Struggling Financing and Competition Cause Bally's Credit Rating to Plummet in Chicago Casino Scenario
Here's a Freshened-Up Take on Bally's Troubles
Bally's Corp., the gambling giant from Rhode Island, is currently swimming in the rough waters of financial turmoil, thanks to its ambitious $1.7 billion Chicago casino project. Fitch Ratings lowered Bally's credit score from "B" to "B-", a clear sign of growing financial stress.
According to Fitch, Bally's EBITDAR leverage will peak at 7.0x in 2024, with the potential to swell to 8.0x-9.0x due to fresh debt and lease commitments. To fill the remaining $250 million gap, Bally's is considering an initial public offering (IPO) that's open only to women and minority investors, though the SEC has yet to sign off on this move. In the meantime, Bally's is also selling $195 million worth of private shares to stay afloat.
Despite having $620 million available on its revolving credit facility and no major debt maturities until 2028, Fitch warns that liquidity is getting tighter due to ongoing financial obligations.
The Chicago Casino's Rocky Road
Bally's permanent casino, slated to open at 777 W. Chicago Ave. in September 2026, faces a brutally competitive market. The city's high gaming tax rates, the hurdle of customer loyalty, and the disappointing performance of the temporary Medinah Temple casino are all potential landmines.
The temporary Medinah location rang up just $8.8 million in revenue in February, its lowest monthly total in over a year. Bally's CEO Robeson Reeves acknowledged the struggles, noting, "The temporary Chicago casino returns are below our expectations, but we're hearing from customers that they're getting more excited about what's starting to happen a few blocks northwest at the permanent site."
Bally's is also seeking a $300 million property tax relief over ten years, although this idea is still under consideration by the Chicago City Council's Rules Committee. The company's minority investment initiative is facing legal challenges from conservative groups, who argue that the program discriminates against white male investors.
If Bally's manages to secure complete funding for the Chicago project and reduce its debt ratios, it might just scrape its way back up the credit ladder. The firm is also considering a sale-leaseback agreement for Twin River Casino, which could net $735 million.
Insights:
- Bally's Chicago project faces delays due to regulatory issues[2][3].
- The temporary casino has generated $160.7 million but incurred a loss of $294.4 million[5].
- The company is considering self-funding and revised investor terms[2].
- Enhancing operational efficiency and diversifying revenue streams could help Bally's[2][5].
- Strengthening relationships with local authorities may aid in securing support and favorable terms[2].
- Despite aiming to open its permanent casino at 777 W. Chicago Ave. in September 2026, Bally's faces a tough competition in a market with high gaming tax rates, the hurdle of customer loyalty, and the underwhelming performance of the temporary Medinah Temple casino.
- To secure complete funding for the Chicago project and potentially reduce its debt ratios, Bally's is looking into self-funding, revised investor terms, and a sale-leaseback agreement for Twin River Casino, which could net approximately $735 million.
- As Bally's Chicago project progresses, the company may seek a $300 million property tax relief over ten years, although this idea is still under consideration by the Chicago City Council's Rules Committee, and it is facing legal challenges from conservative groups concerning the minority investment initiative.
