Chicago Mayor Johnson Supports Bally’s Amid Brewing Controversies
Posted on: April 4, 2024, 04:25h.
Last updated on: April 5, 2024, 09:00h.
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.
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.
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Take a look at the Yelp reviews for Bally's Chicago that were posted in the last week. Then look at the reviews posted earlier than that.
Wait a minute! What about those investigations that are not mentioned above? In early December, reporters at PlayIllinois.com revealed that Bally’s Chicago is drawing the eye of both local and federal investigators. That was according to Crain’s Chicago Business, which reports that authorities are looking at the bidding process that resulted in Bally’s winning the opportunity to construct a casino in Chicago. The probes were spurred by complaints from unsuccessful bidders, the report said. No one close to the investigations has commented on the probes. However, Chicago Alderman Brian Hopkins confirmed the federal investigation, and claimed the entire Bally’s Chicago project could be at risk of coming to a complete halt. The federal investigation is reportedly being spearheaded by the U.S. Attorney's Office. City of Chicago Inspector General Deborah Witzburg is reportedly running the city’s investigation. Early December was four months ago. In the interest of transparency, please provide us with an update. Are those two investigations still underway or are there more than two?
On the ballys.com website, look at the "About Bally's Corporation" portion of each Bally's news release posted there. They proudly mention Bally's is planning for "a land-based casino NEAR the Nittany Mall in State College, PA." Actually, Bally's first land-based casino in Pennsylvania is not planned to be NEAR the Nittany Mall. It will be located in a vacant former Macy's department store INSIDE that mall. Be sure to factor in the estimated $120 million price tag for that State College casino, especially during the critical financial struggle Bally's is now experiencing. Can they still afford that casino project? At least some of the necessary infrastructure in State College is already in place thanks to the builders of that old Macy's store. There will be no ground-breaking ceremony in Happy Valley until the Pennsylvania Supreme Court decides whether or not to authorize the actual issuance of that casino's license that has been tied up in litigation for nearly three years now. The next questions for the media to ask Soo Kim should be about his yet-to-be-heard pledge for Bally's to see the State College, PA casino ribbon-cutting plans through to completion. Then ask Mr. Kim who owns that former Macy's store right now? What if that specific property owner changes their mind about that Bally's casino? Who signed what, when, and why? There remains no done deal on the horizon for a Bally's casino in Pennsylvania.