rates, customer loyalty challenges, and the lackluster performance of its temporary Medinah Temple casino paint a challenging picture for the project.
The Medinah Temple location posted mere revenue of $8.8 million in February, marking its lowest monthly total in over a year. Bally's CEO Robeson Reeves acknowledges the struggles, stating, "The temporary Chicago casino returns are below our expectations, though we're hearing from customers that they're growing increasingly excited by what's starting to happen a few blocks northwest at the permanent site."
Additional Hurdles
Bally's is also striving for a $300 million property tax relief over a ten-year period, a proposal still under consideration by the Chicago City Council Rules Committee.
The company's minority investment initiative is under fire in two lawsuits backed by conservative organizations, with plaintiffs arguing that the program discriminates against white male investors, despite being contractually mandated by the city.
If the company secures complete funding for the Chicago project and manages to lower its debt ratios, it could potentially raise its credit rating. As a means of alleviating financial burden, Bally's is considering a sale-leaseback agreement for Twin River Casino, generating an estimated $735 million.
In sum, Bally's Corp is grappling with numerous financial challenges, particularly with the Chicago casino project, due to burdensome construction costs and broader financial commitments. Despite these hurdles, the company remains resolute in moving the project forward.
Enrichment Data Snippets:
Construction and Financing Challenges:- The Chicago casino project faces significant construction expenses and complexities, including the requirement for multiple city approvals.- Bally's financial commitments, such as the rescue package for Star Entertainment and its own debt issues, add to the financial pressures on the project.
Controversy over Diversity Initiative:- The company's minority investment initiative is being challenged in two lawsuits supported by conservative organizations.- While the initiative is mandated by the company's contract with the city, critics claim it discriminates against white male investors.
- The financial pressures on Bally's Corp, including construction costs for the Chicago casino and other commitments like the Star Entertainment rescue package, are causing concerns, similar to the challenges faced in other sectors like sports funding.
- Even as Bally's seeks to alleviate financial burden by exploring sale-leaseback agreements for assets such as Twin River Casino, their controversial minority investment initiative, which is the focus of two ongoing lawsuits, is reminiscent of similar debates in the world of finance and diversity.
